Kevin Hillstrom: MineThatData

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In 1992 Your Promotion From Analyst To Manager Was Published in DMNews

By 1994 my promotion wasn't published anymore. By 2026 you self-published your promotion on LinkedIn (and earned 77 "likes").

But 1992?

In 1992 you'd submit org structure changes to DMNews so that you could communicate to the entire Catalog Industry just how sophisticated your intentions were.

"LL Bean announced today the promotion of Shannon Ellison to Director of Circulation. She brings with her nearly eight years of experience. Ellison mentioned that she's '... looking forward to partnering with our printer to bring perfect binding to the Christmas catalog'. At press time, LL Bean has not decided whether the Christmas catalog will be 256 pages or 260 pages."

These announcements meant something. There was actual gossip ... "do you think LL Bean could go to 264 pages, I mean, Ellison likes a meaty assortment from what I've heard." I recall our restructure in 1992 to a "Customer Planning and Development" framework (or maybe we left that framework, I don't know). We announced a new Director and new Managers. My goodness, the stimulating conversations as LL Bean and Lands' End held an "exchange" meeting (to exchange names with each other) in room 318 at the Marriott during the Catalog Conference, with 18 people (including 6 actual employees from LL Bean and Lands' End paired with 12 kind vendor-supporting staffers) sitting around two queen beds negotiating the trade of 1.6 million names at $0.005 each.

Twenty years later? All of it ... gone. All of it. Replaced by Google.

Imagine everything that exists today ... gone in 2046. It's going to happen.

Viable Assortment

Here's one of the optional analytics that I might add to a Top 12 project ... I call it the "Viable Assortment".

Viable Assortment = The Number of Items/Styles You Sell That Generate Enough Volume To Be In The Top 90% of Your Sales Assortment (Annually).

The items in the bottom ten percent of your assortment are just rubble ... stuff that is being cleared out, stuff you sold three years ago and 17 customers still love it.

The items in the top 90% of your assortment are your "Viable Assortment". It's what customers care about.

Here's a company that is failing. Here is their "Viable Assortment".

End of 2025: 1,206 Items, Price = $18.20, Average Sales/Item = $15,520.
End of 2024: 1,158 Items, Price = $15.21, Average Sales/Item = $19,892.
End of 2023: 1,335 Items, Price = $15.72, Average Sales/Item = $18,471.
End of 2022: 1,573 Items, Price = $16.34, Average Sales/Item = $16,273.

Weeeeeeee!

Among the Viable Assortment, this brand jacked up prices (or introduced expensive items ... hint hint), driving down Sales/Item in the process. And compared to three years ago, we see that the Viable Assortment is 20% SMALLER than it is today. Bad. Not smart. That's 370 fewer items generating at least $15,520 less ... that's $5.7 million that evaporated due to a smaller Viable Assortment.

Do you measure your Viable Assortment?

It can be part of the "bonus analysis" that is included in the Top 12 Project ... contact me now (kevinh@minethatdata.com) to take advantage of the introductory offer for prior clients and blog subscribers ... offer ends August 15.

So You Aren't Selling

This comes up from time-to-time ... "don't talk to me about selling my business, I'm not remotely interested in selling my business.

Fair enough.

However.

What do you want your business to look like in three years?

Example. You currently manage a $60,000,000 brand that earns 5% pre-tax profit. Yes, three million dollars of pre-tax profit is nice. No, you're not happy with that level of performance, for obvious reasons. When your vendors charge you more and sales don't increase, you no longer earn 5% pre-tax profit, do you? In other words, what does you business need to look like three years from now ... what does "healthy" look like in the context of your brand?

Do you still want to be a $60,000,000 business? Unlikely. You probably want to be a $75,000,000 business in three years. If that's the case, how many new customers do you need to get there? How much does merchandise productivity need to improve to get there? Are there marketing channels you under-utilize ... should you "utilize" them better, and if so, what is the roadmap to get there? Do you need to personalize the assortment of your home page and landing pages to please customers with specific merchandise preferences, or do you let the customer hunt-and-peck their way to what they want to buy? Do you have enough newness in your merchandise assortment to please your loyal customer base so they keep spending $$$ with you? How long do you have to hold on to winning product so that you extract maximum profit from each winning item ... is it two years, five years?

If somebody were considering buying your brand, they'd ask all of these questions ... you'd have to have answers to the questions, credible answers, not theory.

Here's the thing ... if you identify what you want your business to look like in three years, you'll take steps between now and three years from now that get you to where you want to be in the future. It's a strategic plan of sorts. You're essentially going through the process that somebody who wants to sell their brand for $$$ goes through years prior to selling.

The $60,000,000 brand earning 5% pre-tax profit might fetch an imaginary $15,000,000.
Spending three years to get the brand to $75,000,000 and 10% pre-tax profit might fetch an imaginary $35,000,000 at the same multiple ... might fetch a higher multiple as well.

You're probably saying "this doesn't matter, we're not selling, Goober". Ok. How many of you have a bonus structure? Say you are a Director at your ecommerce brand earning $150,000 a year and a 30% bonus if you meet your financial goals. Do you want to earn a half-bonus of $22,500 for a middling business generating 5% pre-tax profit, or do you want to earn a full-bonus of $45,000 for helping get your brand to 10% pre-tax profit?

For most of you, there is a financial incentive (via bonuses) to view your business as if you were getting it ready to be sold in three years.

Or ... keep doing what you've been doing.

Top 12 Analysis: Impact of Pricing

One of the analyses I run in a pricing project is measurement of customer response by price point. If inexpensive price point customers are willing to buy expensive price point items in the future, you're in good shape? If not? You need to maintain price integrity.

I'll run logistic regression models (#oldschool) of next year's response within price point bands ... always a fun and informative analysis!

The table shows the increase in rebuy rates ... for instance, if a customer buys from the low price point band, each item purchased there increases your probability of buying in the future regardless of price point band ... but adds the most in low prices and average prices.

Interestingly (in this case) if the customer buys from the highest price point band, the customer is most likely to keep buying in the highest price point band next year, though the purchase does help increase odds of buying in all price point bands.

There are companies I analyze that have all sorts of odd outcomes ... low price point customers that refuse to move up, high price point customers who buy from everything, average price point customers who default back to low price point bands. Regardless, it's important information you need to learn for your brand.

It's one of the Top 12 Analyses you respond to when we work together on a project! You have a few days left to take me up on my Top 12 offer. Contact me now (kevinh@minethatdata.com).