There are three characteristics that will be part of every thriving print business in 2020; diversified, engaged online, and data-driven. In part one of this article series, I discussed diversification, in part two I discussed online engagement, and finally in part three, I’ll discuss the idea of being a data-driven print business.
What does it mean to be data-driven?
Do you make decisions based on trusted, accurate data or are you forced to make instinctual decisions because you lack the access to trusted data sources or the data is too difficult to get to (e.g. trapped in paper job tickets), or the data exists in so many different systems it’s not worth the effort to collect and normalize?
Every business wants to be data-driven. It makes perfect sense to use the data your business produces to direct your decision making and to impact the behavior of your staff. There is an overall business reward for becoming a data-driven business.According to research by Andrew McAfee and Erik Brynjolfsson, of MIT, companies that inject big data and analytics into their operations show productivity rates and profitability that are 5% to 6% higher than those of their peers.
How does this relate to a print business? Let’s start with the foundation (not the most exciting part of the data-driven equation) but you can’t make strategic decisions without a foundation based on data-integrity and a trusted system of record. All roads to your data-driven foundation lead back to your Print MIS or ERP system. It should be your trusted system of record. When printers take the time and effort it takes to truly adopt and own their Print MIS, they are rewarded with a data foundation that will enable them to become data-driven businesses. This commitment doesn’t end after your Print MIS is successfully implemented to work uniquely with your business, which is just the beginning. Every decision you make after implementation is considered in light of how it will work with your Print MIS and maintain it as your trusted system of record.
A data foundation isn’t only about Print MIS, it’s about how you organize, categorize, and segment your business so it can be properly measured. Do you group/identify common products so you can capture product trends? Do you categorize your staff by the areas of the business they work in so you can see labor trends by area? This is one of the most important things you can do before you embark on a Print MIS transition – go through your data and make sure you agree on how things are being categorized. For example, if you have a person who works half time as a CSR and half time in pre-press is their time being allocated properly? One of the critical areas where almost all print businesses could use greater attention is their cost calculations for estimating. You have to trust what your Print MIS calculates as far as costs – this takes an attention to detail until you understand how the calculation is being made and trust it to do its job day after day. Too many printers lack the trust in the system and second guess almost every estimate – this daily time adds up and leaves a lot of room for error. Make the investment to test the system until you trust it, the payoff is huge. Your system should run your business; your people should run the system.
Once you have a trusted system of record, you have the ability to start making data-driven decisions. Most of us are stuck in the world of custom reports – a snapshot of your business at a given time. Custom reports work well for month end reports and financials. They are less helpful when you’re trying to monitor current activities. Live queries into your Print MIS databases are more effective, typically a Print MIS will allow you to save queries, e.g. “Jobs Due Today” so with one click you can see what’s in store for the day while looking at live data that you can drill into.
Monitoring your business data helps you stay on top of your business, reporting on your data helps you manage the time based trends of your business. All of this attention is to help you make better business decisions. The key element to making better business decisions is to have meaningful metrics that reveal the health and vitality of your organization. There are simple metrics that we all watch; revenues, profits, order volumes, average order value, customer mix, and product mix. Then there are metrics that provide more in-depth knowledge about your business and have the power to drive decisions and behavior.
I collect meaningful metrics – this is your invitation to send me your favorite business metric that you use to monitor your business, how you define it, and why you think it’s important.
Jennie Matt’s current favorite meaningful metrics:
Lead Generation Velocity
Definition: The growth of your lead generation system month to month, if you generated 15 qualified leads last month and 19 this month, your lead generation velocity would be ~26%.
Why I like this metric: if you want to track this metric, it forces you to start tracking qualified leads, which in turn forces you to define what a qualified lead is, which in turn forces you to put someone in charge of creating qualified leads! Metrics should drive behavior in the direction of positive business results. Your lead generation velocity is an indicator of your future sales (impacted by your average sales cycle and your conversion rate of qualified leads to customers). Most people think they have a sales problem, when they actually have a lead generation problem. Learn more at this upcoming Dscoop Webinar, April 9, 2015, 1pm EST: Lead Generation Drives Growth, Sales People Fulfill It
Profit Per Employee
Definition: The total profit of your company in a time period (e.g. month), divided by the number of employees.
Why I like this metric: Think of this metric as return on your talent utilization. When you use your talent in non-value add ways, it’s a cost. When you deploy your talent in a value-add fashion (e.g. your IT guy starts to do billable data-cleansing for customers), your talent becomes a revenue generator. I really love this because it includes all your labor, in print we typically monitor the production floor labor very closely and let sales and customer service get bloated. The number one difference between printers performing in the top profit levels and those performing at the bottom is their control of labor costs.
Profit Per Job
Definition: The profitability of a job based on difference between captured costs (labor and raw materials) and the price paid by the customer.
Why I like this metric: I love this metric because once again in order to measure it, you have to do a lot of foundational work. You have to be collecting labor and raw materials on a job-by-job basis (typically referred to as shop floor data collection). This metric should drive sales behavior; they should understand profitability on every job and be incented to sell products and services where margins are higher.
“Good metrics are consistent, cheap, and quick to collect.” But most importantly, they must capture something your business cares about.” Jeff Bladt and Bob Filbin Know the Difference Between Your Data and Your Metrics.
Be careful when you select your metrics because they can drive unintended behavior. For example, if your primary growth metric is number of jobs, you will inevitably find sales people splitting jobs up to drive that metric when submitting as one job would have been more efficient for the company in general.A thriving print business can only measure so many things well and what it measures ties to its definition of success.