Kelly’s Efficiency Index, or Using Data to Make Smarter Publishing Decisions

In Feature Articles by Hannah Johnson

At Digital Book World, Kelly Gallagher showed just how effective data analysis can be and how it can help you make decisions that will lead to more book sales.
Kelly Gallagher, VP of Content Acquisition at Ingram Content Group, presents data analysis strategies to a full house at Digital Book World 2016 (Image: Hannah Johnson)

Kelly Gallagher, VP of Content Acquisition at Ingram Content Group, presents at Digital Book World 2016 (Image: Hannah Johnson)

By Hannah Johnson | @hannahsjohnson

“Most data is directional,” said Kelly Gallagher, VP of Content Acquisition for Ingram Content Group, in one of the kick-off sessions at the 2016 Digital Book World Conference. What did he mean? Data isn’t always a replacement for the gut instincts an editor may have about a particular book, but when used correctly, data should point you in a particular direction.

In his talk, “Using Data to Improve Sales,” Gallagher demonstrated a number of ways that publishers can dive into available data (BookScan or ISBN-based sales data, internal sales data, industry reports, etc.) to discover trends and create action plans.

He pointed out that just looking at the raw data alone isn’t enough. You need to be able to draw conclusions from the numbers and, when possible, find additional information to corroborate your findings. Gallagher suggested appointing someone inside your organization to manage and master this data, to create useful reports that will help the company make certain decisions.

Kelly’s Efficiency Index

One of the ways that Gallagher came up with to mine book sales data for better information is his Efficiency Index. It’s a formula he developed that reduces down to a single number the success rate of a particular author, in terms of unit sales per book, taking into account your own sales goals.

Get out your calculators, we’re going to dive into a little bit of math. Here’s Gallagher’s basic formula for calculating the efficiency of a particular author in terms of sales:

(number of units sold ÷ number of titles published) x .001 = Efficiency Index

Let’s say you want to publish a biography title and you’ve set a sales goal of 1,000 units (in the formula above, .001 represents the 1,000 titles you want to sell and can be adjusted to fit your particular sales goals). Looking at BookScan sales data (or similar sales data based on ISBNs) for top-selling biography authors, you see that Author A has written 8 titles and sold 14,000 copies in total. Author B has written 3 books and sold 7,000 copies. Using the formula above, here is the Efficiency Index for each of these authors:

Author A: 1.75
Author B: 2.33

Based on Kelly’s Efficiency Index formula, you can see that Author B is more likely than Author A to hit or exceed the 1,000-unit sales goal. The Efficiency Index is a good way to compare a long list of authors at a glance, and it helps reveal the high-potential authors for your own publishing house and sales goals.

Making Smart Comparisons

Gallagher stressed a number of times that the way you segment your data will reveal different opportunities, and that a more narrow focus can offer better, more concrete insights. For example, using the Efficiency Index on a list of the top-selling fiction authors in the United States will give you a list of authors that is probably too broad to draw meaningful conclusions.

Instead, look for authors working in specific categories (e.g. Civil War biography, commercial romance, etc.) or pricing across a single category and format (e.g. hardcover diet books). You can even consider publisher size. The type of authors and pricing from Big Five publishers are different from what you see at a smaller publishing house.

As a good example of spotting anomalies and opportunities, Gallagher pulled up a list of the top 12 publishers of commercial romance paperbacks by point-of-sale data showing average paperback prices and sales volume. Perhaps the original intent of looking at such data would be to find out how to price your own comparable title, but this list revealed another potential insight. Gallagher pointed out that Gale Cengage Learning, an educational publishing company, appeared seventh of this list by sales volume. Why? It turns out that Gale is a leading publisher of large-print books in the USA. We can conclude that there is demand for this format in commercial romance, and that publishers could consider adding this format to their programs in order to generate more sales.

Finding and Following Fads

Taking a closer look at the latest sales data from various sources can help you decide whether or not to join the latest publishing trends (e.g. adult coloring books). Of course, you also need to take into account how quickly your publishing company can react to these trends or incorporate certain titles into your program.

In the case of adult coloring books, Gallagher drew up sales data for this niche that showed significant increases last year in unit sales and the number of ISBNs associated with this trend. The data also showed things like a decrease in page count and unit price as the coloring book trend has matured. In such cases, ask yourself how quickly would you be able to get a title into the market. The longer you wait to join the trend, the more competition you’ll face.

Plenty of book publishers aren’t overjoyed at the idea of publishing trendy coloring books alongside a list of more serious titles, but the revenue-generating benefits of participating in book trends shouldn’t be overlooked.

This is a classic example of the art vs. data debate in publishing. Gallagher said that during his tenure as publisher at Beacon Hill Press, he found that publishing trendy titles allowed them to also publish titles they were passionate about, like poetry.

In the end, it’s up to each publisher how much they want to incorporate data into their decision-making process. One thing that was clear from Gallagher’s presentation is that data can highlight opportunities, niches, optimal price points and potential authors that would probably not reveal themselves another way.

About the Author

Hannah Johnson

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Hannah Johnson is the Publisher of Publishing Perspectives. Before joining PP in 2009, she worked as Project Manager at the German Book Office New York.