November 12, 2007

Interaction

If you are an E-Trade customer with more than a hundred thousand dollars in your account, how brand loyal are you these days?

If I told you on January 1 of this year that E-Trade would be fighting for its life later in the year, would you have believed me?

Our digital society operates on a complex series of "interactions". Interactions are hard to predict ahead of time, but appear easy to see after the fact.

Assume that you purchase inventory at American Eagle Outfitters. Last October, your brand posted a +12% comp. In January of this year, as you made your commitments for this October, could you have predicted the series of economic factors that would conspire to cause customers to actually decrease spend with your brand this October by 3%?

Because if you had predicted this and acted upon it, you wouldn't be sitting on a boatload of inventory that has to be marked down, putting pressure on your profit and loss statement.

The future of multichannel retail belongs to leaders who can see how five or six different factors could combine to yield superior results.

And few of us in multichannel retail have been trained to operate in a world where success is based on combinations of factors that interact favorably with each other. Instead, we want to know the next 'big idea'. And we want it to be an easy big idea ... like re-arranging words in the subject line of an e-mail campaign, or a paid search campaign that works really well and is really inexpensive.

Those who are good at forecasting the interaction of separate factors are believed to have 'gut instinct'.

In our multichannel businesses, you'll know many people have acquired this 'gut instinct' when you start reading about how combinations of factors interacted to cause sales increases.

E-Mail Marketers will start talking about how modules of merchandise interact with creative templates to yield increases in response. When do e-mail marketers ever talk about this?

Database Marketers will stop telling you what happened in the past, and will start telling you what is going to happen ... and will give you a menu of options to avoid trouble.

Catalog Circulation Marketers will clearly explain the merchandising and creative strategies that cause customers to thumb through a catalog and then buy something on the internet or in a store. When is the last time a catalog circulation expert clearly explained this interaction to you in an actionable way, actually telling you how to paginate a catalog in a way that profitably increased sales across channels?

Online Marketers and Web Analytics experts will actually tell us how to assort a website, similar to how good catalogers paginate a catalog. We'll move from landing pages to merchandise themes, themes that replicate customer interests, themes that go beyond the severe limitations imposed upon e-commerce by information technology.

Who do you think is great at seeing how five or six separate factors fit together? Who acts upon these concepts, and drives sales in a profitable way today? Who will do well in the future? Do you have the tools to manage your business differently?