Sending Catalogs to Jennifer

We learned that sending catalogs to Judy is a good idea, and for good reason!  Judy is a thirty-five year catalog purchasing veteran.


Judy is always going to buy from catalogs, as long as she has the money to do so.  This is a BIG issue, by the way.  As best I can tell, I'm the only person in catalog marketing willing to talk about the fact that the core catalog customer (Judy) is now 55+, and in many cases has begun to enter retirement.  For now, we can count on Judy to pay the bills.


We can count on Jennifer (the Transitional customer) to pay the bills in the future.  But she won't pay them the way we want for her to pay them.


Jennifer shops for the best deal she can find.  She takes initiative, "searching" for the businesses and products that best align with her needs.  Catalogs may be a source of inspiration, but they aren't a direct source of profit.


Here's what a sample catalog segment profit and loss statement looks like for a segment comprised of a lot of people like "Jennifer":

This profit and loss statement looks different than what Judy produces.  Notice that Jennifer is unlikely to shop via phone/mail.  She spends her money online.  Her value, as a customer, is equal to Judy.  But, and this is a big BUT ... Jennifer buys regardless whether you mail her a catalog or not.  Look at the 3-week online column, then look at the catalog caused online column.  Of the $4.25 she spent online, only $0.98 was "caused" by catalog mailings.  Your database provider sometimes incorrectly allocates the $4.25 she spent online entirely to the catalog.


When you execute mail/holdout tests, you find that Jennifer is brand loyal, not catalog loyal.


And this is important, because it means that, on an annual basis, you only have to send Jennifer 3-6 catalogs a year, not the 22 catalogs a year you are currently sending her.  Pocket the ad cost, pocket the profit, or re-invest it in customer acquisition if you like, but don't waste it on Jennifer!!


Want your own custom Judy / Jennifer / Jasmine segmentation plan and optimal contact strategy?  Email me by clicking here!

Ladies and Gentlemen, Meet Jennifer

Yesterday, you were introduced to Judy, the classic Traditional customer.


Today, I introduce you to Jennifer, what I previously called the Transitional customer.


Think of Jennifer as a professional or service-oriented 43 year old customer (though she could be anywhere between 35 and 49 years old), a woman who spent her formative shopping years on the internet.


Here's a few things you need to know about Jennifer.

