July 18, 2024

Cost Differences

Do you remember Bernie Mac in Oceans Eleven ... negotiating van prices? Muttering nonsense about Aloe Vera while squeezing the sales dude's hand so hard that the sales dude dropped the price of the vans another two-thousand dollars each?





It was a more enjoyable world when Bernie Mac was with in it.


Anyway, I get to see the advertising cost of mailings. One brand puts 84 pages in the mail for $0.95, another brand for $0.67. You might imagine that one of these brands has a different perspective on cost inflation than the other. 

Maybe one of these brands has Bernie Mac doing the negotiations.

If you are on the high end of the comparison above, might it be time to have a discussion with somebody? Or if volume is the problem, maybe it is time for twenty small brands to band together in some fashion (no, not co-mailing) to be treated better.

As the late Don Libey used to ask, "what if?".


July 17, 2024

My Twitter Readers Are Admittedly Biased Toward My Content

But the thirty respondents who voted, well, they voted with uniformity.



So why do you think it is that so darn much focus is on points, promotions, discounts, and campaigns?


P.S.:  I know what some of you are thinking ... "KEVIN, YOU IDIOT, WE ARE MARKETERS, WE DON'T CONTROL THE MERCHANDISE!". Well, if you love handing out points, why not hand out points to customers who buy specific new items upon new item introduction? Or why not hand out points to customers who buy in June when you are in clearance mode to help you get rid of stuff? Why not hand out points to customers who see your Instagram post and buy the featured item in the post? You have so many choices, choices that are merchandise-centric, right?



July 16, 2024

First Three Months After A First Order

By now, most of you have a separate and fully-developed program to convert a first-time buyers to a second purchase within three months of a first order.

You have one, right?

There's all sorts of fun things you can do. I know, you're about to say "PLEASE STOP WITH THE HEADPHONE STUFF", but here's what Headphones.com did last Saturday to me, a first-time buyer with recency = 20 days since a first purchase.




This stuff is particularly effective with first-time buyers or customers who just reactivated from 37+ month recency status.

I once had an e-commerce professional tell me that her brand "had more than enough traffic, we just don't do anything to convert the traffic to a purchase". Smart woman! Try something like what is illustrated above with customers who placed a first order within the past ninety days and report back here to tell us how the program worked.


July 15, 2024

When Winners Aren't Quite Winners

It's common to measure winners via total demand generated.

It's an easy calculation. But it's also the wrong calculation.

It's important to assess ad cost as well (and gross margin and marketing promotions, yup). Email marketing is inexpensive. PLAs are frequently expensive because they attract a disproportionate number of new/reactivated customers. Catalogs are ridiculously expensive in modern times. As a result, the item that is a winner may not be a winner after accounting for profitability.



In this example, the high-performing catalog-centric item is not as profitable as the email-centric item that generates 60% of the sales of the catalog-centric item. The PLA-centric item is much less profitable ... in part because of the customers the marketing channel attracts.

I've had requests to provide more "free tips" ... this is a whopper of a free tip, I'm helping you figure out the items that are true winners, the items that should be featured where possible across your marketing channels. Please take advantage of this "free tip" that you've asked for, ok?



July 14, 2024

Alex Morgan (Yes, This Will Be About Merchandise)

When the USWNT Olympics Team was announced, all-time great Alex Morgan wasn't on the team. Nor was she on the four player alternate list. The new coach stated she was taking the team in a different direction. Which, if you follow the team, is sad.

Alex Morgan was the youngest member of the 2011 World Cup team that lost to Japan, and was a central figure in the teams that won the World Cup in 2015 and 2019. She also made the 2023 World Cup team that did not medal.

In Merchandise Dynamics terms, she was a member of the Class of 2010 (when she joined the team), was a winner for nearly a decade, and now will not play for an opportunity to win Olympic Gold.

You have items in your assortment that are comparable. Maybe it's the Start Here Slinky Tank, or the Ruched-Waist Houndstooth Floral Dress.

You'll know you have a budding problem if you measure the "age of winners". You already do this, right? For each of the items you believe are "winners", you measure the number of months the item has been offered. If you have a problem, the problem looks like this.

  • Through 7/10/2024 = Winners are 39.4 months old.
  • Through 7/10/2023 = Winners are 33.2 months old.
  • Through 7/10/2022 = Winners are 28.5 months old.
  • Through 7/10/2021 = Winners are 27.9 months old.


