B-to-B Cataloging: Are You Right Sized?
Chart B (below) gives the general rules of thumb regarding sales-to-space metrics. Typically, if a category’s metric falls between .9 and 1.1, the category is balanced in terms of the amount of space it gets in the book. If a category scores above 1.1, it’s a stronger producing category in terms of the amount of space it’s receiving. If a category scores less than .9, it’s weaker in terms of sales compared to space and likely should be evaluated to determine whether its space can be reduced.
How to Use the Metric
If your goal is to reduce your per-unit advertising cost by reducing page count in your catalog, start by identifying those categories that score less than .9 in the sales-to-space ratio. Reducing space in stronger categories likely would have an adverse effect on sales. But by focusing on weaker performing categories in terms of their sales-to-space ratio, you can both trim product and reduce page count while not adversely affecting sales for your catalog as a whole.
In these examples, we assume you have categories that score less than .9 for their sales-to-space ratio. If all the categories in your big book score higher, congratulations!
n Dig. After you’ve identified categories that should receive less space, dig a little deeper into each one. At this point, you may need to apply direct promotional costs to these products in the traditional square-inch technique. Often with big book catalogs, many of the products receive a similar amount of space — sometimes measured in column inches — so the space calculations will be less time consuming than with a consumer catalog. However, this step often is unnecessary.
n Sort. In Microsoft Excel or another spreadsheet program, take each category’s sales data and sort product sales from greatest to least. The products in these under-performing categories often approximate the 80/20 rule, in that 20 percent of the category’s products produce 80 percent of its sales. Though these percentages may not hold up exactly, the question is whether a minority of the products produce the majority of the sales. It often becomes very clear where to start trimming product, which directly translates into space cuts and pages reduction.
A columnist for Retail Online Integration, George founded HAGUEdirect, a marketing agency. Previously he was a member of the Shawnee Mission, Kan.-based consulting and creative agency J. Schmid & Assoc. He has more than 10 years of experience in circulation, advertising, consulting and financial strategy in the catalog/retail industry. George's expertise includes circulation strategy, mailing execution, response analysis and financial planning. Before joining J. Schmid, George worked as catalog marketing director at Dynamic Resource Group, where he was responsible for marketing and merchandising for the Annie's Attic Needlecraft catalog, the Clotilde Sewing Notions catalog, the House of White Birches Quilter's catalog and three book clubs. George also worked on corporate acquisitions.