August 17, 2006

Which Elements Of Business Strategy Truly Drive Top-Line Sales?

Back in the day at Eddie Bauer, I would get questioned about the customers my team chose to mail catalogs to. If a catalog were ten or twenty percent below plan, our merchandising community would question whether my team were targeting catalogs to the right individuals.

There was no way I could reasonably defend myself. At a six percent response rate, I was wrong ninety-four percent of the time. So no matter how I answered, I knew I could always do better.

Then my Vice President would chime-in to the discussion. He always said, "Seventy percent of the success of a catalog is due to the merchandise offered, twenty percent is due to the creative presentation of the merchandise, and ten percent is due to the households you target the catalog to."

I have no idea how he developed these relationships. I have no idea if they are correct, either. My perception is that merchandise represents sixty-seven percent of the success, creative presentation seventeen percent, and targeting strategies sixteen percent. If the merchandise is not appealing, there's no amount of presentation or targeting that can save it.

What do you think? Looking at the online business you are responsible for, what percent of your success is due to merchandise, creative presentation, or targeting strategies? What role does branding play in this equation? Let me know your thoughts!

1 comment:

  1. Anonymous6:25 AM

    Standing in the shower this morning, with warm water cascading down my body, I remembered a time in 1995, while working at Lands' End, when I pulled the 1.3 million best names for a catalog, and accidently sorted the list from worst to best. We decided to mail 1.0 million names, meaning I missed the best 300,000. The catalog was 40% below plan.

    So the targeting strategy can have a much bigger impact than I originally estimated! But assuming the strategy is executed correctly, the ability of the direct marketer to significanty improve performance by more than another 10% is unlikely.


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