This Isn't What The Multi-Channel Pundits Promised Us: Age Distribution

Take a look at this chart.

The blue bars represent the average age of individuals in 2010, per data from the Census Bureau (click here for details).


The green bars represent what I see across about 65% of catalog brands.  If we exclude Kids businesses (for obvious reasons), the distribution frequently looks like what we see with the green bars.


Yes, this means that the average catalog shopper is old.


That's fine today.  Folks around the age of 60 have more money than folks around the age of 30, right?


For a decade, we were told that if we were "multi-channel", we'd be successful.  We just had to align all of our channels around the core business, providing an "omni-channel" experience that customers craved.


Nonsense.


Aligning all of our channels around our core business caused our core audience to like us.  


It did not cause an entire generation of customers to even bother to consider us.  And that's about to become a huge problem.


We're stuck in a nasty feedback loop.  Customers age 50-69 love our products.  We measure the products customers love, then we get more of those products, products that 50-69 year olds love.  And with a 38% annual retention rate (average across 75+ clients in 5+ years of doing this), we have to find a TON of new customers each year.  Guess where we go to find new customers?  Co-ops!!  And who do the co-ops feed us?  Well, they feed us responsive names ... and those names tend to be 50-69 years old (and often rural ... just run a report for yourself and learn what's happening in your business).  What do the names that the co-ops feed us like?  Well, it's product presented and merchandised to 50-69 year olds.


We can't get out of this nasty feedback loop.


By forcing the multi-channel experience to revolve around the catalog, and by forcing our primary customer acquisition channel to align with the co-ops, we created the scenario illustrated in the graph above.


I know, I'm supposed to offer a solution to this problem.


But we don't want to hear the solution to the problem, do we?  That requires change.  And we don't want to change what we're doing.  It's fun to spend six months creating the Holiday catalog ... it isn't fun to create sixteen flash sales events a week, it isn't fun trying to build a business that caters to a 30 year old shopper (Jasmine), a business that uses the communications channels of a 30 year old shopper.


When I presented this problem to an industry expert back in March, the industry expert issued the following statement:

• "By the time this thing blows up, I'll be retired."

By the time this thing blows up, I won't be retired.  I'll be busy cleaning up the mess.


It might be a good time for those who won't be retired in ten years to start developing a strategy for a mess that is a few years out, but is now nearly unavoidable.

Dear Catalog CEOs: Content

Dear Catalog CEOs:


Have you had a chance to read this little ditty about the book industry, in the NYTimes (click here)?


It sounds like authors are being stretched ... audiences have an insatiable desire for content.


I want to create a contrast for you.


I recently overheard this comment from an Executive at a conference:

• "We simply don't have anything to tell the customer.  We mail a monthly catalog, and by month five of a season, we've beaten every possible story over the head of the customer.  Our customers are bored.  We're just trying to get to a new merchandising season.  At that time, we'll have a new series of catalogs ready to go."

And I recently overheard this comment from an Executive at a conference:

• "We have sixteen sales a day.  Sixteen!  And each sale is time-limited.  We work with our merchants and inventory team to come up with concepts that stimulate the customer, that cause the customer to act, today.  The customer wants to be told what to do.  That's what we do.  As long as we're in a good inventory position, we can create a sale today and put it up on the site today."

There is something about cataloging that reduces urgency.  Everything is planned.  Everything is planned months in advance.  The DNA embedded in a catalog employee is pre-disposed to thoughtfulness, carefulness, planfulness, steadiness.

The multi-channel movement of the past decade sure didn't help us, in this respect, did it?  Everything had to be integrated across channels, so any ability to be nimble online was squelched by the need to integrate with a catalog that would be mailed months later.

Maybe it is time to reconsider the content we publish.

Maybe it is time to be nimble, to create urgency, to trust a different set of employees with a different set of skills to drive business.

Thoughts?

Friday Notes

Let's start with this image to our right.


This was what was in my mailbox.  On a Wednesday.  In Late May.


There are nine catalogs here.


I've previously purchased from three of the businesses.

