Connect the Dots
Few catalogers link their merchandise results to a thorough analysis and review of their sales results by segment. But doing so has many benefits.
What Are New Customers Buying?
Since growth through new-customer acquisition is the key goal of many catalog companies, concentrating on what contributes to those acquisitions is critical. One key area to focus on is the merchandise offering.
After you perform a square-inch analysis and begin selecting items for the next issue, take another look at your item performance. Run a report using both your order-level data and customer database to determine which items new customers purchased most often. Compare your new-customer data to your overall merchandise results.
Sometimes the items that are most effective at snagging new customers don’t actually earn their space when examined during a square-inch analysis.
With the above method, you can avoid the mistake of eliminating one of your best customer-acquistion methods.
Thwart the Cherry-Pickers
Once you have the link established between your customer database and transactional data, build several reports.
For example, look for items that, during a square-inch analysis, appear to be successful but actually may be doing more harm than good in the long-term. Some items in your assortment get cherry-picked by new customers who never buy again. In most customer-acquisition models, catalogers don’t make money on a customer until after his or her first purchase.
This reporting and analysis is a little more complicated, because you want to look at customer behavior over time. Look back at least a year at one-time buyers and the items they purchased. You may notice the same items showing up repeatedly.
What percentage of that merchandise was sold to one-time purchasers? If it’s more than 50 percent, consider dropping the item from your assortment. Even when the percentage was lower than 50, if the item attracted a large number of one-time buyers, consider if it really fits into your overall assortment and enhances your brand.