November 25, 2013

Metrics That Matter Most

I ran a veritable plethora of trial "Hillstrom's Heath Index" projects in October - and it became very, very obvious what matters most (click here for file layouts - cost = $4,950).

In order of importance:
  • Number 5 = Increased Spend per Customer.
  • Number 4 = Increased Customer Loyalty via Increased Repurchase Rates.
  • Number 3 = Increase in Number of New, Winning Items Each Year.
  • Number 2 = Positive Balance in New/Reactivated Customers vs. Lost 12 Month Buyers.
  • Number 1 = Overall Increase in Merchandise Productivity.
What trade journalists, bloggers, and vendors ask you to focus on.
  • Number 3 = Omnichannel - Aligning All Channels Around Digital Initiatives.
  • Number 2 = Increased Spend per Customer.
  • Number 1 = Increased Loyalty via Channels, Discounts, Promotions, Loyalty Programs.
Do you see the significant difference between the two lists?

You'll have to look far and wide to find somebody talk about the importance of merchandise. I had a person tell me on Twitter that it is critical to find the right promotion for the right customer at the right time. Well, that may be true - but what exactly is the customer going to purchase with the right promotion at the right time?


I was in a meeting recently, and I told the CEO that "the data suggests that customers don't like your merchandise anymore." Well, you would have thought a bomb went off in the room! Mind you, I had data that showed a significant and prolonged drop in merchandise productivity, but the room hated the message. Hated it! They thought that they might not be applying the right promotional mix to the business.

I was in another meeting recently, and the topic was channel alignment. The thesis was that if channels (mobile, retail, e-commerce, print) were better aligned, customers would spend more.


Look at what Microsoft does with channels. They have a tablet that is every bit as functional as an iPad. It integrates with killer apps like Outlook, Word, Excel. It's cheaper than an iPad. The desktop channel and the tablet channel and the mobile channel (Nokia 41 megapixel camera, wow) are all aligned and integrated.

It's an omnichannel wonderland!

And it doesn't work.

It doesn't work because of merchandise. Merchandise is what matters. Your iPad needs apps to work properly. The combination of tablet and apps represents merchandise.

So the metrics that matter most are merchandise related. You keep hearing stuff like "the customer is in charge". That's garbage. The customer is in charge of deciding what to do based on the information you provide the customer. If the merchandise isn't desirable, then what the heck difference does everything else make?

Merchandise productivity. 

Measure the metrics that matter most.