1. I bought from one of the businesses, online, twelve months ago.
2. I bought from one of the businesses, just once, online, nine months ago.
3. One business I buy from, in store, monthly.

Which means, of course, that the co-ops self-determined the other six catalogs.  

That big algorithm in the cloud made some mighty big decisions.

Ask somebody at your favorite co-op to run you a report.  Have them tell you exactly how many times they decided to contact, in the past year, the customers they selected for your most recent customer acquisition activity, across all of their clients.  Sure, they'll tell you that they're not going to tell you that metric, just like they'll tell you that they aren't going to tell you the secret sauce that goes into their proprietary, cloud-based algorithms (heck, I tell everybody, even my competition, how I do what I do ... it's not bad for business).  This time, when they fail to offer you transparency, do something about it!  Demand transparency!  Because six co-op based catalogs in your mailbox in late May is unlikely to result in an optimal outcome for anybody except the co-op making algorithmic, cloud-based decisions on your behalf.

Retailers Need To Be Liked:  Have you read this one (click here)?  I'll save you a little bit of time by getting to the punchline:

• "Will it drive sales?  Not likely."

Allow me to communicate a parable.  I was invited to speak at Shop.org last fall.  That's an honor.  You stand up in front of four hundred people and share your thoughts.  You check your phone ninety seconds after finishing and you learn that your quotes have been tweeted seventy-nine times in the past thirty minutes.  For the next six hours, you're a star, people come up to you and tell you how much they loved your message.

But not one individual hired me for a consulting project following the conference.

In other words, it was fun to be "liked".  But there was no correlation between being liked and making a living.  

You have to spend your time wisely.

The same thing can be said for all of us who are trying to sell something to a customer.  The activities that cause somebody to "like" us on Facebook are not the same activities that cause somebody to buy something from us.  Maybe it is time to focus our efforts on selling something.

Beer Market:  Tell me why this concept wouldn't work on your homepage (click here)?  And I'm not saying you do this with every item you sell, but why not choose a dozen items and then experiment with them?  And yes, I realize, the multi-channel pundits will light me up on this one, suggesting that you have to honor the price in your printed catalog at your call center, and this technology makes it impossible because you have dynamic pricing in one channel and static pricing in other channels.  Fine.  Create a dozen new items that you only sell online and try this.  And yes, I realize that the multi-channel pundits will light me up on this one, saying that the subsequent idea is a single-channel-only solution that doesn't fit in the multi-channel constellation they adore.  Well, fine.  

Maybe lack of innovation is a reason that multi-channel is a failed concept.

Mobile:  You ever notice how one botched IPO causes everybody to view social media differently?  One little line in an SEC document about it being harder to monetize mobile, and all of a sudden, "Facebook is Dead" abounds on the internet.  Experts from near and far are pontificating about this, even though the same reality existed before the public disclosure and the IPO and almost none of the experts bothered to consider the concept as they ran the valuation up and up and up.

When it comes to advertising, folks famously talked about trading analog dollars for digital dimes.  Maybe we're in the first inning of trading digital dimes for portable pennies.

By the way, dear Catalogers, have you noticed the similarities between e-commerce/mobile and where cataloging went in the 1980s?  Catalogers like JCP/Sears/Spiegel sent their 600 page masterpieces, at considerable cost.  Then folks like L.L. Bean and Lands' End obliterated that business model with 124 page, lower-cost assortments, targeted to niche audiences.  Thirty years later, we're in the same place.  E-commerce is the 600 page masterpiece, mobile is the targeted 124 page assortment with much less cost.

Just think of the parallels as mobile obliterates traditional e-commerce among Jasmine's generation.




Speaking of Judy:  Did you read this little gem about Judy and her love for Best Buy's Geek Squad?  We spent a decade chasing channels, when we should have been focusing on customers.  Now that we're stuck with a 55+, rural audience, why not look at ways to meet the needs of a 55+, rural audience?

