July 18, 2011

The Arguments Against MineThatData

Many of you tell me about the arguments folks use to encourage you to not hire me.  Let's address a few of these issues.

Issue:  His experience came from Nordstrom, Eddie Bauer, and Lands' End.  They are retailers.  He doesn't know anything about a pure catalog business, and furthermore, anything he learned about killing a catalog division at Nordstrom isn't relevant because they're a retailer with a proud brand heritage, what he learned there won't work for you.  Simply put, his experiences don't translate to your business.
  • The most common argument used against me!
  • Always remember that Lands' End was a pure cataloger during my tenure there.
  • I've never said that the Nordstrom experience was relevant.  I've always said that we measured what would happen with mail/holdout tests, and those tests told us what was possible.  I'm asking you to think, to execute mail/holdout tests.  
  • Since 80% of you don't execute mail/holdout tests, I've developed a routine to estimate what would happen if you did execute mail/holdout tests ... a routine that helps you increase profit, on average, by $1,000,000 per year for a $100,000,000 business.
  • Ask a classic direct marketer if they have a methodology for understanding what happens if you stop marketing within a channel?
Issue:  He's going to tell you that your annual retention rate is 38% and therefore, you need to acquire new customers.  Everybody knows that it is seven times more expensive to acquire a customer than to retain a customer.  Work with us, we know of breakthrough multichannel campaigns that jump-start businesses so that you don't have to acquire new customers.  Have you heard about QR codes, for instance?  There's a fascinating link between print, mobile, and e-commerce!
  • Yes, I'm going to tell you that your annual retention rate is 38%.  I'm going to tell you that because, in all likelihood, your annual retention rate dictates your growth strategy.  I'm just being honest with you.  The most successful clients I work with accomplish 50% of their success by having low-cost customer acquisition programs.  I'm going to be able to tell you what you need to do, in order to grow, and nine times out of ten, it's going to require you to revamp your customer acquisition marketing strategy.
  • Ask yourself an important question.  If all of the multichannel campaigns that you've been working on for more than a decade were so important, then wouldn't your annual customer retention rate have grown from 38% in 2000 to 48% in 2011?
Issue:  Kevin gives content on his blog away, for free.  First of all that's anti-competitive, intellectual property is worth something.  Second of all, if he's giving all of this stuff away for free, how valuable can it really be?  Work with us, we have distinct intellectual property that is valuable and needs to be protected.
  • Yes, I'm going to give away a lot of freebies on this blog, in fact, I have always given away all of the frameworks I use for methodologies, for free.  
  • That's not anti-competitive, that's being nice, it's what we should all be doing, we should all be helping each other.
  • If a vendor tells you that what I'm doing is wrong, then ask your co-op why they so willingly help you give away your customers to your competitors for free?
  • An average client generating $100,000,000 in annual sales yields a $1,000,000 annual profit on one of my projects.  So what I'm sharing with you must have some value, right?
Issue:  Don't work with Kevin, he steals business from us.  We treat him nice, then he undercuts our project costs.  Simply don't work with him.
  • This one is a 100% fabrication.
  • I have no idea what it costs for a competitor to execute a project.  When a potential client asks me to bid on a project, I do so in a vacuum, without knowledge of who I am competing against, without knowledge of what competing vendors charge for comparable projects.
  • Based on feedback I get, I suspect my costs are cheaper than what competing vendors charge, or I wouldn't hear complaints.
  • I have never, ever, attempted to steal a client from a vendor.  Never.  
  • This is a fabrication, one coming from industry veterans that you know and respect.
Issue:  Kevin has no idea what will truly happen if you reduce catalog mailings.  Don't fall for his charming mathematical voodoo.  We have housefile optimization models that find the very best customers for your mailings, allowing your business to grow, not shrink.
  • I have a pretty good idea what happens if you reduce catalog mailings.  I've analyzed somewhere between 500 and 1,000 catalog and e-mail mail/holdout tests in my career.  I know a little something about what happens when you don't mail catalogs to a customer.  
  • Hint --- what happens is very different than what the vendor community tells you will happen.
Issue:  Kevin doesn't care about market share, so don't work with him.  You want to grow, and we'll help you grow.
  • If you define market share as total net sales, then yes, I don't care about market share.
  • If you define market share as profit dollars generated, on an annual basis, then I care deeply about market share.
  • I'd rather your business be $30,000,000 in annual sales with $3,000,000 profit than to see you be at $50,000,000 in annual sales with $2,000,000 in annual profit. 
Issue:  Kevin isn't accurate enough. If he tells you that the organic percentage is 52%, and it really is 47%, then you've made catastrophic mailing mistakes that will cost you a fortune.
  • This one comes up a lot from analytical folks and consultants who compete with me.
  • It is an argument that comes from a lack of understanding of the dynamics of actual customer behavior, it comes from having expertise at analyzing campaigns and/or analyzing customers without regard to advertising channels.
  • I can be off by 10 points (i.e. 42% instead of 52% organic percentage), and it does not fundamentally change the accuracy of the ranking model, or the amount of profit.  Remember, matchbacks are so grossly overstating demand (i.e. are so terribly wrong) that my percentages do a great job of optimizing profitability.
  • I'm seldom off by 10 points, FYI.  And when I am off, the organic percentage is usually greater than what I estimate ... I purposely estimate the organic percentage a bit low, to minimize any problems.
Issue:  Kevin knows nothing about modern digital marketing, he's old-school.  Modern digital marketing experts have advanced KPIs that help you understand how to manage your business.
  • I care about customers, customer profitability, and the profitability of your business.
  • Can your digital marketing expert calculate profit?
  • Can your digital marketing expert tell you your annual retention rate?
  • Can your digital marketing expert link data across channels?
  • Can your digital marketing expert analyze mail/holdout tests across channels in e-mail marketing?
  • Can your digital marketing expert predict the size of your customer file, in any channel, five years from now?
  • Can your digital marketing expert predict the size of your customer file five years from now if you decide to double your e-mail marketing frequency today?
  • Can your digital marketing expert predict what happens if your catalog is increased from 96 to 124 pages?
  • Can your digital marketing expert predict what happens to customer value if a customer adds/eliminates channels?
    Issue:  Kevin is completely wrong about the organic percentage.  Listen to him, and you'll be out of business in six months.  You have to advertise to customers, or they won't buy from you.  Period.
    • This is one that can easily be answered by a mail/holdout test.  Simply execute the test.  If 98% of customer demand is generated by catalog mailings, then your organic percentage is 2%, and the critics are right.  If your organic percentage is between 35% and 65%, like it is for most of the people I work with, well, then there's something to what I'm preaching/teaching.
    • Is it possible that there are other ways to advertise to customers?
    • Have you heard of this thing called "the internet", where you can make your products and services available to customers?
    • Is it possible that customers love your brand so much that they buy from you, even when you don't advertise?
    Ok, your turn.  What are the arguments the vendor community uses to suggest that you work with different solutions providers, arguments you'd like for me to refute?

