The Drill Down

How your operations and marketing efforts can benefit from statistical analysis and modeling.

Forgive me if I generalize for a minute. There are two approaches to marketing analysis: the arithmetic and the statistical.

The Arithmetic Approach

Sometimes called “descriptive analytics,” this is relatively straightforward and inexpensive, depending on a spreadsheet and the sweat of your brow. Extracting a season’s sales from your transaction system to your spreadsheet, you can determine the following:
- percent response, by dividing your number of orders by your mail quantity per segment;
- average order value, by dividing your gross sales by your number of orders per segment;
- contribution per segment, by subtracting your cost of goods, promotional costs, and offer costs from your gross sales;
- contribution per order, by dividing the contribution per segment by its number of orders; and
- dollars per book, by dividing gross sales by the number of pieces mailed to each customer segment.