I Just Don't Care About Customer Profitability

One of the most delicious comments of the past year was uttered by an Executive ... this individual told me this nugget:

• "I just don't care about customer profitability.  I don't make decisions on a customer-by-customer basis. As an Executive, I make macro-level decisions.  Do we invest in a new product?  Do we remodel a store or build a new store?  Do we close down our call center and outsource it to India?  Do I hire talented employees?  Do I add a catalog to the contact strategy?  Do I cheat and use paid search to drive traffic, or do I do the hard work to allow organic search to succeed?  Every decision is made at a macro-level.  And if I make the right decisions, customer profitability takes care of itself.  Never, ever, do I sit in my office and say to myself, 'what is the best strategy for Nancy Jones in Medford, Oregon?'"

Boy, that quote is going to chew up some of the pundits in the marketing blogosphere, huh?

Maybe we should turn the story around, focusing on the marketing pundits in the vendor community who demand a true one-to-one, customer-centric strategy of all of us:

• When you write blog posts, are they personalized to your audience ... is each message different, or do you blast the same message to everybody?
• When you publish an email newsletter, do you have fifteen different versions, customized and personalized for different audiences?
• When customers and prospects visit your website, do you have different landing pages for each visitor based on visitor preferences?

The reality, of course, is that few of us focus on individual customer profitability.  There are times when we can make a significant difference (my "A" "B" "C" "D" "F" grades in Catalog PhD projects, for instance).  And there are the other 85% of instances where we make macro-level decisions.

Maybe it is time to be more realistic ... to realize that the macro-level decisions are hard ones, ones that ultimately determine how successful we are.

Attribution: What Do We Really Know?

Here's a few thoughts for you.  Please read these quotes:

• "Mason Crosby kicked a 42 yard field goal as time expired, leading the Green Bay Packers to a 24-21 victory over the New York Giants."
• "The Dow Jones Industrial Average dropped 124 points, or 1.1%, on reports of a two billion dollar trading loss at JPMorgan Chase."
• "Our meeting won't start until 10:15am, because Penny is held up in a traffic jam."
• "My computer is running slow because it is infected with a virus."
• "Janice, a fifteen year veteran, was promoted to Vice President of E-Commerce because of her outstanding work optimizing our email marketing program during the past year."

Each quote offers some form of attribution, correct?

Let's be honest.  Does Mason Crosby deserve full credit for a win?  What about the other 120 plays in the game, contested by forty-four teammates?  What role did each player, and each play, have in the outcome of the game?

Can anybody prove that a two billion dollar trading loss at one company, by one individual, caused billions of shares traded in nanoseconds by computer algorithms to yield reduced market capitalization at companies not remotely connected to the trading loss?

Can we prove that a traffic jam kept Penny from getting to a meeting on time?  Did Penny leave for the meeting soon enough?  Could Penny have chosen a different route?

Even if a computer is running slowly because of a virus, could the user have done anything different to avoid getting a computer virus?

What role did the other fourteen years play in Janice becoming a Vice President?

In life, we accept ambiguity, don't we?  We don't demand a full accounting for how each project that Janice worked on over fifteen years contributed to her promotion.

But in Marketing, we view this differently?  We somehow think that we can parse every stinking click, every visit to the mall, and every silly tweet into a category that results in the division of a $100 order across the 27 actions that led up to the order.

What do we really know about the value of all 27 actions that led to a $100 order?

Discuss.

Summer Schedule

Each year, we go through the same process, don't we?


We start the year with a topic, a theme, something that carries us through the Spring.  Some of you find the topic interesting, and hire me.  Others find the topic interesting, and implement the ideas. Still others find the topic of interest, and continue to subscribe.  Finally, there are those who don't like the topic, and unsubscribe, citing "too many updates"!


Then we get to Memorial Day.


From late May to early September, attention is diverted.  Some might think content is to blame, but I beg to differ.  No, I think our attention span dwindles, in part, because of the weather.


For the seventh consecutive year, you'll be part of a time-honored tradition, called "a decrease in content frequency". 


Starting next week, posts will be published for public consumption on Monday morning, Tuesday morning, and Thursday morning.  As always, when topics dictate, supplemental posts will be published.

