Executive Focus: How to Create a Tangible Reporting System
Do you want to create a reporting system that quantifies your catalog company’s successful interaction between customers and employees? Start with the five R’s:
Retention analysis. Review both employees and customers. Companies with long-term employees can offer better service to customers than those with high staff turnover rates. Losing employees due to low wages and/or high stress is counter-productive when you look at the costs associated with recruiting and training quality employees. If you have a challenge retaining quality people, reallocate funds to improve existing employees’ wages. Becoming an employer of choice will improve your retention rates significantly and will reduce costs.
To retain more customers, review individuals instead of the group. A high acquisition rate can mask a retention problem, creating an illusion of growth and prosperity. Acquisition combined with retention is a powerful force that contributes to long-term success. Acquisition without retention is expensive and indicates a company struggling to succeed. Every customer database review should go beyond the total number and provide a detailed data analysis including:
¥ acquisition and attrition rates,
¥ number of customers who purchased for each of the last five years by first and last purchase date, and
¥ customer analysis by frequency of purchases during the last five years.
Response. Comparing campaign tests to the control is the standard measurement of response and an effective measure of individual promotions. But how are you doing overall? Is your response rate trending up or down? If your retention is increasing, your response rate normally will follow suit. If it isn’t, find out why. Maybe there’s an aggressive acquisition plan in motion that would alter the outcome.
Revenue increases always are good news, but they may hide underlying problems. Instead of looking exclusively at total revenue, look at the revenue per active customer. If it’s decreasing, discover why, and correct the problem. If it’s increasing, find out why and repeat the process.
Return on investment typically is associated with capital investments. It also is an excellent way to see how your company is doing overall. Regularly review return on individual initiatives as well as overall. If the return doesn’t meet corporate requirements, revise the business plan.
Resources. Allocate them to the areas that provide the most return, and move your company to the next level of growth. It’s easy to respond to the details of daily challenges and use resources for areas demanding immediate attention. Try allocation by priority and see how your company grows.
While there are many other benchmarks that contribute to the ultimate success or failure of your company, these five R’s comprise the foundation. A growing organization will enjoy consistent improvements in these indicators. Measure them on a regular basis and compare them to previous periods, with adjustments for seasonal peaks and valleys.
Contact Ellis at (828) 626-3756 or via her Web site at: www.wilsonellisconsulting.com.
