Your assortment is made up of the products and services that you offer your customers. Some industries require frequent product line adjustments, but most large products and services companies review their assortment annually. Through the product assortment review process, you can determine which products and services in your offering no longer meet the needs of your customers, which items are your best sellers, and where you might be able to alter your pricing to maximize your profit on your current offering.
Adjusting your assortment periodically is especially important if your business is new and/or growing. If you are just starting out with a products business, you might have small assortment. You might also have a wide assortment that includes many different items, or a deep assortment that includes a single item or just a few items with a lot of available options. As your business grows and your capacity for production increases, you might choose to increase the breadth or depth of your offering to reach more customers or to meet more of the needs of your current customers.
Look at the sales data from each of the products in your current offering. List them in order of sales volume in both units and dollars. Your best sellers may or may not be your most profitable items. When I worked at Sears, we conducted line reviews every year and followed a formula for assortment cuts at each line review (cabinet knobs and pulls alone were over 2200 items at one point). Ultimately, I made the final decisions about cuts within my lines, but if an item was at the bottom 10% of both the sales volume and units lists, it was eligible for replacement. You can create a similar formula for your own assortment review. Determine how many current items you want to remove or how many new items you want to introduce based on your assortment review and your production capacity. Then, look at pricing. You might want to raise or lower the price of an item rather than pull it altogether. Make your changes based on both data and trends. Finally, consider the environment before you make your decisions. If you recently introduced a product that hasn’t gained the momentum you expected, it might be a product of poor marketing or a lack of understanding, rather than a fault within the product itself.
If you have a service business, you might offer fewer than five services when you start your business and add services or digital products as your business and your team grows and you can accommodate a larger offering. However, you may decide to keep a small assortment. If you keep a small assortment, it is important that each service that you offer contributes significantly to your business and your brand.
When you conduct assortment reviews for a service business, again look at the numbers first. The services that you sell most often or for the highest price should be the bulk of your business and require only periodic adjustments or updates to remain popular for your audience. For second-tier programs and services, consider the time and effort that each component requires from you and your team. If a service requires a huge investment from your team, but doesn’t offer a sufficient payout, consider discontinuing it. You can replace it with a service that either requires less of a commitment from your team or commands a higher payout. One the other hand, if that same second-tier service brings you a lot of new clients who stay with you and purchase other follow-up services, you can consider it a ‘loss leader’ and keep it or raise the price a bit to account for your high internal investment.
Whether you have a product or a service business, it’s important to consider both the sales data that you track for your company, and the current business trends. Constantly watching the competition will not get you far, but the market can change quickly for any business and you should be aware of the market changes that impact your business. If you suddenly see a lot of other coaches introducing programs similar to your own, it could mean that you’re onto something and the market is growing. On the other hand, it might be time to retire or update that program if the market gets too competitive or too junior for your expertise.
In short: monitor the market, watch your numbers, and make assortment changes as needed.
TB
If you want to learn more about how to review your assortment, you can take our Brand Builder Bootcamp eCourse. Look for Module 3, called Create Your Assortment.