June 26, 2016

Multiple Points of View

Here's where we are.
  1. Vote For "A" = 50% Think You Are An Idiot.
  2. Vote For "B" = The Other 50% Think You Are An Idiot.
You are not an idiot, regardless how you vote.

I was in a meeting. The Leader asked an employee for his opinion. The person gave his opinion. Then the Leader ... she says, "well, you are wrong".  And that was the last time we heard from the employee in the meeting.

If anything, we probably need more ideas, even if the ideas are wrong. We need to look out for folks who are under-represented, be it in life, or in marketing.

"A" is seldom right, and "B" is seldom right. Both "A" and "B" have valid points.

Now if "A" or "B" outright lie to gain an advantage, by all means, expose the lie for what it is. With accurate and honest un-manipulated data, of course.

But, geez, in marketing and life, things are more complicated than "A" or "B". Real Leaders figure out where in the A/B continuum we should be ... or figure out that we need "C" and sell it and then Lead us toward it.

Something to think about, when reading your next Thought Leadership white paper about the future of whatever.


June 23, 2016

Work Together

I spent this week outlining a thesis that catalogers no longer compete with each other.

Instead, catalogers are part of a loose federation within a Catalog Brand Ecosystem. When Brand X performs well, then Brand D performs well, and when Brand D performs well, then Brand M performs well. So if we want Brand M to perform well, it doesn't hurt to have Brand X and Brand D perform well, does it?

You depend on the companies you believe you compete with. But how can you compete with these brands when you openly share your most valuable asset ... your customer list ... with each other?

The truth is that you are not competing. You are collaborating within a large Catalog Brand Ecosystem.

When co-op performance fails, it is not the fault of your co-op partners. At all. It is your fault. It is because you are not collaborating with the leaders at the companies you share your most valuable asset with .. your customer list.

So you can fix this problem in two ways.
  1. Instead of competing, please work together. Partner with your co-ops to facilitate the discussions. And if your co-ops won't help you, then send me a message (kevinh@minethatdata.com) and let's figure this challenge out together.
  2. Improve merchandise productivity. The Online Brand Ecosystem does not want your customer. The Mobile Brand Ecosystem does not want your customer. Therefore, when you improve merchandise productivity by focusing on a 55+ year old customer, you actually help all other catalogers in the Catalog Brand Ecosystem. And once momentum takes over, every cataloger benefits.
You can fix this problem by working directly with the leaders you perceive you are competing with. Find ways to collaborate.

In other words, I'm asking you to stand up and be a leader. Put this industry on your back and move it forward. No more complaining about co-ops. No more complaining about Amazon. No more complaining about online brands. No more complaining about elections. No more complaining about weather. No more complaining about economic headwinds. Too many companies are succeeding. It's time to collaborate with other catalogers, work together, improve merchandise productivity, find ways to grow new customers, and essentially grow the industry.

What is so bad about that message? Who among you and/or vendors could be offended by the hope that you become a leader and grow merchandise productivity and collaborate with other catalogers?

Discuss.

June 22, 2016

Go Recruit Some Help

When I analyze Catalog Holding Company data, I can clearly see how various brands align with each other. Brand A performs well when Brand Q performs well ... and Brand Q performs well when Brand Z performs well. There are a ton of linkages, and the best Catalog Holding Companies feed their ecosystem so that the customer moves from Brand Z to Brand Q to Brand A.

The same logic holds with your co-op partners, just on a much larger scale.

Here's what needs to happen.
  1. You need to have a heart-to-heart with your co-op partners.
  2. Ask your co-op partners to share the linkages that allow your business to thrive. If In The Company of Dogs thrives when Williams Sonoma thrives, you need to know this. You are paying the co-ops a lot of cheddar. They should tell you and all of your fellow Catalog Brand Ecosystem partners what the linkages are.
  3. Now that you know the seven brands that align with your brand, it is time to sit down with the leaders of each of the seven brands, and figure out how all seven of you can work together to benefit each other.
Remember, catalogers are no longer competing with each other. At all. 

