Cracks in the Foundation

I'm full of praise for the marketing strategies used by Duluth Trading Company. But you already knew that.

Now go read their Annual Report (click here).

Growth is generally coming via retail ... and profit as a percentage of sales is eroding ... still amazing for a traditional catalog brand expanding into retail ... but eroding.

You're seeing the first cracks in a sound foundation. Nothing to stress about, heck, most retailers would kill to have Duluth Trading Company performance.

But cracks are beginning to show. This is the inflection point (in a business) where things become really fun, the point where a smart Management Team gets to demonstrate their skills.

New Item Spacing

It's common to see "Over 369 New Items" proudly pronounced. That's a good thing!!

It's an even better thing to "premiere" these items ... stagger 'em. Give each item attention, and give each item some space to breathe. Use email marketing to do this.

Email Marketing / Spacing

Recall this image from a few days ago? Look how the offense, via spacing, created a situation where one player ends up with the ball and doesn't have anybody within 10 feet of him.

When the player is this wide open, the probability of a made three pointer increases from maybe 30% to maybe 40%.

A vendor recently sent out a study about email opens and email clicks (click here). The study suggested that opens and clicks are in decline while volume increases. This is a classic example of Marketing Spacing.

In other words, if you send five email campaigns a week, you are not doing a good job of creating spacing. Everything is crowded.

Want an example?  Here are the messages from a brand you know and love ... from three days last week:

• Friends and Family Savings for our Best Customers.
• Spectacular Savings.
• Save Up To 40% Off.
• Special Invite - Free Shipping.
• Up To 50% Off Key Items.
• Good News: Friends and Family Savings.
• Save Up To 50%.

That's eight messages (8) within three days.

And you wonder why email marketing "doesn't work anymore" as a Professional recently told me??

The article goes on to talk about segmentation as a key strategy. And if you're going to send out three campaigns a day, I suppose that is a tactic, sure.

A strategy, however, might include not pummeling the living snot of out a customer with three %-off offers PER DAY.

Spacing is critically important in marketing ... it's something more of us should be practicing.

Join Me In London!!

How about joining me in London on June 13??

I'll spend an afternoon going through the magic of the "Great Eight", talking about attribution, discussing Merchandise Productivity and evangelizing the importance of New Customers.

Later in the session there will be a handful of case studies that the audience will work through. I know, fun, right??!!!!!

Click here for session details.

Click here for event and registration details.

Oh, did I mention ... the afternoon session is being held at Twickenham Stadium ... how cool is that???

So come on out on June 13th, ok??!!

Marketing Spacing

I've been a big fan of "Marketing Spacing" since joining Lands' End back in 1990. That's when Bush 41 was in office. That's a long time ago.

What is Marketing Spacing?

Let's look to the sports world for an example ... in this case, last week's Bucks / Celtics game. With the Bucks clinging to a 5 point lead in the 4th quarter, the Bucks inbounded the ball. The Celtics defended well, messing up the play.

Finally, Milwaukee begins the play, three seconds later.

It's often a good idea to get the ball to your best player ... and that's exactly what Milwaukee did. Look at the Spacing ... five players all 23 or more feet from the basket, all spaced out equally across the court.

Milwaukee's best player drives toward the free throw line. Look at how the defense collapses around him.

When multiple Celtics collapse to stop Giannis, somebody is open. That somebody is Brook Lopez.

Do you see what Giannis did there? He traded a 50% chance at 2 points for a 40% chance for 3 points.  0.40*3 = 1.20 points expected.  0.50*2 = 1.00 points expected.

The result?  BANG!!

A couple of things to think about.

First, the marketer would try to attribute credit for the three point shot. The marketer would spend endless hours debating whether the act of shooting (bottom of the funnel) deserves credit or whether the inbound passer (top of the funnel) deserves credit ... or whether Giannis gets credit for drawing two defenders. Naturally, the marketers spend days talking and analyzing and go absolutely nowhere. Yay, Marketers!!

Much more important, however, is the concept of Marketing Spacing and Optimizing Purchases. The concept is identical to what you observe above. Most marketers are pummeling customers with contacts. Not smart. And most marketers are not optimizing anything properly. Think of it this way ... you have an email marketing program ... do you want Giannis shooting a double-teamed 2 point shot or Brook Lopez shooting an open three pointer? You want the latter. Same thing in email marketing. You want the customer to get an email campaign that hasn't been crowded by three other email campaigns in the past thirty-six hours ... and you want to increase the odds of a purchase by personalizing the merchandise assortment to the customer.

Right?

Right??

Marketing Spacing is critically important. In our modern digital age, we bathe customers in a slurry of marketing contacts. It's not the right thing to do, we all do it, and we've got to install sports concepts into our marketing programs to avoid pummeling the customer.

Dear Management Analytics Consultant: Promotions

Dear Management Analytics Consultant:

Our email campaigns feature deep discounts. I'm talking about 40% off plus free shipping, or 50% off one item, that kind of thing. I reviewed the past 400 campaigns (we run five a week), and 369 of the 400 campaigns offered at least 30% off. This has to damage our brand. Our sales haven't increased in the past two years, but the average promotional discount increased from 33% off to 43% off. That can't be good. Here's my question: How do we get out of this mess?

Thanks,

Randall

Dear Randall:

I don't think your company wants to get out of this mess. If your company wanted to get out of this mess, you'd have clear communication from Sr. Management stating that you will only offer 20% off for the next year, no more, and your sales plan would include a 20% sales decline to account for the business you'll lose.

You are the marketing expert, so change the game. If you have to offer a huge discount, offer a huge discount on ONE ITEM ... an item that has meaning to your business. Or one category. Work closely with your merchandising team and focus on underperforming items, and offer discounts only on those items. Offer a discount for getting a customer to do something that is beneficial to your brand ... if the customer has switched to e-commerce and won't set foot in a mall anymore, offer an incentive for the customer to set foot in a mall. You do not have to have the same promotions in all channels.

Change your discounting strategy into one that pushes the customer places that are beneficial for both the customer and your brand. Back off your promotional percentage by 5% and see what impact that has on sales.

Now, if you want to do all of that stuff and Sr. Management tells you that it's 40% off plus free shipping in perpetuity, then maybe it is time to look for a new job.

Dear Management Analytics Consultant: The Right Email Merchandising Strategy

Dear Management Analytics Consultant:

Here's a problem. I have a segment of customers who love buying Men's Footwear. It's their preferred category. However, when I slice and dice the data, I observe that the category the Men's Footwear buyer is most likely to purchase next is Women's Dresses. This kind of makes sense, because a third of our business is Women's Dresses.

So how should I target this customer? Does this customer get Men's Footwear, other Men's Categories, or Women's Dresses?

Thanks,

Ashley

Dear Ashley:

This isn't an "optimization" problem. This is a "marketing strategy" problem. You are a marketer. It's your job to have a strategy.

Here's a tip. In the vast majority of my projects, the most valuable customers (after equalizing for recency/frequency/monetary/channel-preference) are those who buy from multiple merchandise categories.

This means you need to have a multi-pronged strategy for communicating to this customer. Let's use email as an example. This might be a "personalization strategy" for this customer, via email marketing:

• Monday = Primary Category (Mens Footwear).
• Tuesday = Primary Division (Mens).
• Wednesday = Most Likely Response Category (Womens Dresses).
• Thursday = Weekly Promotional Strategy.
• Friday = New Merchandise Friday.

This means that Monday/Tuesday/Wednesday campaigns exploit "merchandise personalization" based on prior purchasing behavior.