May Your Customers Love Your Brand As Much ...

... as these customers love REI.

How would you measure if your customers "love" you?

If your customers love you but not enough to cover your rent, does brand "love" matter?

If your customers shop your gas station twice a month and a different gas station twice a month, does brand "love" matter if 24 transactions a year net you a ton of profit?

In a project a few years ago, the Executive went off about the fact that I defined a "Loyal Buyer" as one who has at least one twelve-month purchase and at least five life-to-date orders. "You don't know what Loyal is, and you shouldn't go around telling us how to define it. Our customers love us!!"

A tiny piece of your soul just kind of goes into hiding on those pithy arguments that some people like to have. We shouldn't take the definition of "loyal" too seriously, and we shouldn't strive for our customers to "love" us. Instead, we should take care of customers and we should realize the point where our customers generate self-sustaining profit.

New Project: My Top 12!

A podcaster asked what my most popular projects are? 

Interestingly, a look back at the work I've performed over the past three years showed a series of individual analytics within projects that clients consistently responded positively to. There were close to a dozen individual "pieces" of projects that professionals enjoyed.

Which got me thinking ...

... what if I combined the most popular stuff y'all respond to, and create one project out of all of it?

Let's do that!!

My Top 12:

• My Elite Program Analytics that I run for Elite Program Subscribers 3x/year.
• Life Table Analysis that shows the path your customers follow from a first purchase to loyal status.
• Life Cycle Analysis - illustrating what your first-time buyers purchase vs. what average / loyal customers evolve into from a merch/channel standpoint.
• Class-Of Reporting (most popular), demonstrating potential missteps in your merchandise assortment strategy over time. This analysis consistently provides the most discussion in my video conferences.
• Primary / Secondary Merchandise Categories - I'll explain the categories that run your customer ecosystem. Each brand has 1-2 categories that either attract new customers or become that "gravity" that ties your loyal customers to your business. I cannot score all customers as normal within the scope of this project, but you'll understand what drives your business.
• Price Point Analysis - I will measure the impact that higher prices have on repurchase metrics and/or spend per repurchaser. Very relevant in the post-COVID / Tariff environment we operate in.
• New Customer Quality Analysis Over Time - Many ecommerce businesses went down the Paid Social rat hole and were left with a weakened customer file comprised of unresponsive customers. We'll figure out if that happened to your brand.
• 12 Month Future Spend For New Buyers by Channel/Season/Category - You won't get the scoring equations (that costs $$$) but you will learn which channels, which seasons, and which categories contribute to quality new customers.
• Reactivation Potential - I will describe whether your business should "lean into" customer reactivation as a meaningful growth opportunity. You won't receive the scoring models my clients usually receive, but you'll understand if you have customers willing to be reactivated.
• Five Year Demand Forecast (2nd most popular) - I will show you where your business is headed based on a segmentation of customers and prior repurchase activity.
• Multi-Year Marketing Budget Study - This high level analysis evaluates marketing spend by channel for the past three years, comparing your brand to a typical client. Are you over-spending, under-spending, or have what I'd call an "imbalanced spend" by channel?
• Mystery Analysis - Based on customer behavior, I will add one (1) analysis to the eleven outlined above. If you have merchandise problems, I'll draw into my Categories analysis. If you have loyalty problems, I'll dive into the Life Cycle analysis (etc).

Ok, that's a lot!

How much does this cost?

• Pick Any Two Aspects Of The Project = $5,000.
• Blog Subscribers and Clients:  $12,000 through August 15.
• $19,000 For Everybody Else - $19,500 after August 15.
• $34,000 For A Deep Dive Within Each Of The Analyses.

I mean, for $12,000 you're getting an awful lot, aren't you?

I'll also include a one-page summary that outlines what I learned ... beyond the normal writeup/analysis.

You've got a little over two weeks to act, to get in the analysis queue. Contact me right now (kevinh@minethatdata.com) to reserve your spot. Click here for file layouts.

