February 11, 2008

For Best Customers, The Merch Curse Is "Worse"

We talked earlier about The Curse of Great Merchandise.

Frequently, the curse is even worse among the best customers you have.

In this query, I grade each customer, just like in school, based on life-to-date purchases. Look at the results:

By Customer Grade Classic Products Newer Products
Customer Grade = A 65.0% 35.0%
Customer Grade = B 48.0% 52.0%
Customer Grade = C 42.0% 58.0%
Customer Grade = D 39.0% 61.0%
Customer Grade = F 31.0% 69.0%
First Time Purchasers 37.0% 63.0%
Totals 53.5% 46.5%

The percentages skew even worse among the very best customers. The very best lifetime customers are most likely to keep purchasing the same merchandise you've always offered.

So think about this problem, multichannel CEOs. When you want to move your brand in a different direction, your very best customers are going to be the ones that are most likely to resist your direction.

What to do?

If your business is failing, and you want to try a different merchandise assortment, create two versions of a catalog. For your very best customers, send them what you've always sent them, protect your sales. For your "Bs", "Cs", "Ds" and "Fs", you test your new strategy --- these customers are the ones most likely to embrace newer merchandise. New customers might accept new product, I'd test them in either version.

For your website, if you have the ability to create two versions of landing pages or home pages, merchandise them differently based on the customer who visits.

For e-mail, you have huge testing opportunities among your "Bs", "Cs", "Ds" and "Fs". Try anything/everything here ... your risk is so minimal, given that probably 1 in 1,500 of these folks even bother to purchase from an e-mail.

Business leaders --- keep the merchandise curse top-of-mind, when thinking of taking your brand in a new direction.