January 25, 2015

SkyMall - Bankrupt

Click here, dear readers. And read this one, too, while you're at it (click here). And if you like an omnichannel way to grow the business, this author has one for you (click here) - suggesting that omnichannel would save SkyMall.

I keep hearing the "omnichannel argument", as it relates to SkyMall. Geez.

Here's the problem. SkyMall went from $80,000,000 a year in annual sales to roughly $20,000,000 this year ... that's quite a drop over five or six years. 

What changed? Infinity!

What do I mean by infinity?

There was a time when you flew, and you didn't have choices. A book. Hemispheres magazine. And SkyMall. It didn't matter that SkyMall prices were more expensive in SkyMall than the same item was priced on Amazon, you were a bored zombie on a flight from San Francisco to Newark - SkyMall greatly benefited from limited entertainment choices.

Then the FAA decided you could use your phone on the plane. Your entertainment choices went from a handful to infinity.

In one of the articles, the author suggested that you combat infinity by going "omnichannel".

Let me ask you a question.

  • "You are sitting in your living room, and a TV ad comes on the screen, imploring you to buy from SkyMall. And the ads online demand that you buy from SkyMall. And SkyMall has the best website in the world. And SkyMall has the best email marketing campaigns, personalized and relevant and sent several times a week. And let's suggest that SkyMall has the best mobile experience on the planet - and their images are pinned all over Pinterest, integrated with fantastic Facebook marketing and stunningly clever tweets timed for maximum engagement. And there's beauty in their efforts on Instagram - and then there's those Snapchat efforts that disappear. They've got it all. Do you buy from SkyMall? And if you're interested in buying from SkyMall, do you not check Amazon first? And if you check Amazon first, and the price is lower on Amazon, do you not choose Amazon, while Amazon sends SkyMall a Christmas Card thanking SkyMall for creating demand that Amazon captures?"
The number one problem that omnichannel advocates have, other than the fact that sales generally don't grow when you put all your chips in the middle of the omnichannel table, is that omnichannel amplifies infinity.

The question you have to ask yourself, for your business, is how do you expect your customer to pay attention to you when every company employs the scorched-Earth approach of omnichannel marketing? How will you break through when every company is screaming at you in an infinite number of channels? What difference does it make if you are marketing in 127 channels and 10,000 companies are also marketing in 127 channels?

Instead of focusing on channels - why not focus on what, exactly, you're going to do/say that actually causes a customer to care, to pay attention?

Use SkyMall as an example ... sales crumbled the minute airline travelers were given infinite entertainment options. What is your strategy to combat an infinite number of entertainment options?

Piperlime - Done

Click here to read the news - yet another punch in the gut in the omnichannel movement.

These days, you read about online brands opening stores ... you're told that this is the future, an exciting omnichannel future. Well, Piperlime opened a store (2012), just like the omnichannel experts demand of online companies. The brand was backed up by the fixed cost infrastructure of Gap ... plenty of resources to succeed there. They had partnerships with celebrity stylists, TV stars.

They did what the experts say you HAVE to do to be successful.

And yet - they're done.

Our obsession with channels is killing us.

January 23, 2015

eBay Eliminating 2,400 Jobs

Click here for the gloom-and-doom the media are piling upon eBay, who only grew sales by +/- 6% during the November / December timeframe, according to third parties who don't have full access to actual sales numbers.

It wasn't long ago that the pundits lauded eBay, celebrating the fact that they were shifting business to mobile - remember the gaudy platitudes about 40% of new customers coming in during Holiday 2013 via mobile (click here)

E-commerce experts are going to learn what catalog experts learned a decade ago ... channel shift does not equate to incremental sales. It just equates to different, but not better customer behavior.

This is where a comp segment analysis is so critical. Undoubtedly, the analytics folks at eBay have already done this, and either learned that new customer counts are down dramatically, existing customers are spending less, or both. When sales don't meet analyst expectations, there's almost always a comp segment issue with existing customers spending less. And that's a huge problem in e-commerce ... too few outbound marketing tactics to bring customers back (whereas catalog brands have huge advantages in these instances).

Twelve months ago, eBay was celebrated as a mobile pioneer.

Today ... layoffs and derision from outsiders.

Mobile is not the answer ... it's just a channel.

The key to business success is having something that customers want to purchase through you more than the competition. Why do so few in the marketing world focus on this?

January 22, 2015

Hippoman's Big And Tall: Price Points On New Items

Way, way back at the start of the case study, we learned that Hippoman's Big And Tall was selling much more expensive items in 2014.

I decided to analyze the average price point of new items, and of existing items, to see how Hippoman's Big And Tall got to this place.

