May 28, 2009

Case Study: The Chief Marketing Officer

Sarah Wheldon turned from her keyboard, and offered me a very warm greeting.

"I'm just finishing up a few tweets, I thought I would be done by now. Give me a minute please, thanks!".

Ms. Wheldon's office was a veritable marketing library, with books scattered everywhere. The entire Seth Godin collection was pinned against an old CRT monitor. Social media books, search marketing books, e-mail marketing books, even books from Jim Novo, Akin Arikan, Simms Jenkins, and Avinash Kaushik's web analytics book had a place on her crowded desktop.

I asked Ms. Wheldon how the Gliebers Dresses Twitter presence was performing?

"Here's the odd thing. My personal Twitter page has 507 followers. The Gliebers Dresses Twitter page has 129 followers. I work so hard to get customers to follow us on Twitter. We offer special incentives and discounts and promotions, and I end up with four times more personal followers than corporate followers. I subscribe to the daily social media newsletters, and I follow all the rules. What a shame."

Ms. Wheldon started her career at Gliebers Dresses in 1987 as a customer acquisition manager, renting and exchanging lists with key competitors like Anna Carter.

"Do you remember those wild parties that Direct Tech used to host, Kevin? Oh, those were good times, back in the early 1990s! It was a different world. We really had no information at all, but we were perceived as being smart marketers. Today, we have all the data in the world, and we're perceived as being lousy marketers."

Her career ascended in the typical manner, promotions to Circulation Manager, Circulation Director, followed by a brief detour as the E-Mail Marketing Manager back in 2000. She became the Chief Marketing Officer in 2003 when Glenn Glieber felt it was critical to become a fully integrated multichannel brand.

"Multichannel was the buzzword of 2003, wasn't it? Send that catalog, and watch the customer shop on the website. That almost seems like an ancient concept now that you can use your iPhone to photograph a sold-out item and then ask Amazon to share with you the merchants who have that item in-stock. We went from a quaint form of marketing to living in a world not unlike 'The Jetsons' in just five or six years. Nobody trained us to deal with that kind of transformation."

I wondered who is responsible for training us?

"My older staff think it is my responsibility. My younger staff just do it themselves, and it takes every ounce of energy I have to keep up. You should hear the discussions we have. They openly mock me when I ask them to come up with sales scenarios for a 116 page catalog vs. a 124 page catalog. They tell me it is futile, that page counts don't make any difference in modern marketing."

"They don't understand why we don't have a company blog, they say our Twitter presence is calcified, they demand to know why we don't have instant messaging campaigns. And yet, Glenn requires us to have a sales scenario crafted for a 116 page catalog vs. a 124 page catalog. I don't get to keep my job without crafting the sales scenarios. So yes, I guess it is my job to train everybody ... I need to teach my younger staff why we need to craft sales scenarios, I need to teach our Executive team why an instant messaging campaign matters to our future. I need to do all of this while learning it myself, on the fly. That's why I read a lot of marketing stuff, much of it really awful. I mean, how many times will I have to read about three easy steps to dig out of a recession, or five easy steps to social media sales success, or free shipping, the key to customer loyalty? We've been burned so many times by such bad advice."

I asked Ms. Wheldon to share information about Gliebers Dresses customers.

We know that our catalog customer is a lot older than our online customer, and that makes multichannel integration almost impossible. The more we integrate, the worse the catalog and website perform as independent entities. The less we integrate, the farther away our channels drift from each other --- prom is optimized online, extended sizes are optimized in catalogs. Not a lot of people talk about solving problems like the ones I just mentioned. It isn't a cut-and-dried, black-and-white strategy. It is an art, not a science."

"We also know that our recent customers with multiple lifetime orders generate most of our sales and profit."

I asked Ms. Wheldon to discuss customer acquisition activities, given the discussion I had with the CFO earlier in the day.

"We're failing on all fronts. We dramatically cut back on customer acquisition in 2007, following the brutal postage increase. I think that decision is hurting us today. We do all of our customer acquisition through RelationshipShop (one of the big co-op databases in the industry), with the exception of our list exchange relationship with Anna Carter. Co-op response was a lot better than response through our list vendor, so we just switched everything over to RelationshipShop. That being said, customer acquisition performance is falling faster than housefile performance, dropping by about 30% in the past three years. I honestly don't know how we'll acquire new customers in three years."

