I share this with you because this is what you'll have to do in the age of AI ... AI is going to write better than you. You and I have to clearly, simply, beautifully compete with technology. If we don't, we lose.
One can make a strong argument that as AI consumes jobs, an increase in artistic jobs fill the void. Writing is a noble artistic job.
Back in the day at Nordstrom Mens Apparel was a "high crossover" micro-business (category).
What does that mean?
It means that a Mens Footwear customer was willing to buy Mens Apparel next.
It means that a Mens Tailored customer was willing to buy Mens Apparel next.
It means that a Womens Apparel customer was willing to buy Mens Apparel for her husband on a next purchase.
It means that a Cosmetics customer was willing to buy Mens Apparel on a next purchase.
High crossover categories are prime candidates for email marketing. You want customers early in the life cycle to crossover into as many micro-businesses (categories) as possible - the odds of future purchases increase meaning that lifetime value increases.
Email marketing isn't some mindless "set it and forget it" program. It requires thoughtful consideration. Do the small things that lead to customers who are likely to purchase more often.
We've been evaluating micro-businesses ... your business is comprised of dozen(s) of micro-businesses. Each of those businesses possess different dynamics.
Sometimes there is an overriding relationship. For instance, this business is represented by a graph ... the x-axis is the rebuy rate of customers buying again from each individual micro-brand (category), the y-axis is annual net sales for the micro-business (category).
In general, one could fit a line through the dots ... if a micro-business (category) retains more customers, it generates more net sales. Sort of a #duh. Snoozer.
Except for two things.
Look at the category with an approximate 7.8% rebuy rate ... but generating about $11,000,000 a year. That shouldn't happen ... that micro-business should be somewhere around $6,000,000 a year. Why so high? High price points. The category has high prices, which artificially lower rebuy rates ... but the customers who do purchase spend a lot more, resulting in a good outcome.
Look at that data point with a rebuy rate > 14%. This micro-business has as loyal of customers as any category, and yet sales are awful. Why so low? Because the category does not attract customers outside of its own micro-category. Yeah. Customers like this category, but customers who do not buy from the micro-category DO NOT LIKE this category and won't buy from it, greatly limiting the potential of the category.
There's a lot of secrets in your business ... go look for them ... then develop marketing plans for each micro-business (category).
Allow me to simplify the message. Here is a brand that has seventeen categories. One of the categories is Gifts. Here is how the micro-business generates sales.
I really enjoy Sprint Car Racing ... toss Weather / Pickleball / Sprint Car Racing / Headphones / Food into any day and I'm generally in a good place.
When one of the two big 410 Sprint Car Series come to Central Arizona, yeah, I'm in. My favorite driver is named Rico Abreu - the most popular driver out there.
He was the champion of this series last year, and is the obvious crowd favorite ... young and old alike. There were many young ladies and boys around his car looking to meet him after the event, wearing his merch.
You don't run a race team without $$$. Lots of $$$. One of Rico's sponsors is SugarBee Apples from Washington State (click here). How do I know this? They're not prominently featured on his car, so they must be doing something else.
Well, they have the SugarBee mascot ... who had to be BOILING on Saturday night (race time temperature was 103 degrees when I arrived) ... featured here on FloRacing's broadcast of the event ... which means, of course, that not just the people at the event are hearing about SugarBee.
SugarBee did something else ... they had free apples. If you went to Rico's merch trailer (where his wife was making $30 every thirty seconds selling merch, plus you got to meet Rico's dog Gus), you were instructed to take a free SugarBee apple ... packaged in a teeny tiny adorable carrying case.
Once word got out that you could get a free apple, there were free apples everywhere. Where I sat, maybe five people were eating a free apple at the same time. The apples looked like those yummy Honeycrisp apples to my eyes ... turns out they are half Honeycrisp / half unknown variety.
All sorts of cross promotion as well.
Why bring this up?
One of the most common questions I receive is this question?
Sometimes I'll step back and look at changes across several years. Many clients don't realize the subtle changes they've caused.
In the business we're studying, there are subtle changes worth pointing out.
Comp Rebuy Rates: -6% vs. three years ago. Not ideal.
Comp Segment Demand: +1% vs. three years ago.
Comp Items Purchased: -8% vs. three years ago. Yup, this company is selling more-expensive items over time. The COO is probably looking at downsizing operations folks, the CFO might be happy if gross margins are up. Always remember that items = customers. It's not a bad thing if management has metrics moving in odd directions with a top-line that is steady/growing. It's almost always a bad thing when fewer customers buy from a client.
Comp Item Price: +9%. Wow.
Comp Full Price Selling: -4%.
Comp Off-Price Selling: +11%. The two metrics tell a story, don't they? The likely story is that merchants are increasing prices when they offer new items, customers rebel against the merchants, so the marketing team offers discounts/promotions which customers accept. #ohboy
Comp New Items: +5%.
Comp Existing Items: -2%.
I create the metrics (above) to cut through all the BS a consultant hears from "some" members of the Management Team. The business I'm analyzing here had an ownership team who wanted to "transform" the brand. After digging into the numbers and speaking with members of the Management Team, it was clear there wasn't trust/harmony between the Ownership Team and the Management Team.
The core problem wasn't merchandise ... the core problem was trust.
As it so often is.
You run these metrics for your business ... right? Of course you do. You like to know what is happening, you like being smart.
Every business has customers shopping across micro-businesses / categories. Every business has interpersonal dynamics between ownership / management / employees that spill over into the customer relationship. The consultant / analyst cuts through all the nonsense, identifying core issues impacting the customer.
