Communication and Metrics in Business

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Communication

  • Fuzzy language is vague language and it is common in the workspace
  • Sought clarification: What is the reason behind the request? What is the right question to ask?
  • Proxies: is a variable that stands in place of another variable (which is typically hard to get)
  • Price dumping: occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect (could be illegal)
  • Line organization: most requests come directly from your manager
  • Functional organization: requests can come from all over the company
  • Majority rule: a decision rule that selects alternatives with more than half the votes
  • Prototyping has several advantages like easier estimation, profitability decision, changes and goals flexibility
  • Supply Chain Management (SCM): the management of the flow of goods and services

Metrics

Measurements that help management track of the overall health of the business:

  • Metrics are observed across time
  • Metrics are calcullted separately at specific points in time
  • Metrics are understood in a chronological context

A good metric should have the following characteristics:

  • Accurate: do not create anything wrongly measured
  • Simple and intelligible: easy to read for anyone
  • Easy to drill down into: are we doing good or bad and why
  • Actionable: ability to change things according to the measure
  • Dynamic: metrics need to change over reasonable periods of time
  • Standardized: everyone should see the same thing with no inconsistency
  • Business Oriented: should be relevant for the business

Examples:

  • Gross Domestic Product (GDP)
  • Inflation
  • Unemployment Rate
  • Revenue
  • Conversion Rate (CR)
  • Average Order Value (AOV): reduce payback period and increase Return on Investment (ROI) in retail
  • Net Promoter Score (NPS): quantifies customer satisfaction
    • % Promoters - % Detractors = (# Promoters - # Detractors) / # Total
  • Churn Rate is when a customer ceases to be a customer (subscription-based)
    • # Churned Customers / # Total Customers
    • The more customers you lose, the smaller the pool of potential customers becomes
    • Current customers are more likely to buy the more expensive products than new customers (subscription based)
    • Churn rate informs how happy customers are with your product
    • Happy customers provide free advertising
    • Rretaining existing customers is more profitable than acquiring new customers
    • Applying and Evaluating Models to Predict Customer Attrition Using Data Mining Techniques