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?
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.