What Business Metrics Should Be On Your Dashboard Right Now?
From a business management perspective, a dashboard system or view is essentially a software tool that compiles and summarizes information from other data sources and provides measurements for a decision-making user. Similar to the dashboard on a car that gives the driver quick, high-level information on fuel, engine status, distance traveled and temperature, the dashboard tool provides the same regarding the health of a business on specific KPIs. It is however important to note that the dashboard is only as useful as the data entered and the subsequent information displayed. If it’s the wrong data or the wrong metrics, then the dashboard is useless.
Your Business Dashboard Should Cover an Overview of the Business as a Whole
The benefit and output of the dashboard functionally comes in its information displayed; the results can help shape the direction of the business and put it closer to where the company should be for optimal performance. Whether it’s used daily or monthly, the dashboard’s summary output provides quick, real-time, status checks. This is why the data reflecting the entire business versus just segments is so important to include as a starting point. What’s missing from a dashboard can be just as important as what is displayed. Ultimately, picking the right dashboard, as well as the right elements, can make a huge difference in the performance of a decision-maker, especially at the daily level.
Your Business Intelligence Dashboard Can Be Broken into Components
There are essentially three types of dashboard tools available: operational, strategic and analytical. The operational dashboard is a snapshot of current status. The strategic dashboard provides status checks to know how all of the moving pieces are progressing. The analytical dashboard is a report of measurements over time to spot trends not apparent in snapshot data. From a sales perspective, these three dashboard types would be comparable to business health & financial data, production efficiency, and customer satisfaction/customer generation, respectively. There are different users who subscribe to each category of dashboard regularly, however, any decision-maker to some extent within the same organization can leverage each. The customer generation/satisfaction package is going to appeal far more to marketing for example whereas the production efficiency view may lend itself more to manufacturing and accounting. The business health and financial data is primarily in the domain of the executive team and finance department.
Customer Generation and Customer Satisfaction
The whole point of collecting customer data is to learn from it so that the businesses can attract and satisfy customers as it continues to grow. All of that information however, is far too much to display at once which is why the analytical dashboard approach comes into play. The goal here is to have access to immediate data insights and be able to see or predict potential outcomes with customers. By understanding behavior better, businesses are then able to increase customer retention, a key aspect of business long-term success.
The strategic approach is far different than the customer-oriented analytical dashboard. Instead, strategy involves what levers a decision-maker can pull within the operations to keep improving results. The key factor here is that the business controls what is being measured whereas in the customer side the business is dependent on external elements, customer behavior. Typical operational factors that would be strategized or managed would be the costs of production, delivery and inventory control.
Business Health and Financial Data
Finally, there is the operational dashboard, which focuses on the heartbeat of the company: business health and finance. After all, profitmaking and healthy returns are what allows a company to continue to expand market share and generate even more sales in the future. But growth alone can oftentimes be dangerous and allow over-extension. That in turn leads frequently to big debts and bankruptcy, killing the business. So metrics watching the bottom line profit margins, as well as debt liabilities to assets and income, are critical temperature gauges of company health. This data can change fast and dramatically in a very short time, making it a key aspect of a company dashboard system for management.
All of These Areas Have Multiple Metrics That Can Be Tracked
While there are key metrics in each type of dashboard, one should remember there are multiple metrics that tell the whole story. Together they are frequently more valuable than fixating on just one metric alone. Just like in statistics, more measurements and sampling provides a better accuracy reading than a one-off view.
The Dashboard is an Overview of All Areas in Real Time
It’s important to remember that dashboards need to be both comprehensive as well as useful. There’s lots of information to track in a business, but that doesn’t mean it helps make valuable decisions on how to operate, sell and move in the market. Again, a dashboard should be a summary level report of data, not the data itself; avoid the temptation to track specific data paths or you will get lost in the trees and miss the forest. That said, if there is a big blip or sudden unexplained variance, you should have the ability to get to the source very quickly versus waiting weeks for explanations. Ultimately, the dashboard needs to be able to identify the source data quickly with the ability to drill down into specific data.
Cost Per Acquisition is the Most Important Marketing Metric
For marketing, cost per acquisition is a key reading. This is the total expense, not just the price paid, one invests to get a customer to act or engage. Whether that be providing information or triggering a sale, the cost per acquisition is a read on what the business has to put into marketing to get a desired market reaction. To calculate the cost per acquisition, you simply take the total campaign expense and divide it by the number of successful customer actions while examining it over a specified period of time.
Conversion Rate is the Most Important Sales Metric
With the cost per customer action determined, then it can be combined with the rate of customer action. Assuming, for example, that a conversion is a sale, the business should be tracking how many conversions are happening per potential customer connected with. Taking the total number of sales and dividing it by the number of customer leads can calculate the conversion rate. Obviously, too little in sales versus lots of conversions can indicate that something is wrong, as activity is happening but not sales.
Customer Return Rate is the Most Important Customer Satisfaction Metric
On the other hand, just winning a customer is not enough. A business wants to know how well it is doing with keeping customers coming back. The Customer Return Rate measures this. This is measured by tracking the number of return customers over the total number of customers in a time period. A large number means big success in customer retention.
Total Cost of Service is the Most Important Efficiency Metric
When figuring out operating costs, some are going to be sunken expenses or indirect expenses. However, just because they aren’t directly associated with a sale doesn’t mean they don’t have an impact on business health. The total cost of service rate is important to track because it shows the operational cost drag on the business as it tries to make profits. A high cost means the business is spending too much and not clearing enough net profit.
Profit Margin is The Most Important Financial Metric
The net profit margin is the bread and butter metric every dashboard should have. A sizable net profit is a healthy position to be in. A very small net profit margin is a big problem because any major hiccup means the business could easily go into a loss status.
Remember, dashboards can be amazingly powerful and useful management tools, but they are only as good as the choice in metrics used and the data supplied. Measure the wrong data or too much detail, and the user ends up losing sight of what’s important. Ideally, the dashboard should be tracking the entire company and key metrics of health and performance.