P.S.:  If you are rebuilding your business, you'll need this analysis to point you in the right direction.

Times Change

Times change, folks.

Did you know that somebody at a catalog agency works on the Amazon Toy catalog?

It has to be a fascinating feeling ... for a quarter century you watched Amazon systematically consume an "industry". You watched, mostly helplessly, as catalog brand after catalog brand either went out of business, were rolled-up within umbrella companies, or reduced circulation to the point of not even being a catalog brand anymore. Your agency competitors contracted or went out of business.

Then it got worse.

Remember back in 2022 when the catalog brands that still existed couldn't even get paper? The VP from Midland Paper mentions here the 50% decline in catalogs in "recent years". My estimates suggest 80% of all circulated pages have been removed from commerce in the past twenty years.

Somehow you worked through all of that. And then you're given a new assignment. It's your job to work on the Amazon Toy catalog.

Jarring!

You've fought against the incessant encroachment of Amazon on catalogs for decades. Now you help them complete the task, helping Amazon further contribute to the contraction of what used to be an "industry".

Catalogs are alive at Amazon, and they're alive among Zombie Retailers like Saks. 

We should expect this to happen. As costs soar out of control, the brands that can support catalogs are those with hyper-loyal customers, brands that could care less that costs to put catalogs in the mail increased roughly 25% over the past three years +/-.

Years ago I joked that in the future the only catalogs in the mail would come from Amazon, who would mail (literally) everybody because they were the only brand that could still afford to mail catalogs, the only brand that doesn't need to prove ROI.

My joke could come true.

Times change.

Rebuilding

I watched a program on linear television (#gasp #oldschool #luddite). A pair of perfectly wonderful sisters were running a restaurant that was unprofitable. The sisters didn't want to change. They served gigantic meals at unrealistically low prices ... paired with ridiculous monthly rent, they were flying their plane into the side of the mountain.

Something had to give.

They had to serve less food.

They had to raise prices.

They had to reduce expenses (i.e. fewer people).

In other words, this restaurant needed to "rebuild". They were like the Arizona Cardinals, the Los Angeles Angels of Anaheim, the Utah Jazz, the Vancouver Canucks, the Wisconsin Badgers Football Team.

Our Country needs to rebuild. No need to go further.

A generation of ecommerce businesses (founded 1995 - 2015 ... think legacy brands like Stitch Fix) are ready to rebuild, if they haven't already begun to rebuild. They're like that house you built in 2011 ... it needs to be painted, floors need to be replaced, appliances don't work, bathrooms are tired. We know this is true when growth stops. We know this is true when merchandise productivity erodes. We know this is true when email marketing hasn't fundamentally changed post-COVID. We know this is true when somebody says "Facebook isn't delivering quality names".

My catalog clients? Forced to rebuild. It's like your Hall of Fame quarterback just retired, except in your case your paper / printing / postage partners keep increasing costs to the point where the discipline they love is ending because of their cost increases. You get to rebuild as a digital marketer.

Like the NFL Team rebuilding after losing a Hall of Fame Quarterback, it can be hard to understand "what" needs to be rebuilt. A great quarterback covers a multitude of sins. Now your defense is on the field more often. Your new quarterback holds onto the ball too long, making it look like the offensive line is bad. Are they bad?

If you are rebuilding, you likely need analytical guidance, so you can tell if your defense / offensive line / etc. is in need of fixing. Same thing in ecommerce. You have to know "where" your rebuilding efforts need to be emphasized.

Share of Demand by Advertising Channel Detective

This one came up in the past year. I noticed a problem with a business.

Regardless of the attribution method (they're all wrong and yet they're called "truth" by so many in the industry), it's pretty easy to play detective and identify a business that is not healthy.

Healthy Business:

• 40% of Sales Happen Organically, Without Aid of Advertising.
• 20% of Sales Happen Via Email Marketing.
• 20% of Sales Happen Via Search Marketing.
• 10% of Sales Happen Via Social Media (Paid + Organic).
• 10% of Sales Happen Via Other Marketing Channels.

