October 15, 2014

Diagnostics: What Do I Do About The Results?

It's easy to create a system for diagnosing business challenges.

It's not easy to communicate the results in a digestible way, without offending people.

Therefore, try to stick to the facts. It's perfectly reasonable to say that the business is not meeting expectations, and to show why. Try to stay away from opinions like these:
  • "Your merchandising team really butchered the past three years, didn't they?"
  • "You need to shift to an omnichannel business model or you'll be out of business in a few years."
  • "Your business model is so old-school that you need to digitize or die."
Stick to the facts. Take our example from earlier this week, for instance:

Stick to the facts.
  • Comp customer performance is down from two years ago, and though it rebounded some last year, it rebounded not because of more customer loyalty, but because of a slight increase in spend per customer (did discounts/promotions drive this behavior)?
  • Customer productivity dropped at the same time that productivity in the Kids merchandise division dropped. What decisions were made in the Kids division, and why were those decisions made?
  • Customer productivity in low price pints dropped dramatically. This is not entirely due to the Kids division. What was the business strategy surrounding changes in price points?
  • You are not observing declines in Mens, Womens, or high price point items. Good job!
  • New item productivity is down. Is this because of Kids?
At this point, prepare for some blowback. People, especially those accountable for the problems, are going to get defensive. It's just human nature. Merchants will quickly blame marketers for not promoting the top-selling items enough. The CEO will get defensive because she made decisions that backfired. Try to keep folks focused on the data, and not on opinions.

In my projects, I try hard to get these facts out there, in the first 1-2 days of a project. There's no sense in delaying the story - get the story out there, and let there be discussion. You'll find that folks will ask questions, and those questions will make any subsequent work you do that much better.

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