September 16, 2014

Diagnostics: When Merchandise Is A Problem

A good marketing/analytics system should be able to quickly diagnose the impact that merchandise has on business struggles.

I use the comp segment analysis to identify merchandising problems. Trust me - the comp segment analysis quickly identifies merchandising problems!

In this case, look at the online, in-store, and total columns, especially in the past two years. Both channels exhibit sales declines. Comp segment performance dropped by 4.5% in 2013, and has dropped by 6.0% in 2014.

This, my friends, is a business that is suffering from a bad merchandise productivity problem.

I cannot tell you how many meetings I've been in where the Executive Team calls the Marketing Team into the conference room, and then beats the marketing folks silly over sales declines. Then the marketing team performs a wonderful song and dance, trying to deflect blame while maintaining accountability. 

Most often, both sides have incomplete data.

80% of the time, I observe the situation outlined above. Customers are comparable, and spend by channel is in decline across all channels. This is a business that is suffering from a major merchandise productivity issue.

The issue, in this case, is merchandise. Customers don't want to buy the merchandise being sold by the company. My system quickly identifies the problem, and then allows one to dig in further, to uncover why there is a merchandising challenge.

The goal of any system is to eliminate doubt, to enhance clarity. There's simply too much data available today, and most of it is campaign-centric, meaning that few people can actually diagnose a business problem ... meaning that most can simply observe that a business problem is happening.