Performance Dashboards: Sales & Customer Satisfaction

Performance dashboards are a commonly used management tool to improve corporate performance.  While this sounds good in theory, how can a small business use dashboards to improve customer satisfaction and increase sales? 

Sales and Customer Satisfaction

Another potentially important category of measurements is sales and customer satisfaction.  For your business to succeed, you need sales.  Are you getting enough?  Does your sales pipeline have enough backlog to keep your company running at a satisfactory level?  Does your operational system generate quality products that you customers like?  Do you have one particular customer service rep who constantly makes order entry errors?  Identifying sales measurements is easy for most organizations.  However, identifying key measure of customer satisfaction may be more difficult.  Time spent discussing your operation and identifying how to measure satisfaction, or more importantly dissatisfaction, will pay dividends as you attempt to grow your business.  Potential measurements for this area might be:

Orders by Time of Day
Customer Complaints by Product
Order Errors by Shift
Stock-outs by Product Type
Sales Volume Over Time
Order Backlog
Sales by Region or Department
Marketing Costs Payback
Sales by Category
Sales by Salesman
On-time Order Delivery %
Complaints as a % of Sales Orders
Returns by Product Type
Product Failure Cost
Customer Satisfaction Rate
Product Quality Index

Do you have other sales and customer satisfaction related measures that small business owners should measure?

Leave a comment with your suggestions. If you need help setting up performance dashboards for your business, give us a call.

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Performance Dashboards: Operational Measures

We’re talking about performance dashboards and what to measure in your small business. We’re looking for the most important performance measures in the operations of the company.   

Operational Efficiency

Operational efficiency measures typically are thought to apply only to a manufacturing or fabrication type operation.  However, most businesses will have some type activities that when measured, indicate how efficiently they run their business.  Again, the specific measures that you choose will be dependent on your individual business, but here are some potential measurement ideas:

• Manufacturing Efficiency
• Raw Material Usage
• Scrap Rates
• Labor Hours per Unit
• Utility Usage
• Lost Time Accidents
• Transportation Costs
• Inventory Turns
• Monthly Closing Days
• Job Efficiency
• Operating Efficiency
• Vacancy Percent
• Job Cost Turnaround
• Billing Days

Do you have other operational related measures that small business owners should measure?

Leave a comment with your suggestions. If you need help setting up performance dashboards for your business, give us a call.


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Performance Dashboards: Financial Measures

Performance dashboards are a commonly used management tool to improve corporate performance.  Stephen Few, a business intelligence guru defines dashboards as “a visual display of the most important information needed to achieve one or more objectives; consolidated and arranged on a single screen so the information can be monitored at a glance.”  While this sounds good in theory, how can a small business use dashboards to drive a more profitable operation?  What specific items should be monitored? 

Cash Flow and Profitability

“Profit is illusion, cash flow if fact.”  The old adage clearly identifies the most important criteria in constructing a small business dashboard.  There are many ways to measure cash flow and in each business the important measures will be different.  One fact cannot be over emphasized in a small business setting: cash is king. When you run out of cash, you’re out of business. We should measure profitability, too…right?

Businesses need both profitability and cash flow to be successful over time. So you should consider both these measures. Maybe you can compromise and measure EBITDA, a sort of hybrid of both. If you can only measure one, measure cash flow.  As a business owner, you should be focused on cash flow already. In fact, your primary concern as business owner is to know how much cash you have in the bank, how much cash is coming in over the next few days or weeks, and how much cash you’ll have to use over the same time period. It’s up to you to manage that. You can have accountants who do calculations for and make accounting entries for you, but don’t turn over this job to your accountant. It is fine to have both of you focusing on this, but don’t turn this job over to your accountant. You are the only one who cares enough about your business to have this job.

Within the cash flow and profitability section, here are some potential measurement ideas.

