data

Lies, Damn Lies and Analytics

Easy to get caged in your analytical playpen when you don’t know the why behind the data.  Learn to ask the tough questions.

The beauty of a dashboard is that access to statistics and results can be immediate.  With the press of a button, google analytics provides a host of information on a websites performance. The daily sales dashboard from the data warehouse has some good stats. The unfortunate result of that is proclamations of success or failure at any given point without comprehension of the why, can drive action which does real damage to an assortment, a marketing campaign, revenue drivers, purchase projections.  You name it.

The downfall of a dashboard is that many observing it don’t understand the why behind the current results.

  • The average order value to our customer is continuing to increase annually.  We’re doing such a good job providing them with the goods and services they demand.  What do you mean the customer base is decreasing?  We need more customers!  Let’s grab them from our competition.
  • Traffic to the website is spiking.  We’re brilliant!  Oh.  What do you mean that 500,000 catalogs landed in mailboxes this week?  That’s print.  Print is dead.  It’s all about our website.  Look at that increase in conversions!  Look at the average order value!
  • Look at the revenue we’re driving with that discount coupon!  We’re up 30% in revenue!  We need to keep up price promotions on the entire site!  Our customer base is eating this up!  What do you mean we’ve lost 600bps in margin?  We’ll make it up in margin dollars!  Why are we out of our bestselling products?
  •  Revenue in category A increased from 10% of the total to 20% of the total for a 100% increase in sales. Genius!   Really?  Give me the $.  Sales and margin.  If total revenue increased from $100,000 to $105,000, then category A increased from $10,000 to $21,000 which is 110% increase in sales in the category, driving an overall 5% increase in revenue.  Unfortunately, category B and C, which have higher margins than category A dropped in penetration due to downtrending product, or delivery issues, or price increases due to tariff changes, etc.  So overall gross margin came in at $32,000 vs. $38,000 LY, leaving less to cover overhead.  Where do we cut?

Basic arithmetic and an good understanding of the foundations of a business are all you need to dissect a dashboard.  How many times do you hear the why questions being asked?  Sure, traffic and page view increases to a site make everyone feel good.  More feet through the door are exciting.  But if they don’t funnel through with increases in conversions and order values, the story can be misleading and may not end well.  Give me facts tied to actual products and categories any time.  The right mix combined with more customers will have happy ending.

 

demand

Creating Demand

Bicycles

As an economics major, the very first lessons involve supply and demand.  When demand increases, supply should rise to meet the demand without flooding the market with excess.  If that happens, the product becomes ordinary and the price lever is utilized in an effort to reduce the supply before demand evaporates altogether.

Designers begin demand creation by developing inspiring products, often working with merchandising and marketing teams for input.  Flattering silhouettes.  Appealing colors.  Uniquely useful items.  Faster, smarter, better.  Items that make a statement about the person consuming them.  Without exposing those things to an audience, the creation has no purpose.  Merchants are constantly searching for the fresh, new “stuff” with a target audience, price tolerance, profit margin and end use in mind, often guided by details in financial plans and working with merchandise planning teams.  Marketers are critical in getting the story of those products in front of the key audiences using both visual and analytical components for the best ROI.  All together, they create demand while walking the razor’s edge of the right amount of supply as well as product expansion opportunities.  When the demand for the supply has begun to downtrend, price reduction can be used responsibly to liquidate the excess quantities.

This all leads to the right product, at the right price, in the right quantities at the right time.  The ultimate endgame for creating demand and maximizing profit.  Otherwise, why bother.  Driving demand with the hi/lo pricing game may drive short term results, but will ultimately reduce profitability and shorten the life of a product prematurely.

demand, merchandising

Content + Commerce

In a prior life, my role was to guide the selection and presentation of very specific product to a passionate enthusiast base.  Their positive response would drive profit and revenue to the business. Content was aspirational photography and detailed instructions and supplies in the same category of product but vastly varied aesthetics, size and difficulty levels. The challenge was telling a compelling story to entice and convince the viewer that they needed multiple versions of the product category because they would be missing out on something great if they didn’t pounce on it. Whether the offerings be colorways, patterns, specific prints, techniques, or an exclusive deep black fabric, they needed to light a creative fire.

Another adventure was in the world of childbirth and early childhood education, combining that with the best “stuff” in the business.  Working with IBCLCs, nurse midwives, early childhood education experts, child safety experts, and many others, we not only conducted classes online and in our center communities, but we culled through all of the unnecessary and unsafe product offered in a vacuum to uninformed parents and their friends and families.  Content was king, but commerce sealed the deal.  You could see the shoulders relax in a father who had been sent on an emergency errand to pick up a breast pump part when he walked into one of our locations.  Or the groups of brand new mothers heading out of a classroom with their babies and new friends in the exact same boat.

What is your content for your commerce?  Do your merchants, marketers and planners know how to set that stage for the theater that is retail?  Think about your business and ask yourself where that happens.  How does each channel function?  Do the product pages on your site provide inspiration, as well as all of the details that a customer needs to pull the trigger?  Do your emails or direct mailings drive traffic to all of your channels?  How are they richer in content than your competition?  Is there a sense of urgency created ?  Limited quantities, unique product properties?  Something beyond price?  I hope so.  Without the perceived value of information and inspiration, who cares.