Moses

No, not Him.

I mean Moses, the little miracle kitten (click here).

Did you see how the world found out about Moses?  Read through the historical posts.  This video "went viral", as they say.  Next thing you know, Moses is on The Today Show, and even earns honored status on I Can Has Cheezeburger.

But this isn't about something going viral.

The chain of events leading to this video going viral cannot be captured in a bottle.  You have a random blog, you have YouTube, you have popular websites appealing to Jasmine, you have websites appealing to Jennifer, you have the Today Show (Judy).

Marketing experts will tell you that you have to "do everything", that you have to be "multi-channel".  And yet, if you tried to astroturf this thing, you'd fail ... if you set up a blog and YouTube and your PR people tried to astroturf it on popular blogs or on television, you'd fail.  Be honest!

Everybody wants to know what the "Best Practices" are ... somebody just please give away some trade secrets for free, and we'll all be successful, right?

But these days, "Best Practices" make no sense.  Sure, the fundamentals still make sense ... you minimize returns and forecast inventory properly and you'll be wildly more profitable than your mediocre competition.  Marketing "Best Practices", however, have a low probability of success.

There are probably a thousand stories like Moses out there.  If marketed properly, you have a 1 in 500 chance of being noticed.  If not marketed properly, you have a 1 in 1,000 chance of being noticed.  This results in a share of not-so-good-practices succeeding ... and in almost all spectacularly-planned-via-best-practices strategies failing.

It's a good thing that little Moses is adorable, because that makes the story possible ... the content (or in our world, the merchandise) still matters.

New Customers, For Free

If you like to keep up on marketing/analytics, you probably read Andrew Chen, right?  And you've probably read this post, right? (click here).

If not, there's two sentences that you might pay attention to.

• The important thing about virality is it is free. So it's an important skill for startups.

It's an important skill for anybody!

I get calls and emails ... "what's the next big idea, Kevin?"  Now, I don't have the slightest idea what the next big idea is, but a business like One Kings' Lane that goes from $0 to a couple hundred million dollars in a few years is worth paying attention to, right?  Mostly grown by virality, it's certainly something we should pay attention to.

That's when I get the response ... "I need something that scales. You can't bank on virality, it's unpredictable. You can bank on Abacus giving you a million names that will generate $1.5 million in sales, +/- 5%.  That's what I'm talking about.  What's the next big idea like that?"

In other words, you want someone to assume all of the risk for you, and you will gladly pay them for the right to remove all risk, correct?

Big ideas are headed in the opposite direction, and have been for some time.  Judy's generation paid for offline access to information (Abacus).  Jennifer's generation paid for online access to information (Google).

Jasmine's generation just won't pay.  New customers can be found, for free.

Now this is hard, risky work, isn't it?  With Abacus, the odds of breakthrough success are nearly zero, but the odds of treading water are great.  With word-of-mouth, the odds of breakthrough success are, what, one in ten, or one in a hundred?  With word-of-mouth, there is no treading water ... you either succeed wildly, or you're finished ... you'll know, either way, really soon.

In the old days, you'd have a customer acquisition analyst, horse-trading names with competitors. And some geeky mathematician wrote SAS code on a mainframe computer, hoping to avoid a dreaded SB37 error ... analyzing test results when there were enough cycles available to process information.  Combined, the individuals earned your business new customers.

Read the blog post above, or the post on Growth Hackers, and you see a world that parallels what was done twenty years ago ... but is fundamentally different.  Gone is the teamwork required twenty years ago, replaced by technology, coding skills, rapid A/B testing, and the promise of free, new customers.

There is a gulf between the world that Judy thrives in, and the world that Jasmine thrives in.  We probably need a better balance between the two, don't we?

Swim Lanes

In merchandising, some companies introduce the concept of "swim lanes".  This is a valuable concept.  Merchandise is forced to stay within a swim lane, to eliminate the myriad problems associated with redundant skus.  Merchants are assigned a category, and are asked to not interfere with the work of another merchant. Each merchandise category is allowed to grow and thrive, without interference from the efforts of an employee responsible for another merchandise category.  In theory, this helps simplify the purchase process for customers as well.

