Watch this excellent video to learn about the 5 metrics all small businesses need to monitor. CEOs need to monitor the following Key Performance Indicators regardless of the maturity of their business:
Cost per acquisition – CPA is measured in various ways, but the best way is to roll up all sales and marketing costs for the month and divide by the number of customers acquired that month. If your sales cycle is 6 months, then use the sales and marketing expense from six months ago as the numerator and use this month’s unit sales as the denominator.
Revenue per employee – We measure revenue per employee on a monthly basis, dividing total revenue by the number of employees and then multiplying by 12 months to get an annualized number. Tracking this figure each month has enabled us to make sound hiring decisions, manage our expenses, and be accountable to the labor investments we make.
Customer loyalty – What you want to know here is how referable your business is. When you’re likely to be referred, you get leverage on those marketing and sales dollars spent each month. Therefore, the higher the referability, the more you can invest in CPA.
Lifetime customer value – When you know how much a customer is worth to you over the life of the customer, your decision-making improves significantly. You also know how profitable and healthy your business model is, how effective tweaks in your model are and how to adjust as you grow.
This metric is a super-metric because it is comprised of two critically important drivers of the business model. LCV = Average Revenue Per User / Churn. So, you can increase your LCV by increasing the ARPU or by decreasing the churn. Play with this equation and it doesn’t take long to realize that churn rate is what makes or breaks a business model. Furthermore, slight reductions in churn can make massive improvements in LCV.
Usage. Every software company needs to know how its customers are using and adopting the software. There are those who feel otherwise, but I feel that any software company wanting to drive long-term value for its shareholders needs to drive usage. Usage is king. Everything else falls in line nicely when customers use the company’s software.
Dashboard Examples: Executive Dashboards for the Insurance Industry. This letter came to the Dashboard Spy recently:
Dear Dashboard Spy: How does one design an executive dashboard in the insurance industry? I’m in the process of designing a global Business Intelligence system in the form of executive dashboards for my organization. The goal is to understand the minimum perspectives that a executive dashboard in the insurance industry should include. Looking for diverse views from people on how have they designed dashboards or what key performance indicators or metrics such insurance dashboards should contain. Hoping you can help.
Well, you’ve come to the right place for dashboard examples. I dig through the archives for you. Meanwhile, here are a couple to check out:
Google uses a text-based layout for “The Google Dashboard”, a product that informs Google account holders of all the various data that Google knows about them. Take a look at this video and you’ll see that the simple design works very well.
Here’s how Google explains it:
Transparency, choice and control have become a key part of Google’s philosophy, and today, we’re happy to announce that we’re doing even more.
In an effort to provide you with greater transparency and control over your own data, we’ve built the Google Dashboard. Designed to be simple and useful, the Dashboard summarizes data for each product that you use (when signed in to your account) and provides you direct links to control your personal settings. Today, the Dashboard covers more than 20 products and services, including Gmail, Calendar, Docs, Web History, Orkut, YouTube, Picasa, Talk, Reader, Alerts, Latitude and many more. The scale and level of detail of the Dashboard is unprecedented, and we’re delighted to be the first Internet company to offer this — and we hope it will become the standard.
What? Can it be true? Can one have too many business intelligence dashboards? Well, take a look at this article. Just as too many metrics and Key Performance Indicators can lead to analysis paralysis and failure to take action, one could have too many dashboards on too many systems to keep track of.
This article is from an ft.com post titled: Business Intelligence – Too many dashboards will bog you down.
Dane Group, a UK supplier of building facades and architectural metalwork, used frequently to incur unanticipated costs that cut into its profits.
It managed its contracts – which can take up to 18 months to complete – via a welter of spreadsheets that were not always kept updated.
“We would get to the end of a contract thinking we had made so much money on it and then discover £100,000 ($157,000) of costs we had not spotted before,” says Richard Bertram, finance director of the company, which has £25m of annual sales and 150 employees.
“We would order things on the phone and forget to place a purchase order. When the invoice came in, there was nothing to match it up with.”
To improve control of the manufacturing and billing process, Dane installed a business management system, supplied by a Swedish company – Industrial and Financial Systems.
This allows management to keep track of designs and materials and monitor costs and margins as a contract progresses.
“We used to make decisions based on perceptions rather than an analysis of the facts,” says Mr Bertram.
“Now we get better quality information in a more timely manner, which helps us with our decision-making.”
Awareness of true costs and margins gives the purchasing department more time to get better quotes from suppliers and simplifies calculating the amount of profit against sales.
Training on the new system started at the top of the company and went down.
Some staff readily adapted to the system, but additional training was provided for those who were warier.
Enterprise resource planning (ERP) systems of the sort installed at Dane have become vital to the management of businesses of all sizes over the past 30 years.
The increased uncertainty and volatility created by the credit crisis of 2007-2008 has made businesses even more dependent on up-to-date information on suppliers, customers and the internal workings of their own businesses.
Chief executives can no longer leave the management of their IT systems to their technology teams or their chief information officer. They must integrate it into their long-term strategy.
The use of smart phones and tablets at home and in the office has helped bridge the technology gap, but companies of all sizes often struggle to achieve full integration of IT into their strategic planning.
“We try to get chief executives to understand that if they can prioritise their key decisions and decide what information they need, they can get their technology organisation to create it,” says Stacy Blanchard, lead partner for organisation effectiveness for analytics at Accenture, a consultancy.
“If chief information officers do not see their role as being involved in the decision-making, then they are missing an opportunity. Lots of companies don’t have a creative partnership between the chief executive and the IT team.”
Even when senior management and the IT team are working effectively together, they can be swamped by the sheer amount of information that modern systems generate.
“Companies can be overwhelmed by data,” says Ms Blanchard. “They have to take a step back and sort out what information they need to achieve their strategy and to make decisions.”
Faced with this complexity, many companies have turned to “dashboards” to present the most vital data in an easily digestible format.
The onscreen dashboard will show top-level information in graphic form – like the dashboard of a car – and allows users to look at the underlying data as well.
In theory, dashboards are meant to overcome the conflicting versions of events that used to occur when companies depended heavily on spreadsheets, which were difficult to control and not always kept up to date.
But many companies now find they have too many dashboards and key performance indicators, so once again clarity is lost.
This profusion of information can mean senior management gets bogged down in analysing the past instead of using the data to think about the future.
Matt Peers, chief information officer at Deloitte, says: “People spend too much time poring over last week’s sales, rather than getting a model for next week’s.”
Technology can deliver the information, but leaders who have a clear idea of the data they require and the strategy they intend to pursue are vital for success.
Microsoft Excel can be an excellent choice of platform for quick business dashboard implementation. If you want to see the range of stylings that a sales dashboard constructed in Microsoft Excel can have, visit the post titled “32 Examples of Sales Dashboards” at Chandoo.org. This post is literally the largest grouping of excel sales dashboards collected in a single post.
The best part of the post is that you can download the source files for these excel dashboards.
Here are just a couple of examples of the dashboards on the post:
