September 22, 2015

Communication Matters

By the way, I'm not the only person talking about having a system - this is from newly hired Milwaukee Brewers General Manager David Stearns (click here).

  • The GM-to-be said in his introduction that every team has the same basic “need to acquire, develop and keep controllable young talent — quality Major League talent.” Doing that, he said, involves “develop[ing] a process and a system that allows you to consistently generate that pipeline, even as you are competitive at the Major League level. There are a couple of teams that appear to be able to do that, and that’s certainly our goal here in Milwaukee.”

You can already see that he's talking about new merchandise ... a system to constantly generate new merchandise. See - I'm not the only one who thinks this stuff is important.

Back to the six established components of my system - one more to follow:
  1. Annual Repurchase Rates dictate the strategy a marketer needs to employ - and in most cases, that strategy is to find a ton of new customers.
  2. If we have to find a ton of new customers, and most of us have to find a ton of new customers, we need healthy levels of merchandise productivity to get the job done.
  3. If we have poor merchandise productivity, we optimize via profit to get the most out of a bad situation. If we have good merchandise productivity, we optimize via profit to obtain healthy sales and profit growth.
  4. It is very difficult to sustain long-term annual repurchase rate increases, new customer increases, or profit optimization without healthy new item development. Therefore, new item development is a critical component of business health.
  5. Channels seldom offer multiplicative gains. Channels interact with each other, causing customers to make tradeoffs instead of spending more money.
  6. It is hard to learn how valuable a tactic is until you stop (or start) performing the tactic.
None of the six components matter if you cannot clearly communicate the impact of the six components.

Back in 1994, our CEO, Bill End, strongly recommended to the leadership team in my department that I needed to learn how to sell my ideas. I was sent to Dale Carnegie training.

Life changing.

The training proved critical when, back in 2001, I was struggling with how to communicate the fact that customer behavior was changing. Back then, at Nordstrom, our catalogs were running -30%, +/-, while the online channel was doubling or tripling in size.

Well, you try to communicate what is going on, via data, and you open yourself up to a lot of criticism. "You analyzed everything wrong." "You didn't factor in the fact that catalog customers became online customers, and therefore, catalogs cause online orders to happen, and therefore, catalogers deserve a raise." "Please stop stuffing catalogs into the packages of my online buyers, you moron". "No ideas are bad ideas, we're only brainstorming here, but for heavens sake, stop suggesting that the catalog has any meaning in a modern world." "Without the catalog funding all of the online marketing efforts, the online marketing staff wouldn't even have a job.

Circular arguments, nonstop in-fighting, you get the picture.

I had to figure out how to communicate findings and truth ... quickly.

I created a daily quiz.

Yup ... a question ... three choices ... one answer. Everybody guessed (hopefully). 

The secret, of course, is that by doing this 250 times over the course of a year, the truth about customer behavior became self-evident. And because it was a quiz, it became very hard to argue against the "right" answer. The "right" answer was "C". So why are you arguing?

Now, that's the kind of communication strategy that can get you fired. Conversely, it's the kind of communication strategy that can align a group of people around a common goal.

You can share all the facts you want ... but in many cases, a third of your audience will side with you, a third could care less, and a third will be against you. You have to find a communication style that gets the third who could care less to pay attention. If you can get that audience to understand your message, if you can get them to pay attention to the six components of the system above, well, then you're on your way to making a difference.

My system has seven components.
  1. Annual Repurchase Rates dictate the strategy a marketer needs to employ - and in most cases, that strategy is to find a ton of new customers.
  2. If we have to find a ton of new customers, and most of us have to find a ton of new customers, we need healthy levels of merchandise productivity to get the job done.
  3. If we have poor merchandise productivity, we optimize via profit to get the most out of a bad situation. If we have good merchandise productivity, we optimize via profit to obtain healthy sales and profit growth.
  4. It is very difficult to sustain long-term annual repurchase rate increases, new customer increases, or profit optimization without healthy new item development. Therefore, new item development is a critical component of business health.
  5. Channels seldom offer multiplicative gains. Channels interact with each other, causing customers to make tradeoffs instead of spending more money.
  6. It is hard to learn how valuable a tactic is until you stop (or start) performing the tactic.
  7. Communication matters.