Old School

From 1996 - 2006 a great transition happened.

As e-commerce took hold, customers shifted behavior. Behavior shifted in two ways.

1. Customers who used to call the contact center to place an order with a sales associate instead ordered online. If you ran a contact center back in the day, these were depressing times.
2. Different customers purchased ... customers who didn't focus on old-school channels bought online. They behaved differently, as well.

The latter point was always a fascinating one.

In the early days of e-commerce at Eddie Bauer, we performed demographic studies of who was buying online ... way back then the core customer had shifted from an outdoor enthusiast to a women's apparel buyer (that fact alone transformed the brand in unrecognizable ways) ... but the customer buying online skewed to men, maybe toward technology enthusiasts. They bought from a different portion of our assortment. They didn't interact with our catalog. And most importantly ...

• Their long-term value appeared to be significantly less than the core customer buying from traditional channels.

This pattern, this "old school" pattern of new channels yielding customers with lower long-term value than the core brand repeats over and over again.

• 1994:  New customers purchasing from specialty catalogs (i.e. a Home catalog within an Apparel brand) were worth less than new customers from the core brand.
• 1996 - 2006:  New customers purchasing via e-commerce were worth less than new customers acquired via catalog or stores.
• 2006 - 2011:  New customers acquired via search were worth less than new customers acquired via email or direct load.
• 2011 - 2016:  New customers acquired via social were worth less than new customers acquired via search.

Here we are, late in 2024, and the tradition continues ... it's appearing via new merchandise. When you offer new products, customers in different channels embrace new products/merchandise, with the change in assortment often delivering customers who are less valuable than the core customer buying from the core assortment. On the surface, this analysis suggests to "stick to the basics" ... keep doing what you've always done, keep selling what you've always sold.

And yet ... history tells us the opposite ... that in the short-term, anything new you try is not likely to work, and if it appears to work in the short-term it might not work in the long-term ... and then whatever you do becomes "normal".

Always be willing to be patient with anything "new".

Have You Ever Looked At Performance This Way?

I bring this up annually. But the analysis is so darn much fun!

Take every customer who purchased between Black Friday and Cyber Monday last year, and measure if/when these customers purchase again.

What is fun about this analysis?

You might learn that these are your best customers, and this purchase improves recency/frequency, giving the customers "file power" that fuels sales in January/February/March. I've seen this happen.

You might learn that these customers become dormant until next year's Black Friday / Cyber Monday event. If you learn that, you are blessed ... you don't have to waste marketing dollars on these customers.

You might learn these customers buy all-year, and all you've done is give away $30 of gross margin per customer. You lost money trying to please trade journalists and boutique agency thought leaders.

Regardless, you are going to learn something unique and interesting ... and you'll be able to do something fun in response, making more profit for you business.

A Mistake

BigO Tires is using their SMS-based CRM system.

Not mentioned here is they provided an oil change a half-year ago and they replaced a tire sensor about nine months ago.

So ... two points for their brand using a SMS-based CRM system. Odds are likely you aren't doing this.

But if you are going to wander down this path ... get it right.

I know many of you get frustrated when I say something about Headphones.com (somebody emailed me last week to tell me how I got their story "all wrong" ... thanks for the feedback), but when I log in to their community forum and look at a specific topic, they send me an email about products related to that topic.

• Their feedback is based on my actions in-between purchases, their action is relevant and immediate.
• BigO Tires sends a CRM-based message not connected to purchases or actions, and contains inaccurate data.

My industry is kind of lost right now ... and we wonder why we retain 25% of customers when we could retain 35% of customers??

Middle of the Funnel

A CEO mentioned something on the phone earlier today about "middle of the funnel" activity, and I thought he made a really bright insight.

More on that in a moment.

Back in the stone ages (2005 - Nordstrom) our brilliant IT support team (who reported to the Credit Division) built us a process to identify every visitor on our website. We recorded information about every single visit, and if the customer purchased, the email address was linked to every single visit, allowing us to tailor/target/personalize any offline marketing activities because we linked purchases to visits.

We also learned what we called the "3-2-1" rule ... the customer generally visited three times a month, carted merchandise twice a month, and purchased once a month (with 3/4th of those purchases happening ... in a store ... which our crack IT staff linked back to the website visits via integration of our point-of-sale system and our e-commerce system).

Show of hands ... how many of you are doing all of that today? In other words, if a customer who hasn't purchased in twenty-seven months all of a sudden ends up on your website, how many of you have programs in place to immediately communicate with that customer?

The simple act of recognizing a customer ... that's a middle-of-the-funnel activity.

Since 2005, we've become GREAT at bottom-of-the-funnel activity.

