February 11, 2016

Expensive Stuff

This image from my customer acquisition presentation comes to us courtesy of Rag & Bone (click here).

You visit their home page, and you are served a dollop of white space. You look at the merchandise, and you quickly realize that you will have to take out a second mortgage to afford the assortment!

Expensive merchandise means that rich people are eligible to buy the merchandise. Head to Facebook (click here), and you'll see that famous people like Jennifer Lawrence own a handbag. That attracts traffic, folks.

I recall being in a meeting at Nordstrom, way back in 2002. The accessories merchant was in an argument with another merchant ... and the accessories merchant was winning the argument. Her comps were pushing +10% ... and for good reason ... she was pushing prices higher and higher and higher. Her claim? She said that when you pushed prices as high as possible, you self-select an aspirational audience. In other words, she was choosing the audience she wanted to acquire via the price points offered in her category.

I know, I know. You sell widgets. Widgets are a commodity item. You are under severe price pressure from Amazon and your competition. If anything, you have to lower prices! Fine. Good luck with all of that.

Do you think that Rag & Bone has stiff competition? One of the fast fashion brands can knock this stuff off in less than two weeks and sell something similar for $30 instead of $300, right?

Expensive merchandise is a customer acquisition strategy. Regardless of your business model, you have expensive merchandise that your existing customer base craves, and the expensive merchandise anchors a perception among prospects. You get to pick your customer acquisition audience. Why pick and audience that always demands the lowest price?

VT/NH Marketing Presentation - March 31: Gonna Be Sold-Out Soon!!

So many of you have told me you want to attend. Better hurry up and register before the event is sold out, as I'm told is likely to happen soon.

Click here to learn more.

Click here to be taken to the latest version of the presentation, where more than 30% of the slides have changed. Or, if you can see the slides below, please thumb through them right now. But for heaven's sake, register now and don't miss out!!





February 10, 2016

Winners / Contenders / Others

If you are a marketer, you are probably exasperated with your merchandising team. They beat you over the head for contacting the wrong customers at the wrong time in the wrong way. They look at your email marketing performance and think that one customer purchasing for every seven hundred deliveries is an apocalyptic catastrophe. If you are a cataloger, then it is common for the merchandising team to blame the performance of 160 pages of merchandise on the marketer. I've been in the meetings. I've witnessed the carnage.

As a marketer, you can hold your merchandising team accountable for performance. It's not rocket science. And no, you won't hold them accountable for performance with a square inch analysis. That style of analysis helps you figure out how to merchandise/paginate a catalog, and that is of the utmost importance if your organic percentage is under 30% and you care deeply about catalog response. For everybody else (which is almost all of you now), you care about a merchandise assortment that works the whole year 'round, and works in email and affiliates and paid search and SEM and comparison shopping engines and via direct load traffic. You care about an assortment that attracts new prospects.

I recommend that you start simple.

I will also say, right up front, that there are plenty of consultants out there who will do a great job for you and will disavow my style of analytics. Please, work with those folks. They will help you improve response/conversion.

I use a concept called "Winners / Contenders / Others".

Step 1 = For the desired period of time, count how many customers purchased during that time frame.

Step 2 = Now, sum total demand per item, and total units per item for that same time frame. Do this for each item.

Step 3 = Divide demand by customers. Divide items by customers.

Step 4 = If an item is in the top 5% of all items for demand/customer or it is in the top 5% of all items for items/customer, the item/style is deemed a "Winner".

Step 5 = If an item is not a "Winner", but is in the top 45% of item performance in terms of demand/customer, then the item is deemed to be a "Contender".

Step 6 = All items not classified as a "Winner" or a "Contender" are segmented as "Other".

Using this simple framework, you'll see that +/- 40% of annual demand comes from a handful of "Winners". Another +/- 50% of demand comes from "Contenders". And then you have 55% of the assortment that contribute +/- 10% of annual demand, and are generally not worth measuring.

Perform a simple longitudinal study of Winners / Contenders / Others by Category. This simple analysis is going to tell you if you have a merchandising problem. Count Winners over time. In almost all merchandising challenges, you'll see a reduction in Winners, a reduction that is often sourced from poor new item performance from 1-3 years earlier.

