How to Utilize Data Visualization to Bring Actionable Insights: An Example of a Merchandise Dashboard

This article is for those merchandisers who want to find a dashboard facilitating their daily work, as well as for those Data Analysts who help build the dashboard.

A dashboard is an invaluable tool in business operations, offering timeliness, intuitiveness, and flexibility beyond regular reports. By developing a well-structured dashboard, users can identify key problems at a glance and promptly take action to address them. Therefore, understanding how to build a dashboard that provides actionable insights is of great value. This article aims to guide you through five key points on utilizing data visualization to bring actionable insights, using the example of building a merchandise dashboard.

1. Understand the daily responsibilities of the target audience:

To make a dashboard actionable, it should closely align with the responsibilities and daily decision-making processes of the target audience. It is crucial to comprehend their concerns, the metrics they prioritize, and the corresponding actions they may take.

Merchandisers need to understand customer anticipation and manage product inventory to fit the customer’s needs. Their work includes budget planning, ordering products, monitoring the inventory level, forecasting stock changes, and deciding on sales promotions.

Therefore, the key metrics for merchandisers to refer to could be:

• Sell-through rate: Percentage of products sold divided by the percentage of products ordered. This metric is to evaluate the stock level as well as the product’s popularity.
• Sell through rate trend: The sell-through rate trend could show the sales performance in the past. It can also show the forecasted trend in the future.
• Sales and Gross Margin: This is to evaluate the profitability and can help decide on ordering more profitable products.
• Stock on Hand: This is the inventory level which can help manage the inventory level, and help decide whether to give sales promotions for not performing products.

By these metrics, merchandisers could make decisions such as:

• Assign more budget on high gross margin products.
• Increase the ordered quantity of products with a high sell-through rate.
• Make decisions on sales promotion, and products replenishment according to forecasted stock changes.
• Give sales promotions for products with a high stock on hand.
• Quickly Identify the problematic store locations, brands with a low sell-through rate, as well as the superstar store locations, brands with high sell-through rate.

2. Decide the granularity of the metrics

What is granularity: A Dashboard can show data in many different granularity. For example, a dashboard could have an overall sell-through rate, but we could also break it down into different stores, product types, product brands, and even drill down into different clothing sizes.

How to decide granularity: The granularity usually depends on the job position of the merchandiser. In the fashion industry, managers typically focus on high-level metrics, they are likely to make decisions above or at the brand level. But executives/buyers might have to consider at the clothing size level. It is also crucial to acknowledge that individuals in various positions within a department have distinct daily responsibilities. Consider the information necessary for their decision-making processes and ensure that the dashboard caters to their specific needs.

3. Have proper UI/UX design for decision-making

After determining the key metrics and granularity to show, the next step for business analysts to consider is how to arrange the chart position in the dashboard. Here we can follow this principle: Align the flow of the dashboard with the mind flow of decision-making.

Decision-making process usually starts by asking a broad question. The merchandiser may want to know “How is the overall sales performance? Is it good or bad” Or “What is inventory level now?”. Therefore, you can put the key metrics for evaluating performance, such as sales, gross margin, sell-through rate, and stock on hand at the overall level on the top of the dashboard.

Subsequently, merchandisers may wonder, “Why is this the case? What factors contribute to it?” In this segment, they would appreciate seeing a breakdown of the performance in different granularity. For example, you could put the breakdown by brands, store, and clothing size

Finally, provide a certain level of flexibility. It is common that people may want to investigate sales in a specific time range, or inventory for a specific store, brand, or size. Providing a selection box for custom selection would largely increase the capability of the dashboard.

One more option is to create a “quick question” area. Merchandisers may have some frequently asked questions in mind. For example, they may want to investigate the top 10 invested brands’ performance or the top 10 stock-on-hand brands. To increase the search efficiency for these usually-asked questions, you can directly list the answer in the “quick question” area. This saves users the effort of searching for information manually.

By this design, where the flow of the dashboard is aligned with the flow of the question, your dashboard provides all the information needed and gives users enough confidence to make decisions and take action.

4. Add Benchmark for metrics:

The data alone can hardly show good or bad. You need to have a benchmark to compare. There are several ways to construct a benchmark:

• Horizontal comparison with performance from the previous year/month/week.
• Vertical comparison with industry averages.
• Pre-set rules based on experience.

Different standards yield different effects. Choose the standard that best suits the needs of your audience, or you can also put multiple benchmarks for comparison.

5. Add visual aids to help merchandisers understand the information

When people scroll down the dashboard, it is always good to have an icon or color highlighting the data. There are some visualization tools you could use in the dashboard:

• Alert for action: you can place an alert next to items with a sell-through rate below 10%, suggesting that merchandise team should take sales promotion for this brand.

• Use Color: Color can be used to convey the interpretation of data. You can have different colors for good and bad performance. For example, when the sell-through rate is increased, it is shown in green, while when it is decreased it is shown in red.

It is noticeable that color interpretation may differ among different cultures. For example, in Hong Kong, green is typically associated with good performance, while red signifies poor performance. However, in Mainland China, it is the opposite.

Conclusion

To utilize data visualization to bring actionable insights, you need to

• Understand the daily responsibilities of the target audience
• Decide the granularity of the metrics
• Have proper UI/UX design for decision-making
• Add Benchmark for metrics
• Add visual aids to help merchandisers understand the information

By following these 5 steps, you can create a wonderful dashboard for your business!