Are You Using BI And Retail Management Software To Target Future Customers?
Forecasting future customer needs requires a combination of business intelligence (BI) and retail management software, plus a long-range view. As a mid-market retailer, part of the challenge is to get your head out of the day-to-day grind, taking the time to think about useful metrics to track and ways to refine operations based on data.
It is one thing to capture data with point of sale systems, but quite another to analyze it and identify trends in the information. In general, BI provides the ability to analyze the data you’ve captured. This ability is something retailers need to plan for; it doesn’t magically happen. Too often, a company decides it wants to do a certain analysis, only to realize that its retail management software hasn’t been capturing the necessary data.
Ultimately, your ability to create accurate forecasts depends on amassing the relevant data, the statistical soundness of the data, and having the right tools to analyze it.
A good way to approach this challenge is to identify your goals and objectives, and then work on lining up the data with those goals. Start by breaking your top goals down into stats that help you more easily measure your progress toward them.
If the goal is to improve profit margin next year, for instance, think about factors that would need to change. Perhaps you’re turning too many customers away because you’re out of stock, or spending too much on shipping due to where your stock is located. If you have accumulated enough data using your retail management software, BI helps you drill down and produce statistically sound conclusions. These broad projections could be either customer- or vendor-related.
When you’re capturing all of this sales data, you can’t just browse through and find an answer. You need BI tools to aggregate, dissect and manipulate the data to produce solid reasons for taking a course of action. Clear analysis of the data should show your true weak spots. From there, it’s a matter of picking an area to improve, such as inventory management or vendor relationships.
Key data for retail management software include details about how much of certain items you have in stock. You might have one type of yellow shirt coded as YEL, for instance, and a yellow jacket from another manufacturer coded as YLO. Then you’ll need to add different codes from other manufacturers that are also supplying yellow clothing.
One way you could use BI would be to bring all of those different codes for “yellow” together and relate them back to what we call a base dimension. Then, you’re able to base BI analysis off that base dimension. When you set up these base dimensions for all of the colors you carry, you’re able to see how those colors are trending in terms of sales, and change your future orders accordingly.
In the end, it’s impossible to make general recommendations for metrics that everyone should track, since these vary greatly depending on the type of retail you do and what your goals are. Even then, different metrics may prove valuable at certain times, but irrelevant at others. That’s why it’s critical as a retailer to take the time to identify useful metrics and ways to use the data to refine your business operations.
Learn more about optimizing your operations with BI by scheduling a free operational assessment with ArcherPoint.
Author: Wm. Matthew Street, Solutions Consultant/Retail Product Lead at ArcherPoint