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Sharing Your Stats: Strategic Finance Reporting on Customer Segmentation

Sharing Your Stats: Strategic Finance Reporting on Customer Segmentation

Part 4 in the Series: The 8-Ball of Customer Portfolio Segmentation for Finance

If you've won at billiards like a true pool shark, it means your rationale, strategy and execution were probably collectively effective. It also means that you might hear the sound of applause in the background of the smoky billiard room. Your cosmo-wielding business fans in other departments such as marketing are cheering for you, because winning at the game is not easy. And neither is effective customer portfolio segmentation.

Pause from the sound of slow clapping for a moment. The game isn't actually over.

The true pool shark isn’t a pool shark until a pattern of winning has been established, and can be shared with others.
Abigail Lutte, Dun & Bradstreet

When you return home after a successful game of pool, you might regale your family and friends with qualitative information about how strategic your timing was for this specific game, about how inept your competition was, about how you masterminded your wins in a powerful way. Similarly, when you start seeing wins from your effective customer portfolio segmentation strategy, it may be tempting to look at them in celebratory isolation. Yet, the true pool shark isn't a pool shark until a pattern of winning has been established, and can be shared with others.

If you've been following our previous discussions on portfolio segmentation, you'll know that an effective segmentation strategy is all about how you map your business strategy to your customer groups to maximize mutual value. You'll also know what pitfalls to avoid and what tactics might help you succeed in this cross-functional endeavor.

If you've gotten this far, you've already done most of the hard work. Yet, the final step in your plan might be the most important of all: reporting on your results.

Finance lives and breathes reporting. No other group is more familiar with the importance of data quality, visibility and governance in a post-Enron world. Indeed, finance is uniquely poised to understand and use customer segmentation to drive value, according to Accenture. "They can better judge such critical key performance indicators as the cash conversion cycle, which measures how well a company is converting investments in products and services into cash through sales. They can pinpoint opportunities more quickly. And they can manage risk much more effectively." These skills are absolutely essential in the creation of and communication of the success of portfolio segmentation, because the segmentation of customers ultimately affects the bottom line (hopefully in a positive way!). Finance's close eye on the management of daily business, alignment of employee incentives and establishment of strong controls are all deeply impacted by the portfolio segmentation strategy. Knowing how it's doing in the moment, as well as over time, is the final frontier of value creation.

How do you go about navigating the difficult terrain of effective reporting?

Here are a few guiding principles to help you.

1. Simplicity
Possibly one of the most difficult aspects of conveying information using data is effective communication. Finance is deeply familiar with the importance of choosing the right metrics to report on and the art of conveying them in an understandable way. Yet, as in day-to-day business life, it's extremely easy to under-communicate, mis-communicate and to over-communicate. Choosing and monitoring the right set of metrics is critical to change management and effective reporting. Operate with the mindset that you are seeking to find the fewest possible visualizations, metrics and data points to convey a single view of the truth about how your customer portfolio strategy is performing. Be careful about pre-defining what you want your story to be and using the data to back that story up.

2. Visualization
Visualization is much more art than science. Behind effective data visualization, again, is the art of strong communication. When you create your final reports, think about both your audience and how meaningful the information is. Strive to make any of your data visualizations graspable within 10-15 seconds, or less. The richness of the story you need to tell with data will be lost if your audience is struggling to interpret your graphs and pie charts.

3. Flexibility
Retaining simplicity and strong visualization takes powerful discipline. While reporting on trends over time is crucial to business success, it's equally important to be able to drill down into patterns or move up a level to identify the behavior that's driving your portfolio segmentation strategy. Technology and integration play a strong role in making your reporting efforts simple enough to be meaningful while flexible enough to provide more information where needed.

4. Delivery
Lastly, it's critical to deliver your reports in a meaningful way. While Excel spreadsheets and paper reports continue to be used in day-to-day business life, it makes sense to implement flexible tools to share and interpret data on a cross-functional basis. Tools such as cloud-based dashboards continue to gain popularity due to their simplicity and ability to be customized. Co-creating and driving excitement behind an executive dashboard that illustrates the effectiveness of the portfolio segmentation strategy will drive both alignment as well as a mutual understanding of the business reality.

If you've followed this series, you know that creating an effective portfolio segmentation strategy takes the perfect mix of strategic thinking, mastery of the landscape and excellent timing. Your immediate concerns--cash flow, profit margins, customer satisfaction, retention and investor relationships--focus your attention on navigating risk effectively and identifying opportunities. Improved cash flow, collaboration and profit are all potential outcomes of wielding your pool cue of portfolio segmentation in just the right way. We've given you some pro tips on what to avoid, as well as some effective tips for winning at this highly complex game.

Staying nimble and agile in your quest to become a data-savvy pool shark in finance can take time, but with the right levels of collaboration, data inspiration and organizational alignment, you can begin the process of driving enterprise growth as a team.

Download the eBook: The 8-Ball of Customer Portfolio Segmentation for Finance

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