Catalogers are a loose federation of brands within a Catalog Brand Ecosystem. When some brands within the ecosystem succeed, all other brands succeed because of the success of others. I don't care that you perceive that you sell the same merchandise as another catalog brand - who cares? You are sharing names, so that means you are already sharing trade secrets - what could be a bigger trade secret than your customer list?

The co-ops can facilitate the partnerships, the linkages. The co-ops can perform the analysis, and then go to each brand and share the linkages. The co-ops can bring leadership from each brand together for conversations. The co-ops have the data, and they have the relationships to make this happen. The only thing stopping this from happening is adherence to 1980s thinking ... from you ... and from the co-ops.

Go recruit some help from your co-op partners.

If you run into a brick wall, contact me (kevinh@minethatdata.com). We'll try to figure something out.

Remember - you are not competing with each other anymore. You won! You own the 55+ year old customer. The Online Brand Ecosystem doesn't want your customer. The Mobile Brand Ecosystem doesn't want your customer. You won the competitive battle. Now please work together to help each other succeed.

June 21, 2016

All In The Same Boat

I want to show you something that came out of recent research I performed.

Here's an equation for customers who have yet to purchase from Brand A.
  • Brand A Next Year Demand = 0.920 + 0.05*(Weighted Brand B Dollars) + 0.04*(Weighted Brand C Dollars) + 0.08*(Weighted Brand D Dollars).
Weighted dollars are based on recency (send me an email and I will show you how I calculate the weights).
  • Orders 1 Month Ago = Demand * 1.000.
  • Orders 2 Months Ago = Demand * 0.886.
  • Orders 3 Months Ago = Demand * 0.784.
  • Orders 4 Months Ago = Demand * 0.695.
  • Orders 5 Months Ago = Demand * 0.615.
  • Orders 6 Months Ago = Demand * 0.545.
  • Orders 7 Months Ago = Demand * 0.483.
  • Orders 8 Months Ago = Demand * 0.427.
  • Orders 9 Months Ago = Demand * 0.378.
  • Orders 10 Months Ago = Demand * 0.335.
  • Orders 11 Months Ago = Demand * 0.297.
  • Orders 12 Months Ago = Demand * 0.263.
  • Orders 13-24 Months Ago = Demand * 0.127.
  • Orders 25-36 Months Ago = Demand * 0.030.
  • Orders 37-48 Months Ago = Demand * 0.007.
Let's say that a customer purchased from Brand B one month ago, spending $100, and has no other purchases.
  • Brand A Next Year Demand = 0.920 + 0.05*(100*1.000) + 0.04*(0) + 0.08*(0).
  • Brand A Next Year Demand = $5.92.
Ok, now let's assume that the customer lapses, and has not purchased in two months from Brand B.
  • Brand A Next Year Demand = 0.920 + 0.05*(100*0.886) + 0.04*(0) + 0.08*(0).
  • Brand A Next Year Demand = $5.35.
In other words, if Brand B fails to keep this customer highly recent, then this customer is less likely to buy from Brand A - about 10% less in this example.

Now, let's pretend that the customer buys from Brand C, spending $100 in the past month, and spent $100 three months ago from Brand B.
  • Brand A Next Year Demand = 0.920 + 0.05*(100*0.784) + 0.04*(100*1) + 0.08*(0).
  • Brand A Next Year Demand = $8.84.
This is what the co-ops are dealing with. Because many catalogers have had considerable merchandise productivity problems in the past year, the co-ops are dealing with a bunch of customers worth $5.35 each. If all catalogers had merchandise productivity gains, the co-ops would be feeding you $8.84 value names.

Again, this is not longer the fault of the co-ops. The co-ops are a mirror of all catalogers and shared cataloger merchandise productivity. Because cataloger merchandise productivity has not been great, the co-ops select names for you that are worth less.

Catalogers no longer compete with each other.

Catalogers are all part of a Shared Catalog Brand Ecosystem.

