When managing a business that is multi-faceted, fast moving and volatile, people who have been in their business a long time tend to select one statistic that will act as their thermometer to relay the health of their company. It could be something that may seem highly unlikely that they would base their business decisions on because no text book would ever suggest it. Obviously you cannot rely on this for the overall management of your company. However, just as a thermometer reading will indicate there is an issue, you would not rely on the temperature of your child to indicate their entire health. You will investigate further if there is a high temperature This concept is the same.
For instance, there is a C-Store company that monitors the number of coffee cups sold each day. They know that if at a certain level, their store traffic was at acceptable levels and therefore their other goals would be met as well. They would only be alarmed when the number of cups sold reached a number below that which they noted as the optimum level.
Another C-Store company measures for sales comparisons between different periods of time. As long as the sales were the same or more as the previous year at that time, they weren’t concerned. And yet another company watches projected sales. They like how it will let them know if numbers are not be met, while there is still time to do something about it.
There are so many indicators as to how a business is doing, but typically there are one or two that will relay how things are going before it begins to impact the CEO’s reports. Great managers will find their key indicator and watch it. This is not to say that other analytics aren’t viewed but these are the stats that they ask about while passing someone in a hall, or walking into a store, and are probably thinking about while making their coffee first thing in the morning. Finding that one statistic may not be as hard as you think.
1) What statistics are typically fluctuating each day that can easily be correlated to store performance?
2) Are there many other statistics that could be impacted by changes in this statistic?
3) Is it a short time frame when repeat unacceptable numbers could have a negative impact to bottom line results?
4) Can the end of month bottom line numbers be saved/improved if this statistic is remedied quickly?
So books may not be recommending you monitor coffee cups, but an experienced manager might. It will tell them how much traffic they are getting and you can even acquire a formula to determine how much gas was sold with each number that is reported throughout the month. It can tell you if the gas sales are high, but coffee cups are down, perhaps the station is not as clean as it needs to be in that store or, pricing may need to come down based on a nearby competitor’s price. It can tell you if people are considering you as a fast food breakfast alternative to indicate how your sales may be doing in breakfast foods. The list goes on and on.
When the numbers is below the level you want, you look at these other things and fix them as they are found to ensure your bottom line goal is being met. It may not be an obvious statistic, but it one that can relay a lot of possibilities of where failure can occur. If you take the time to answer these four questions in order to find your coffee cup, your life may become a whole lot easier when comes to assessing performance.
If you don’t have tools that do Business Intelligence Analytics for you, it could even be critical to find your coffee cup. It can make or break a bottom line and meeting your goals. Perhaps you too want to be the manager who is always asked how you repeatedly reach your goals each month where you can simply reply, “We sold enough coffee”.