Here is the average price point of new items, for the past four years.

  • 2011 = $21.31.
  • 2012 = $22.83.
  • 2013 = $21.93.
  • 2014 = $26.83.
Do you see a trend? What happened in 2014?

Here's the average price point for existing items, for the past four years.

  • 2011 = $22.00.
  • 2012 = $22.33.
  • 2013 = $24.83.
  • 2014 = $25.00.

Well, the trend between 2013 and 2014 is constant, isn't it? There was a modest increase from 2012 to 2013, no doubt about it. But the major increase in price points in 2014 came exclusively from new items, didn't it?

We saw what happened when prices increased. Repurchase rates slumped, comp segment productivity slumped, and items per order slumped.

Management decided to cut back on new items.

Management decided to introduce new items that were 20% more expensive than prior year introductions.

Customers, without the power of increased free shipping promotions, rebelled against Hippoman's Big And Tall.

And Hippoman's Big And Tall paid the price. A profitable business became an unprofitable business.

How would you craft your presentation for Mr. Hippoman? What would you tell him? What would be the tone of your message?

January 21, 2015

Hippoman's Big And Tall: New Item Development

Well, we identified a big problem with new items.

Now let's look at new items offered during the past four years. We'll borrow a table from my Merchandising Forensics framework.

In 2011, there were 732 new items introduced, generating $10.1 million in demand (average = $13,786 per item).

In 2012, there were 724 new items introduced, generating $10.4 million in demand (average = $14,363 per item).

In 2013, there were 622 new items introduced, generating $8.9 million in demand (average = $14,235 per item).

In 2014, there were 567 new items introduced, generating $7.0 million in demand (average = $12,323 per item).

Remember, in 2013, the increase in promotions (free shipping) masked the new item issue. New items were cut from 724 to 622 in 2013 ... and these items essentially maintained productivity per item.

In 2014, new items were cut back significantly, once again, from 724 to 622 to 567 in 2014. And without the increased glow of free shipping, productivity slumped to $12,323 per item.

In reality, without the free shipping bump in 2013, we'd observe two big trends.

  • New item offerings cratered ... 724 to 622 to 567.
  • New item productivity cratered ... $14,363 to $14,235 to $12,323 ... with the $14,235 in 2013 likely being $13,235 without the glow of free shipping increases.
Look at where demand came from (the bottom three rows of the table). Doesn't 2013 look like an outlier? It does to me. It looks like Hippoman's terminated a veritable plethora of old items, and instead featured items 1-2 years old, found that the strategy didn't work, and then held on to more of the older items in an attempt to grow productivity.

If you were me, what would you tell Mr. Hippoman?

Hippoman's Big And Tall: Why Did The Business Do "Ok" In 2013?

Within the comp segment framework, I can see evidence of why the business remained mostly flat in 2013. Here's my comp segment table for paid shipping orders.

Let's simplify the analysis. Look at paid shipping orders in 2013, and 2014, in total.

  • 2013 = -9.3%.
  • 2014 = -10.9%.
Now, let's compare the results to orders via free shipping.

Again, let's simplify by looking at the totals for 2013, and 2014.
  • 2013 = +14.8%.
  • 2014 = -6.8%.
Tell me what you observe?

The reason the business was flat in 2013 was because free shipping propped up the customer file.

In other words, from a global standpoint, free shipping performance masked the problems with new items, causing Hippoman's Big And Tall to perceive that business wasn't all that bad.

However, when free shipping was comp'd against 2013 results, the glow from free shipping disappeared, leaving the gaping void caused by new item productivity to magnify.

Does this make sense to you?

Do you think this dynamic might be happening at your business?

Do you now understand why I continually harp on new item productivity? The vast majority of my project work in 2013-2014 demonstrated a merchandising challenge, usually a new item challenge, that was masked by increased discounts/promotions.

Rarely do I find unfettered incompetence in channel management or website optimization or omnichannel strategy.

I almost always find merchandising challenges.

At Hippoman's Big And Tall, we've identified a merchandising problem ... a big merchandising problem.

January 20, 2015

Penney Is Mailing A Catalog

The old-school PR blitz by Baby Boomer media is telling:
If your customer is Judy (average age = 62), mail a catalog. Please. Mail lots of 'em. And generate a ton of profit in the process. Please - do it!

If your customer is Jennifer (average age = 46), don't mail more than 3 per year, it's not worth it. I've tested it, over and over and over again. You are not a cataloger, you mail a quarterly catalog to stimulate some demand. 

If your customer is Jasmine (average age = 30), catalogs are as relevant to her as are vinyl records.

