How Are You Using Your Data?
One of the great things about technology is the amount of data available from which to make decisions. Too much data, though, can be a problem if you don’t know what to do with it all. And quite frankly, too much of the data available today is useless. The challenge is not just to store all that information, but to understand the opportunities it offers and effectively analyze it ahead of the competition.
The key is to process and interpret the data, gaining insight from it. Start by separating your data into two categories: need to know and nice to know. The 80/20 rule will no doubt come into play here with the need to know category representing 20 percent of all your data.
Your need to know data is the information you need to operate and make decisions on a daily basis. This data includes sales, net profit, gross profit margins, average customer transactions, sales and expenses per square foot, average sales per labor hour/labor dollar, shrink, etc. The nice to know data is just that, meaning you don’t require it to make daily operating decisions.
ANALYZING THE NUMBERS
The movie "Moneyball" dramatized how the Oakland A’s baseball team could win if they studied and played by the numbers that the players produced instead of gut instinct and player reputation. Interpretive expertise is important in order to understand what all the data means, draw conclusions and make wise decisions based on the analysis. You can apply this to identify customer and product trends, such as your most profitable/least profitable customer segments; most profitable/least profitable products and services; and your most productive/least productive employees.
Keep in mind that lawyers study individual judge’s decisions to gain insights into strategies to use in their courtrooms. Delta Airlines knows before a plane lands that a passenger’s baggage didn’t make the flight. They then alert the passenger about the bag’s whereabouts and when they will get it before the passenger’s blood begins to boil as he or she waits next to an empty baggage carousel.
Police departments also routinely sift through huge volumes of information to predict and plan for crime trends. They may look, for instance, at weather, traffic patterns, sporting event schedules, holidays and dates of paydays to pinpoint crime hot spots where targets of opportunity -- distracted people flush with cash -- are likely to intersect with would-be bad guys.
The Westin/Starwood hotel places their customer data into the hands of their employees servicing customers. Upon check in, the front desk clerk has the technology to bring up the prompt, allowing her to make a personal connection with the guest: “Welcome back, Ms. Clark. I see you were here with us last October. Would you like to stay in the same room?”
Likewise, you can use your data to glean insight into what makes your top-performing employees tick and perform at a high level. You can use the data to predict how employees will perform on the job and how to get them more engaged and motivated. You can study data from past employees, including patterns in their behavior on the job, which will lead to identifying personality attributes that are helpful if people are to perform at the level necessary for the position.
This approach requires store owners and managers to think like researchers. By better understanding your workforce (and potential hires), you can maximize their levels of engagement on the job. Assess employee engagement by surveying employees and studying the data. Engaged employees add -- not take away -- from the bottom line. Engaged employees develop relationships with customers, which results in increased sales, which drives profitability.
Lowe’s, the home improvement chain, found that the difference between its highest and lowest engaged stores was more than $1 million in sales annually. Something to think about, isn’t it?
Terry McKenna is principal and co-founder of Convenience Store Coaches & Employee Performance Strategies Inc., where he helps convenience retailers achieve greater financial results by optimizing their workforce. McKenna can be reached at (910) 458-5227 or [email protected] He also maintains a blog at www.terrymckenna.typepad.com.
Editor's note: The opinions expressed in this column are the author's and do not necessarily reflect the views of Convenience Store News for the Single Store Owner.