November 30, 2015

What Does A Customer Acquisition Problem Look Like?

There is a big difference between a Merchandise Productivity problem and a Customer Acquisition problem.

When you have a Merchandise Productivity problem, you run your comp segment and new+reactivated comp customer count tables, and you learn the following:
  • November Comp Segment = -5%.
  • November New+Reactivated Comp Customer = -5%.
When there is a Merchandise Productivity problem, both numbers are down, equally.

When you have a Customer Acquisition problem, you run your comp segment and new+reactivated comp customer count tables, and you learn the following:
  • November Comp Segment = +2%.
  • November New+Reactivated Comp Customer = -8%.
You see the latter happen in retail. That's how you know that your merchandise resonates with your core customer. That's how you know that you are not appealing to non-customers. That's how you know that you are doomed, long-term.

The Merchandise Productivity problem dooms you in the short-term. But that problem is easier to fix ... you just fix your new merchandise issue, and the business moves along (yes, I get it, it is hard to fix merchandise problems ... but it is easier to fix merchandise problems than it is to fix a structural customer acquisition problem ... just ask catalogers).

Online and in Cataloging, you can overcome the new+reactivated comp customer issue by over-spending to horrific levels. The p&l looks awful, but you keep the customer file strong, and that protects the future of the business.

In Retail, you don't have the same levers ... when you advertise, advertising impacts all customers, and often, it resonates with your best customers.

Run your comp segment tables, and run your comp new+reactivated customer tables.

Run your comp analytics for new merchandise, and for existing merchandise, by merchandise category.

And if you don't have the resources to do this, contact me (kevinh@minethatdata.com) and I'll do it for you. Customer Acquisition in the story of 2016-2020.