If your customer is Jadyn (average age = 14), you should read this story about Snapchat Stories ... one billion (1,000,000,000) are viewed each and every day (click here). Let that one sink in. One. Billion. Each. Day. Or read this story about fast fashion (click here).

You are so much smarter than the content in the articles. You don't market to "the customer", as the articles say. Instead, you segment "your customers". You don't adhere to mailing catalogs to every demographic. You don't require the entire business to be omni-channel in an effort to allow others to be paid via your profit.

JCP mailing a catalog is not proof that catalogs work. If it were proof, then JCP never would have stopped mailing them in the first place. You can't have it both ways.

JCP has no choice but to try things (good for them) ... their sales have not rebounded under new/old management. They have to do something. Have to. If they are targeting their new catalog to Judy, they're being very, very smart.

Updated Slides For The February Presentation In Concord, NH

Click here, dear friends, for updated slides for the VT/NH Marketing Group presentation in Concord on February 19.

I added another 30-40 slides ... I won't get to them all, and that's ok. I changed the second half of the presentation, where we'll spend some time talking about the future as it relates to the stories we tell our customers. Based on your feedback, I'll update them if necessary.

Click here to register ... do it soon, the place is filling up. I'm told the attendees are exactly the kind of folks you want to spend time with, so don't waste any time ... join me on February 19! No selling, low cost, high quality content from the other presenters (you can judge my stuff by looking at the slides).

I'm really excited to do this, folks. No selling. Low cost. An opportunity to discuss ideas, to discuss the future. Where else are you going to get that?

If you're not interested in going, please email me (kevinh@minethatdata.com) and let me know what dissuades you from attending, or what you'd need to see to attend in the future.

January 19, 2015

Hippoman's Big And Tall: New + Reactivated Customers

Earlier in the case study, we learned that Hippoman's Big And Tall is highly, and I mean highly dependent upon new customers for sales growth.

So let's look at new + reactivated customers (all new customers plus all customers who, when they bought, were at least 13 months past their last purchase) during the past three years.

Now, please look at January - June of 2014. There's a serious problem, don't you think?

Remember our new item comp segment analysis results from January - June 2014?

And here was what existing item comp segment performance looked like:

There is a problem with new + reactivated customers in January - June.

There is a problem with new item productivity in January - June.

There is no problem with existing item productivity in January - June.

Across my client base, when there is a problem with new + reactivated customers, the marketing team gets "lit up". In fact, with the kind of problems observed here, it's likely that somebody in marketing is going to be fired.

Would you fire somebody in marketing, now that you've had a chance to review the results?

Or would you focus the company on new items?

Hippoman's Big And Tall: Tops And Bottoms Do Not Reveal Differences

Last time, we learned the real reason this business is tanking ... new item problems.

Here's the comp segment analysis for Tops:

And for Bottoms:

There are subtle differences, but let's be honest - the end result, on an annual basis, is the same. Both divisions were up 3% in 2013, the two divisions were down 9% and 8% in 2014.

The problem isn't Tops, and the problem isn't Bottoms.

The problem is new items within Tops, and new items within Bottoms.

January 18, 2015

Omnichannel Rob Lowe

For those of you who still watch television, you can't spend a half-hour without seeing a Rob Lowe DirecTV commercial. Click here if you're reading in email for an example ... or watch below if you're reading via the website / RSS.

The script is simple ... and can be applied to the omnichannel movement.

Rob Lowe: "Hi, I'm Rob Lowe, and I buy stuff."

Omnichannel Rob Lowe (Holding A Tablet, A Mobile Phone, And A Laptop): "And I'm Omnichannel Rob Lowe, and I love shopping via devices."

Rob Lowe: "I like shopping at companies that have merchandise that I want to purchase."

Omnichannel Rob Lowe (Accidentally dropping his laptop on the floor): "And I like shopping at companies that allow me to access my shopping cart anywhere, anytime."

Rob Lowe: "Fact: If a company has something I want to purchase, I just purchase the item."

Omnichannel Rob Lowe: "Fact: If an influential blogger won't pin an item on Pinterest that is shared via Twitter with a hashtag and then is available for eight seconds on Snapchat and then is given a thousand thumbs up on Facebook and is then featured in retargeting ads 1,443 times per day on every website I visit and then is available online and in stores so that I can drive to a store and try on the item and then not buy the item in-store but instead have the item shipped to my home next-day from a neighboring store, shipped for free of course, I won't purchase the item. Because this is what the customer demands, right?"

Rob Lowe (pointing at Omnichannel Rob Lowe, who is grumbling that his shopping carts are not updating in real time across his laptop, mobile phone, and tablet): "Don't be like this 'me'. Drop your omnichannel habits, and just buy the stupid item, now.

