ERP software is great for creating a centralized location within your company where you can track sales, financials, and manufacturing information all in one place. But a lot of companies don’t use all of that centralized information to help them improve their processes or their bottom lines. By pulling just a few crucial data points from all of the information your ERP collects every day, you can make improvements to supply chain, HR, and sales that will pay off in a big way.
Lean manufacturing, development, and retail practices encourage teams to reduce the amount of inventory stored in the warehouse. Instead of keeping 500 extra units on the shelves all year round, no matter if business is slow or fast, lean processes call for manufacturing and supplies to be driven by what the customers are buying, rather than just holding onto inventory for its own sake.
By analyzing the total inventory on hand against the total number of products in demand over the course of the year (or several years layered on top of one another), you can spot any trends that arise when customer buying slows or when demand increases. Adjust manufacturing processes accordingly to keep inventory quantities on-hand low and your employees engaged.
Understanding your customer is crucial to improving your sales and marketing techniques and increasing your overall revenue. By running reports on what kinds of customers typically purchase which products and looking at which products customers purchase together, you can easily increase your overall revenue by growing your average purchase price.
When you run reports that show customer location, average purchases, and demographic information like age and sex, you can tap into general trends about your customers. Use what you learn from these tools to better target customers and segment email lists and ad targeting within your marketing automation tool. Use your marketing tools to send product recommendations based on what similar buyers purchase or on what other products might complement a recent purchase. Such practices can increase customer average spending and average order totals.
Your ERP holds tons of information about the types of contacts that turn into prospects and customers, and within all of that information you should be able to see if you’ve got a leaky sales funnel.
Depending on the speed of your sales cycle, you’ll want to examine how many leads are in each stage of your funnel at different times during the year. Does your funnel stay consistently full throughout the year, or are there times when the top goes empty but the bottom gets a little bloated? It might be time to take another look at whether sales and marketing teams make consistent efforts throughout the year.
If you chart out each of the stages in your sales funnel, you should have many more leads in the awareness stage than you do in the action stage. But be on the lookout for dramatic decreases between adjacent funnel stages. Use the analytics and reporting tools in your ERP to better understand lead behavior and where you need to improve your processes to send more leads toward a conversion.
So often we look almost exclusively at the trend lines, usually because we’ve been taught to do so by statistics and the research professors of our youth. But sometimes paying attention to the outliers in your financials, such as the customers that perform really well or really poorly, will help you learn more about what your team members are doing right or wrong than all of the average, trend-line-hugging customers you’re currently targeting.
Run a couple of reports from your ERP’s financial and sales tools to examine:
- Annual customer revenue: The positive outliers here will tell you who the biggest customers are, which is something that you might miss in your day-to-day interpretation of your sales process. Take the time to survey, interview, and ask the opinions of the customers who make up your major outliers. Make sure your surveys are personalized, and consider calling them on the phone. People love to know that you value their opinion. Use this time to ask the customers what it was that brought them to you, what about the experience made them want to come back, and how you could improve the experience for them. Do the opposite with your low-spending accounts.
- Order amount: Plot all of the data points for your order amounts over the course of the year. Are there times of the year when order amounts go up? Try order amount against several pieces of information like location, company size, or industry, and find where your outliers are. Again, you may need to follow up with your customers to find out why they bought more at that particular time (store opening, stocking up for the holidays, whatever).
Once you have the information on who your outliers are and why they buy like they do, use this data to refine your target customers, plan future marketing campaigns, and help you better understand your sales cycle.
Take the time to pull these data points and analyze them carefully. Understanding your customers, sales process, and employees better is easy when you have the right data and a little bit of know-how.
Tamara Scott is Research and Content Manager for TechnologyAdvice.com. She writes about the intersection of technology, business, and education in Nashville, TN.