This means your assortment is aging. You are not finding new items to replace the items that always worked.

Your assortment will always go through a transition, with best sellers extracting as much profit as possible from customers before tiring, before being replaces by up-and-coming items. You are no different than the General Manager of an NFL, MLB, NHL, or NBA team. In fact, you should have a prediction for every item in your assortment for how long of a life that item has left. You are no different than the Green Bay Packers, assessing the number of high-performing years that Aaron Rodgers had left, analyzing that against the upside potential of Jordan Love, and then making a decision that was very risky at the time and, in retrospect, pretty clever.

Does this make sense to you?

Measure the "age of winners", and let me know what you learn. Well-run brands may not analyze this specific metric, but they know what the metric means and they have a succession plan for every winning item in their assortment.

July 11, 2024

Focusing on Tiny Things

Sometimes on LinkedIn you'll see "all the good stuff" from the CEO. An image of twelve people sitting inside a restaurant, glasses of wine from a 2009 Paso Cab, half-eaten ribeyes and chicken piccata with nineteen dollar roasted cauliflower sharable sides, and a quote saying "My team and I are recharging before a big day tomorrow with Acme Industries!" The post will be liked seventy-nine times, with eight comments from individuals with titles like "Strategic Thinker" saying "this is what true leadership looks like". 

Oh, LinkedIn! How cute.

Conversely, I once worked for a President who sat at the cubicle of my forecast analyst for several days to watch all of the details of how the hourly call center volume forecast was created. He'd asked questions like "don't you think the forecast of 1,137 calls at 10:00am on Wednesday is 5% too high?" My analyst would look at me, pleading for help.



That is an instance of focusing on a tiny thing.

Increasingly, I'm seeing focus on "tiny things".

And I get it ... you focus on tiny things because it's easier to deal with the subject line on an email campaign than it is to deal with the existential/structural issue of paying the same amount of money for 25% fewer new customers with increases in marketing costs coming seemingly forever. Easier to put the forecast analyst on blast mode about hourly order forecasts than to figure out how those orders will be generated in two years.

Some CEOs are focusing on bigger topics right now. They have to do that. Every employee needs them to do that. The brand they support won't exist if they don't do that.

Catalog CEOs ... don't let your paper/print/postage partners push you toward small topics that keep their cash register dinging (kids - there used to be things called cash registers - you can still see them at your local grocery store). You need to be looking to the future, and you know your future involves much less print than it requires today. Could you go to Washington, DC and lobby for lower postage costs? Sure. Have dinner, enjoy yourself. But you are focusing on a small thing. No amount of work on that front matters anymore. The very organization that supported you for nearly twenty years removed the word "catalog" from the name of their brand. That tells you all you need to know. They're reducing their focus on tiny things.

July 10, 2024

McDonalds

Let's use a Dale Carnegie technique ... show of hands, how many of you have eaten at McDonalds?

Now, how many of you routinely eat salads when you go to McDonalds?

You might enjoy this article, sent to me by an intrepid reader (my wife), about the de-emphasis of salads at McDonalds (click here).

One of the seminal moments in my career happened at Nordstrom in 2003. We were having endless meetings about shutting down the catalog division, and at one point I mentioned that the catalog generated $160,000,000 in annual sales and about $8,000,000 in annual profit. My boss said "who cares"? Stunned, I said something pithy like "shareholders care, it matters that we generate sales and profit." Her response was even better.

  • "Kevin, we discontinue items every single day. Every single day. And yet, we somehow move forward. We can discontinue a marketing channel in the same way we discontinue products. Besides, we don't want that customer."

I went back to my office ... a naive 37 year old Vice President, pondering how stupid my company was to not want the profit from a catalog customer in North Dakota.

And then I thought about it.
  • You can discontinue marketing channels, it's ok.
  • It's ok to not want all customers.

So yeah, if McDonalds doesn't want the salad eater, that's fine. Go make the McRib customer happy. And yeah, they'll be told that they don't have healthy options. My goodness. There's an infinite world of healthy options. Salad and Go has 'em. Interestingly, they don't want the McRib customer.

Have you ever asked yourself who the customer is that Macy's wants?

Or how about your brand?

Cost Differences

Do you remember Bernie Mac in Oceans Eleven ... negotiating van prices? Muttering nonsense about Aloe Vera while squeezing the sales dude...