When one cataloger improves merchandise productivity, all other catalogers in the Shared Catalog Brand Ecosystem benefit. This means we are all waiting for the first catalog leader to stand up and improve merchandise productivity significantly and lift the industry on her shoulders.

You (the reader) are capable of fixing the sluggish performance that some/many of you are experiencing. When you improve merchandise productivity, everybody else benefits. When your peers at other companies improve merchandise productivity, you benefit.

And best of all ... the Online Brand Ecosystem does not want your customer base. That ecosystem (except for Amazon) has largely shut out the 55+ year old customer.

The Mobile Brand Ecosystem completely ignores your customer base. They do not want a customer who purchases merchandise while wearing tri-focals.

So the average catalog customer is 55+, and is all yours!! (and yes, I get it, some catalogers cater to a 47 year old customer ... but the vast majority don't, so let's please be realistic here).

This means you are responsible for fixing the problem.

And you can fix the problem - I have faith in you!!

The solution is to find merchandise that the 55+ year old customer loves, merchandise that the Online Brand Ecosystem and the Mobile Brand Ecosystem doesn't want to sell. Then, you use the skills you've acquired over a career to market to your 55+ year old customer.

You are all in the same boat.

And you can solve the challenges yourself.

Time to get busy collaborating with each other, don't you think?

Business Stinks / Employee Orders

Yup - you are the marketing/analytics expert, and you are sitting in a meeting with this guy, and he says "it's your fault business is so bad".

It is not your fault that business is so bad.

I've told this story a half-dozen times, but the story is particularly relevant at a time when pundits utter nonsense about "economic headwinds" or the impact of "the election".

It was 1998 at Eddie Bauer ... the online division was running -15% ... stores were running -20%. Bad, bad business. And eventually, it became time to assign blame ... it was "marketing's fault".

So, I ask my team to run a query.

  • Sum all demand from the 30 employees who have a Vice President title for Spring 1998.
  • Sum all demand from the same 30 employees with a Vice President title for Spring 1997.
  • Index the change, year-over-year.
The results?

The 30 employees with a VP title spent 20% less in Spring 1998 than in Spring 1997.

I could hardly wait for the meeting to start!

It only took ten or fifteen minutes for one of the merchandising wizards to openly suggest to the room of VPs that marketing had once again "damaged the brand".

I pulled out the results of the query.

I shared with everybody in the room that everybody in the room was spending 20% less this year than last year.

I reminded everybody in the room that "the economy" couldn't impact their spend, because they were all being paid the same or more than the prior year.

I reminded everybody in the room that marketing could not impact their spend ... they all received every catalog as part of a seed program ... they all received every email campaign as part of a seed program.

I informed the room that the only reason an employee would choose to spend less is because each employee, Executive employees mind you, found the merchandise less compelling this year vs. last year.

Well, you've never heard a room go so quiet.

Then the meeting resumed. But from that point forward, marketing was not blamed for bad performance in an Executive meeting that I attended.

Maybe you've had a bad spring, and you want to blame Trump v Clinton or you want to blame your marketing team for mucking things up. Do yourself a favor. Find out how much your salaried employees spent this year vs. last year. If spend is down 15%, then the answer to your woes resides in the building ... go ask your co-workers why they are spending less.

Run the query.

June 20, 2016

A Shared Catalog Brand Ecosystem

Once all catalogers joined all co-ops, catalogers stopped competing against each other.

Instead, catalogers became a loose federation of brands, all working together.

So when co-op performance falls off of a cliff (as we've seen in the past year), it isn't because the co-ops are performing poorly. It is because catalogers are performing poorly. Nobody wants to say this publicly, of course, but we all know this to be true. 

The good thing is that we can fix this problem!

When you analyze what I call a "catalog holding company" ... a company that owns 2+ catalog brands, you learn something fascinating.
  • When one brand experiences a merchandising breakthrough, all other brands benefit from the gains enjoyed by one brand. A 10% gain within one brand yields a 1%+ gain across other brands.
If this is the case within a catalog holding company, imagine what happens across thousands of catalog brands within the co-ops?

