June 16, 2009

Gliebers Dresses: Strategy Presentation

It's time to share my recommendations with the team at Gliebers Dresses.

Glenn Glieber (Owner):
"... and so we have arrived at consensus. All employees who use the supply requisition form (SRF) for a new computer monitor and obtain a signature from a member of the Executive team will be eligible for a flat-screen LCD monitor."

Meredith Thompson (Merchandise
): "Kevin, is that you?"

Kevin: "Yup, it's me."

Glenn Glieber: "Kevin, your work has been indispensable during the past thirty days. You've given us plenty to think about. We don't always agree with your opinions, but we do appreciate your feedback."

Kevin: "Well thank you!".


Glenn Glieber: "Given your feedback, we'd like to bring you back on a frequent basis to help us work through our day-to-day challenges. Are you up for that?"

Kevin: "Certainly!"

Glenn Glieber: "Good! Now let's start going through your recommendations."

Kevin: "Please take a look at the following slide."



Kevin: "I listened to all of your feedback. I interviewed each and every one of you. I combined your ideas with my geeky math. My recommendation is to stop over-mailing catalogs to customers who participate in your e-mail marketing program. I recommend walking these customers down from twenty-four catalogs a year to twelve catalogs a year, even though the data suggests we can mail zero catalogs a year. This allows us to not take too dramatic an action, one that could hurt the business if the analysis and test results are wrong. I created a series of equations that will tell you which e-mail subscribers can support fewer catalogs. I will work with Boris Feldman to help implement those equations. We should be able to act upon this within fifteen days."

"This strategy allows you to save $800,000 a year in marketing expense."

"Next, I am asking you to spend an additional $1,300,000 a year on customer acquisition, and I strongly recommend that you spend that money equally, between catalog marketing and online marketing, if not skewed more to online marketing. This means you are going to spend an additional $500,000 a year in marketing. This is money you can find, find $650,000 for the rest of this year and test different strategies, spend $1,300,000 more next year."

"Using this strategy, profit will increase by about $500,000 per year, and sales begin to grow. As profit grows and you get the courage to expand the strategy, I strongly recommend that you re-invest the profit in customer acquisition. Over five years, this strategy generates an additional $2,500,000 in profit, that's nothing to sneeze at."

"I advise against implementing a loyalty program at this time, simply because the numbers do not support long-term profitable growth based on an assumption of a 10% lift in customer performance due to the loyalty program. It would require more money to fund the discounts and promotions associated with a loyalty program, money that Mr. Glieber communicated is not available. I do acknowledge that there would likely be a short-term profit bump, maybe several million dollars of profit during the first year, if the program truly generated a 10% increase in sales per customer We cannot make an accurate guess as to the sales increase in year one."

"I would advise you to strongly consider testing smaller catalogs, 48-64 page catalogs that replace 124-148 page catalogs. Many companies find that it is most profitable to send three 64 page catalogs than it is to send three 148 page catalogs, or just one 148 page catalog. Times are changing, and a small contact can be more profitable than a large contact. Small contacts can also be more productive than remail catalogs (catalogs where the guts of the catalog are the same, but the covers are changed to make the catalog look different). Small contacts could have a targeted merchandise assortment, mailed only to the customers who like the merchandise in the targeted catalog. I can work through these scenarios if you would like for me to."

"I advise leadership to seriously consider who on the Executive team owns online marketing decisions. It is obvious to me that Ms. Thompson (merchandising) owns the catalog, and that all decisions stem from her leadership. Decades of meetings caused your organization to know exactly what role each leader is supposed to play. In the online channel, however, I sense that roles and responsibilities have not been clearly defined. Marketing owns promotions, online marketing strategy, e-mail marketing, blogging, and Twitter. Operations owns the how the website is coded, they own maintenance of the website. Creative seems to own things like video marketing. All areas of responsibility are dependent upon each other. It seems that any individual can recommend making website improvements or changes, and those changes are implemented or not implemented based on a collaborative arrangement between operations and other departments. Your business appears to be multichannel, in that your merchandise and marketing strategies are aligned between channels. You do a nice job of making things look multichannel to the customer. That being said, I believe that your online channel would benefit from having an "owner", one person who is ultimately accountable for all online initiatives."

"I bring this up, because I do not perceive there to be a vision for the online channel. Given that the future growth of this business happens online, regardless of the advertising channel that drives customers to the website, it seems really important that the website have a leader who drives website best practices, future social media and video opportunities, and current catalog and online marketing conversion performance. I believe that having a leader who drives online performance will result in a better conversion rate, which reduces the need for spending money on new customer acquisition. Honestly, this isn't my idea. This is your idea, many of you voiced this issue to me in one way or another. I'm simply in a position to be able to say it back to you."

"There is one other recommendation I'd like to offer to you. I'd like for you to consider launching a micro-site, one that focuses on customers age 15-39. You can call it whatever you like, but market it to customers age 15-39, not to customers age 55-60. To me, this is the place where you get to experiment. Try marketing without a catalog. Try your social media experiments, try your video marketing experiments. Try optimizing the website with established website best practices. Use this as a place to test the ideas and concepts you've always wanted to test. And given that your audience is 15-39, you'll have a better chance of having new marketing ideas work, because you'll be speaking to an audience that is receptive to new marketing ideas. Roll out your Quiceanera strategy and Sweet 16 strategy and mobile marketing strategy and any of these new strategies within this audience, and see if you can grow this business. If you want to promote these businesses in your catalog, go ahead and do so, but focus on the micro-site as a unique entity that you are trying to grow using new marketing strategies. Any strategies that work can be considered for the primary Gliebers Dresses website. Should the primary business continue to struggle, you may find that this effort gives you a viable business that can be grown in the future."

At this point, the room sounded very quiet. A thousand thoughts run rampant through my mind, positive and negative. "They hated this" ... "Maybe the video connection wasn't working properly" ... "Maybe I've just been fired" ... "Maybe this is the most brilliant strategy they've ever heard."

Glenn Glieber: "Kevin, there's a lot of information you shared here. Would it be ok if we bring you back in to our meeting tomorrow? We'd like the opportunity to noodle over your thoughts for the rest of the day, and then speak with you tomorrow. Is that acceptable to you?"

Kevin: "Absolutely."

Glenn Glieber: "Thanks, Kevin. Our next topic is our leadership luncheon next week, where we reward our best employees for great performance. I'd like to recommend we order box lunch sandwiches from Rhondas. Our choices are Roast Beef, Ham, Chicken Salad, Tuna, and Vegan. What would all of you like to have?"

Roger Morgan: "Can I have a BLT sandwich?"

4 comments:

  1. derek.newman5:33 PM

    Thanks Kevin,

    the last couple of posts in this series have been outstanding. You've really shone a light on how your forensic approach works.

    Cheers

    ReplyDelete
  2. Sometimes it is better to write this way than to talk about the cold mathematical topics that do everything behind the scenes ... thanks for the feedback!

    ReplyDelete