• Jennifer and the internet are "one".  If Google truly went down in protest of SOPA or PIPA, Jennifer would quietly implode.
• Jennifer is willing to pay full price for merchandise she loves from brands she trusts, but she's never going to pay for shipping or handling.  Jennifer will use any affiliate possible to get free shipping, she'll visit coupon sites, she'll like you on Facebook for discounts, she'll subscribe to and click through your email campaigns just to get the discount.  Channel marketers will say that Facebook or email "work", but to Jennifer, it's a means to an end ... a way to make sure she gets free shipping and hopefully a discount, too.  Jennifer is "post-channel", not "multi-channel".  Jennifer will scorch the internet to get a deal.  Do not get in her way!
• In fact, Jennifer loves sites like Coupon Cabin, she enjoys Kate Gosselin's blog.
• Jennifer carefully reads reviews from other purchasers.  Jennifer does not want to be burned when she spends $399 on a handbag.  That handbag better come with a 4.8 out of 5.0 stars and have at least a dozen positive reviews.
• Jennifer likes events like Cyber Monday, where she gets to combine discounts with promotions and fun.  She doesn't have to go to the mall on Black Friday and yet she gets great deals.  She feels like a "slueth", she literally "hunts" for merchandise at the best price.
• Jennifer spent her formative shopping years on the internet.  She met her husband on AOL.  She had an "Excite Homepage" before people knew what Excite even was.  She discovered Google in 2000.  If Jennifer were in college today, she'd argue that you don't need to study for a test, you need to know how to leverage Google and Wikipedia to get the answers you need.
• Because Jennifer was weaned on AOL, she has always been first to be "social".  She used email, she joined MySpace, then Facebook, and then Twitter, and is one of the biggest fans of Pinterest you'll find.
• Jennifer is the customer that email marketers are measuring.  All email marketers should code Jennifer in the database and actively measure her behavior.
• Jennifer browses catalogs, and even buys online after reviewing a catalog.  However, half of the demand that is attributed in matchbacks to catalog marketing would happen anyway.  You can mail Jennifer far fewer catalogs and get almost all of her demand.  Catalogers do not want to hear this.
• Attribution wonks struggle with Jennifer, because she "does everything".  She receives catalogs, she browses catalogs, she uses Google to comparison shop, she clicks through an email campaign, she visits a coupon site for a discount code, she visits via an iPad after reviewing your catalog in an app, she likes you on Facebook, and she buys on your website.  Jennifer "hunts" for her merchandise.  Hunters cover a lot of ground!  Take any channel except Google away from Jennifer, and she'll hunt for a new way to get to the same end result.  Just make sure she can get to her discount code in some way, and she'll buy from you regardless of email or catalog strategy.
• Jennifer is the iPad user you're currently tracking.  She will dictate what the iPad app experience will look like in 2015.
• Jennifer found Zappos before anybody else ... she liked free shipping both ways, and she loved the fact that her shoes arrived in a day or two.  "Why can't everybody do that?" is something she said often in the early days of Zappos.
• Jennifer has formed a "shopping habit" on Zappos, paying for Amazon Prime, buying consumables and having them shipped to her home.  She has no loyalty to the merchants she buys from on Amazon, all of her loyalty is with Amazon and only Amazon.
• If Judy buys a CD at Target, Jennifer loads up her iPad with music ... "I'm not going to sit here and listen to songs and commercials that I don't like, life is too short for that."

We can easily spot Jennifer in our database.  She doesn't purchase via mail or phone.  She often combines channels (receives email, visits via search twice, buys via a free shipping code from an affiliate) to place online orders.  She is more likely than average to take advantage of discounts and promotions.  She might be first to jump on new products or fashion products.  She's probably not one to be hooked on "winning products", as she has a sense of style and fashion that goes beyond what everybody else is doing.  She's an email subscriber using Gmail.  She purchases on Cyber Monday.  She visits the site a lot and doesn't purchase (online wonks think they have to fix this problem ... they don't ... that's just the way Jennifer behaves, just get a discount code in her hand and you'll be fine).

It's easy to find Jennifer in a database.  Find her.  Segment her!  Then start speaking her language, a language that probably doesn't include 22 catalog mailings per year.  In my consulting projects, I am routinely able to cut catalogs by 30% - 60% to this customer without a significant drop in demand.


Go set this attribute up in the database ... NOW!!

Tomorrow, we meet our Transformational customer, named Jasmine.

But What Is A Transformational Customer?

It's not hard to understand what a Traditional customer is, especially if you're a cataloger.


And it isn't terribly hard to understand what a Transitional customer is, most of us go through this stage at one time or another ... search buyers, for instance, are about five years into the "Transitional" categorization.


The "Transformational" customer, however, is tougher to pin down.


In 1995, this customer used Netscape, had a blazing fast 9kbps internet connection, and saw that email might one day replace snail mail.


In 2001, this customer used Google, had a MySpace presence, and stuck with e-commerce even though the rest of the universe was reeling from the dot.com bust.  This person could not understand how you could spend a fortune on an iPod when there were already many highly functional MP3 players, most less expensive.


In 2005, this customer had a blog and thought that Wordpress would kill Blogger. This person suggested that podcasts could change the world, listening to many podcasts downloaded from iTunes onto an iPod.


In 2008, this customer thought that brands could offer promotions on Twitter, and couldn't understand why more brands weren't engaging in f-commerce (Facebook Commerce).  This customer understood that Dell was wise to be an early adopter of Second Life.  This customer could see that flip phones were going to be killed off by the iPhone.


