Numbers Tell a Story

By Steve Trollinger

How to use square inch analysis

Square inch analysis (SQUINCH) is an extraordinary tool for consumer and business catalogers alike. Sorted and executed the right way, a comprehensive SQUINCH can serve as a creative road map to your catalog campaigns, just as your contact strategy defines the plan from a marketing perspective.

A comprehensive square inch analysis allows you to evaluate product sales and placement to determine whether the right product, price point or category is given the appropriate amount of space in the right location in your catalog. And by basing the analysis on customer behavior, as culled through transactional data, you can keep your "gut feeling" from being the primary driver of the catalog's merchandise and creative development.

For business-to-business (b-to-b) mailers, the squinch process may not feel as comfortable as it does for consumer catalogers for a number of reasons. First, there are the sheer number of pages and item counts. It's relatively common for b-to-b catalogers to feature thousands of SKUs or produce books that have hundreds of pages. In fact, some business mailers refer to their big books (400-plus pages) as catalogs, but their smaller books (as large as 72 pages) as flyers. The SQUINCH process can be as meaningful — or perhaps more so — for those smaller piece mailings as for the big books.

Second, the data aren't always the easiest to understand. B-to-b catalogers have so many difficult-to-track order sources that it often is next to impossible to determine what role the catalog plays in the selling process and how responsible it is for the actual order. If your business book doesn't struggle in this regard, consider yourself lucky.

Finally, it's challenging to use analysis and incorporate your findings into the next round of creative. Often b-to-b catalogers say the products they sell are purchased out of need, not want (a critical difference from consumer mailers) and that no amount of photo glamour or effective hot-spot utilization will peddle more merchandise. That may be true, but it doesn't mean the squinch process isn't useful in other ways.

The Essentials

Here's a short list of the data elements needed to perform SQUINCH:

Item data, which includes product number, item description, category description, selling price (if you offer quantity discounts, use an average selling price), cost, units sold, dollars sold, page number featured and number of square inches used to sell the product in the space.

Costs associated with creating the catalog, namely advertising costs. Ultimately, you want to evaluate the performance of items in terms of their contribution to overhead and profit (assuming you're breaking even on fulfillment).

A marked-up catalog where all of the items are denoted with unit and dollar sales. This is a helpful visual tool that complements your data analysis. If a product is performing exceptionally well, it's helpful to know if a specific creative treatment is facilitating sales. If so, perhaps that treatment can be applied to other items to improve their sales as well.

Measurement Tips

If you don't have software that calculates space measurement, choose one measuring technique and apply it to the entire book. Then use the exact same technique in the future.

Takeaway tip: Have only one person do the measuring. If too many people get involved, you're sure to get inconsistent measurements and possibly skewed results.

The key is to pick a method of measurement, document it and adhere to it in the future so that when you do another analysis, you have apples-to-apples data.

And how should you treat non-selling space? If white space is brand-enhancing, then it should be considered so for all items in the catalog, not just those on the page where it's used. If non-selling space is presenting a message particular to an identified group of products (e.g., a lead-in spread on laptop computers for a Hewlett-Packard business solutions catalog), that non-selling space could be allocated specifically and equally to the products in the category of interest.

For Better Results

SQUINCH is as much about interpreting data as it is about crunching numbers. While you could evaluate data in almost any conceivable way, the following views generally yield the greatest results:

Category analysis. You want to identify the most meaningful relationships between certain indicators. Answer the following questions: Which categories generate the greatest percentage of sales relative to the percentage of the overall offering they represent? How about versus the overall space percentage they represent?

Also determine which categories represent the greatest percentage of units sold relative to the percentage of the overall offering they represent. And again, how about versus the overall space percentage they represent?

Next, discern which categories have the greatest percentage of winners, products that exceed the established requirement for profitability. Can you grow those categories or reposition them? Should certain categories be spun off for smaller targeted mailings or prospecting efforts?

Page analysis. Here you're concerned primarily with the most efficient page count. Are enough pages reaching the required profitability threshold to support more pages? Or should you have a smaller book?

If more than 70 percent of your selling pages are meeting the goal for profitability, you may be able to increase your page count — provided you boost pages by adding products from your most successful categories and at appropriate price points for your customers.

Affecting Change with SQUINCH

If you're producing just one catalog per year, or are repurposing much of the creative for re-mailings, you may need to conduct a SQUINCH only once per year. If you produce new creative several times a year, consider a SQUINCH prior to each major creative effort. And plan to have the analysis completed well before the merchandise handoff is to take place.

If you have a big book and you're unsure how to use the findings of the analysis, start with pagination. Consider leading the book with your strongest category, closing with your second strongest and working your way to the middle from there.

Your cover should feature one of your strongest sellers from one of your best-performing categories, or a variety of strong products from several good categories.

The Human Touch

Don't forget to get the sales team involved. SQUINCH may identify products that shouldn't be included in the catalog based on sales but may be tremendously important to a sales person in the field. Numbers tell a story, but they aren't the only things to consider in good merchandise analysis.

Steve Trollinger is senior vice president of client marketing at J. Schmid & Associates, a Shawnee Mission, Kan.-based consultancy. He can be reached at (913) 236-8988 or stevet@jschmid.com.