Ms. Wheldon is using industry-speak to say that when she markets to customers who have already purchased from Gliebers Dresses, she hasn't seen a big decrease in productivity over the past few years. When she rents names from other companies through her co-op database, she notices that customers are spending less, every single year, than the year before.

I asked Ms. Wheldon what trends she followed in online marketing and online customer acquisition?

"Search was really big for a few years. We spend the vast majority of our online marketing budget in search. Mr. Glieber is big on 'doing things for free', so we've tried just about everything imaginable with social media --- all of it has been a big flop. I don't think a 55 year old catalog customer in Vermont cares that a blogger is in love with our brand. I don't think a 55 year old catalog customer in Wyoming is seeking a free shipping key-code on Twitter. And I really don't think a 55 year old woman wants to be 'friended' by Glenn Glieber on Facebook."

"We have had some success using social media to promote our prom assortment. My Twitter presence kind of validates a hypothesis I've had for awhile --- social media helps promote individuals, not brands."

I asked Ms. Wheldon if she though she could grow her business by doing far more of her customer acquisition activities online?

"I don't think so. We do all of the tactics that we're supposed to be doing, search, affiliates, display, shopping comparison, e-mail, you name it. If the metrics supported us spending more, we'd already be spending more. It comes back to a 55 year old customer in New Mexico, we have to use the tools that she is most comfortable using. I have to put myself in the mind of the 55 year old woman every day. Not many marketers try to do that."

I kept taking notes.

"At some point, we have to acknowledge the reality of our target customer. We're a New England based business that caters to an older woman. We basically followed the baby boomer audience from early adulthood to age 55-60, occasionally selling merchandise to Gen-X and Gen-Y in the process. I've been advocating a strategic offsite session for years, one where we talk about the customer we want to serve in 2019. Mr. Glieber keeps telling me that if we don't fix this thing, none of us will be here in 2019. So we have to balance the needs of staying in business today with the equally important issues surrounding who our target customer will be in 2019."

"I don't think it will be in our best interest to market to a 70 year old woman in 2019."

I asked Ms. Wheldon what would happen if she stopped mailing catalogs altogether?

"Did Lois Gladstone (the CFO) get to you? She's been floating that balloon for the past month, telling everybody we could save the planet and eliminate expense at the same time. It simply doesn't work that way. We do a matchback analysis, where we take all online transactions and see if a customer was mailed in the 90 days prior to the catalog mailing. About half or more of our online transactions match back to a catalog. Our website conversion rate is 10% during the week of a catalog in-home, it is 6% during non in-home weeks. Shopping carts are abandoned less when catalogs are in-home. E-mail campaigns have a 20% better open-rate when catalogs are mailed. Our ecosystem depends upon the catalog, and the catalog depends upon the target customer, and the target customer is aging, and our business is failing. Sheesh!"

And yet, Gliebers Dresses has a thriving prom business that is largely independent of the catalog.

"I don't get that one. It seems like it is all word-of-mouth, like the customer somehow magically finds that stuff. I doubt we have an 18 year old customer. I think we have a 50 year old mother who receives the catalog, then shops online for prom dresses for her beautiful daughter. My bias is toward the catalog, because that is what I know. I almost have to believe that the catalog is responsible for causing everything."

This kind of feedback is essential when crafting a Multichannel Forensics project. We want to get as many hypotheses on the table as possible, so that the analysis can address various assumptions.

Next week, we begin our analysis!

8 comments:

  1. Really enjoying reading your case study. Keep going. :-)

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  2. Good! Thank you for commenting, that helps.

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  3. Great stuff. In your next life, be a novelist! I feel like I work with these people every day...heck, I am these people.

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  4. All of us are these people.

    Thank you for the nice comment. Who knows, this case study could turn into a book, right?

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  5. This line:
    I almost have to believe that the catalog is responsible for causing everything.Gives me heartburn. But it is so, so true too much of the time.

    Again, really enjoying this.

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  6. I ran into it again today, metrics are created around a process (matchback) that gives the perception that catalogs drive most of the volume.

    And for some, catalogs do drive the volume.

    For others, neat things happen when you take the catalog away.

    It is hard to think about not having a catalog when you've built your entire career on having a catalog.

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  7. Agreed....skip the multi-channel forensic crap + move right on to the book production.

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  8. You never know, David. This series of studies may open doors!

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