Why does this happen? You all know about RFM concepts from the 1980s/1990s, right? If a customer is more recent, the customer spends more. If the customer buys more often, the customer spends more. If the customer spends more in the past, the customer spends more in the future. Well, these ideas translate across the Catalog Brand Ecosystem. If a customer is recent with one brand, it helps response with your brand.

The solution to catalog struggles in Spring 2016 lies within each and every one of you.

When one of you increases merchandise productivity by 10%, then companies aligned with you have a bigger pool of recent buyers to select from, and their business grows as a result, because the names they take are of better-than-average quality.

When one of you finds a way to improve customer acquisition by 10%, then companies aligned with you have a bigger pool of recent buyers to select from, and their business grows as a result because the names they take are of better-than-average quality.

It is time to stop blaming the co-ops for weak performance. The co-ops are simply a reflection of your merchandising strength. The reason the co-ops are dying is because your merchandise is slowly dying.

This means that the solution to catalog struggles in Spring 2016 lie within each and every one of you, within the merchandise you sell.

Yes - you!! You can fix this!

You are the solution.

More on the topic tomorrow.

June 19, 2016

A Strange Year For Catalogers

Lots of information in the past few months.
  • For many, terrible business results, especially in customer acquisition.
  • For some, very good business results - so you can't blame "the election" or "economic headwinds" for any downturn in business. At all. Don't even try. Why would other companies experience so much success if external factors were to blame?
  • A significant number of leaders preparing to sell catalog brands. Got a LinkedIn request last week signaling yet another case where this is going to happen.
  • Catalog brands being shuttered.
  • Retail brands shuttering catalogs.
  • Online brands firing-up catalogs. Remember, just because Wayfair has a catalog doesn't mean catalogs are rallying ... it is far more likely that Wayfair (and other online brands) are running out of new customers or ways to monetize existing buyers. Talk to folks at online brands, they'll tell you what's up.
  • Catalog brands being reorganized (some of you have been peppering me with thoughts about Orchard Brands as an example).
  • Across-the-board downturn in co-op performance ... something that is routinely talked about privately but almost nobody will say anything about publicly.
  • Employee fear. This is pretty common, and I understand the fear.
Here's the interesting thing, folks. Catalogers don't really compete with each other anymore. That ended back in 2005ish when all catalogers participated in all co-ops, openly sharing all names with each other. You cannot compete with each other when your success depends upon the success of somebody else. Vermont Country Store needs Blair, Blair needs Oriental Trading Company, Oriental Trading Company needs In The Company of Dogs. Nobody will talk about this fact, but the fact is 100% true.

For the rest of this week, I am going to discuss a new thesis ... the shared Catalog Brand Ecosystem you all participate in. You are not competing with each other. If anything, you are a loose federation of brands that compete against the Online Brand Ecosystem and the Mobile Ecosystem. And here's the good part ... you've already won the battle. The Online Brand Ecosystem doesn't want your customer base (#tooold). The Mobile Ecosystem doesn't want your customer base (#grandparents). You own your customer base (customers > age 55). It's all yours!!! What a huge advantage you have.

So if you own your customer base, then your success / failure is fully dependent upon you ... you and the other brands in the Catalog Brand Ecosystem. As a result, co-op performance has nothing to do with co-ops anymore ... it has everything to do with you. If co-ops don't work well anymore, it's because of a core issue with the Catalog Brand Ecosystem you participate in - your business dynamics are driving down co-op performance.

The problems can be fixed. You can do this!!

We'll address this topic tomorrow.

June 17, 2016

And The Results Of The Test Are ...

Like a bald eagle, one can see the results from a mile away!

I performed an experiment on Friday ... the blog post, titled "Ralph Lauren - And Five Tips For Success" is, according to my email service provider, the most clicked-through and most "engaging" article of the month ... and it has only been active for a couple of days whereas other articles have had more than two weeks to percolate.

The plus-side of the experiment is that an audience can be motivated to act.

The minus-side of the experiment is that an audience can be easily motivated to act on the least important and unactionable content imaginable.