February 09, 2016

A Brand Response Team

When I bring up the topic of Brand Response Marketing, I am occasionally greeted with the expression seen here.

It's an expression of doubt and "we've tried this before, and it didn't work, so please give me a great idea, for free of course, that is guaranteed to work, because my entire career is now dependent upon free advice from outsiders and $1,795 reports from Woodside Research."

When I worked at Eddie Bauer, circa 1995 - 2000, I was part of what was called a "Catalog Business Team". It was the "Triple-A" of Management, and I mean that in the most positive way possible.

This team had at least a half-dozen key members.
  • Me - Director of Circulation / Analytics.
  • Inventory Director.
  • Merchandising Director.
  • E-Commerce Director.
  • Call Center Director.
  • Finance Director.
  • Creative Director.
The team met for two hours every Wednesday. The team went over current business. The team had three or four VP "mentors" who occasionally attended ... especially when business was bad or when we were taking risks. Once a quarter, we presented where we were taking the business to the Executive Team. We were pummeled, we were questioned, we were praised.

What a training ground!

Now, don't get me wrong. There were four layers of Management above me ... a DVP of Marketing, an SVP of Marketing, a EVP of Global Brand Direction, and the CEO. Anything we wanted to do could (and was) vetoed by our VP mentors, or by the four layers of leadership above me. That's life.

Regardless, we largely came up with the tactics and strategies that were implemented. Even when folks disagreed with me, I still mostly did what I wanted ... I mailed who I wanted, I forecast the business the way I wanted, I applied discounts/promotions the way I wanted, I assigned page counts per mailing the way I wanted, I created edited/smaller catalog versions the way I wanted. Tactics were modified, discussions happened, angst occurred. In the end, we posted the most profitable year in the division of the catalog / e-commerce channel (back in 1999), best results in 50+ years.

In other words, the org structure worked.

Fast forward to today. What a mess. I keep seeing situations where classic direct marketers hold our businesses hostage by demanding immediate return on investment. Similarly, I keep seeing situations where brand marketers swing for the fences, spending millions "building a brand" with no return on investment whatsoever. I see digital experts who have no idea how business works. I see business experts with no idea how digital works. I see tepid sales growth. I see frustration.

What we need today is a Brand Response Team. Here's what I recommend.
  1. Only employees age 30-39 are eligible. When an employee hits 40, the employee must move on. This keeps modern marketing concepts at the forefront. Your mileage will vary. But the last thing you need is a crusty fifty year old like me holding the company back.
  2. Cross-Functional ... make sure Finance, Merchandising, Creative, Online Operations, Classic Direct Marketing, Digital / Online Marketing, IT, Inventory, Social Media, Mobile are all represented.
  3. Director-Level Recommended. Make sure that this is the training ground for future leadership positions.
  4. Authority. This team gets to make real decisions, they are not pawns on the Executive Chess Board. Otherwise, why do this at all?
  5. Accountability. This team owns Customer Acquisition, pure and simple. They OWN it. They are given a budget, they are given a customer acquisition count target, and they are given a profit target. When they succeed, they are promoted. When they fail, they are booted off the team.
  6. Bonus. This team earns at least a 50% annual bonus if customer acquisition targets are met. I know, you hate this. Tough. Pay people for outstanding performance.
Now, when you have a team with the six (6) criteria above, do you think this team will blindly allow a paid search vendor to own customer acquisition? Do you think this team will let the co-ops be responsible for 85% of new names? Never!! This team will approach Customer Acquisition with the necessary zeal required to grow a modern business.

This team is called a "Brand Response Team". 

Their number one job is to profitably grow new customer counts. By doing this, the Brand Response Team guarantees the future success of the business.

I know, I know. You sell widgets. Your Executive Team has an iron-fisted approach to Management - they tell people what to do, not the other way around. Ok, then, good luck to you. 

But for the rest of you, those of you with open minds and an appreciation for future success ... what would stop you from forming a Brand Response Team?


February 08, 2016

Sometimes Productivity Fails In An Uneven Manner

As you've heard me #testify, in 80% of my Merchandise Forensics projects, there is a problem where customers are spending less, and they are spending less because of merchandising issues.

