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Ever wondered about the secret sauce to boosting your revenue and ensuring your business is sailing smoothly?
In this article, we're diving deep into the world of data visualization and uncovering five essential graphs that can help you monitor your revenue. Understanding data and employing it to make management decisions sounds simple in theory, but business leaders struggle with making sense of the mountains of data they encounter every day. A global study by Oracle shows that 85% of leaders experience decision distress, and 97% want to use data to help alleviate this feeling (Source: Newswire). Knowing this, it becomes vital to ensure that we are simplifying our data practices in general but also keeping up with the fast-changing landscape of data-driven decision making.
So, buckle up as we take you on a visual journey that will not only simplify your data but also empower you to make strategic decisions that help elevate your business!
A basic requirement for a business user wanting insights into financial performance might be the Month-on-Month (MoM) revenue metric. Monthly assessments, rather than weekly, provide a more comprehensive view of performance especially if there are recurring promotional or sales activities taking place each month, or seasonal patterns to be tracked. For example, if your business offers holiday planning services, you will be experiencing a significant uptick in sales during the summer months. Hence, this monthly approach not only captures subtle changes in revenue but also allows for a more strategic response to capitalize on seasonal trends.
See the line chart displaying MoM sales below, filtered by product category – the cards on the left also display total figures by year, quarter, and month, making this visual easy to read at first glance.
Figure 1 Sales Trend (Source: PowerBI)
Keeping an eye on your sales funnel conversion rate i.e., how many leads convert into paying customers is key for any business! This is directly proportional to revenue. Consistently low revenue may necessitate a closer look at your sales funnel – are you struggling with getting enough leads, or is it more of a "why aren't they converting" situation? Often, you may also find that poor conversion stems from suboptimal lead generation. Better messaging and targeted ad campaigns on social media could show improvement – but be prepared to keep experimenting as this is usually an iterative process!
The graph below reveals an interesting data visualization technique to display the sales funnel and conversion rate at each stage, showing business users exactly where bottlenecks may lie.
Figure 2 Lifecycle Stage and Conversions (Source: HubSpot)
This one will be especially helpful for businesses that have expanded and are selling their products or services in diverse geographical locations. Viewing sales distribution by country, city and even neighborhoods will help you understand where revenue originates from. This will in turn inform your business strategy and planning for selling, marketing, and distributing your offerings in a way that optimizes revenue. When doing this, you may want to carefully think through leveraging local culture and trends in the areas you are operating as that will help people form personal associations with your brand – you may be successfully doing this in some geographies but not others, which could lead to differences in revenue contribution.
The same strategy can also be applied when predicting revenue across geographies – the results of a case study by McKinsey below display exactly this, using a map visual to highlight which zip codes have the highest sales potential. Business users can then work their way backwards to figure out a strategy to capitalize on these opportunities.
Figure 3 Omnichannel Sales Potential (Source: McKinsey)
Pro Tip: Talk to our data experts today for more information on data visualization tools.
For businesses with a wide product offering, product-wise revenue contribution becomes a vital metric to look at. This will show you precisely which products are the main drivers of revenue, and this in turn will help you make decisions about where to focus sales and marketing efforts. You will also want to understand why certain products are performing better than others – real time user testing and feedback, market research, and analyzing distribution efforts (because it’s not always a product-market fit problem!) may aid you in getting this answer.
The visual below uses a pie chart titled Highest Revenue Product Category to show percentage of revenue contribution by category. It also utilizes a bar chart to display the number of orders per product category.
Figure 4 Revenue and Orders by Product Category (Source: Portermetrics)
Knowing what percentage of customers stop engaging with your product over time can help you quantify lost revenue. As a business owner, you will want to minimize customer churn rate or at least ensure it does not exceed industry benchmarks. The more customers you can retain consistently over a period of time, the higher you can expect recurring revenue to be. This will create financial stability and hence long-term sustainability for your business.
The line chart below displays churn rate by month and displays the percentage increase from the last 6 months to 1 year, helping business users quantify the improvement that has taken place, if any. An important caveat is how each business defines churn rate – misalignment in definitions can result in inaccurate calculations and hence visualizations.
Figure 5 Customer Churn Rate (Source: ChartMogul)
In summary, we've explored the instrumental role of visualizing revenue data through these five crucial graphs. From Month-on-Month revenue trends to Sales Funnel Conversion Rates, each graph poses a unique strategy for gaining revenue insights.
As you embark on this data-driven journey, it is paramount to recognize that analytics extends beyond these metrics. It is also a question of building the necessary capability and mindset to extract, interpret and use data. As Data Pilot, we not only build end-to-end analytics for our clients but also act as thought partners to help formulate a tailored data strategy. Moreover, the future of analytics will be centered in a landscape where data not only recounts historical events but forecasts future trends through leveraging powerful machine learning and artificial intelligence capabilities. Considering this context, businesses that comprehend upcoming trends and begin making strides today to incorporate data-driven decision making will be ahead of the game.
By Manaal Shuja.
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