A guest post about segmentation from Anna Kayfitz, CEO of StrategicDB.
How A Staircase Railings Manufacturing Company Used Segmentation to Drive Sales Up and Cost Down
No one would think that segmentation analysis of the sales data of a Staircase Railings Manufacturing company could have led to significant changes in the company’s business. Even more so, it was a success that the company had not seen since their website launch. The analysis was based on the staircase railings shipments grouped by state and city as well as the evaluation of sales by multiple SKUs (over 500 to be more specific).
What were some of the insights that segmentation analysis uncovered?
- 20% of their SKUs received less than 0.05% of their sales. Therefore, the added cost of manufacturing and storing these products was a loss for the business.
- They needed to hire sales reps in the growing regions of the country. Historically, they only focused on a few key markets and did not realize the potential in several underserved regions where a few sales reps were having a hard time following up on orders.
- A couple of large clients often bought the same products in bulk. Therefore, their initiatives on marketing new products were not very useful and potentially might be annoying.
- Design and geography do go together. It may or may not come as a surprise that someone in California would have a different interior design taste compared to someone in Ohio, but they did! Therefore, matching the design to the region, not only drove up sales but helped to improve logistics. Different warehouses started accumulating different SKUs and that led to the decrease of delivery time and more importantly reduced transportation costs.
- Finally, a small group of clients had been identified as trend-setters in the interior design group. They would order products a few months or even years prior to having the rest of the marketplace to catch up. They were recognized as the perfect group to test new product ideas going forward.
Data Involved in this Segmentation
What data was submitted to conduct this analysis? Not much. Sales data of the past 10 years, with the following data points:
- Purchase Date
- Client Name/ID
- SKU (Product Purchased)
- Ship To Location (City, State)
That was it. These correctly selected four pieces of data were enough to find all the useful insights. The key to a great segmentation analysis is usually not the data, but what you are trying to solve and how data can help you.
Watch this short video to get some further insights. https://youtu.be/lvzGvuTgxv4
For more information about working with Anna at StrategicDB you can reach her at anna@strategicdb.com
647-406-2651
www.StrategicDb.com
Note: I am not compensated with payments for guest blogs but occasionally bring them to my readers because the information is valuable. Contact me at 919 720 0995 or jeffslater@themarketingsage.com