Increasingly, folks want to know who is spending less. That answer "depends".

In this case, look at what happened in months 12 - 30 (i.e. 1.5 to 3.0 years ago). Look at the bottom of the twelve-month buyer file ... between the 0th and 20th percentiles. These customers were spending 30% less than they were spending four years ago. Notice that their spending declines started first ... they were the harbinger that problems were brewing. The problems didn't get to the top of the customer file until several months later ... the problems were not as dire ... and the recovery was just a bit stronger than at the bottom of the file.

You are probably already running a comparable analysis, and you probably know who is spending more/less over time. It's more dire when best customers spend less ... but sometimes, when marginal customers spend less, it is because a handful of key products that marginal customers like are discontinued.

Your business is not succeeding/failing because you are not on the cutting edge of programmatic ad buys. Your ad buys are not working because of missteps in your merchandising strategy. Use your comp segment framework to understand who is spending less, and why.

February 07, 2016

Events

Have you ever attended the Internet Retailer conference? Or Shop.org?

You know, we read too much about pointless omnichannel tactics and strategies ... almost none of what we're told to do works. Nobody wants channel alignment, for if customers wanted channel alignment, Macy's would be posting +10% gains.

But trade organizations, these folks actually execute credible omnichannel tactics, don't they?

Internet Retailer has a series of publications they sell. They write stuff about online brands every day. All of their efforts integrate with their annual summer conference ... something nearly all of you reading this post have attended. Think about the conference. They get big time speakers ... many conferences even get speakers to pay to play, don't they? They have a vendor hall where you are hawked by folks who paid tens of thousands of dollars to be able to encourage you to pick up a free laser pointer in exchange for hearing about "programmatic". Trade journalists cover the conference and spread the word on behalf of Internet Retailer. Attendees tweet about the event, spreading the word for free.

All of this nonsense is designed to keep Internet Retailer in business. It's an actual, viable omnichannel strategy, isn't it? But the event is the heartbeat of the whole thing. Without the event, there is not nearly as much to get people (you) excited about during the year.

In e-commerce, retail, and catalog marketing, events are completely under-utilized. Think about Fashion Week. This is an extravaganza designed to get retailers to carry the merchandise that fashion brands want to sell. And it works! Free advertising everywhere, digital and analog.

The Men in Blazers hosted BlazerCon last November ... their podcasts and TV show and conference and merchandise and newsletter all work together, creating buzz and new customers (listeners) in the process. Both loyalty and acquisition are rewarded.

I know, I know, you sell widgets. Nobody wants to come to a two-day event to hear the latest in the world of 3D Widget printing.

Nonsense.

If you have 100,000 twelve-month buyers, you have 300 buyers who adore you and would attend your event. Bring in your vendor partners, make them stars in your industry during the course of a year or two, and then when you host your event, the names will be recognized and adored and will generate interest. You get all of this free advertising in the process, free advertising that generates new customers.

Go hire a brand response marketer, and get busy creating an annual event that your customer base cannot help but want to attend. You attend Internet Retailer and Shop.org, don't you? Do you love those organizations? No? And yet, you attend. Why wouldn't the concept work for you business.

Customer Acquisition is the biggest challenge we face in 2016. Do something different.

February 04, 2016

Ship Something!

There's Julie Bornstein, of Nordstrom / Sephora fame, shipping something to prospects at Stitch Fix. You take a quiz, and a personalized assortment is shipped to the customer.

I know, I know. You are unique. You are different. You sell widgets. Why would a customer ever fill out a quiz that enables the customer to receive a personalized set of widgets?

I get the chance to analyze continuity programs ... you know ... programs where customers receive monthly shipments of stuff they don't even know they want yet ... or stuff they know they want and are happy to receive. Either way, the Stitch Fix example is really nothing more sophisticated than the old "receive twelve VHS movies free" concept that caused a customer to receive movies for a full year. It's just a modern twist on an old concept.

I know, I know, you think continuity programs only work for best customers. Not true. The concept fully depends upon what you ship to the prospect. And if the hypothesis were true, so what? Why not use your current merchandise assortment to up-sell the customer into monthly shipments?

