Our previous article focused on the fundamentals of data-driven decision-making. That represents our theoretical thinking. Let’s take the theory into practice – and what could be more illustrative than our own example of our internal data-driven practices?
Length: 7 minutes.
While reading, if your feet are comfortable in the shoes of a CEO, think how your own company performs across the areas that are fundamental to your business. If you represent the board of directors, think what kind of information you receive and if it is optimally served to drive your business’s future. On an operational level – what kind of data do you collect, and is the “why” behind the data collection clear to you.
This article answers to four questions:
- What is important for us?
- What data is important for us at this specific moment?
- What and how do we track then?
- Do we go barefoot?
1. What is important for us?
To answer what is important, some simple sub-questions help a lot. In what kind of business are we, and in what kind of business do we want to be?
On paper, we are in a consultative “70220” business. In practice, we are in SME’s support business. We want to improve our clients’ profitability. We are both in discussion and financial modelling business. Eventually we are in a result business. Concept (Clarity) remains, scope per client may differ. We have software, but we are not a SaaS company.
What we truly are is what Alfred is for Batman.
Meaning everything important in place, right advice at the right moment so that the CEO and top management are always equipped to better perform in demanding leadership roles.
Tracking the present is important but for a growth company it is a poor proxy for the future. Setting up data-driven practices based on history is meaningless as you cannot lead from the past.
So. In what kind of business do we want to be? We have not calculated (=meaning that not all data is collected…) how many hours we have spent on answering that question internally but it is a lot.
Simply put, we are in a lucky position as we want to remain as “Alfreds (1)” to SMEs.
Could we start selling Clarity as a software? Yes, easily. Business case could be easily calculated. But does software help in improving profitability? Does any software help in deciding what kind of phone call should be taken next, or to tell whom to call? Quite rarely. (2)
For us, what kind of business we are and what kind of business we want to be in are the same. This should not be taken for granted and it takes backed up reasoning to confidently say so.
2. What data is important for us at this specific moment?
This is what we draw before we get started:
Clarifying what truly is the data needed is way more important than selecting KPIs based on data available.
Before touching upon any systems, we have figured out key areas that we need to track somehow. Those are withdrawn from the current nature of our business.
- Customer satisfaction
- Customer acquisition
- Service delivery
Sales sell, operations take care of the customers, customers become and remain happy and financials are the end result, if placing the listed components on a timeline.
However, we have placed customer satisfaction on top. If customer acquisition leads to short customer relations and high churn with sad faces, why even bother to sell? With happy clientele, customer acquisition becomes meaningful.
Data-driven practices may be qualitative although data-driven decision-making aims at quantifying basically everything. That being said, we have no quantified customer satisfaction metrics in place. As we discuss with our clients on a monthly basis, we either sense their satisfaction, ask proactively pros and cons from past months or in best cases hear feedback without asking. On top of that, some of our board members will biannually have a phone chat with each of our client for more objective feedback round. All of this is qualitative as no number can overrun one sentence, and the feedback is invaluable to develop further our Clarity concept.
How about customer acquisition then? It becomes a bit more quantitative, as sales is more or less numbers game after all. How many calls were taken, how many emails sent, how many clients met, proposals sent or deals closed? Each stage of the sales process could be tracked and goals defined. On most of the funnel phases, we have internal goals defined but mostly to drive activity levels. Best proxy that predicts the future is the amount of outstanding proposals, and that is what we focus on. If it increases without any phone calls, we are more than happy. Although, qualitative angle still remains important as improved conversions per stage are a result of qualitative work (as we all personally hate phone call bots and sales focused on volumes only.)
Tracking service delivery is important from two angles. Are we able to deliver quantified benefits to our clients and are we profitable when doing so? If we price all of our services on hours, service delivery efficiency would not be that big of a deal as hour spent would generate y euros in sales.
But does Batman care how many hours Alfred spent when cleaning up Batcave or washing up dirty Batmobile?
