So…your metrics aren’t what you expected to see. It could be a sales slump (hmmm…) or perhaps an unexplained uptick – a thrilling problem to have, but you’d still like to know exactly WHAT is happening so you can keep the momentum going. Any given business model has a nearly endless number of variables that contribute to the topline sales numbers. So how do you know what lever to pull to stay on track to meet your goals? You need a systematic method to find the interesting bumps in the data. And finding those anomalies can often point us directly at a specific problem, and then to a strategy and set of tactics.
1) CUSTOMER SEGMENTS. What segments are growing, which ones are shrinking? What is the long term trend for the 12-month buyer file? A growing 12-month buyer file is a great sign of health, but if they make fewer purchases than the previous year, you can still see shrinking sales.
2) CATEGORY SALES. Are there some categories that show significant year-over-year change? This could mean that a new type of customer has found you, or that a particular merchandise line going through significant change. For example, a B2B client of mine noticed 5 years ago that a small category – was growing in a huge way. Because they identified it early, they were able to nurture this nascent customer group into a really significant portion of their customer file.
3) CONVERSION RATE. This could literally be your website conversion rate, or n a B2B environment, this can be close rate. In any case, low or declining numbers here often means that there is a failure to show value. This can manifest in a variety of different ways. You can be priced too high, or priced appropriately but not communicating the value properly – where the creative (or sales script) doesn’t properly convey the features that justify the price. This points to a need for some a pricing evaluation and/ or a review of how the value is communicated.
There’s another possibility here too: the path to conversion is too lengthy or complicated. You should conduct a thorough review of the sales funnel through your customer’s eyes – making sure the path to conversion is easy, clear as few steps as possible.
4) COMPETITION. Certain brand bellwethers can tip you off that your competition is taking a big toll on your market share, or that your top-of-mind brand awareness is suffering. These are direct traffic and competitive placement on SERPs. Direct website traffic reflects the number of people who go directly to your website via the address bar or bookmark, and it’s usually the most hyper-engaged segment and the best conversion rate. But it’s also a good indicator of how many people are thinking about your brand on a regular basis. A sinking direct traffic rate is a bad sign, potentially one that either your regular customers have started dialing up the competition, or that you’re not staying top of mind.
5) CUSTOMER SPEND. Okay, it’s AOV, but come with me here, or the alliteration doesn’t work. A lowering AOV can wreak havoc on the bottom line, and even if your 12-month buyer file is growing, if it’s doing so at a lower than usual AOV you might still see shrinking sales. So it’s important to outline a specific strategy to combat a weaker than usual AOV with add-ons, tiered offers, in-cart product suggestions, and other tactics.
One more thing – these 5 Cs, as you might have already observed, link, overlap, and affect one another. A drop in category sales can alert you to a new competitor in the field, or a new product rollout by an existing competitor. But the key is to examine your data from a variety of angles to see what patterns emerge before blindly throwing marketing dollars after the problem. If you do, you’ll be on more solid strategic ground!
I love talking data! If you have a great story, or need help finding a few interesting bumps in your data, shoot me a note at laurena@jschmid.com.
Tags: Data Driven, Data Driven Marketing, Lauren Ackerman, Marketing Analytics