Get Squinched!
For many years, square-inch analysis was delegated to the newest member in a catalog marketing department and was almost considered a rite of initiation. Assigning this relatively tedious task to the newbie provided the added benefit of making sure every member of the department understood and appreciated square-inch analysis.
Square-inch — aka “squinch” — analysis is a method for determining the relationship between the space allocated to the sale of a product or set of products and the sales and/or profits stemming from their appearance in that space. Quite simply, you compare the sales and profits to the cost of the space the product set occupies.
Squinch reports provide a consistent and objective way to measure merchandise sales. They can help you decide whether to give your products more or less space, or perhaps not carry them at all. Large or small, B-to-B, B-to-C or hybrids, all multichannel merchants can use squinch analysis.
Examine Every Page
If your company is totally new to squinch analysis, start by examining the sales and profits for every page in your catalog. Naturally, some pages will have higher or lower sales and profits than others. The poorest-performing pages can be improved or removed and replaced with new products. Or, they can be used to feature products that need or deserve more space because they sell well. Many catalog marketers, especially those who extensively use spreads to sell, prefer to look at sales by spread.
You can even start with a study of the amount of space you give each product category vs. the sales and profits from that category. Consider a test in which you give the best-performing categories more space, more products or more prominence. You can move the strongest product category to the front, for instance, leading the catalog.
L-com, my company, is a B-to-B multichannel marketer of a wide range of connectivity and wireless products, based in North Andover, Mass. Our catalogs and Web sites are packed with highly technical business products; therefore, we pay very close attention to sales and profits by product, page, category and channel.
Determines Categories’ Fates
Other catalogers use squinch to help determine how much to expand or contract a merchandise category, as Gina Valentino, owner and president of the Kansas City, Mo.-based catalog consultancy Hemisphere Marketing, points out. “If the data shows all of the products in the category are profitable, then the category has potential to expand its merchandise offering.”
Easy Process
Like many of the reports catalogers depend on, it’s easier today than ever to do a squinch report. Whether you’re a multichannel, multititle conglomerate or a mom-and-pop shop with a catalog, you should be able to build your own squinch analysis. And if you still can’t, there are many tools and individuals to assist you. Although squinch analysis is mainly used on printed catalog pages, there also are efforts underway to develop an application for online measurement.
Every cataloging metric from “back in the day” has found its 21st century analytical counterpart, from response analysis to sales-and-inventory forecasting of multiple demand curves, points out Ken Lane, founder and president of Hathaway & Lane Direct, a Litchfield, Conn.-based consultancy whose specialty is supporting small- to medium-sized catalogers with circulation and direct marketing analytics. “In a multichannel world, squinch analysis is a must-have in your marketing department,” Lane says. “And the concept of a product paying for its space does translate from paper to cyberspace.”
Front, Back Cover Selection
Valentino’s catalog clients use squinch to determine which categories or items should be placed on the front and back covers. Squinch analysis also alerts them to the best-selling price points. That helps her clients objectively select products to consider for the back cover, she points out.
In fact, after you complete your squinch analysis, you may choose to divide your products, pages or categories into three groups: winners, losers and average performers. You can give winners greater exposure, eliminate losers and test different ways of showing the products in the middle to see if you can improve their performance.
One of the biggest mistakes you can make is to try to use more space to make the poorest selling products winners. Instead, focus your energies into strengthening your winners.
White Space, Too
The term “square inch” literally means you divide each page of your catalog into a specific number of square inches and measure how many are allocated to each product or set of products. Next, calculate the cost of each page so you can use the divided page to apportion the cost to each product or group of products.
Remember to include the cost of all the white space, editorial content and ordering information — all the costs of the catalog. Ideally, spread these costs across your products, so they’ll all hopefully enjoy the benefits.
Next, decide which metrics matter the most. Ponder these questions, for example:
• Do you want to look at sales or profits?
• Will returns be included?
• How will overhead and/or fulfillment costs be included?
Keep your metrics consistent to compare and trend them. While it’s interesting to know how a widget sells in a single catalog, it may be more important to see how the sale of that widget changes over time. If you measured catalog sales for the previous catalog at 10 weeks after your mail date, for example, wait 10 weeks after the mail date to measure sales of the current catalog.
One of my favorite expressions is that catalogs and Web sites are evolutionary. If you start slowly and plan to increase the space given to winners and decrease the space given to poorer performing products, you’ll be able to improve sales and profits, as well as your return on investment.
For All Channels
Lane of Hathaway & Lane reminds us to make sure we include all channels. “If you aren’t measuring squinch on your Web site, you’re either making bad decisions or leaving money on the table by not making decisions at all.”
Mary Ann Kleinfelter is director of marketing at L-com, a B-to-B catalog/multichannel marketer of connectivity products based in North Andover, Mass. You can reach her via e-mail at mkleinfelter@L-com.com.
