The Four Pillars of Business Analytics | CLEARIFY

Business Metrics Made Simple

Although there are many components to each one of our Analytic Pillars, here are the simple descriptions.

1. Opportunities - finding customers
2. Customers - knowing your customers
3. Operations - delivering products and services to your customers
4. Finance - profitability of your business

Opportunities

The one question, which 99% of all business owners would fail to answer accurately, is the cost of acquiring a new customer.  Yet this is probably the most important metric - and is the first pillar of information that should be determined.  It is even more important for subscription and web based businesses.

It is more than just looking at marketing costs, and it could involve different channels. 

Some typical questions to answer:

• How do people find you?
• How many touches does it take to make that sale? 
• How much education is required for the customer to feel comfortable enough about your product to purchase it?
• What percentage of leads become qualified opportunities?
• What percentage of opportunities become sales?

Customers

This is the most common area for any analytical tool.  However, the majority of visualization is spent on sales, and sale comparisons.  The customer pillar is more than that.

• What is your customer profile?  Geographically? income leve? business size? age?
• What are the buying patterns? Cross sales?
• What is the expected/average life time value of each customer?
• Existing customer campaign metrics?

Operations

The biggest umbrella pillar, encompassing many aspects of the delivery of products and services.

• Manufacturing processes and costs
• Inventory control, forecasting and management
• Job costing and WIP
• Service profitability, warranties
• Resource management, number and type of hours worked, payroll costs

Finance

Traditionally the highest focus of existing reporting functionality within an accounting program.

• Financial Statements
• Budgeting and Forecasts
• Statement of Cash Flows and Cash Flow Forecasting
• Financial Ratios and KPI for asset turnover, capital expenditures
• Transactional history and audit trail

Financial Metrics vs Management Metrics

All accounting programs focus a majority of their reporting functionality in the finance area, as it is the basis for compliance and financial reporting. However most business owners, and department heads are in need of management reporting - which can be totally different than financial reporting.

We think it is important to have a good handle on all the areas of your business, and why we developed this system.

Look for more in the coming months.