Unhealthy Business #1

• 10% of Sales Happen Organically, Without Aid of Advertising.
• 15% of Sales Happen Via Email Marketing.
• 35% of Sales Happen Via Search Marketing.
• 15% of Sales Happen Via Social Media (Paid + Organic).
• 25% of Sales Happen Via Other Marketing Channels.

Unhealthy Business #2

• 5% of Sales Happen Organically, Without Aid of Advertising.
• 65% of Sales Happen Via Catalog Marketing.
• 12% of Sales Happen Via Email Marketing.
• 15% of Sales Happen Via Search Marketing.
• 1% of Sales Happen Via Social Media (Paid + Organic).
• 2% of Sales Happen Via Other Marketing Channels.

Whether you are trying to rebuild your business or are looking to buy/sell a business, this is a good guideline for you to reference. Unhealthy businesses generate very little demand/sales organically (without the aid of marketing). Healthy businesses did the marketing years ago, earned trust via the merchandise they sell and consistently good customer service, resulting in ongoing sales that do not require marketing.

Unhealthy businesses possess two key attributes.

1. Marketing is required to generate sales. Less marketing, less sales.
2. One marketing channel is responsible for more than half of annual demand.

Again, most of you are not looking to buy/sell a brand (if you are, I'm the person to evaluate the health of the business ... kevinh@minethatdata.com). Most of you are looking to rebuild your business or maintain it. Use what you've read this week to rebuild/build your business.

"Cheating" Detective

In the 2016-2018 timeframe Private Equity folks asked me to evaluate a business that they felt was "cheating".

What does "cheating" mean?

It means the brand was somehow boosting net sales in a manner that wasn't ideal for the future of the business.

When I reviewed ad spend, I didn't see anything unusual.

8,500 lines of code later, my detective work paid off.

• 13-24 Months Ago = 15% (numbers disguised here) of sales from discounted/promo items.
• Past Year = 55% (percentage disguised here) of sales from discounted/promo items.

In other words, Management decided to make it look like the business was surging, when in reality Management was cheating.

At this time, Management had not provided Private Equity with their p&l ... you can't hide from the p&l of course ... discounting leads to lower gross margins, which would have set off alarm bells.

If you are selling your business or rebuilding your business, best not to cheat. Do the hard work.

Playing Merchandising Detective

In the 2016-2018 timeframe, I was asked to evaluate a business that was simply bumbling along. I was told to figure out how a company with a reasonable annual repurchase rate (35%ish) could struggle to grow, even though customer acquisition efforts were being managed properly.

This is when you have to become a Merchandising Detective.

Very few clients manage merchandise consistently over time.

It's easy to see when the CFO demands higher gross margins. I'll see an immediate price per item purchased increase that is immediately paired with a customer response decrease and/or conversion rate decrease.

It's easy to see when a merchant quits or is fired. The new merchant comes in, has disdain for what the predecessor did while disrespecting what previously worked (see Lands' End 2014-2015ish for examples), leading to a new vision that is "trend right". Sales plummet and it takes 2-5 years to dig out of the mess. Nobody wants to hear that message, but that's frequently the message you deliver when playing merchandising detective.

It's easy to see when the paper / printing folks interact with unsuspecting catalog merchants. Costs increase by 20% or 25%, the unsuspecting catalog merchant cuts pages, the pages that are cut are not supported via digital marketing, and sales decrease ... then the paper / printing folks belittle the merchants for "being stupid". It's a common story post-COVID.

If you are planning on selling your business (catalog brands) or rebuilding your business (many ecommerce brands are in the rebuilding stage right now), you'll need a stable merchandising base. Take two years and build your merchandising foundation. This isn't the time to hire a "maverick" who takes risks. You need the smartest people possible to put together a multi-year plan to put your business on stable ground.