Customer Acquisition is the most important topic in 2016. We need to shake things up. We need to try different strategies. It's time to hire a brand response marketing professional and then it is time to get busy implementing different tactics / strategies.

February 03, 2016

Language and Talent

You hire copywriters.

Snapchat hires "Language Designers".

I know, I know, you believe this is an issue of semantics. You are doing the same thing they're doing, they just have a fancy title.

Imagine being a 29 year old writer. Are you likely to take the catalog job writing copy, or are you likely to become a Language Designer at Snapchat?

Game over. Snapchat wins the talent battle.

Now imagine that the 29 year old writer actually takes the copy writing job in Georgia ... has personal reasons for wanting to stay home and all that. Are you going to give this person the leeway to do great work? Or are you going to demand that the individual adhere to company standards? You already know the answer. You'll turn the copy writer into a drone ... and then, not surprisingly, the copy on your website reads like a text book. Who wants to read that?

If you want to acquire the best customers, you need to hire the best talent. In order to hire the best talent, we all need to modernize our internal structures. Nobody wants to write copy. Many people want to design language. That subtle distinction pays dividends.

I know, I know. You sell widgets. You are unique. You are different. You hired a Creative Director in 1997 because you watched the J. Peterman character on Seinfeld and thought somebody like that could make a difference, but the person you hired came in to work every day barefoot and wearing flannel pajama pants ... "it didn't work out, so he left the company to spend more time with family." You vowed to never make that mistake again.

It is very difficult to be great a customer acquisition while writing boring copy. Do something different.


February 02, 2016

Packaging and Copy and Storytelling


They share tips for small businesses ... but of course, many of the tips apply to your business as well.

They recently shared a tip about Frostbeard Studio. Stop everything you are doing right now, and go visit them on Etsy (click here).

Do you put as much energy into your packaging, copy, and storytelling as they do?

They are selling a soy candle ... heck, everybody sells candles. So, they take a different approach to their craft, don't they?

Packaging and Copy and Storytelling are Customer Acquisition Strategies, aren't they?

I know, I know, you are unique, you are different, you sell widgets and you tried clever packaging back in 1996 and you got product placement on Friends and sales didn't increase, so you strongly believe that this is yet another tactic that "doesn't work".

You can't have it both ways. You cannot grumble that it is hard to acquire customers in a "competitive landscape buffeted by headwinds" and then assert that you've tried everything and nothing works. Either you go all-in on math (co-ops, Google, Facebook, Retargeting, Programmatic) and you create a soulless experience, or you hire brand response marketers and give them the freedom to creatively solve problems. Since the soulless experience isn't getting anybody anywhere, why not try to creatively solve your problems?

February 01, 2016

Humor

In my Customer Acquisition presentation (click here), I share a slide about humor. The slide features a commercial where the candy bar being advertised is "not for girls".

I know, I know. Your brand is unique, your brand is different, your brand is inclusive, your brand is serious ... you sell widgets, and there's nothing funny about widgets. You tried a joke back in 1988 about Michael Dukakis and sales didn't increase. Humor doesn't work.

Customer Acquisition is the biggest story of 2016. One way to find new customers is to entertain prospects. Maybe humor hasn't historically worked for your business. Is it possible what you've tried, historically, wasn't funny in the first place? I mean, I spent years working on the "Gliebers Dresses" series ... not saying it was funny, but it was an attempt at humor, and subscribers increased and it was frequently mentioned during client visits ... so it did something.

Try something.

January 31, 2016

Coloring Books

In my customer acquisition draft (click here), I created this slide ... about coloring books.

Yup ... physical book sales actually increased in 2015, and coloring books were a huge reason why. It's not so much that physical books are making a comeback as that a genre was re-imagined.

All of us manage businesses where we could re-imagine something old in a new way. We simply choose not to. 

I know, I know. Your business is unique, it is different, you've tried stuff that didn't work, you have to make your quarterly numbers. You just haven't hit upon the right idea yet, and you won't hit upon the right idea if you keep telling everybody who has an idea that the idea won't work.

Customer Acquisition is the biggest issue for businesses in 2016.