May 07, 2019

Dear Management Analytics Consultant: How To Evaluate This Stuff

Dear Management Analytics Consultant:

How the heck do we evaluate how our catalog is working? Seriously? If I have twelve items on pages 8-9, how do I know if those twelve items worked in harmony and delivered sales/profit?


Dear Darren:

That's a good question. Each catalog should have a mail/holdout panel. But instead of measuring success at a catalog-level, we're going to measure success at an item level. Measure the sales the mailed group generate for a SPECIFIC ITEM and compare the sales to the control group (for that SPECIFIC ITEM) ... a group who did not receive the catalog.

Sum the results for all items on pages 8-9.

Look at items not offered in the catalog, compare mailed vs. holdout for those items, and allocate the difference equally across all spreads.

Now run a profit and loss statement on the incremental sales (mailed totals - holdout totals) for items on pages 8-9.
  • RED = Profit vs. Net Sales Between 30% and 39%.
  • ORANGE = Profit vs. Net Sales Between 20% and 29%.
  • GREEN = Profit vs. Net Sales Between 10% and 19%.
  • BLUE = Profit vs. Net Sales Between 0% and 9%.
  • PURPLE = Profit vs. Net Sales < 0%.
Repeat this for every spread in your catalog.

On the wall in your Omnichannel Seamless Customer Experience Conference Room (formerly known as Conference Room 1A), post each spread and color-code the spread.

Tell me what you see.

You'll see why the catalog worked or did not work.

Not only is this analysis highly valuable, it's FUN to run!!!

P.S.:  This analysis also works for email marketing.

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