April 15, 2007

How Healthy Is Your Business?

So often our businesses grow and evolve, and we don't thoroughly understand why they are growing or evolving.

Take this example. This is a web-based business, selling Women's Casual Clothing, Men's Clothing, Children's Clothing, and during the past two years, management added a Women's Professional Clothing line.

In total, the business is growing at about the same rate, year-over-year, for the past three years.

If this business is growing at about the same rate, year-over-year, what does this tell you about the health of each individual merchandise division?

In other words, take a look at the number of customers, spend per customer, total spend, and growth rates of each merchandise division. Once you've analyzed each merchandise division, answer the following questions in the comments section of this post.

Question #1: Is the customer file more healthy, or less healthy, since adding Women's Professional Clothing to the merchandise assortment?

Question #2: Is this business growing because of its ability to add customers, or its ability to get customers to spend more?

Question #3: If you were the Vice President of the Women's Casual Clothing merchandise division, how would you feel about the growth of your business unit?

Question #4: If you were the Vice President of the Children's Clothing merchandise division, how would you feel about the growth of your business unit?

Question #5: What additional information would you like to have available to you, in order to better diagnose the heath of this business?

Question #6: How many "multi-divisional buyers" do you have, by year? In other words, how many customers purchased from multiple merchandise divisions?

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