Business Strategy and Strategic Management
May 5, 2007
Sales as best Statistic Builder
Internet usage has revolutionized how we do business. In the quest for statistical support for strategy that shows growth or helps dramatically turn-around a business, especially helpful is the web. I looked at the dynamics of functional web sites that gather and measure and report on the type of statistics needed in our managed strategic transformation of AbleCo. (Red Carpet; 2000-2007, paraphrased)
We as strategists are responsible for every aspect of the business. We can capture most function, valuation, business and corporate facets in form of statistics. But, which statistics best describe our mission? Do we know how we can apply statistic knowledge to our business and cause it to grow? With statistics we can move from the general to more specific, but what is the best unambiguous detail?
For instance: the most obvious statistic for many businesses is sales. That is because sales represent a window into companies. Sales are direct results of implicit and explicit aspects of the company and industry. Here two pertinent questions are part of every business function:
- How many sales do you make per day/month/year?
- How much profit do you make per sale?
If we are to follow the logic of the parent company Walden Corp, our statistics will have been broken down into all three categories: per day, month, and year. As Walden is a quarterly returns company, adoption of this simple facet could simplify our communications in future discussions of managed strategies.
For it is likely, from the number of sales made per month, we can easily figure out our gross sales amount. Then we take our expenses per sale into account and figure out profits. Remember, only cost of sale expenses should be deducted and not something likes one-time expenses of overhead, and the like.
Other typical statistical knowledge bubbles up from complexity of our competitors, but is captured in several themes, that all revolve around sales:
· Gross Profit per sale
· Traffic counting
· Daily and Unique opportunities
· Inquirer conversion
· Analysis: how many to make how much?
All the above have much variance for different markets. It turns out, some firms would need a conversion rate of around 5%, while other companies need a conversion rate of 80%. Therefore it is imperative to make a model of the blend of statistics that will have first good, then better, and then best impact for Walden-AbleCo.
Most of the important comparative information is available from public corporations. They all publish their financial reports for scrutiny. Most of the statistical knowledge is from forecasted events that the corporation made last season. How that strategy worked out is what we read about in the financial statement. It is a documentation of the past in that regards.
In context of what is to be a good/better/best result for W-A Co’s future, I suggest we follow the best practices for analysis. Three contexts continue to pop up, as we look further at our analogy in sales statistics. At this point in our analysis, we can now see that there are three ways in which to improve the company’s performance:
- Increase profit margin
- Increase conversions
- Increase traffic
Increasing profit margins often means raising prices or lowering costs. Improving conversion rates is a functional item, in that it means overall optimizing the business. Total Strategy Management in other words will improve end-user interface with Walden-AbleCo and all its products. Increasing traffic is no less improving associations and relations, developing referrers, and using statistics. (Nielson, J and all; 1995-2007, paraphrased)
This previous is submitted as a compendium of the use of statistics to cover the mission of making a plausible business plan. I am enthused about the many additional values supported with statistics that my colleagues will come up with as we move forward in our race achieve mutually assured Success.
References
Nielsen, Dr. Jakob, Hwang, Luice, Provo, Darcy, (1995-2007) Discussion of usability, targeting, and counting especially in web technologies, Nielsen Norman Group, 48105 Warm Springs Blvd., Fremont, CA 94539, USA retrieved at: useit com
2000-2007 Red Carpet Web Promotion (May 5, 2007)
Red Carpet Web Promotion has gathered statistics relating to the Internet, e-commerce and online marketing to keep a realistic perspective of the market. Note: Because these sources often offer conflicting opinions, it's important that you read the reports and draw your own conclusions. The statistics below are a good start. All statistics are from third parties, and are linked from this page for your convenience. Use your browser's "back" button to return to this page, retrieved from red carpet web
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