Finding New Customers for Indie Books

I have been commenting in this space about the uses and abuses of data. Here is an example of a good use, a set of surprising facts that come not from the big five publishers whose doings get all the media attention, but rather from IPG’s data warehouse, which accurately reflects the real world of indie publishing.

IPG’s data warehouse draws on five tightly integrated databases that keep track of almost every transaction generated by our business activity. Using a powerful sales analysis tool, I can pull up data from any of the thousands of fields in those databases and from any time period; and I can do it with startling speed. (Our databases can run sales analyses nearly instantaneously on an Online Analytical Processing (OLAP) cube.) Anyone with good spreadsheet skills could learn to do likewise very quickly.

Capturing the data that I am going to show you took me about four minutes – first to construct the questions, and then 10 seconds for the computer to comb through millions of records to find the answers. The speed of the powerful new databases now available amounts to a revolution in the book business all by itself. Of course good data is of little use without good judgment, but I believe access to good data can greatly increase the power and range of good judgment.

Here is the question I wanted to explore: what part of IPG’s total unit sales were being reported by Nielsen’s BookScan, the service that captures point-of-sale information, i.e. books sold through retailers’ cash registers and also books sold by the online retailers?

Year                Percent Captured           

2009                48%

2010                42%

2011                45%

2012                37%

2013                34%

These results perplexed me. Over this five year period BookScan steadily expanded its coverage of indie bookstores, non-traditional accounts, and big box stores such as the price clubs and mass merchandise outlets. They do a terrific job. But what is going on here? Given BookScan’s broader reach, the coverage of IPG sales should have increased, not declined by 14%.

Obviously I needed to do some research on where the IPG books were selling outside of the customers reporting to BookScan. And here is where the new sales analysis tools really shine. The five yearly percentages listed above are just the tips of huge icebergs of data. With a few mouse clicks I could drill down into that data to almost any level of specificity.  What percentage of sales for each title was captured by BookScan for those five years? What percentage was captured each week for each title? What about the performance of titles in various subject areas or produced by various publishers in various time periods? In this case the way to solve the puzzle of BookScan’s declining coverage of IPG sales was to drill down into non-traditional sales channels.

Sales Channel                          Revenue Increase from 2009 to 2012

E-book                                        1867%

Mass Merchandise                   906%

Consumer Direct                      346%

Specialty                                     73%

Obviously IPG was experiencing very strong increases in sales to customers that were not captured by BookScan. But who exactly were these customers? What titles were they buying? What discounts did they require? Were they growing in importance or declining over time? A few more mouse clicks brought me definitive answers to those questions and to other questions that occurred to me along the way. The problem now is not access to data; it’s knowing when to quit.

The customers who constitute the non-traditional sales channels listed above are less familiar to most independent presses and quite new to IPG too. Many of them have only been in business a few years. E-book marketing remains a bit of a black art, and many indie publishers still think you only need to sell to three or four e-book customers to capture the market. In addition, it turns out that selling to the mass merchandisers requires a very different sort of pitch than selling to traditional book-trade customers. And success with direct-to-consumer sales largely depends on website and list-building skills of a high order.

And then there are the customers that IPG puts into the “Specialty” pot: Gift, Museum, and other Specialty Online and Chain Stores, Email, Association, and Display Marketing accounts, and Homeschool, School, and Education suppliers, to name only the most important. All of these non-traditional customers require idiosyncratic terms, and often need special subject catalogs—and sometimes even special-purpose sales forces—to be sold effectively.

Mastering new sales channels is a lot of work, but the sales increases they can generate certainly argue that they are worth the effort. Moreover, it is terrific news that these new kinds of customers are now accessible to independent publishers. To prosper we need more customers, not fewer. Any sort of monopoly or contraction in any segment of the book business will benefit the big five publishers (it used to be the big six!) and hurt us.

Subsequent posts to this blog will attempt to shed some light on these non-traditional but increasingly important new customers.