Without statistical analysis any business is flying blind. Fortunately most businesses manage by statistics to some degree, though in the majority of cases those businesses focus only on primary stats. Revenue, sales volume and other such “big” indicators get the attention, while other stats are ignored, or aren’t even tracked.
The truth is every component of any operation can, and should, be quantified for results.
The Whole Picture
Statistics can be applied to anything. A simple example of a statistic for a person is weight. Weight can be an indicator of overall health, and monitoring your health is a vital part of being human.
Weight, therefore, is a stat worth tracking.
But weight isn’t everything. Other stats act as indicators of health, and could be measured and tracked. Blood pressure, body mass index (BMI), heart rate, oxygen absorption. These are all ways to tell how you’re doing.
And there are things that will improve how you’re doing. Things such as number of steps in a day, calories taken in, minutes spent exercising, getting some space, sunlight and so on. Those are also worth your attention, in the interest of improving the fundamental stats.
It’s important to monitor metrics that do both; results, and things that attain the results.
Keeping statistics like these gives you the whole picture. In this case, moving those stats up into ranges you know encourage longevity and better health, results in the improvement of your “business”, the business of being human.
This is true for any enterprise.
The Right Statistics
Naming the statistics you want to measure and monitor is a key first step. Like a racecar, you’ll want gauges (stats) for all aspects of the operation. Certain stats are more important than others, but as with any high-performance environment, you don’t want to ignore any of them. Speed and oil pressure may be more vital at any given moment than fuel level, but you’ll want to keep an eye on that too. Especially if there’s a sudden leak. Definitely want to catch that before it becomes a problem.
Does it seem like we’re having fun with these analogies? We kind of are.
Amazon is already collecting information on most of the things you need to know. That’s the good news. It’s just a matter of monitoring. Tools like ManageByStats collect that data and present it clearly for analysis — as well as allowing you to add your own information, with inputs for things like costs and other expenses, thus giving you the additional, vital statistics of profit, ROI and margin.
There are also Key Performance Indicators to keep in mind, or KPIs, which provide the best measure of the overall health of an Amazon business. We’ve talked on this subject in other articles.
Ultimately, visualization of information is the way we humans operate. Dials, graphs and dashboards give us a quick look at how things are going. If the first step is naming the right statistics, the next thing to do is to set up your analysis properly.
Proper Scaling & Spotting Trends
In order for a statistic to be useful, it needs to measure something that’s valuable to the entity (business, person, etc.). Then, if you’re using graphs to view it, the graph needs to be scaled in such a way as to show actionable change.
Otherwise a stat becomes impossible to manage by.
Let’s take an example of revenue. For a large company, recording changes by the individual dollar would create a radical up and down graph that would be useless for managing. Maybe a scale of $1K increments would make more sense. Scale your units to give you the best indication of change that matters.
This applies for the time scale as well. Do you need to see changes every day? Is every week often enough? In order to spot trends on which to act, you’ll want to set your time scale — and your units scale — to meaningful values.
Which brings up another point. The inverted graph. Say you’re graphing refunds. Best-case for refunds, the ultimate, perfect nirvana, would be a big fat zero, right? In that case, set the top of the scale to zero. Then, when the graph goes “up”, it’s a true indicator of improvement. A refunds graph with zero at the bottom would look bad when refunds dropped, which would, in fact, be the opposite of what’s happening.
If “down” is good, then make “down” activity trend “up”.
You get the idea.
Philosophy vs Science
A stat is a representation of the success of the thing it’s measuring. That’s the simplicity of it. Why use stats to manage? In the same way you wouldn’t drive a racecar without dashboards, gauges and other information inputs, you wouldn’t run a business blind.
Would you call this a philosophy or a science?
A case could be made for both, and perhaps it is. A bit of both. There are exact, scientific principles you can apply to trends, reverting downtrends, pushing uptrends higher. It’s also a business philosophy. An approach to management.
Without stats, however, without at least keeping and consulting the most important stats, like KPIs, there would be no way to effectively expand your operation. Logically, if this is true at the highest level (how can you run your business without knowing the revenue, for example?), then it’s true at every level.
Which means if you ignore using stats, in any area, that area will be ineffectively managed, if it gets managed at all.
Therefore we contend the science of statistics outweighs the philosophy. Facts, information, data analysis, taking action based on trends — this is how you reliably expand.
The Company Named for the Science
ManageByStats was founded on that science. Managing your Amazon business by statistics. The entire software suite is built around that core.
If you’re managing an Amazon business, the stats will guide you to each new level of success. Look at the trends, see what you can do to push each statistic up, and watch your business soar.
To your success.
Your ManageByStats Team