• Bank Cash Balance
• Operating Cash Flow
• Cash Conversion Cycle
• Days Sales Outstanding
• Days Cash on Hand
• Gross Profit Margin
• Operating Profit Margin
• Net Income Percentage
• Return on Assets
• Debt Coverage Ratio
• Product Line/Category Profitability
• Division Profitability
• Plant Return on Investment

Do you have other financial related measures that small business owners should measure?

Leave a comment with your suggestions. If you need help setting up performance dashboards for your business, give us a call.


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Performance Dashboards: What to Measure

Dashboards can have many different uses.  The specific departments or users of the data will determine what is included on the dashboard.  For example, a corporate accounting department would have a vastly different dashboard than a manufacturing unit.  While the accounting department would measure things like length of monthly closing, the accounts payable cycle or days sales outstanding, the manufacturing unit might measure operating efficiency, labor hours per pound of production and lost time to injuries.

In the same way that different groups within a large corporate setting will have vastly different dashboards, a small business will likely have a much different dashboard than a large public corporation.  And in fact, the dashboard of one small business will be different than the dashboard of another.

A dashboard is nothing more than a tool for improving performance.  As such, it must be created to monitor the most important measures of your individual company performance.  It is also important to remember that a business owner can only keep his or her eyes on a limited number of measures.  Careful deliberation on the keys to success of your business should be the items that populate your dashboard.

Another important consideration is the use of comparative analysis to artificial measures like budgets and quotas.  While a department or even an individual dashboard might contain comparative measures to quotas or budgets, a company-wide comparison to an artificial yardstick is usually not advisable.  Remember, a corporate performance dashboard should identify and measure the keys to business success.  Is comparison to a budget or quota really a key to your business success?  If the yardstick has been put in place by your primary lender and is a determining factor in the renewal of your credit line, then maybe it is.  If it’s a self-imposed yardstick, you should be careful of using valuable real estate on your dashboard with such a measure.

Copying the dashboard of another company will be no more effective at managing your business than using their financial statements to run your company.  Having said that, there are general categories that all small business owners should consider when compiling a dashboard; cash flow and profitability, operational efficiency, and sales and customer satisfaction. We’ll talk about each of these categories individually over the next several posts.


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Metrics, Measures and Men

There’s a saying in quality circles, “what get’s measured, improves”.  Do you measure performance at your company? I’m actually a big believer in this idea that you can’t improve what you don’t measure. “Metrics” is one of the key buzzwords these days and is thrown around by all sorts of people. Metrics is just a fancy way of saying measure.

Measuring isn’t quite as simple as that though, is it? What do you measure? What about issues which are tough to put numbers on? “We have a great measurement system, but we don’t really use it because it takes two days just to figure out the current measurement.”

First, every business is different. What we measure at my business will be different than what we need to measure at your business. Why is that? Well, for starters, I’m different than you. My business is different than yours. What I’m most interested in seeing improved will be different that what you’d like to see improved. The goals and plans at my business are not the same as at your business.

“You mean we don’t all measure the same thing?”

No.  What you should measure in your business is based on your own goals and plans. What you measure at the corporate Board of Directors level will be different than what you measure in your regional sales office, on the manufacturing floor, or in the human resources department.

“Wow, this is getting really complicated.”

No, actually, it’s quite simple to determine the issues to be measured. Drilling down to the root cause to collect the proper data for measurement can sometimes be a bear. But, identifying the major issues to be measured is actually quite simple. What do you want to see improved? What are your big performance issues? What do your customers/owners/managers/auditors/partners/vendors complain about? The real issue is getting your employees to change their behavior so that you can collect meaningful data to improve your systems and performance.

“What does this have to do with my employee’s behavior?”

Everything. Most times, data collection means that employees have to “tattle” on themselves. So the pressure is on you to create an atmosphere without fear, where employees can work on your business without fear of being fired. THAT, is where measuring is difficult. It’s not the measuring, per se, is hard. It’s changing employee behavior that’s really difficult.

We’ll keep talking about measuring for performance improvement. Next time I’ll show you a local company with an awesome dashboard and how they use it to improve their business.


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