Is Bad Economic News Affecting Your Catalog Sales?
The economic news could hardly be worse: The stock market is plummeting, consumer confidence is gone and the credit markets have frozen. That all leads us to a couple of questions that catalog/multichannel marketers need to ask themselves: One, can you measure how the economic gloom is affecting your catalog sales? And two, can you get an early read on your holiday sales?
First, track the metric of your daily catalog sales. Compare sales for this year vs. last year on a daily basis for August, September and October. Are your Monday-to-Monday daily sales the same as last year, or are you seeing a drop-off? Are your monthly sales for August, September and October keeping pace with last year? Are they keeping pace with your budget? Looking at the daily and weekly actual sales, comparing year over year, shows if you have softness and when the softness started.
Develop a comparison worksheet for daily sales. (Click on the chart in the top right position at the bottom of the page for an example.)
Always compare daily sales Monday to Monday so your best selling days line up year over year.
Compare your monthly sales to last year’s monthly sales and to your budget to see how you’re doing compared to last year and to your plan. (Click on the chart in the top left position at the bottom of the page for an example.)
Catalogers see a wide variation in reaction to the economic news. Some remain on budget. Others see softness across all their merchandise categories. And some see big-ticket sales vary much more than lower-ticket purchases. Drill down into your data to get a clear picture of how your sales are performing.
Look closely at your sales from customers vs. sales from prospects. Your customers may be responding well, while response from prospects may be where you’re falling off. A good metric to look at is zero- to 12-month customers because it’s easy to compare their performance against the performance of the same segment from the prior year. (Click on the chart in the bottom row position at the bottom of the page for an example.)
What can you do if you see softness in your sales? Try the following:
* Determine if you should deepen your promotion strategy. Start promotions earlier, offer deeper discounts, add ink-jet messages with promotions, and increase the frequency and promotional messages of your e-mails.
* Examine your planned merchandise purchases to ensure your purchasing department buys according to the most accurate forecast of future sales. Cut back the items on order if necessary.
* Look at your head count of employees for your holiday ramp-up and match your personnel needs to your fourth quarter sales projections.
* Cut costs if sales are softening.
* Accurately project sales for the fourth quarter. Recalibrate sales now, and use your sales projections to make changes in your fourth quarter business.
* Watch your competitors as they react with more aggressive promotions, and determine if you need to follow their lead in ramping up your promotions.
* Watch the price-comparison engines to see if you’re staying competitive on branded items.
Knowledge is power, so start with an accurate sales forecast based on how your own sales are affected by economic news. You may be surprised. Lots of catalogers are staying strong, and the speculation is that the high price of gas will cause consumers to shift toward more buying from catalogs.
Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. You can reach him at (505) 986-9902 or email@example.com.