KPIs in Retail & Store Analytics

I like this post. While I added some KPIs to their list, I think it is a good list to get retailers on the right path…

KPIs in Retail and Store Analytics (continuation of a post made by Abhinav on kpisrus.wordpress.com:
A) If it is a classic brick and mortar retailer:

Retail / Merchandising KPIs:

-Average Time on Shelf

-Item Staleness

-Shrinkage % (includes things like spoilage, shoplifting/theft and damaged merchandise)

Marketing KPIs:

-Coupon Breakage and Efficacy (which coupons drive desired purchase behavior vs. detract)

-Net Promoter Score (“How likely are you to recommend xx company to a friend or family member” – this is typically measured during customer satisfaction surveys and depending on your organization, it may fall under Customer Ops or Marketing departments in terms of responsibility).

-Number of trips (in person) vs. e-commerce site visits per month (tells you if your website is more effective than your physical store at generating shopping interest)

B) If it is an e-retailer :

Marketing KPIs:

-Shopping Cart Abandonment %

-Page with the Highest Abandonment

-Dwell time per page (indicates interest)

-Clickstream path for purchasers (like Jamie mentioned do they arrive via email, promotion, flash sales source like Groupon), and if so, what are the clickstream paths that they take. This should look like an upside down funnel, where you have the visitors / unique users at the top who enter your site, and then the various paths (pages) they view in route to a purchase).

-Clickstream path for visitors (take Expedia for example…Many people use them as a travel search engine but then jump off the site to buy directly from the travel vendor – understanding this behavior can help you monetize the value of the content you provide as an alternate source of revenue).

-Visit to Buy %

-If direct email marketing is part of your strategy, analyzing click rate is a close second to measuring conversion rate. 2 different KPIs, one the king , the other the queen and both necessary to understand how effective your email campaign was and whether it warranted the associated campaign cost.

Site Operations KPIs / Marketing KPIs:

-Error % Overall

-Error % by Page (this is highly correlated to the Pages that have the Highest Abandonment, which means you can fix something like the reason for the error, and have a direct path to measure the success of the change).

Financial KPIs:

-Average order size per transaction

-Average sales per transaction

-Average number of items per transaction

-Average profit per transaction

-Return on capital invested

-Margin %

-Markup %

I hope this helps. Let me know if you have any questions.

You can reach me at mailto://lauraedell@me.com or you can visit my blog where I have many posts listing out various KPIs by industry and how to best aggregate them for reporting and executive presentation purposes ( http://www.lauraedell.com ).

It was very likely that I would write on KPIs in Retail or Store Analytics since my last post on Marketing and Customer Analytics. The main motive behind retailers looking into BI is ‘customer’ and how they can quickly react to changes in customer demand, rather predict customer demand, remove wasteful spending by target marketing, exceeding customer expectation and hence improve customer retention.

I did a quick research on what companies have been using as a measure of performance in retail industry and compiled a list of KPIs that I would recommend for consideration.

Customer Analytics

Customer being the key for this industry it is important to segment customers especially for strategic campaigns and to develop relationships for maximum customer retention. Understanding customer requirements and dealing with ever-changing market conditions is the key for a retail industry to survive the competition.

  • Average order size per transaction
  • Average sales per transaction

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Business Intelligence Clouds – The Skies the Limit

I am back…(for now, or so it seems these days) – I promise to get back to one post a month if not more.

Yes, I am known for my frequent use of puns, bordering on the line between cheesy and relevant. Forgive the title. It has been over 110 days since I last posted, which for me is a travesty. Despite my ever growing list of activities both professional and personally, I have always put my blog in the top priority quadrant.

Enough ranting…I diverged; and now I am back.

Ok, cloud computing (BI tools related) seems to be all the rage. Right up there with Mobile

BI, big data and social. I dare use my own term coined back in 2007 ‘Social Intelligence’ as now others have trade marked this phrase (but we, dear readers, know the truth –> we have been thinking about the marriage between social networks / social media data sets and business intelligence for years now)…Alas, I diverge again. Today, I have been thinking a lot about cloud computing and Business Intelligence.

