October 26, 2020

What is Selling?

COVID is changing what sells.

Just a cursory view of merchandise division and/or category level data will show you that fact. It's common to see some categories selling 2x as much as in 2019, while other categories are selling less than last year.

Be VERY CAREFUL when interpreting this information. You might be able to ride these trends out well into 2021. Long-term, customer behavior is likely to change ... not going back to 2019 behaviors but will be fundamentally different.

It's common here in 2020 to see long-term winning items perform extremely well. Do not be convinced that this trend will continue and as a consequence you de-emphasize new merchandise. You're gonna need new merchandise to do well today so that you have something to sell in 2022 and 2023.

October 25, 2020

Compound Interest

There's the geeky math behind lifetime value ... data-centric folks argue about the "best" way to measure long-term value, but those arguments are largely irrelevant. Measure what happens after you acquire a cohort of customers.

When you acquire a cohort of customers, the cohort pays you back. Their payments are a form of compound interest.

As you head into Christmas, make sure you know why business is up (if it is up, as it is for so many of you). There are several things that could be happening, and it is possible that all of the things are happening at the same time.

  1. You might be getting more new customers than expected because of COVID.
  2. You might be getting existing customers to spend more than expected because of COVID.
  3. You might be generating Compound Interest from COVID-newbies from Mar/Apr/May.
  4. You might have merchandise productivity independent of (1) (2) (3).
  5. You might have marketing strength independent of (1) (2) (3) (4).
Undoubtedly you've parsed these issues and know the answers. You know the Compound Interest generated by all of your COVID-newbies, and your CFO appreciates the gains being generated.

October 21, 2020

Amazon Catalogs

When Amazon mails one (1) catalog, it does not mean that an old channel is experiencing a resurgence.

It does not mean that Amazon is embracing the technology they helped displace. At all.

It means they mailed a catalog.

Stop talking about what Amazon does.

Start focusing on what you do.

A Virtual Chief Performance Officer refocuses Leaders on what is important. Amazon mailing a catalog is NOT IMPORTANT. That catalog could do a billion dollars in annual sales and that would still represent just 0.3% of their total.

Focus on what you control. 

October 20, 2020

Internet of Things / Creative

The term "Internet of Things" is what happens when you use analytics to run all of your Creative people of out the world and are then stuck with asking the people who remain to come up with a name for an industry trend.

Oh, I get it. I spent plenty of meetings in my career just wishing that I didn't have to listen to another discussion about whether we could hire "Catherine" because her "essence" fit the "spirit of our brand" (fyi - I am aware of two companies that competed and both felt that the exact same model fit the essence of the spirit of their brand, and it was fascinating to know how each side felt given that each other side had no idea how the other side felt). But now we're in 2020, and I just wish there was one (1) Zoom where a Creative individual was even bothered to participate.

I had a discussion with a CEO ... and he told his team on the group conversation that all he needed was a product ... any product ... and with the right promotion he could get any customer to buy the product and didn't need marketing or creative or merchandising to be successful. At first I thought his thesis was ... well, I thought it was "out there".

But there is something to his argument as it related to a pre-COVID world. He didn't care about marketing, creative, and merchandising. He cared about the "offer".

Anytime the world changes, something is gained and something is lost. As Analytics weeded out all the waste in Creative, we lost the Creativity in our businesses. Maybe in a post-COVID world we can do something about that?

October 19, 2020

But First, 2021

Let's just use a simple example.

You'll have to forecast where 2021 is headed. It's probably not wise to forecast productivity gains (yet) until the customer proves that the customer spends more in January/February ... probably best to forecast 2019 performance.

But you have all these 2020 customers ... and they need to be forecast properly ... meaning that the QUANTITY of those customers needs to be forecast properly, but potentially using 2019 productivity.

Simple example.

  • 2019 = 10,000 good customers spending $30.00 average in 2019. Value = 10,000*30 = $300,000 actual.
  • 2020 = 10,000 good customers spending $45.00 average in 2020.  Value = 10,000*45 = $450,000 actual.
  • 2021 = 15,000 good customers.
You have choices:
  • 2021 = 15,000 customers * $30.00 spending average from 2019 = $450,000 forecast.
  • 2021 = 15,000 customers * $45.00 spending average from 2020 = $675,000 forecast.
  • 2021 = 15,000 customers * $XX.XX spending guesstimate = ????.
If it's me, I'm going with somewhere between $30.00 and $XX.XX. I'd probably sandbag my forecast and start with $30.00 until somebody in Finance / Merchandising screamed at me in-person or typed a message IN ALL CAPS ... and then I'd budge toward $XX.XX in a begrudging manner, clearly stating what my hesitancy was(is).

October 18, 2020

A Preview of What Will Be Needed to Be Successful in 2022.

Watch the entire 15 minutes here.

And if you don't have 15 minutes, then watch the final 1-2 minutes, because the punchline is offered there.

COVID is going to convince us that sales gains are easy for some brands for the next year. They're not easy. It's darn hard outside of a pandemic. The merchandising / creative factor is so important, so overlooked, so under-analyzed.

This (the video) is what it will take to win in 2022. Passion and Creativity and Attention to Detail. It was the path we were already headed down before a pandemic handed so many companies cement mixers full of money while forcing so many others out of business.

P.S.:  You'll be able to win in 2021. Realistically, we inherit the "new world" we'll live in going forward in 2022. We can't see it, yet, but once there is a vaccine we'll begin getting glimpses ... then we'll see it clearly, and Passion / Creativity / Attention to Detail / Merchandise take hold based on the rules of the "new world".

What is Selling?

COVID is changing what sells. Just a cursory view of merchandise division and/or category level data will show you that fact. It's commo...