Busy, busy, busy, every day, lots to do, people to meet, problems to resolve, new ideas, new issues, incoming calls, blipping emails… from early morning to late at night… Sounds familiar? After all it’s good to be busy, being busy means money coming in, so it’s good…or is it really?
In all this rush we often lose track of what we want to achieve beyond solving the issue at hand or winning a new client.
We used to have a business mentor for a while and the main benefit of having one was that it forced Mark and I as well as the senior management team to take time out and think about these things…
- What are we set out to achieve?
- What’s important?
- What services shall we focus on?
- What capabilities and resources do we need?
- What products/ services make us the most money for the least amount of cost/ effort?
- What products make us grow?
- Are our clients happy?
- Are our team members happy?
- Are we on track to where we want to get to?
We used to have a meeting every month. For each of these meetings we also had to prepare – we had to gather and analyse data about our business. It was forcing us to stop and think. Even if we have not achieved much during our mentoring meetings, it did force us to stop and think as well as voice what we want to achieve. And just by stating where we want to be – it was all of a sudden a lot more tangible. I dug out my old notes from one of those meetings the other day and all of our ‘dreamt up’ goals that were really quite challenging at the time are now ticked off two years later…
Then we decided that we know it all and can do it on our own and had about two years without the business mentor…and started seeing that our growth is not as dynamic as before… So we have appointed another business mentor who interviewed all our staff and found out that in the rush we’ve lost the cohesion and focus as a team and we no longer remembered what the goals were and what we were set out to achieve. We were happy and still growing – but functioning on auto pilot more than travelling consciously to any particular destination. We now have another opportunity to create our business together with our staff. It’s a bit overwhelming, we’ve had our first session and identified our goals and a lot of actions that need to happen to reach our goals. It’s going to involve a lot of work but it’s also very exciting as we know that by ‘planning to reach the stars’ we may not get there and ‘reach the moon’ instead… which is way better than where we would have found ourselves if we did not do any planning at all.
So why am I going on about this…
Having a business mentor is great, no doubt, and I highly recommend having one or at least dedicate a good amount of time regularly to sit down and dream up what you want to achieve. And by all means do that as well with your spouse for your marriage one evening with a bottle of red…
The other reason for this long introduction is to highlight the importance of business analysis for ecommerce. Our business shifted to focusing a lot on ecommerce companies so now we know a lot about them, know what they do well and what they struggle with. Many of our clients, especially ecommerce retailers, gather vast amounts of data about their products, clients, transactions, rankings, campaigns… Which is really great as this data used well can help make optimal business decisions. But many ecommerce companies don’t do enough ‘stopping and thinking’… The most common issues we see are:
- Lack of full knowledge about the real costs and margins – this results in running campaigns for the wrong products or prioritising the wrong products on the site, creating sales that don’t even recoup the cost price, etc. and often losing money
- Lack of knowledge about which clients are the most valuable – and trying to please the wrong people who are actually not generating as much profit as some others
- Lack of tools to customise the offering depending on how much the client is prepared to pay
- Looking at the wrong metrics – e.g. looking at straight revenue as opposed to margin that includes product costs, handling costs, shipping costs, sales commissions and any discounts
Fair enough – a lot of it is to do with our busy days, being too close to the coal face and not having enough perspective. There is nothing wrong with keep doing what we are doing already…after all we are still in business… but there are HUGE benefits to stopping and thinking.
What to stop and think about:
- Check out our ‘What we are about’ blog inspired by Simon Sinek’s TED talk.
- Stop and think what you want to create for your business. What revenue, what margin, how many people, serving what customers, in what time frame, what do you want to be known for, what need are you wanting to satisfy, why should your business exist, how are you different from others, etc.? Lots to think about here.
- For ecommerce companies – analyse your products and customers – you will be surprised! If you need help, contact us. The analyses you could do (just a few to think about). Chances are that you have got MASSES of data – you just need to tap into it and convert into business information that will make your decisions much easier and more focused on getting to the goal…
o Where is my revenue coming from?
o What are my real ‘per product’ costs (fully loaded – with cost price, handling costs, shipping costs, sales commissions, after sales service, returns, discounts)
o Where is my margin coming from? Is it the same as the revenue? (Usually it’s not!)
o Are my sales campaigns making or losing money?
o Which customers buy the most, spend the most? Which return the most? Which ones are the best in terms of net numbers? Are there any patterns in their behaviour? How can I segment my customers and send them relevant messages/ offer relevant products?
o Where are my best customers? The answer could be ‘in Harrogate area’ or ‘on fashion forums’ or anything else…
o Which marketing channels give me the best value?
o Is my stock turning over well – or do I have any ‘non-moving items’ that are just costing me storage fees?