Analytics — predictive, historical, diagnostic and other kinds — are hot topics in the retail industry, and for good reason. We’re able to collect more data on consumers, their habits, and our own business operations than ever before. The excitement around what a company could know with the right data is enticing, and significant resources are spent working with analytics firms to develop plans for the KPIs you want to know, gather and measure about your operations and your customers.
But what happens when the rubber meets the road and it’s time to actually execute on your plan?
Although analytics is a dynamic and exciting field, the reality of implementing and integrating the technology to carry out your plans isn’t getting any simpler. While you may have spent months planning out an ambitious analytics effort, there are usually gaps between what sounded great on paper and what’s realistic within your existing systems and applications. Even if your plan is to build a custom analytics solution, you may find roadblocks between what you envisioned with your analytics partner and what is possible within your organization.
The problem stems from the fact that most consulting companies only look at the ideal KPIs, but there’s a knowledge gap around what it actually takes to produce those metrics. Perhaps you’ve found a third-party source that discusses KPI best practices, or your consultant recommends creating a plan. Whatever the case, first and foremost make sure you have the data to support the KPIs you want to measure. If not, you’ll be disappointed when you can’t turn your plan on paper into reality.
When starting an analytics project, avoid creating one from scratch. Typically, you should start with a data model or a product/framework (with a data model) and then modify it to meet your needs. And I don’t mean the flashy front-end dashboard; I mean the unsexy, back-end structure that will be the backbone of your entire solution. There is almost always an industry data model or some type of solution that will help you get off the ground quickly and save you a lot of extra work.
I don’t want to discourage you from aiming high with your KPI plans and I’m not saying all efforts at planning are pie-in-the-sky. But if you are in the midst of or are thinking about developing a KPI plan, keep these questions in mind and talk through them frequently and frankly with your analytics partner. Then, when it’s time to bring your plans to fruition, you’re less likely to be stopped by either technology hurdles or a high price tag.
How can you actually accomplish what you want to do?
Dashboards have been around for years and the ability to drill into different data sets is highly valuable. But what happens next? What are the exact systems you should look at to fix your problems? In other words, analytics shouldn’t just tell you what you need to do; they should be actionable and take you to where you need to fix the problem. Then, your integration partner can help make that action a reality and create a more seamless flow of data. With a good understanding of what you want accomplish, your integration partner can ensure you have future options with various sets of analytics.
I also want to make a brief but important side note here: Any analytics solution should be implemented with as little impact to the transactional systems as possible. Do not connect analytical solutions directly to your transactional systems to get real-time updates; this can slow your transactional systems tremendously and be disastrous.
What are your priorities?
You could spend years gathering and splicing data, but what do you really want to accomplish with it? Increase sales of a specific product? Improve inventory management? What are your choices for action based on that information? With a thorough understanding of not only what you want to know but what you want to do with that knowledge, your integration partner can better understand your business objectives and create a more helpful and comprehensive plan of action.
What’s really motivating your customers?
All the data in the world isn’t helpful if you don’t know which points are motivating your customer or having the greatest impact on your operations. By understanding your goals, you’ll know which indicators you should be watching, and you can avoid developing a huge number of irrelevant KPIs. Keep in mind that modern day analytics are about taking action: The KPIs should reveal what’s wrong and help you understand what to do differently next time.
Your integration partner can help guide and advise you on how to think through what’s most important to your organization, but you are the only expert on what specifically you need to know and do to be successful.
Transitioning Your Plans Into Reality
Analytics are a critical part of your operations, and a retailer that doesn’t understand what they need to know or what they need to do with that information will fall behind. When identifying your KPIs, know what questions you should be asking to ensure your plans are actionable. Then, when your integration partner is brought on board, you are starting from a stronger position to transition those plans into reality.
Tom Schoen is president of BTM Global and is charged with setting and overseeing the strategic initiatives of the company, along with client management for BTM Global’s largest clients. Schoen has a history of managing complex, high-profile clients on a global scale, along with 30 years of software engineering experience including scientific, military and retail applications. He also oversees BTM Global’s charity initiatives, including home building for those who live in poverty, relief for orphans and a variety of personal nonprofit activities.