Measuring Your Way Up: the Importance of Gathering and Analyzing Data.
When I was in basic school, I used to place among the top 5 students of my class a lot of the time. What strikes me from that time is the way my parents used to track my performance with interest. They weren’t simply taking note of my placement for the term — but were also keen on using the previous term’s performance as a benchmark for my improvement.
“Nii Sowah, why did you score 89% in this term’s math when you scored a 94% for the first term?”. It was as if mum would prefer that I’d be 20th in class with an improved score, rather than the best pupil with a dip in the score.
Fast forward to some seventeen years after basic school, and I am appreciating that line of questioning from my parents more and more each day. In gathering product performance reports — analyzing performance trends have been a major part of daily to monthly activity at work — — and that has included the benchmarking of actual figures against targets and performances of previous months. It has thrown more light on why my mum especially was asking those questions. What are the lessons that experiencing and thinking through those childhood situations as an adult have taught me? Let me paint a certain picture for you…
You own a pastries and drinks outlet on a small university campus — and it serves as a good spot for students and lecturers alike to have their snack times in between lectures and other academic activities — it is basically the most patronized hangout place on campus. When school is in session, sales are up and good as compared to when campuses close for long vacations and the only people around are students on extension for research and some adjunct lecturers. Despite the difference in seasons, your place is still the hottest spot at the two different periods.
Imagine this is all you know about your business. Would you say that is enough to expand the “frontiers” of your business? Now, Imagine that this business is not the biggest on the campus in the main schooling season, but you have a structure that tells you more about your customers and what they order, when they do, and in what quantities they do that. When sales grow, or fall, over a period of time you are able to gauge how much it fell, or grew, by. In the period of the long vacation. whereas other businesses are affected by the drop in numbers of people on campus, yours basically maintains its trends and is hardly affected by that.
The main point in the two scenarios is that, whereas in the first one it sounds all well and good to be the topmost snack bar on the campus, being able to measure what got you there is important. That was simply the mindset my parents wanted to instill in me — that current performance should always be benchmarked against past performance just to measure if progress is being made at all. The importance of this to parents is that they are funding a service (education), and want to know if funding that service is beneficial, or they need to seek out another provider — or perhaps even look at ways of intervening to get better results from the service. This, when superimposed, on the campus pastries and drinks joint’s scenario means that the management’s ability to track the daily numbers of the joint, kept them in touch with the strengths and weaknesses of the service — and by that, optimizing for its delivery.
In today’s world where more and more people are developing and transferring ‘natural’ experiences into digital spaces there is a mass of data that in one way or another tells a story of the type of users/audience that each business has. For instance, if your food joint normally receives the least number people, but has a higher value of sales than any other day on a Thursday, it could be telling one, two, or more of a number of possible stories; e.g.,
- The people who visit your joint on Thursdays are more affluent than those of the other days.
- The people who visit your joint on Thursdays spend more than those of the other days.
- The meals prepared on Thursdays are averagely costlier than those of the other days
- And a host of others…
The point here is that, religiously gathering and analysing your data will expose information that may not be visible to the ordinary eye, to you. From that information you are able to ask questions of the various data points and draw lines of connections where possible. For instance from the above;
- Data has established that you have less patronage on Thursdays — — some of your questions can then border on why that is so, e.g.
- Is the menu the problem?
- Is it too expensive?
- Do we need to vary it?
The same data also established that Thursdays are the days you make the most sales value, so the following questions are also very valid when asked;
- Are the people who keep coming on Thursday willing to pay that much for the food, or the food is just expensive and with just a few orders you make good sales?
- Do we need to make the Thursday menu more varied so as to invite in more people to make the sales even better?
The aforementioned scenario is just an illustration of how important it is to regularly look at the numbers that matter to the success of your business. Certain numbers pinch you to dig deeper to try and understand them.
When you are able to connect dots and make valid inferences and test to prove or disprove the inferences, you end up getting much deeper insights and a better understanding of what is actually occurring. The only way up is to measure, learn and change if you need to. It is the only way to know if you are moving closer to your goals, or moving farther away from them.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
Sign up to the Rancard mailing list to keep up with what we’re up to, and find out when we publish the next article in the Rancard Blog.
