August 17, 2008

Only 3 Free Spots Left: Hillstrom's Zip Code Forensics Free Beta Test

As of right now, there are only three spots left in the free beta test for Hillstrom's Zip Code Forensics.

In fact, based on initial demand, there have been more than twenty brands that have expressed interest, so it appears likely that the final three slots will be gobbled up soon.

Sign up, folks!!! Contact me now, before the spots are gone.

I've been surprised by the negative feedback, the criticisms of our industry leaders ... your negativity motivates me!! Some of the questions are valid, so allow me to address those issues.

Question: How is this different than all of the zip models that have only worked "so-so" over the past few decades? There are a few subtle differences. First, we are combining sales across many different companies, not simply including company-specific data. Second, we are using census bureau data to better estimate sales per individual. Third, we are going to forecast the channels that are preferred by zip code, which will aid your catalog marketing and e-mail marketing activities, as well as aid your lifetime value calculations. Fourth, we will have a small number of segments, between four and eight, a significant change from the commercial zip code tools that are currently available, tools that have sixty or more segments.

Question: You suggest that by filtering out the poor performing zip codes, segment performance will improve by ten percent. Is that worth it? That's for you to decide. This question comes up repeatedly. An industry that is struggling might embrace something that helps improve performance.

Question: Can I see separate models that are tailored to unique merchandise divisions (i.e. Home, Kids, Apparel)? At some point in the future, yes. In the beta-testing stage, with only ten companies, probably not.

Question: If I don't participate in the beta test, what will is cost me to purchase the segmentation tool? If the beta test is successful, the product is tentatively priced at $5,000 per year.

Question: Show me how I will use the tool. Ok, let's assume that you are going to consider catalog advertising to two segments of customers (e-mail marketing works the same way). The first segment is at break-even (so you decide to mail the segment), the second segment is below break-even (so you decide to not mail the segment).

Here is the profit and loss statement before applying Hillstrom's Zip Code Forensics, and after applying Hillstrom's Zip Code Forensics. This is likely to be the level of performance you can expect --- some would scoff at it, others would apply this across dozens of segments across dozens of mailings, and enjoy the profit.


Before Applying Hillstrom's Zip Code Forensics





Segment 1 Segment 2 Totals
Households 20,000 0 20,000
Demand $40,000 $0 $40,000
Net Sales $32,000 $0 $32,000
Gross Margin $16,000 $0 $16,000
Less Marketing Cost $11,200 $0 $11,200
Less Pick/Pack/Ship $4,800 $0 $4,800
Variable Profit $0 $0 $0








After Applying Hillstrom's Zip Code Forensics





Segment 1 Segment 2 Totals
Households 10,000 10,000 20,000
Demand $22,000 $20,900 $42,900
Net Sales $17,600 $16,720 $34,320
Gross Margin $8,800 $8,360 $17,160
Less Marketing Cost $5,600 $5,600 $11,200
Less Pick/Pack/Ship $2,640 $2,508 $5,148
Variable Profit $560 $252 $812

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