Since 2005, we've become mediocre at middle-of-the-funnel activity.

And since 2005, we've become horrible at top-of-the-funnel activity. It's all been eliminated from the marketing mix, viewed as "waste". Turns out it isn't "waste", is it? It's the activity that trickles down to the rest of the business.

I recall an author telling me pre-COVID that it was all of the waste from top-of-the-funnel activity that led to good middle-of-the-funnel activity which ultimately led to high ROAS bottom-of-the-funnel activity. I've never forgotten his thesis.

As we head toward 2025, we're going to give top/middle-of-the-funnel activities more scrutiny. We "have" to do this, don't you think?

The Triumphant Return of Physical Catalogs

The folks on LinkedIn sure enjoyed this (click here).

You tell me ... is the Advertising Specialty Institute right? On their Wikipedia page (click here), it says, and I quote, "ASI's main business is organizing and classifying suppliers' products in catalogs."

What do you think of what they wrote?

Another Reader Question

Here we go:

• "Is there more to what is happening across e-commerce than what you are talking about? In other words, it just seems like marketing is under pressure right now. Would you agree that marketing tactics are under pressure right now?"

Yeah. I would agree.

What's changing, of course, is "how" we communicate with customers.

We've learned three things post-COVID.

1. E-commerce brands are too focused on "bottom-of-the-funnel" tactics. The relationship in-between purchases is quite limited, and needs to be expanded.
2. Expensive "bottom-of-the-funnel" tactics are being ruthlessly eliminated by reduced response in the post-COVID era paired with overwhelming competition from Amazon.
3. We don't know how to communicate at the "top-of-the-funnel", especially now that old-school methods like television (outside of sports) are largely limited to a 50-85 year old customer.

Allow me to use eBay as an example. They are great at communicating with me when I've looked at a headphone or a dac/amp combo. They thrive at the bottom-of-the-funnel. They also have no clue whatsoever at how to keep me interested in-between purchased. They know exactly what I've looked at, they know what I've purchased, and they know what I've sold. They appear to use virtually none of that information in the months in-between purchases ... just a complete failure of top-of-the-funnel activities.

So yes, marketing tactics are under pressure right now. Anything too expensive at the bottom-of-the-funnel is being ruthlessly eliminated (ask Orvis). And too few e-commerce companies know how to keep a customer or prospect interested in-between purchases. Having a million followers on Instagram is easy. Having a compelling story to tell customers between purchases is hard.

The Phoenix Zoo

Another Question:  We plan our entire marketing calendar around the catalog. What do you expect us to do on October 28 when we don't have a catalog in-home that day, or for any day for the rest of the year?

Catalog brands sometimes had weaker-than-average marketers, because historically the catalog "was" the marketing vehicle, with the misguided omnichannel thesis requiring that all other marketing channels support catalog in-home events. The catalog in-home was "the" event. Without a catalog ... you'll need to create reasons for customers to spend money with you. 

You need to create something out of nothing.

How many of you have visited a zoo at night? It's not like you get to spend time looking at a giraffe at 8:35pm ... that's a daylight event. And yet, the zoo is sitting there ... available ... after dark. It "could" be utilized in some way.

The Phoenix Zoo is famous for their ZooLights Program ... especially at Christmas (click here). I realize you don't think a 50 degree evening in December is cold, but in the desert after you've acclimated to 115 degree temperatures, 50 degree evenings in December are VERY cold. And yet, the locals flock to the Zoo, at night, in the cold, to look at the lights.

It's not only at Christmas, by the way. They schedule events in late October as well, like earlier this week.

In my case, it was a group of six of us who went to see the butterfly display, then we spent $$$ on dinner at the restaurant at the Zoo (named Gertrude's, where hundreds were dining, most outside on an 88 degree evening in late October), followed by walking the grounds looking at the light display, called "Light Bloom".

I mean, there's no reason to visit a Zoo at night ... and yet, somehow, the Phoenix Zoo was teeming with people who spent money to be there on a perfect October evening.

They have plenty of events (click here).

They are hustling.

You, too, will be hustling when the catalog no longer exists.

Can you imagine the fun you're going to have creating events from scratch?

P.S.:  This applies to you in the e-commerce world as well. Instead of "60% OFF TODAY ONLY" followed by "60% OFF TODAY ONLY" again next Friday, why not create real events that customers want to be part of?

P.P.S.:  Another question from a reader ... "Is there an industry that does events well?"  I'd volunteer the wine industry. They create events and on-site tastings and video-tastings, the build excitement for their 2021 Pinot Noir release, they have wine clubs (i.e. subscriptions) where they get you to spend $600 a pop, they're quite good at what they do as an industry. Look at what wineries do for events, ok?