Why temporary processes can be a bad idea in your business

Working with one of our customers recently, I was reminded why temporary processes can become such a headache for a business.

Our client uses a key report that shows the real profitability of their products by taking product sales and applying various additional costs and revenues to them to produce the true margin applicable to each product. It’s a vital report to the business. But, it’s created using a massively convoluted process, with a lot of manual intervention. Information is taken from over 30 different sources and manipulated to make it suit the reporting model. Very few people understand the process and it takes at least 6 months for someone new to learn how to do it. Also, it takes one person 20 days each month to produce the report, so it’s a full time job. Of course, with so much manual work, it’s also error prone and an area of high risk - what happens if the person who knows how to produce it is ill, for example. We’ve been helping them to understand and document the process, and making some recommendations for improvements, but changing it now is going to be hard for them.

Like many problematic processes I’ve seen in other companies, it started life as a feasibility study, answering questions such as ‘can this be done?’, ‘how can it be achieved?’ and ‘what would the results look like?’ That’s fine, and it’s a good approach to finding out what’s possible, but the trouble is that there’s a tendency for these things to turn into a real process once the underlying questions have been answered. Suddenly, what started out as a feasibility exercise has become a permanent fixture, which isn’t what the approach was designed for in the first place. Then people start to rely on the outcome of it, other processes are built on the back of it and, before you know it, you become trapped doing something in a less than ideal way.

My advice is to find any processes like this in your business and take stock of them. Consider if they are really necessary and whether, if you were to design it from scratch now, what would you really like it to do and how would you want it to work. Chances are, you’ll find that it’s not really giving what you want anyway, and there are much better ways to do the job you really need.

It’s worth spending some time and money to do this sort of thing properly with a real process that’s carefully thought out, using the proper tool for the job. In this case, a huge amount of information is being processed using 23 Excel spreadsheets, with macros and complex formulae, and a lot of elbow grease. The limits of what’s possible with this tool have really been reached, causing a lot of extra headaches.

Quite often, especially with reporting, and certainly in this example, the real problem that needs to be solved is at the point that the information arrives into the system. When people enter transactions onto systems, the requirements of key reporting processes need to be understood, so that the right information is being gathered at that point, to allow later analysis in the right way. In this example, if the revenue and cost transactions were already being posted at the best possible level, it would be so much easier to analyse the eventual effect on profitability, without all the manual effort to translate it.

So, next time you set someone off on a temporary approach to something, I’d recommend you think about where it might all lead. And once the feasibility study results are in, take the time to use what you’ve found out to design a proper process that provides a workable and sustainable solution to the problem.

If you would like some free advice about any processes in your business that are currently causing you concern, please just drop us a line by clicking here.

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Businesses leave valuable data untouched

Almost every business already has valuable information about its customers at its disposal. With recent technological advances in printing making personalised direct mail campaigns affordable, there has never been a better time to apply the data mining techniques used by direct marketers to predict customer behavior.

Business to business or b-to-b marketing is one of the more challenging areas. B-to-b marketers have been slower to adopt database marketing best practices. They tend not to have the in-house expertise to leverage the historical information from their customers, which might help segment their customer base and make the most use of customer data.

Working with a combination of in-house transactional data as well as overlay business “firmographic” information, companies can target their current customers and also understand where to find new clients that resemble their best customers. Studies show that an existing customer is 7 times more likely to buy from you as a stranger.

Many companies don’t track the amount of money their customers spend, making a ‘lifetime value’ figure for the average customer impossible to price. This makes it very difficult to accurately gauge how much to spend on marketing. That process can be as simple as tracking total sales or as complex as completely analysing their transactional history and corresponding profitability. Most business owners tend to think of a customer based on the current transaction; they tend to be more transaction- than customer-focused, not looking at the bigger lifetime picture.

Derrick Cameron from Eximium comments, “What was once very difficult to track and monitor can now be simplified through the intelligent use of IT. Once the systems are in place, monitoring this type of essential information becomes quite straightforward.”

Here are Derrick’s three key tips for getting more out of your existing customer data:

1) Be clear what you want. Data mining techniques are useless if you don’t know what you want to achieve. You don’t want to data mine for its own sake. You want to make sure that the information you retrieve can be applied to winning or converting more clients or up selling to existing clients. Focus your data mining on areas where you are producing results that can be implemented into tactical initiatives. Use the information to achieve your marketing objectives. It’s all about planning and preparation.

2) How current and reliable is your customer data? Perhaps it’s time to conduct a data audit. Find out how accurate it is and assess the information based on its origins. Did the information come from the customer directly, during the point of sale, or from a third-party source? Look to your marketing objectives to determine what information is required. Track all transactional history back to the customer mapping. A common issue is the use of different versions of a company name in your database. One day the order might be placed using ‘Ideal Marketing’ as the customer name. The next time, you might use ‘The Ideal Marketing Company’ or even an acronym such as ‘IMC’. You need to make sure those purchases are being linked to that same customer to ensure the accuracy of your analysis.

3) Keep it clean. It’s worth doing a final manual check to spot potential errors, undefined fields or duplication. The follow through from the data audit is to make sure you capture all the information you can on a customer, and to make sure you can match those transactions.

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