Dear Catalog CEOs:
We don't often think about the profit models surrounding Judy, Jennifer, and Jasmine, do we?
We monetize Judy by "front-loading" her experience. We spend money, up-front, with the hope that Judy will pay us back. We rent Judy from the co-ops. We advertise to Judy on television. We spend money, under the assumption that Judy will pay us. We spend $10,000,000 up-front, hoping to get $50,000,000 in sales and $5,000,000 in Earnings Before Taxes.
We monetize Jennifer by "intercepting" her while she hunts. We do this in many ways ... by sending her three email campaigns per week (low cost) ... by intercepting her while she comparison shops on Google (only paying for clicks) ... then by teasing her (free shipping + 20% off) to close the deal. We spend money at the time of the transaction. Between Google, Email marketing, and discounts/promotions, we spend $10,000,000 to generate $50,000,000 in sales and $5,000,000 in Earnings Before Taxes.
We monetize Jasmine via a hybrid of "gamification and freemium" strategies. We use Facebook and Twitter to "engage" Jasmine, we use Email marketing to build a prospect list of a half-million folks who behave like Jasmine. Then, we offer Jasmine low prices with free shipping, the offer/merchandise is so compelling that Jasmine does the marketing for the business, earning recognition-based rewards in the process. A Jasmine-based business gives up $10,000,000 of gross margin / shipping income to generate $50,000,000 in sales and $5,000,000 in Earnings Before Taxes.
We get in trouble when we attempt to fuse all three strategies upon a customer, without knowing who the customer is.
Sit down with your Executive Team this morning, and discuss each strategy for growing a business. Then discuss the mix of Judy, Jennifer, and Jasmine in your business. Are your strategies aligned with your customer base?