QVC, a televised home shopping network, is broadcasted daily to millions of viewers via satellite and cable television. The business was founded in 1986 and today it is an $8 billion company. So what has made this company so successful, so profitable? It is a combination of things including their three customer focused values – Quality, Value, Convenience (QVC), it’s high level of customer service, and its customer loyalty. While all of these are important components to a successful business, QVC is most serious about its scorecards and their scorekeeping system. This simply tells them which products are profitable and driving bottom line results. In other words, which products stay and which products go.
QVC, like many organizations, possesses a lot of data, but unlike many organizations QVC uses that information for real time scorekeeping on the right things. Their scorekeeping is based on one of two measurements:
Units Per Minute or Dollars Per Minute
If you take QVC’s unit of measurement and create a scorecard with it, it would look like the following hypothetical graph:
In this graph, the product “Extremely Effective Weight Loss Supplement” is being tracked over its 18 minutes of air time and the profit focused measurement is the number of units sold per minute. If the product consistently sells below 300 units per minute, it is considered unsuccessful and will not be brought back. However, if the product consistently sells more than 650 units per minute, it is considered to be extremely successful and will be brought back, possibly at more frequent intervals, or given more air time. The area in between 350 and 650 is considered a satisfactory level of performance.
Notice how a visual a scorecard above helps you understand the bigger picture as opposed to the raw data:
If you look at the scorecard, we can see at minute 9 and minute 11 have two very different results. We need to identify and analyze these two points in time. What made minutes 9 a unsuccessful while minute 11 was a success? Is it within our control? What were we doing during these specific minutes that could have impacted sales? What do we need to change or reinforce that will impact these two points in our timeline to help us continue to increase the units sold per minute?
When you join profit focused scorekeeping and good leadership with Quality, Value, and Convenience, it’s a powerful combination that can help turn both individuals and organizations into highly profitable assets.