Think about BI and portals, like Sharepoint (just to name 1)…It was all of the rage (or perhaps, still is)…”Integrate my BI reporting with my intranet / portal /Sharepoint web parts…OK, once that was completed successfully, did it buy much in terms of adoption or savings or any number of those ROI / savings catch – “Buy our product, and your employees will literally save so much time they will be basket weaving their reports into TRUE analysis'” What they didnt tell you, was that more bandwidth meant less need for those people, which in turn, meant people went into scarcity mode/tactics trying to make themselves seem or be relevant…And I dont fault them for this…Companies were not ready or did not want to think about what they were going to do with the newly freed up resources that they would have when the panacea of BI deployments actually came to fruition…And so, the wheel turned. What was next…? Reports became dashboards; dashboards became scorecards (became the complements for the former); Scorecards introduced proactive notification / alerting; alerting introduced threshold based notification across multiple devices/methods, one of which was mobile; mobile notification brought the need for mobile BI –> and frankly, and I will say it: Apple brought us the hardware to see the latter into fruition…Swipe, tap, double tap –> drill down was now fun. Mobile made portals seem like child’s play. But what about when you need to visualize something and ONLY have it on a spreadsheet?

(I love hearing this one; as if the multi-billion dollar company whose employee is claiming to only have the data on a spreadsheet didnt get it from somewhere else; I know, I know –> in the odd case, yes, this is true…so I will play along)…

The “only on a spreadsheet” crowd made mobile seem restrictive; enter RoamBI and the likes of others like MicroStrategy (yes, MicroStrategy now has a data import feature for spreadsheets with advanced visualizations for both web and mobile)…Enter Qlikview for the web crowd. The “I’m going to build-a dashboard in less than 30 minutes” salesforce “wait…that’s not all folks….come now (to the meeting room) with your spreadsheet, and watch our magicians create dashboards to take with you from the meeting”

But no one cared about maintenance, data integrity, cleanliness or accuracy…I know…they are meant to be nimble, and I see their value in some instances and some circumstances…Just like the multi-billion dollar company who only tracks data on spreqadsheets…I get it; there are some circumstances where they exist…But, it is not the norm.

So, here we are …mobile offerings here and there; build a dashboard on the fly; import spreadsheets during meetings; but, what happens when you go back to your desk and have to open up your portal (still) and now have a new dashboard that only you can see unless you forward it out manually?

Enter cloud computing for BI; but not at the macro scale; let’s talk , personal…Personal clouds; individual sandboxes of a predefined amount of space which IT has no sanction over other than to bless how much space is allocated…From there, what you do with it is up to you; Hackles going up I see…How about this…

Image representing Salesforce as depicted in C...
Image via CrunchBase

Salesforce.com –> The biggest CRM cloud today. And for the last many years, SFDC has

enbraced Cloud Computing. And big data for that matter; and databases (database.com in fact) in the cloud…Lions and tigers and bears, oh my!

So isnt it natural for BI to follow CRM into cloud computing ?? Ok, ok…for those of you whose hackles are still up, some rules (you IT folks will want to read further):

Rules of the game:

1) Set an amount of space (not to be exceeded; no matter what) – But be fair and realistic; a 100 MB is useless; in today’s world, a 4 GB zip drive was advertised for $4.99 during the back to school sales, so I think you can pony up enough to help make the cloud useful.

2) If you delete it, there is a recycling bin (like on your PC/Mac); if you permanently delete it, too bad/so sad…We need to draw the line somewhere. Poor Sharepoint admins around the world are having to drop into STSADM commands to restore Alvin Analyst’s Most Important Analysis that he not only moved into recycling bin but then permanently deleted.

3) Put some things of use in this personal cloud at work like BI tools; upload a spreadsheet and build a dashboard in minutes wiht visualizations like the graph matrix (a crowd pleasure) or a time series slider (another crowd favorite; people just love time based data 🙂 But I digress (again)…

4) Set up BI reporting on the logged events; understand how many users are using your cloud environment; how many are getting errors; what and why are they getting errors; this simple type of event based logging is very informative. (We BI professionals tend to overthink things, especially those who are also physicists).

5) Take a look at what people are using the cloud for; if you create and add meaningful tools like BI visualizations and data import and offer viewing via mobile devices like iPhone/iPad and Android or web, people will use it…

This isnt a corporate iTunes or MobileMe Cloud; this isnt Amazon’s elastic cloud (EC2). This is a cloud wiht the sole purpase of supporting BI; wait, not just supporting, but propelling users out of the doldrums of the current state of affairs and into the future.

It’s tangible and just cool enough to tell your colleagues and work friends “hey, I’ve got a BI cloud; do you?”

BIPlayBook.Com is Now Available!

