Sunday, October 4, 2009

Trends & Sales


How do you analyze trends and sales? Currently, I am reading an amazing book, The Drunkard's Walk: How Randomness Rules our Lives (http://www.amazon.com/Drunkards-Walk-Randomness-Rules-Lives/dp/0375424040) by Leonard Mlodinow. It truly examines the nature of randomness, the history of how game theory and event analysis developed and how this chaotic element impacts all of our lives.
As some of you may know, I work at times in a bike shop. I am continually surprised by how Sundays can be extraordinarily busy or very, very slow. There seem to be few factors which connect to it - weather, events in the Main Street area where the shop is located, seasonality, overall economic conditions and gifting holidays. What surprises me is the incredible variation which occurs in this store when those factors are relatively similar or within a narrow range.

Is there more to it than these factors? Are there elements which appear random but in actually are not? If so, how do you identify that? A great example is "customer service." How can we truly measure excellent customer service? I know you can run focus groups, information surveys and other such analytic tools, but in the face of the power of the random, it seems a bit paltry. There is something undefinable about the impacts, and yet we all seem to understand implicitly that there is a clear, direct correllation between superior customer service and financial performance. We talk about building community, creating consumer evangelists, developing relationships and a whole host of phrases, but what do they really mean for trends and ultimately sales and profitablity? How can we harness the inevitable chaos to help rather than hinder our businesses and ultimately our lives? Thoughts on it?

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