A company will fall somewhere on a spectrum from Limited to Leading in terms of its analytical capability. The table below summarizes the primary objective within the organization at each level on that spectrum, as well as some characteristics that help establish where your own company may slot into this framework.
One aspect is common across each of the levels: improvement. Even companies that may be categorized as “Leading” are constantly seeking ways to improve how they approach business analysis.
|Capability Level||Objective||People||Process & Organization||Technology|
|Limited||Produce limited or backward-looking insights into Distributors and Customers. Heavy focus on financial results, size and productivity of the field, and basic operational key performance indicators (KPIs).||· Home office team may pride itself on gut instinct-based decision making.
· Few team members with deep analytical experience or comfort using analytical outputs.
|· Production of reports and ad-hoc analyses based on tribal knowledge of a handful of analysts from IT or Finance.
· Limited documentation of analytical processes, with considerable variation in how outputs are produced and used.
|· Data quality issues are prevalent, with multiple sources of data .combined manually
· Extensive use of Excel or desktop PC tools.
|Disconnected||Individual departments develop some insights tailored to specific programs or projects, like product and opportunity promotions, cost savings initiatives, or other one-off endeavors.||· Isolated skill sets in some departments, such as sales/opportunity marketing analysts, strategic planning team, and CRM team
· Some management support and interest in a broader capability
|· Some capabilities within each department.
· Departmental capabilities are not well-understood across the organization.
· Limited sharing of tools, resources, and knowledge.
|· Unintegrated source data from various systems.
· Some basic BI tools in place or more sophisticated usage of Excel and Access.
|Ready for Improvement||Aspiring to a coordinated program with defined, company-wide performance metrics. Interest in field dynamics, maximizing promotional effectiveness, improving distributor service levels, and more advanced operational KPIs.||· Analysts in place in most areas of the business, though with limited interaction across sales/opportunity marketing, finance, and operations.
· Executives and functional management aware of information needs and interested in investing in analytics.
|· Separate analytical processes in place
· Informal or limited standardization of analytical toolsets
· Ongoing challenges gaining alignment across functions for data governance & needs
· Often limited resources or cross-functional forums to meet business needs.
|· Multiple BI tools used across functions, including multiple data warehouses and presentation tools.
· More sophisticated presentation layers are available, with mobile and on-demand access.
· Competing ideas about which BI solution may serve the company best.
|Proficient||Develop integrated analytical processes and tools to understand business performance. Analyze business outcomes with hierarchical KPIs tied to functional contributions to results.||· Analytical skills in place, with most properly aligned to information needs.
· Executives dedicate time, effort, and funds required to maintain analytical capabilities.
|· Dedicated BI organization in place, with change control processes and data governance serving the organization’s needs well.
· Outputs available and utilized widely.
|· High-quality data in a single source
· Enterprise-wide BI strategy in place
· IT processes and governance are in place
|Leading||Continuously renew and improve analytical capabilities to develop deep, strategic insight.||· Highly skilled analytical team, often centralized or coordinated across functions
· Management team passionate about improvements to analytics and focused on their outputs
|· Analytics integrated into company culture and processes
· BI Center of Excellence (CoE) dedicated to data, process, and output governance closely tied to functional users’ needs and company strategy
|· Enterprise BI fully implemented|
Adapted from “Competing on Analytics,” by Thomas H. Davenport & Jeanne G. Harris, Harvard Business School Press
Regardless of where your company falls between Limited and Leading analytics, Direct Sellers should keep the following points in mind in looking to advance to new levels of capability:
- Enterprise approach is critical – Much of the progression toward Leading analytics involves standardizing and broadening the use of analytics across a business. When each department or country has differing definitions of Distributor “activity” or a different standard for when an order is booked–or they use disparate data sets from their own disconnected systems–it’s hard to speak the same language. Putting in place the governance capability for master data standards, metric management, and system administration is essential to ensuring that analytical insights can be leveraged across functions and markets.
- People are integral to the capability – Computer software and a data repository won’t produce useful insights via their mere presence alone. It may seem counterintuitive that technology and BI systems, which are often seen as a means to reduce manual effort, can require new roles within the organization to maximize their return on investment. These expanded teams are far more than organizational bureaucracy – they support consistent, high quality data, allocation of resources to the analytics that benefit the company most, and a tie between the company’s strategic priorities and its ways of measuring results.
- Prioritize carefully – It can take years to put in place a Leading analytical capability. Diligently watching how desired metrics will inform strategy development, execution, and critical operating processes can help determine which should come first. Direct Sellers should focus on metrics that help them improve
- 1) the effectiveness of compensation & rewards in driving recruitment, retention, and productivity in the field
- 2) the performance of the product in the hands of distributors and customers, as well as the associated cost profile of that product
- 3) how distributors operate their businesses and how the home office can maximize success over the stages of the distributors’ careers
- Don’t just prioritize, also set limits – Recently, we came across a company with fewer than 100 employees that had, over the last 3 years, created over 1,100 dashboards and reports in its BI tool. There’s just no way that all of those could be put to effective use, but the organizational resources required to build and maintain this analytical behemoth were staggering. Before deciding what to implement, think about how much information each team really needs, then work within those limits. Orient efforts toward quality, availability, and accuracy rather than quantity.
- Analytics should inform strategy and execution: Every analytical effort should directly relate to something actionable. Top level KPIs are essential to setting future strategic direction and reporting out results to stakeholders. Beyond that, an analytical capability should be seen as an accountability framework for key processes and a means of improving processes and policies. Some of the most actionable insights in Direct Selling come from understanding the distributor and customer lifecycles.
- Simplicity wins, especially with the field: Direct Sellers’ analytical capabilities should extend beyond the home office to support the independent contractors that represent the brand and products every day. Just as the home office needs information to run its business, distributors need to understand their customer bases, their performance, and their rewards. While complicated, esoteric charts and graphs can have seductive, scientific aura, they can also be difficult for even sophisticated users to understand. Or, worse yet, the complexity may simply cause them to be ignored. Often, simple tables, commonly-used graphs, and infographics convey information better than pareto charts, logarithmic scales, or busy network diagrams.
How we can help
Direct Sellers compete in a rapidly evolving marketplace, where the lines between eCommerce, retail, and traditional direct selling are getting more and more blurred. Hepfer & Associates has significant experience in helping both growing and established direct sellers implement analytical capabilities. Our understanding of strategy and operations across the Direct Selling value chain, combined with our internal expertise in data & analytics makes us uniquely positioned to design and implement.