As an aside, I’m excited to announce my latest website: http://www.biplaybook.com is finally published. Essentially, I decided that you, dear readers, were ready for the next step.  What comes next, you ask?

After Measuring BI data –> Making Measurements Meaningful –> and –>Massaging Meaningful Data into Metrics, what comes next is to discuss the age-old question of ‘So What’? & ‘What Do I Do About it’?

BI PlayBook offers readers the next level of real-world scenarios now that BI has become the nomenclature of yesteryear & is used by most to inform decisions. Basically, it is the same, with the added bonus of how to tie BI back into the original business process, customer service/satisfaction process or really any process of substance within a company.

This is quite meaningful to me because so often, as consumers of goods and services, we find our voices go unheard, especially when we are left dissatisfied. Can you muster the courage to voice your issue (dare I say, ‘complain’?) using the only tools provided: poor website feedback forms, surveys or (gasp) relaying our issue by calling into a call center(s) or IVR system (double gasp)? I don’t know if I can…

How many times do we get caught in the endless loop of an IVR, only to be ‘opted-out’ (aka – hung up on) when we do not press the magical combination of numbers on our keypads to reach a live human being, or when we are sneaky, pressing ‘0’ only to find out the company is one step ahead of us, having programmed ‘0’ to automatically transfer your call to our friend:  ‘ReLisa Boutton’ – aka the Release Button().

Feedback is critical, especially as our world has become consumed by social networks. The ‘chatter’ of customers that ensues, choosing to ‘Like’ or join our company page or product, or tweet about the merits or demerits of one’s value proposition, is not only rich if one cares about understanding their customer. But, it is also a key into how well you are doing in the eyes of your customer. Think about how many customer satisfaction surveys you have taken ask you whether or not your would recommend a company to a friend or family member.

This measure defines one’s NPR, or Net Promoter Rank, and is a commonly shared KPI or key performance indicator for a company.

Yet, market researchers like myself know that what a customer says on a survey isn’t always how they will behave. This discrepancy between what someone says and what someone does is as age-old as our parents telling us as children “do not as I do, but as I say.” However, no longer does this paradigm hold true. Therefore, limiting oneself by their NPR score will restrict the ability to truly understand one’s Voice of the Customer. And further, if you do not understand your customer’s actual likelihood to recommend to others or repeat purchase from you, how can you predict their lifetime value or propensity for future revenue earnings? You can’t.

Now, I am ranting. I get it.

But I want you to understand that social media content that is available from understanding the social network spheres can fill that gap. They can help you understand how your customers truly perceive your goods or services. Trust me, customers are more likely to tweet (use Twitter) to vent in 140 characters or less about a negative experience than they are to take the time to fill out a survey. Likewise, they are more likely to rave about a great experience with your company.

So, why shouldn’t this social ‘chatter’ be tied back into the business intelligence platforms, and further, mined out specifically to inform customer feedback loops, voice of the customer & value stream maps, for example?

Going one step further, having a BI PlayBook focuses the attention of the metric owners on the areas that needs to be addressed, while filtering out the noise that can detract from the intended purpose.

If we are going to make folks responsible for the performance of a given metric, shouldn’t we also help them understand what is expected of them up front, as opposed to when something goes terribly wrong, signified by the “text message” tirade of an overworked CEO waking you out of your slumber at 3 AM?

Further, understanding how to address an issue, who to communicate to and most importantly, how to resolve and respond to affected parties are all part of a well conceived BI playbook.

It truly takes BI to that next level. In fact, two years ago, I presented this very topic at the TDWI Executive Summit in San Diego (Tying Business Processes into your Business Intelligence). While I got a lot of  stares ala ‘dog tilting head to the side in that confused glare at owner look’, I hope people can draw back on that experience with moments of ‘ah ha – that is what she meant’ now that they have evolved ( a little) in their BI maturation growth.

Gartner BI Magic Quadrant 2011 – Keeping with the Tradition

Gartner Magic Quadrant 2011

Gartner Magic Quadrant 2011

I have posted the Gartner Business Intelligence ‘BI’ Magic Quadrant (in addition to the ETL quadrant) for the last several years.  To say that I missed the boat on this year’s quadrant is a bit extreme folks, though for my delay, I am sorry. I did not realize there were readers who counted on me to post this information each year.  I am a few months behind the curve on getting this to you, dear readers.  But, what that said, it is better late, than never, right?

Oh, and who is really ‘clocking’ me anyway, other than myself? But that is a whole other issue for another post, some other day.

