Driven by Data
Quick! What were your top three best sellers for last year?
When the names of the products sprang to your mind, where did you get this information? Was it a gut “This product is SUPER popular! I’m always selling it and I can’t keep it in stock!” or was it from hard data and metrics? If it wasn’t from hard data and metrics, you could be leaving money on the table. A business best practice that a wise mentor once shared with me is that he makes all decisions on sales and production based on the previous year’s sales. He doesn’t base decisions on his gut. He doesn’t make decisions based on what he likes. Rather, he uses data to figure out what the customer wants and likes.
Quick! How many times have you decided to keep a product because you love it, or your Mom loves it or your Aunt Edna loves it? But really, the sales weren’t there to support it?
We’ve all been guilty of that. I kept Fresh Baked Bread fragrance oil (yes, it really was as delicious as the name makes it sound) for two years longer than the sales reports said to keep it because I loved it so very much. Unfortunately, the numbers did win out though and Fresh Baked Bread is a thing of the past. It simply wasn’t a good business decision to keep that fragrance but I overrode the cold, hard facts because I convinced myself that others would see the genius in Fresh Baked Bread if only given a chance.
At the end of your sales year, run your sales reports for everything you sold – each individual item, families of items, fragrances or however you organize your items. After you have your reports, it’s time to evaluate the numbers and make changes for the upcoming year. By now, you should have a handle on your taxes from last year, have your plan for this year for sales outlets and shows so it’s a perfect time to review your sales data for last year.
Things to do with your data:
(1) Predict sales for each month so you can accurately plan your production. Wouldn’t it be great if you didn’t run out of your best seller at the same summer craft show every year? You can staff for manufacturing properly and make sure that your materials are there for your seasonal items with your sales data.
(2) Plan promotions and discounts for slower moving items to give them a fighting chance to stay in your line up. This is where you let your gut have its say. If there’s an item that’s just on the edge – soooooooo close to making it – it’s okay to give it another year and fiercely promote it. If you believe in the product, give it a chance! After all, the first lotion bars in a deodorant tube to be introduced 15 years ago? They took a while to catch on but now there a staple in many home crafters lines.
(3) Discontinue items. This is the hardest one for me to do but by keeping items that don’t sell well, you’re taking up the space for a new item that might sell great! Remember, items that are made but are not selling are the same as cash sitting there, staring at you. It’s better to make the hard cut to make way for new items than it is to keep a relationship with an item that isn’t producing the results you need it to.
If you’re not keeping track of your sales and your data, make 2012 the year that you start! Just think of how much more effective you can make your business in 2013 when you’re armed with reliable sales numbers.