He cares if the equipment works and wants to drive down the streets with a shiny car.
Our customers invest in results. Then it becomes our job to deliver the results sought. Besides, tracking hours needed on client work is the best proxy to define when we are in need of new colleagues. Starting the recruiting process when working on 110% capacity is too late – and starting a recruiting process without knowing how much client work truly takes time would be based on a hunch.
Financials. This deserves a separate blog post. Simply put, what is important for us is that our financial history is a) always correct b) quickly ready c) without hassle. Tracking profitability based on “there might be something wrong in July’s P&L” or cash flow based on “let’s grow 10% next month because it looks good in our estimates” is meaningless. Bullet proof history is only solid baseline for financial model to run in our own Clarity.
What is missing above is our people. They are also the main reason why the heading ends with “at this specific moment”. As our team is still relatively small, daily laughter index (DLI, no patent pending) provides good indication enough. In a bit longer run when headcount increases and facetime with every colleague shrinks, more systematic approach to employee satisfaction becomes a top priority.
3. What and how do we track then?
Towards the data and systems. All tools that are mentioned below are mentioned because we simply think those are great tools for any growth company and could suit many of our clients’ operations. No referral deals or other strings attached.
We have currently 26 different software in use. None of them overlaps. We follow some data points from each area. But many of those are currently trivial to run Aamu Partners as a company.
Customer satisfaction. As mentioned, this is currently qualitative data, gathered in a Google Spreadsheet. For us, this works and sums up all information into one place. Board members document the feedback into one place making the process internally efficient to run through. Synthesis is done by our CEO and reviewed in board meetings.
Customer acquisition. We have Vainu as a prospecting tool and Pipedrive as a CRM. Integrated. Saves tons of time, provides good enough reporting and enables our sales to focus on sales. What is important that both software are in daily use and data remains up to date. Key KPIs are tracked in Clarity to provide our board a timely view on our sales development. Email for communication, Whereby for online meetings, PowerPoint for material creation – keeping it simple. Visma Sign for contract signatures and storage, saves tons of time once again.
Service delivery. Clarity to analyze our clients’ performance. Asana to keep track on the to do lists. Toggl to track every single minute we spent during the day. Toggl is by far the best tool any of us has used for time tracking. For some it might feel intimidating to visualize how to spend the working day but without accurate view on time management, service delivery development would be impossible.
Financials. Clarity for board reporting – it takes roughly 15 minutes per month from Tuomas to prep board to the next meeting as all data is constantly there. To keep Clarity in shape, Fivaldi as a bookkeeping as it is currently light enough for us. eTasku for submitting expenses in seconds.
To conclude, tools we have selected are there to help us spend more time with our prospects and clients. Tools are there to fulfil a specific purpose and those are used systematically. Tools are there to collect the data we need. The data we need for developing us as a company towards our goals in the business we are and want to remain at.
4. Do we go barefoot?
Above we have mentioned Google Spreadsheet. We have mentioned email and PowerPoint. We have not mentioned LinkedIn nor Google Analytics. We have mentioned qualitative data. Although above it says that we systematically use all software and all data is always up to date, that is not the reality. Keeping the data in shape is not the main focus if being in a hurry.
It may be our board complaining that why selected operational data is missing, CEO challenging hour trackings when figures seem odd or a colleague checking CRM and seeing no meetings from the data even though others have been running from a meeting to another.
Those are the moments that define if we go barefoot or not. Those are the moments that tell that we are doing the right thing and running our business based on meaningful data.
If no one would care, then we would go.
1) By the way, did you know Alfred’s surname? We neither before checking from Wikipedia. It happened to be Pennyworth. Such an undervalued naming decision. We assume that he was named way before his true value to Batman became clear.
2) Yes. AI, ML and dozens of other abbreviations make software smarter all the time and at some point will help in replacing humans from the decision-making equation at some level. Our software is not there yet, and we have not come across any software that could replace humans. Yet.