Now let's look at the failed concept known as "multi-channel marketing".  Everybody is an expert!!  The Chief Merchandising Office knows what email campaigns need to look like.  The Chief Operating Officer possesses distaste for affiliate marketers.  The Chief Financial Officer wants to trim catalog circulation by 30% (and would trim it by 97% if she could, because you just mail the customers who are going to purchase, right?).  The Chief Creative Officer thinks you need to "engage" the customer more via social media, and will work behind your back on developing a content-based strategy on Twitter, if necessary.  The Chief Inventory Officer wants to abandon paid search because it cannibalizes organic search results.  

The Chief Marketing Officer actively mines her network on LinkedIn, anticipating her next job.

Have you ever been in one of these meetings?  A half-dozen Executives all jumping out of their swim lanes to improve marketing performance?

I remember being at Lands' End in the early 1990s ... a profitable quarter was blown up, in part because somebody in Finance made some sort of mistake on currency exchange rates.  I remember the gnashing of teeth, because that mistake cost every employee a percentage of his/her annual bonus.  Nobody likes it when a bean counter is responsible for taking beans away from you!

I don't remember employees telling Finance how to manage money, however.  Money, even if mis-managed, was part of the Finance swim lane.

And you don't often see marketing leaders demanding a right to determine which robotics system to use in a warehouse, do you?

When it comes to marketing, swim lanes break down.  Everybody is an expert, right?!

A strong Marketing leader has facts to back up his/her claims.  A strong Marketing leader listens to Executives, then helps Executives move back into their swim lanes when appropriate.  A strong Marketing leader reminds every employee of the importance of Merchandise ... in other words, when business is down by 10%, the Marketer quantifies that Merchandise weakness is casing 9 points of the 10 point drop ... then the Marketer offers solutions to help the Merchant regain a few points.

A strong Marketing leader teaches Executives to respect each other.  A strong Marketing leader teaches Executives the limited potential of tools/techniques.  A strong Marketing leader teaches Executives the unlimited potential of creativity/working-together.

Finally, a strong Marketing leader reminds Executives about swim lanes ... reminding Executives about the importance of focusing on what one knows best.

Dear Catalog CEOs: Visiting A Non-Competitive Brand

Dear Catalog CEOs:


Here's one thing I don't understand.  Why won't we ever go spend a day with a non-competitive colleague?


We're on LinkedIn, so we have this network of 1,148 professionals.  And LinkedIn tells us that this network is really valuable, right?


So why don't we use it?


Get on the phone this week, and call a CEO at a non-competitive brand.  Arrange a visit.  Then get on an airplane and visit your colleague.


It's even better if the colleague leads a non-catalog brand.


Set up a six hour meeting.

• 10:00am - 11:00am:  Business results over the past five years ... a review of the profit and loss statement, customer file counts, orders per buyer, items per order, retention rates, that kind of thing.
• 11:00am - 12:00pm:  Marketing strategy ... a review of the way that each brand acquires customers, retains customers.  Discussion of the strategies, effectiveness, return on investment, vendors used, etc.
• 12:00am - 12:30pm:  Lunch.
• 12:30pm - 1:30pm:  Merchandising strategy ... how are products sourced, how is the mix of new and winning products arrived at, how is product productivity measured?
• 1:30pm - 2:30pm:  Employee strategy ... where do you find talent, how do you retain talent, how do you balance outsourcing talent to vendors vs. hiring the best people.
• 2:30pm - 3:30pm:  The Future ... a discussion of what "the next big thing" is, and how each business plans on growing over the next five years.  What are the strategies and tactics that lead to a viable business in 2017 and beyond?  What are the threats faced by each business?
• 3:30pm - 4:00pm:  Takeaways ... what was learned by each business that will be implemented.  How will the takeaway be measured?  How will each business communicate with each other?

The goal is to find complimentary ways for each business to help the other grow.

What would stop you from getting on a plane and having a session like this?