Great question… but, that question may have additional questions. Like, what does “analytics” mean? Or, I could even go deeper and ask, “What do I analyze?”
In the world of restoration, many companies have learned to just react to their customers’ needs and timing. Many companies never get a chance to think about analytics at all. Yet we are seeing trends of smaller jobs, less profit, more administrative effort needed for our clients (TPA’s). The bottom line is we are seeing many changes occurring in our business, and the need to understand what is happening, along with making changes to adapt and maintain profitability is essential to our future!
Let’s start at the beginning. I define analytics as simply reviewing your business data to learn and understand what is working, not working, etc. Instead of “working”, you could insert “profitable” (This really hits home for most of us). The intent here is to get ahead of your trends, and instead of reacting to the needs to your business, you begin to understand, forecast, make distinctions, and execute for a positive outcome.
As an industry consultant, I have assisted many clients in the analysis of their business data, and they have made significant changes to their business strategy for the better. Things like which vendor program/insurance carrier are they most successful with or not, performance KPI’s for their internal staff, marketing ROI, gross margin percentages, etc.
Your business data should be used as a tool of improvement and verification!
OK, so what are some of the pitfalls of analytics? The number one answer is bad data! By bad data, I mean data that is not telling you truths about any aspect of your business. It is amazing how often I am asked for input by a client, when the first thing I notice is that the data is incomplete. Things like: poor date management within their job management software. It does not matter which job management software platform you choose. It could be DASH, Restoration Manager, PSA, Albiware, Xcelerate, iRestore, etc. They are all date-driven to their reports! If you do not understand the logic of the software as it applies to the dates, your data will not tell you any truth.
Recently, I evaluated a company being considered for purchase via M&A. Their sales for the year were approximately $300k (established by jobs having a work authorization date entered) while they invoiced $3.7 Million! There were over 200 jobs that were in the “Received but not inspected status” with cost of over $1.3 million. These are some profound examples of just how far off our data can be if we don’t understand how to consistently document and know what each date triggers, so we can show each job accountable to the numbers. So many businesses want to begin using analytics, when the first step is getting their software documented accurately.
I know what you’re thinking… Is anybody’s data ever perfectly up to date? Perhaps, but it can change in a moment. There is such a thing as acceptable but not perfect.
If your data falls within the acceptable status, what are the next steps to utilizing analytics? It is a good question, and I will tell you that most job management platforms in our industry provide Business Intelligence (BI) tools and reporting. Most will leave it to you to decide what you want to analyze, and you will need to have an internal resource (team member) learn the tool and begin plotting and building the reports & “dashlets”. There is also a requirement of having someone maintain and manage what has been built.
You may also find BI tools through Microsoft, Google, and Tableau where your business data can be exported from your job management software and then built into dashlets for analytics. Again, you will need to support internal staff and resources to build and maintain these tools.
A third option would be to outsource to a company that will build, maintain, and modify your BI tools for you. This enables you to stay focused on your business while still having the benefit of analytics.
Is there such a thing as over-analyzing our data? Sure, there is, and like most things in business, striking a balance in all we do is key to optimal success. It can be very easy to overbuild what is needed. Some of the clients I work with have hundreds of dashlets. I heard one business manager tell me they have a “dead file” for dashlets that were created but no longer in use.
Another benefit from using analytics is efficiencies gained! You and your staff’s time is your greatest resource. As a former GM of a restoration company, I used to run countless weekly and monthly reports specifically for recognition and analytics. Typically, this took me 12-14 hours per month. With the BI tools available today, I would not have to spend time creating spreadsheets and pivot tables. The reports are always front and center for me. Most companies are providing these tools to their managers, estimators, PMs, and admin staff and found there to be less printing of reports and greater consistency of their job management data being accurate daily! For the managers overseeing this effort, having the BI tool quickens their ability to see and manage all performance KPIs resulting in better adherence to the company goals!
By now, you will likely see the many benefits of using analytics in your business. Here is a recap of what you need to do to move to analytics:
- Access your existing data for accuracy/consistency of input. Garbage in, garbage out. (Analytics is a giant magnifying glass)!
- If it is acceptable, move to #2
- If it is not acceptable, then take steps to improve it and set goals to accomplish (Most companies can accomplish this in 4-8 weeks)
- Evaluate whether you want to commit internal resources to build and maintain or outsource to a third party.
- If internal, pick your platform to build on. Job management-BI tools, Microsoft, Tableau, etc.
- Decide what you want to measure and analyze.
- Test what is built to verify accuracy and that it is delivering the information you wish to analyze