And now, in the waning days of 2011, this customer uses Shopkick to get perks at a local Best Buy store, recruiting gaming friends for a new release of software, earning virtual rewards in the process.


In other words, this customer is "out there".  It's not always the same customer, but it is always a customer operating on the fringe of your business.


This person sees things different than most customers see them.  This person abandons older channels for the simple pleasure of experimenting with new channels.


This customer is frequently wrong in the short term ... but is directionally right in the long term.


Our job is to identify the Transformational customer, because there is a lot of profit opportunity here.  We limit old-school marketing techniques with this customer, we experiment with this customer.


Now, I get it ... you're about to say ... "how do we identify this customer?"


Don't make it hard.  For instance, at checkout, simply ask the customer if they are on Facebook, if they are on Twitter, if they own a Smartphone.  Just this simple act pushes the peanut, folks.


Get a web analytics project on the book of work ... seek to integrated logged-on user website data with your customer data warehouse.  When the visitor comes via an iPad or iPhone, record that as a piece of "Transformational" information.


Then test your catalog and email marketing strategies across Tranditionals, Transitionals, and Transformationals.  Again, don't over-complicate this stuff, keep it simple, learn, and adapt.


Ok, time for your thoughts.  Use the comments section, send me a tweet (@minethatdata), or send me an email message.

Diagnosing Business Issues Via The 3Ts

The three T's (Traditionals, Transitionals, and Transformationals) help us understand how (or if) our business is evolving and changing.


Here's an example.  A business leader suggests that a customer shift from traditional channels to the web is costing him business.  Well, there may be truth to that, but at least we can measure how customers are truly migrating.  We'll run a query, watching how customers in the 3Ts migrate (Traditional = Mail/Phone, Transitionals = Web/Email/Search/Affiliates/Banners, Transformationals = Mobile/Social).

Ok, there's a few things we have to digest here.

1. Between last year and this year, customer counts across all segments are in decline.
2. Transitionals (primarily the online channel) actually repurchase at a higher rate than Traditionals.
3. Traditionals are not migrating to Transitionals at high rates, and if they were, the data suggests that this would be a good thing, because repurchase rates actually increase.
4. Transitionals are not migrating at high rates to Transformationals.  In other words, new channels are not capturing customer mindshare.
5. Even when this brand generates Transformational purchases, these customers head back to the Transitional segment, suggesting that the experience in the Transformational realm isn't satisfactory.
6. Customers who purchase in the Transformational realm have the highest repurchase rates, suggesting that if this brand can get customers to "stick" there, there is opportunity for heightened customer loyalty.

This is a business where customers have largely migrated from Traditional to Transitional status.  Unfortunately, customers are not taking the next step, as those who migrate from Transitional to Transformational status go back to Transitional status.

Traditionals, Transitionals, Transformationals

Sometimes, we make everything way, WAY too hard, don't we?

If you really want to simplify things, do the following:

1. Any purchase via Mail, Phone, or Online via Catalog Matchback is considered a TRADITIONAL purchase.
2. Any purchase via Email, Search, Affiliates, Banners, Retargeting, and other Online Marketing techniques is considered a TRANSITIONAL purchase. 
3. Any online purchase not attributed to any marketing, any Mobile purchase, and any Social purchase is considered a TRANSFORMATIONAL purchase.
4. Weight historical purchases ... purchases 0-12 months ago = 1.00 * Demand ... purchases 13-24 months ago = 0.50 * Demand ... purchases 25-36 months ago = 0.25 * Demand ... purchases 37+ months ago = 0.125 * Demand.
5. Multiply all historical orders by Weighted Demand.
6. The segment (traditional, transitional, transformational) that holds the most weighted historical demand is the segment that the customer is classified in.

At this point, every customer is placed into one of three segments (traditionals, transitionals, transformationals).  Now, dump this segmentation outcome into your email campaign results, your web analytics platform, and your catalog matchback algorithm.  Measure (or, as they say on Twitter, #measure) campaign performance against each customer segment.

Be prepared to be dazzled!