March 06, 2012

Five Year Anniversary

Today marks the five year anniversary of starting my own consulting business.


(quiet applause)


Thank you!


There's a few things worth considering, as we look back over the past five years.  I recall telling my "network" of business colleagues what I was doing.  I recall the tepid response ... most often documented with the following statement ... "you'll be a Vice President at a company within a year, that's what happens to everybody who says they're going to become a consultant, they don't make it, no offense."


The original business model was simple, and has not fundamentally changed.

  1. Publish at least 4x a week on the blog (folks said this level of posting was too often).
  2. Write textbooks that outline details about each methodology (folks said these books were way too expensive).
  3. Give away nearly every idea for free, attract an audience, then have a small fraction of the audience pay for specific, customized projects.
This last point really chapped people's lips.  I recall speaking at a conference, back in the early days.  About fifteen minutes into my talk, after giving away a whole bunch of information, the consultants in the room (my competition) hijacked the presentation, loudly criticizing my business model ... "you can't just give away everything you know for free, that's plain stupid, it is bad for business, why would anybody ever hire you!" was one of the most interesting responses that drew laughter and derision from the attendees who agreed with the comment.

Since 2007, my business has grown by an annual compound rate of 19% ... in other words, it is double today what it was at the end of 2007.  Apparently you decided it was still worth it to hire me, for that, I am very grateful.

Times changed, so my approach had to change as well.  Twitter probably had fewer than 3,700 users in 2007, today, I have more than 3,700 followers on Twitter.  In 2007, I dreamed of having a book in a Barnes & Noble or Borders store.  Today, I only self-publish booklets on Amazon, 40-60 pages of content.  In 2007, Google + My Blog = 70% of my business.  In 2012, My Blog + Booklets = 70% of my business.  In 2007, I had maybe 250 blog subscribers.  In 2012, I have about 2,600 blog subscribers.

In 2007, I thought that my math "sold itself".  My math did not "sell itself".  Nobody wants to buy math, people want to buy "stories".

In 2009, I introduced "Gliebers Dresses" as a parable designed to communicate business issues that were not readily absorbed via "my math".  This turned out to be the most popular series I had written to-date, but it did not result in an increase in business ... people liked the characters more than the business concepts the characters talked about.  Engagement was high, sales were low ... the classic story of social media failure that so many have experienced.  You learn to never chase engagement if you want to pay the bills.

In 2012, I changed course.  I introduced Judy, Jennifer, and Jasmine.  Suddenly, math and fiction merged, and you "got it" ... you decided to buy Judy, Jennifer, and Jasmine.  Under the covers, the same math I've always used is fueling the description of our three ladies.  But now you are buying a story, you understand what I'm trying to accomplish, and you are more likely to purchase a "Judy, Jennifer, and Jasmine" project than a "Multichannel Forensics" project.  Strategically, you can easily infer what a business that caters to Judy will face, you understand why you must always have free shipping and discounts and promotions for Jennifer, and you are building for the future by trying to understand what Jasmine needs.

It is likely that Judy, Jennifer, and Jasmine will overtake my "Catalog PhD" projects as most requested in 2012.  Both projects yield a very similar result ... clients utilizing the Catalog PhD methodology since 2010 have increased profit by more than $24,000,000 on an annualized basis.  Clearly, the methodology works ... we identify customers who will shop regardless whether we mail catalogs or not, and we mail them fewer catalogs.  Simple!

These days, the pundits tell consultants that they have to base their practice on "so-lo-mo" ... social, mobile, and local ... pundits suggest you'll be out of business if you don't modernize what you're doing, you're sunk if you don't somehow tie Twitter engagement or Facebook likes to purchase transactions.

There might be another approach, folks.  Many CEOs, EVPs, VPs, and Directors tell me they are looking for a "bridge", one that connects the past and the future.  Judy, Jennifer, and Jasmine are a step in that direction.  When you know that 68% of your file is comprised of people like Judy, you realize that "so-lo-mo" is irrelevant to you.  When you know that 68% of your file is comprised of people like Jennifer, you realize you are going to have to find a way to fund free shipping.

When I started the thing, back in 2007, all you read about were channels ... hearing lines like "multichannel customer are the most valuable customers".  That never panned out, and in so many ways, our industry did us a disservice by forcing us to "do everything" to serve a mythical multichannel customer that didn't actually exist.  

In 2012, it's all "social / mobile / local".  Not surprisingly, a half-decade of social media immersion hasn't yielded sales increases outside of the Jasmine demographic.  Be honest, if you cater to Judy or Jennifer, what percentage of your sales today are attributed to social media or mobile (excluding the iPad, which isn't mobile but is a much better laptop)?

My approach had to change with the times.  I never guessed it would evolve in a manner congruent with "personas".  That being said, we relate to personas easier than we relate to channels.  We know why Jennifer is looking for the best deal.  We don't know how to merchandise to a customer using long-tail keywords coupled with affiliate sites that publish our promotion codes.

It is obvious to me that there are major inflection points that we will all have to deal with.
  1. Judy will retire soon, and this will disrupt the catalog industry far more than the internet disrupted it.
  2. Jennifer will never go back to paying full price, and this will continue to disrupt e-commerce by putting intense pressure on gross margins, pressure that will cause there to be fewer mid-sized companies, pressure that will result in a small number of giant online brands and a ton of very small niche players.  Mid-sized companies are being killed by discounts/promotions.
  3. Jasmine won't relate to classic cataloging or traditional e-commerce, resulting in new business models that we are not likely to invent or easily understand.
My work, therefore, has to focus on helping you deal with the reality behind Judy, Jennifer, and Jasmine.  I will continue to find ways to greatly increase profitability, doing so by explaining customer behavior in an actionable manner.  I'll be blessed if you continue to follow me on this journey.

6 comments:

  1. Kevin, Congratulations! You deserve the success you have achieved through hard work and constant experimentation. As someone who is not a paying customer, I am glad you are around because I have learned much from you over the years.

    Here is to your continued success in 2012 and beyond.

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  2. Congratulations! And best wishes for the next five years.

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  3. Congratulations Kevin (hat tip). It is always a pleasure to find your newsletter sitting unopened in my inbox...means I have an immediate IQ boost to look forward to. Here's to reading your 3/7/2017 post!

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  4. Thanks to all of you!

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  5. Congratulations Kevin! I will cross the 5-year mark myself in a couple of weeks. Your contribution has been simply astonishing! I am amazed at how much valuable information you are able to generate, consistently, often, all the time.

    You will never lack clients.

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