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every product has to be stocked. Every stocked item has to be paid for. The job of any company engaged in direct trading is turning that stock into money, preferably more money than it paid for it. Buying products that are not popular with your customers greatly hampers this process and makes your site convert less well and makes your company poorer. At its simplest, simply allocate each of your products to a product group. It doesn’t matter too much what your product groups are as long as they make sense to you. By the way, a product is the aggregate of all the variants of the product such as size or colour. Calculate the cash sales of each product and use that to calculate the cash sales of your product group. Finally, figure out the percentage of turnover of each product group and the percentage of products within it. Where there is a serious variation between the two, investigate further. Poor sales per line indicate that the customer believes you are wasting your time selling this stuff; great sales show the customer is demanding more of it. If you want to get more sophisticated with
your catalogue, measure the space that each product occupies and compare the percentage of space of each product category to the percentage of cash sales. Other tweaks are to measure profit—which does not measure consumer demand—or use the space measurement to calculate the presentation cost of each product— by dividing the cost of the mailing by the space, giving you an ROI for each product. You can also apply the technique to price bands. This usually shows that catalogues are underrepresented in the mid to high price bands. A couple of notes of caution: First, only
compare like seasons, so measure last Christmas’s activity. Second, if you do use the ROI calculation, be cautious with the results; you must allow yourself the luxury of being extravagant with space occasionally otherwise your catalogue is going to look a boring, cramped mess. One little tip. As you move nearer to
Christmas move the average price in your catalogue down. Sadly, people spend more on themselves than on other people and in November there is very little personal purchasing going on.
Prepare properly The key to getting the most out of any Christmas
activity is knowing what works for your customers and prospects across all your vehicles and channels. What’s more, you must keep moving the game on by a constant programme of testing. If you keep using the same mailings or keep your website identical from year to year you cannot expect to get a better result. The only way your business is going to improve is if you constantly test new things. And I do mean test. Just chucking stuff out
there on a hunch will not do. Everything should be tested against the current package and not rolled out until a significant and measurable increase in business. Otherwise, it is like popping your business on a roulette table and hoping for the best.
The other reason for testing is that unless
you do head-to-head tests you won’t actually know if the test worked or not. You may see that you are converting better this year, you may believe that the new format is pulling better, you may make more money, but you will never know if the format you abandoned would have performed as well or if not better. And there are always what Nassim Taleb calls “Black Swans”, those almost unpredictable national or world events that can affect any business. If you are unfortunate enough to meet with one of these as your untested mailing goes out you really have no idea if your business would not have been so badly affected if the planes had not flown into buildings, a princess had not been killed or that the weather was incredibly warm for that time of year. When you test offline you don’t have to test
50/50. A statistically significant amount will do—usually about 10 percent of your housefile will suffice. I know it is costly to do but the benefit of testing is a more robust business built on well researched information, not on a “best guess”. Online has been made easier with most platforms these days allowing for split testing and Google, bless ‘em, happily providing results. There are simply oodles of things to go at.
Offline, you can test whether a large-format catalogue makes it worth breaking the 100g barrier; if giving a hefty promotional discount to prospects results in more or fewer residual customers; if altering the way you treat certain sectors of your housefile increases retention. Online, you could look at copy placement on your product pages, button colour and placement, and which basket format worked better. If you doubt how much difference this stuff
can make, go to
whichtestwon.com, a site that Dan Croxen-John of Applied Web Analytics introduced me to. It’s a terrific illustration of how much businesses can benefit from structured testing.
The contingency plan This is the equivalent of Granny setting fire
to the turkey. Unthinkable things have had a habit of turning up on a regular basis in recent years. We’ve had mail strikes—twice, extreme weather—twice, a VAT change mid-season, and one of my clients had flu sweep through his call centre like the plague. It therefore seems to be a good idea to spend half a day discussing with your colleagues how you will alter your plans should disaster strike in your most profitable season. Time spent doing this now and perhaps sourcing some resources as well could stand you in good stead come a strike-ridden, freezing November. On that cheerful and uplifting note, let me wish you a profitable and successful Christmas.
Andrew Wilson is an independent direct commerce consultant.
The key to getting the most out of any Christmas activity is knowing what works for your customers and prospects across all your channels.
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