Yes, this is a light-hearted tease ... I fully understand that customers use multiple devices to shop, I get it. I think it's important to point out what we are communicating ... we are telling customers to act in a complicated manner to complete simple tasks. We can spend more time simplifying shopping ... and if we did, maybe, just maybe, customers would spend more.

January 15, 2015

New Subs and Unsubs

In case you haven't noticed, I am in the process of running a three month long test here on this blog.

In much of November / December, I shifted the focus to retail, and to omnichannel.

In January, I am working through a fictional company (Hippoman's Big And Tall), and will continue to do so for another few weeks.

Here's what happens when I conduct experiments.

  1. New subs double or triple.
  2. Unsubs double or triple.
  3. The increased buzz/velocity results in more subs.
I'd like your feedback.

What, in your opinion, is the appropriate cadence of content? Should I have themes, and if I do have themes, should I go all-in for a month, or should I intersperse the content with other content? Finally, what should the other content be?

Tell me what you think.

Hippoman's Big And Tall: Good Customers vs. New/Existing Merchandise

Last time we studied Hippoman's, we saw that productivity isn't always in decline. Summer productivity is flat, and November productivity is improving.

Let's look at productivity among 2x buyers, for new items and existing items.

Here's new items.

Ok, now we're getting somewhere, aren't we?!!

Look at January - June 2013. Productivity increased, didn't it? Customers spent more on new items.

Then we have September - December 2013. A catastrophe. New item performance cratered.

Now look at January - June 2014. Holy cow! Mr. Hippoman's team must have cut way, way, way back on new item introductions, because those kind of metrics are just catastrophic.

More on new items in a moment.

Here's the comp segment analysis for existing items.

HOLY COW! OMG! And whatever term you want to add to exclaim the reason this business is failing. We've figured out a major component of business failure, haven't we?

What do you see, when you compare this table to the comp segment analysis of new items? Study both tables closely.

In 2013, new item comps were -2%, while existing items comps were +7%.

In 2014, new item comps were -29%, while existing item comps were +4%.

Mr. Hippoman is literally starving his customer file. His merchandising team either decided to stop offering new items at historical rates, or his merchandising team decided to offer new items that customers hated. We'll have to research this trend further, no doubt about it.

This analysis - these two tables - continually reveal business challenges across my client base. New items on the merchandising side are as important as new customers are on the marketing side.

Can you see why it is so critical to run a comp segment analysis on the total business, on new items, and on existing items?

January 14, 2015

Retail Sales Decline In December

Click here for details, folks.

Ask yourself why retail sales would decline at a time when omnichannel strategies have never been stronger, gas prices are the lowest in a decade, and the weather was bearable compared to 2013?

Retail sales were down in November, too.

We are focusing on technology ... but customers don't buy technology, they buy merchandise. We need a greater focus on merchandise. It is clear, now, that customers do not want what we are selling. We cannot sell crap on a tablet or phablet - that's not the solution. We need to sell stuff our customers want to buy. 

Back to the basics.

We will fix this problem.

We will fix this problem.

Hippoman's Big And Tall: How Are Good Customers Performing?

Let's look at a comp segment analysis of 2x buyers.

Ok, this isn't all bad news, is it? Yes, there have been some bad months, horrible months really (January - June 2014, September - October 2014). But business flattened out or improved moderately in November and December. That's not so bad. We'll have to check in with Mr. Hippoman to see what happened during the Christmas season.

Notice that existing customer performance generally improved in 2013. This is very, very interesting. The total business was down by about 1% in 2013, but comp segment performance was up 3.3% in 2013. This means that there were customer acquisition and/or customer reactivation problems.

When compared to 2012, we see the following.

  • Productivity declines in January, February, April, September, October, December.
  • Flat performance in May, June, July, August.
  • Productivity gains in November.
We'll need to check in with Mr. Hippoman, to see what is happening in late Winter and early Fall. It appears that summer is flat, and November is actually experiencing productivity increases.

January 13, 2015

Hippoman's Big And Tall: Merchandise Divisions

The news has been continually bad, and will get worse.

Mr. Hippoman analyzes his business across two merchandise divisions ... Tops ... and Bottoms.

Here's the four year trend for Tops:

That's a non-stop train wreck, don't you think?

Here's the four year trend for Bottoms:

The past eighteen months haven't been pretty - but the eighteen months prior to that maintained total demand. So something was done with Bottoms during that timeframe, something that at least held things constant.

When analyzing a failing business, it is common to see different trends across merchandise divisions. Often, one merchant is experiencing more success than other merchants. This can cause bad feelings. When analyzing the business, I try to find a couple of successes, and then amplify the things that were done well.