Why Understanding Your Sales Figures Can Make or Break Your Business
Most people’s eyes seem to glaze over when you talk about numbers in your business.
Let’s face it.
As a designer, you are a creative being.
The last thing you want to do is analyze your business.
We see this time and time again with designers.
Designers who are all about the creative aspect of the business, but when it comes to bookkeeping, pricing their products, and analyzing their sales figures, these types of responsibilities seem to fall by the wayside.
Of course, this is absolutely fine if you have someone to look over the business and numbers, but chances are you’re wearing multiple hats in your business.
There are a few things you need to take into consideration when knowing your sales figures that can ultimately help you in either growing your sales or hurting your business.
First of all: Do you know what your best and worst sellers are.
The main task of a merchandiser is to always be aware of exactly what’s selling well, and what’s not selling so well.
Once you determine these styles, you can then start to analyze why you believe they are selling well.
Maybe there a was a store who happened to buy a huge chunk of a particular style?
Or maybe there was a piece that was received a ton of press?
Whatever the reason is, you need to make sure you’re tracking this information and really digging into the “why” of why the style sold well.
Same thing goes for a style that didn’t sell well.
Was it too expensive?
Was the sample late?
Was the style’s design just an overall flop?
✨ANOTHER GREAT TIP:
Try to gather as much feedback as possible from buyers.
Ask them lots of question during a meeting and also throughout the season.
This not only shows that you care but it also creates a sense of partnership and is also incredibly important when it comes to future planning and building next season’s SKU plan.
They are usually very well aware of what’s working for them at the moment and are obviously much closer to the customer than you are.
Second of all: Do you know what makes up 80% of your sales?
You’ve heard of the 80/20 rule, right?
This is what’s called the Pareto principle.
It basically states that for many events, roughly 80% of the effects come from 20% of the causes.
And in business, the rule definitely seems to apply.
Many businesses state that 80% of their sales come from 20% of their products or services.
I can say that this was true for many of the brands that I’ve worked for in the past.
There were clear winners and losers every single season.
So based on this principle, you obviously need to pay extra close attention to that 20% that’s driving your business.
Because without that 20%, the majority of your business could disappear!
Finally...do you know how styles are selling in the actual retail store?
This concept is huge because if a style sells well to buyers, but is absolutely flopping at the retail level, buyers are not going to be happy!
Just because buyers love a style doesn’t necessarily mean it’s going to sell to the end consumer.
When something like this happens, buyers will sometimes ask for returns exchanges, or for larger retailers they may want markdown money to account for the loss that they’ll take when they put the item for sale at a large discount.
You obviously want to avoid this from happening but buyers are human and can make the same mistakes as everyone else.
You want to make sure you’re staying in contact with stores to get sell through feedback once the goods are delivered.
Not only will this be helpful for you in building that relationship, but it will further help you understand the purchasing habits of the final customer - who is the most important customer of all since they’re the ultimate buyer.
The main concept to remember is that you need to be analyzing your business.
If it’s not you personally, you need to outsource this type of task.
Make sure you take all of this information that you gather from your sales and what buyers are saying in order to prepare for next season’s offerings.
Remember the 80/20 rule. You need to focus on that 20% (or you could go out of business), but the 80% is also important as well in the sense of it’s what makes your collection stand out.
It’s also important to remember that when merchandising your collection you sometimes do need to add a few styles that may not necessarily be your top performers but add a little something extra and eye catching that will attract people in the first place.
This is where true merchandising tactics work as long as you are being responsible and conservative in your production/inventory planning.
At the end of the day, it’s all about analyzing, researching, and planning.
So stay on top of your sales figures and realize that sometimes the things that you aren’t so thrilled to do are the things that ultimately will help push the needle forward in your business and (more importantly) how much you sell.
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