As an aside, am excited to say that my latest websites http://www.biplaybook.com is finally published. Essentially, I decided that the next step after Measuring BI data, Making the Measurements Meaningful, and Modifying Meaningful Data into Metrics was to address the age old question of ‘So What’? Or ‘What Do I Do About it’?

BI PlayBook offers readers real-world scenarios that I have solved using BI or data visualizations of sorts, but with the added bonus, of how to tie it back into the original business process you were reporting on or trying to help with BI, or tie back into the customer services/satisfaction process. This latter one is quite meaningful to me, because so often, we find our voices go unheard, especially when we complain to large corporations via website feedback, surveys or (gasp) calling into their call center(s). Feedback should be directly tied back into the performance being measured whether it is operational, tactical, managerial, marketing, financial, retail , production and so forth. So, why not tie that back into your business intelligence platforms using feedback loops and voice of the customer maps /value stream maps to do so.

Going one step further, having a BI PlayBook allows end users of your BI systems who are signed up and responsible for metrics being visualized and reported out to the company to know what they are expected to do to address a problem with that metric, who they are to communicate both the issue and the resolution to, and what success looks like.

Is it really fair of us, BI practitioners, to build and assign responisble ownership to our leaders of the world, without giving them some guidance (documented of course), on what to do about these new responsibilities? We are certainly the 1st to be critical when a ‘red’ issue shows up on one of our reports/dashboards/visualizations. How cool would it be to look at these red events, see the people responsible getting alerted to said fluctation, and further, seeing said person take appropriate and reasonable steps towards resolution? Well, a playbook offers the roadmap or guidance around this very process.

It truly takes BI to that next level. In fact, two years ago, I presented this very topic at the TDWI Executive Summit in San Diego (Tying Business Processes into your Business Intelligence). The PlayBook is the documented ways and means to achieve this outcome in a real-world situation.

“LAURA” Stratification: Best Practice for Implementing ‘Social Intelligence’

Doing an assessment for how and where to learn social media to better understand your business drivers can be daunting, especially when you want to overlay how those drivers affect your goals, customers, suppliers, employees, partners…you name it.

I came up with this process which happens to mimic my name (shameless self-persona plug) to ease the assessment process while providing a guided assessment plan.

First, ‘Learn’ to Listen: learning from the voice of the customer/supplier/partner is an extremely effective way to understand how well you are doing retaining, acquiring or losing your relationships with those who you rely on to operate your business.

Second, Analyze what matters, ignore or shelve (for later) what doesn’t; data should be actionable, (metrics in your control to address), reporting key performance indicators that are tied to corporate strategies and goals to ensure relevancy.

Third, Understand your constituent groups; it isn’t just your customers, but also your shareholders, employees, partners, and suppliers who can make or break a business through word of mouth and social networking.

Fourth, Relate your root causes to your constituents value perceptions, loyalty drivers and needs to ensure relevancy flow through from step 2. Map these to your business initiatives and goals exercise from step 2. Explore gaps between initiatives, value perceptions, loyalty drivers and corporate goals.

Lastly, create Action plans to address the gaps discovered in Step 4. If you analyzed truly actionable data in step 2, this should be easy to do.

To apply this to social media in order to turn it into social intelligence, you need to make the chatter of the networks meaningful and actionable.

To do this, think about this example:

 

A person tweets a desire to stop using a hotel chain because of a bad experience. In marketing, this is known as an “intent to churn” event; when social intelligence reporting systems ferrets out this intent based on scouring the web commentaries of social networks, an alert can be automatically forwarded to your customer loyalty, marketing/social media or customer response teams to respond, address and retain said customer.

A posting might say “trouble with product or service” – That type of message can be sent to customer operations (service) or warranty service departments as a mobile alert.

And a “having trouble replenishing item; out of stock” question on a customer forum can be passed along to your supply chain or retail teams — all automatically.

The Wynn has a great feedback loop using social media to alert them in real-time of customers who are dissatisfied with their stay who Tweet or comment about this during their stay.

The hotel manager and response time will find this person to address and rectify the situation before they check out. And before long, the negative tweet or post is replaced by an even more positive response, and best of all, WORD of MOUTH to friends and family.

Its sad to say, in this day and age, we are often left without a voice or one that is heard by our providers of services / products. When good service comes, we are so starved that we rejoice about it to the would. And why not? That is how good companies excel and excellent companies  hit the echelon of amazing companies!