    3 comments:

    1. Here are some of the others I've recently heard about you. For the record, I endorse/recommend you often and get MAJOR flak about it. I've seen A LOT of your work and can vouch that it's rock-solid and priced way-too-low.

      "Kevin doesn't favor a channel." I think your channel agnostic approach is, by far, one of your biggest benefits. With that said, it appears to be quite the scare tactic used by some of the vendors especially to catalogers. I heard it at Merit again last week by one of your competitors.

      "Kevin doesn't like discounts. He doesn't understand discounts or companies who discount" or "he's bipolar on discounting. Do you know how much Nordstrom discounts at their Anniversary Sale or Land's End in their clearance sections? Yet he pretends that you can sell anything without a discount."

      "Kevin doesn't appreciate the intricacies of B2B which is 180 degrees from B2C in data/analytics/measurement." When I respond that you've done fantastic stuff for some of our B2B clients, it's met with a deathly silence.

      "Kevin is all about merchandise. Your client sells the same garbage as everyone else. They don't have good merchandise. Kevin's ideas only work with people who have unique product and can add 30% new product every year." (I've heard this a lot and I hear the 30% number a lot too -- I have no idea where it came from.)

      "Kevin hates email and PPC and he always makes them look worse than they really are. I don't even want to think what he'd do with mobile."

      "How much work can Kevin possibly have? He's always on Twitter and/or blogging. You need someone who is too busy to write books."

      When all else fails, the rhetoric is always "Kevin Hillstrom hates you. He called you a bully and that was the nicest thing he's ever said about you. Whenever you tweet something, he tweets 2.2 seconds later about pundits. Everyone knows you're the pundit."

      I've learned to say nothing. If I did say something, it'd be #ohboy.

      If only I was a pundit.



      P.S. For the record, I am not adding these items to create drama -- I'm hoping that you will respond to some of them so I can just send a link of this post when the need arises. You are a HUGE bang for the buck. As an aside, lately I've become disenchanted with a couple of the big #measure agencies/firms -- mostly because they are putting fresh-out-of-college kids with NO experience on $250,000+ projects and then acting shocked when their cookie cutter reports don't make sense. When people hire you, I know they get you and that makes a big difference to me.

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    2. I'll post a response, that's good stuff!!!

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    3. Great post (retweeted it).

      For me, the fun part of your post is perhaps intentional, perhaps not. You've shown a critical understanding of the habits of your competitors, and we can assume you can do the same for any client that brings you on board.

      Well done!

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