If this happens to you - a smart audience - imagine what happens on a daily basis ... even in your business?

In other words, when you seek to optimize / maximize, say, email productivity, are you doing what is best for your business, or are you following the lowest-common-denominator (#discounts #promotions #engagement) so that your metrics look good?


June 16, 2016

Ralph Lauren - And 5 Tips For Success

A great example of Merchandise Forensics in the real world at Ralph Lauren ... click here.

I'm doing a test today ... I never succumb to the noxious pap known as "subject lines". But I'll do this test today, because I want to see how you, the studio audience, respond ... do you increase opens and clicks? Because if you do, well, that's something to think about, don't you think?

Ok, here are the FIVE TIPS FOR SUCCESS, stuff that works across my client base.
  • Have a Marketing Point of View.
  • Proper Demographic Alignment.
  • Increase Merchandise Productivity.
  • Have a Robust and Diverse Customer Acquisition Program.
  • Thoroughly Understand Your Brand Ecosystem.

June 15, 2016

The Catalog Brand Ecosystem

When you buy from Absolute Socks, your transactions don't go into the catalog co-op database ... but when you buy from In The Company Of Dogs, your transactions likely make it into the database.

So in this way, the catalog Brand Ecosystem at a co-op scale is largely functioning properly. You don't care that Absolute Socks transactions don't appear, because the customer buying from Absolute Socks isn't the customer buying from Blair. You don't want 100,000,000 households with detergent purchases ... you want 8,000,000 households modeled properly.

So when we hear from catalogers (constantly) that co-op performance is dying, we're left with a handful of conclusions.
  1. The 8,000,000 best catalog names are constant, but are performing worse over time.
  2. The 8,000,000 best catalog names are slowing churning into 6,000,000 catalog names, and the co-ops fill the remainder with unproductive buyers from online categories or grocery stores or wherever/whatever. Best have been reduced because the catalog ecosystem is dying.
Nobody in this industry wants to admit that (2) is a possibility. Careers are on the line. I get it. It isn't fun to talk about, so instead we fantasize about how some new allegiance model will deliver breakthrough results.

One CEO told me that a large co-op told him that only 45% of the names he gets have ever purchased from his category ... and hint, everybody has to have what this person sells. This cannot happen unless the co-op is incompetent (they aren't) or the universe is dwindling rapidly.

Catalog names are like salmon to orca whales ... if there aren't enough salmon, orca whales up here in the Pacific Northwest struggle to survive.

Your co-ops have all of your data. They could describe the catalog ecosystem to you in an hour. Heck, they could all band together, host their own conference, allow you to attend for free with all the money you've paid them, and they could give you a thorough description of the overall Catalog Brand Ecosystem. They could tell you that what used to be 14,000,000 great names was 8,000,000 three years ago and is now just 6,000,000. They could fully describe what is happening, in easy-to-understand terms. They could describe what is happening to the Catalog Brand Ecosystem. Then, they could get busy helping you move into the future.

Contact your favorite co-op immediately. Ask them to perform a Catalog Brand Ecosystem analysis for you. Ask them to explain just what the heck is causing such lousy performance. These are good people, they should respond to your request, right?

June 14, 2016

Marketing Tactics Feed The Brand Ecosystem

Take a look at this little beauty from the Direct Marketing Association.

You pay the DMA $30,000 a year ... $300,000 over a ten year span. They take your money, and they create ads with potentially inappropriate word play.

Maybe you think it is funny.

Maybe you don't think it is funny.

Either way, this form of advertising feeds their ecosystem with the kind of individuals who like this form of advertising.

I have a client that is exhausted with constantly having to find new and better promotions. When I asked the client how they acquired new customers, they mentioned that %-off and free shipping promotions "work best".

Well, what kind of customer do you think this brand acquires?

What kind of customer do you think the DMA acquires, using your money?

Your marketing team makes decisions today that impact what your brand ecosystem looks like tomorrow. Make sure your marketing team is making decisions that align with an ecosystem you'd be proud of.