There Are Subtle Differences

I'm going to dummy-up this discussion to protect the innocent while explaining to you how your merchandise assortment has subtle differences by channel.

A company had two skus that were quite similar.

• A "Minions" Child Blanket.
• A "Charlie Brown" Child Blanket.

When analyzed, each item was preferred by different customers.

• The "Minions" blanket was preferred by Product Listing Ad customers.
• The "Charlie Brown" blanket was preferred by customers placing phone orders at the Call Center.

What are the results telling us?

It's essentially the same item, same "style" if you will. One sku aligns with an older generation, one sku aligns with a younger generation.

Every one of you have items that appeal to different audiences. Knowing which items align with different audiences allows you to properly align your brand toward the future.

Optimal Page Count & Circ Depth Example

The catalog portion of my audience, if they're not already running this simulation for every one of their in-home dates ... will be running this simulation for every one of their in-home dates within a few months. It will become a necessity.

The simulation illustrates optimal profit levels based on page counts and circulation depth. Examples:

• 32 pages, 260,000 circ depth = $150,500 profit.
• 64 pages, 200,000 circ depth = $160,700 profit.
• 112 pages, 120,000 circ depth = $155,400 profit.
• 176 pages, 100,000 circ depth = $143,500 profit.

Each profit number above is the optimal level of profit given the number of pages offered.

Which strategy would you rather employ?

• 32 pages to 260,000 customers giving you $150,500 profit.
• 176 pages to 100,000 customers giving you $143,500 profit.

I get it - optimal profit is in-between there in this simulation. However, the point of this exercise is to help you understand what is coming. What's coming?

• Small Page Counts.
• Deeper Circulation.

This is a necessity, driven by increased costs and decreased productivity.

Run the simulation.

If you can't run the simulation, reach out to me and I'll set one up for you (kevinh@minethatdata.com).

Just Tell Me What To Do

When I arrived at Lands' End in 1990 (November), I recall furious analysis of our Holiday catalog and our Holiday prospect catalog. One had something like 192 pages, the other 64. We conducted an A/B test between the catalogs.

• Among equal customers, the 192 page catalog generated something like $4.00 per catalog mailed. The 64 page catalog generated something like $3.00 per catalog mailed.

I recall folks talking about how the bigger catalog "worked better". Sure, it generated more volume. But a funny thing happened when you calculated profit.

• 192 Pages:  $4.00 * 0.35 - $0.80 = $0.60.
• 64 Pages:    $3.00 * 0.35 - $0.45 = $0.60.

Essentially, each version generated the same amount of profit. Any customer worse than the average customer should, by default, get the smaller version.

Our Circulation Director would tell anybody who listened that she could pick the products and the creative that would be most profitable. Three companies later I worked with her and she could get 95% of the sales on half of the pages. She was that good.

Modern Catalog Marketing is a wasteful enterprise. You can feature items online for free, or you can pay a dollar to push 10% of the recipients to the website knowing that 8% of the recipients would have visited the website without a catalog. In the 1990 example I gave, at least 100 pages were fully wasteful - generating no useful benefit whatsoever. In 2024 it's much a more extreme problem with far more profitable answers available at every turn.

This is where somebody usually says to me ... "Just Tell Me What To Do".

Vendors will tell you that Direct Mail and Search are like Peanut Butter and Jelly. Let's assume they are correct. Why would you spend $1.00 on print to drive a customer to Google where you pay another $0.50 to re-direct the customer to your website? Wouldn't it make more sense to spend $0.60 on print with something with far fewer pages, chocked full of only your best-selling items and best-performing creative?

Why would you waste $1.00 sending a catalog to a customer who purchased via email marketing in the past nine months when you already speak to that very same customer every single day using the medium the customer buys from? Better to spend $0.60. Even better to spend $0.00, but at least meet the customer halfway.

If you know you have a customer who visits your website via social media on a monthly basis, why would you waste $1.00 sending a catalog to a customer who is already interacting with your brand, for free? Why not spend $0.60 instead? Even better to spend $0.00, but at least meet the customer halfway.

If you know you have a customer who visits your website via YouTube, where your in-house experts produce videos watched by hundreds of thousands of viewers each week, why would you waste $1.00 sending a catalog to a customer who is already interacting with your brand at no additional variable marketing cost? Why not spend $0.60 instead? Even better to spend $0.00, but at least meet the customer halfway.

In the example I gave earlier, from November 1990, this is the relationship between pages and demand per catalog recipient.

The relationship is, at minimum, similar today, and is likely more extreme. In 2024, with so many other marketing actions tugging and pulling at the customer, you no longer need to feature your entire assortment, or even a fraction of your assortment. Given the cost of mailing something in 2024, you are honestly limited now to featuring the best performing items using the best performing creative you have - allowing your free and nearly free channels to do the heavy lifting.

A less costly and more productive mailing allows you to mail deeper than normal.

A less costly and more productive mailing allows you to increase frequency among better customers.

All of these truths were self-evident in 1990.

They're more relevant today than ever before.

That's what I'm telling you to do.

Send me an email (kevinh@minethatdata.com) telling me why this strategy won't work.

 

Good Vendor Employees Are Working All Around You

So I'm on a Zoom yesterday, and the individual representing the vendor did SUCH a good job.

What does doing a good job look like?

• Patient.
• Respectful of the Client.
• Tries to Help the Client.
• Translates Between the Client and Others.

The best vendors you work with are able to translate between Spanish and Portuguese. You'll have two parties speaking similar but different languages. Those two parties can run in circles for darn near infinity not understanding each other, unless somebody translates for one party in a manner the other party understands.

Maybe you have a, oh, I don't know, a paid search vendor, and you think the job of the vendor is to generate the best ROAS possible. You're not wrong. But you are also missing something if you view vendors under solely via performance.

In the case I'm talking about (from yesterday), the vendor did a fabulous job of bridging the gap between parties who viewed the world differently. Once everybody had a common definition of reality, there wasn't much to talk about. The problem was solved by the vendor.

There are so many good vendors ... there are also lousy vendors who hire great people ... align with the great people to overcome other issues.

I don't talk about it often, but I did spend a year at a retargeting startup back in 2000. We had some fabulous people working at this company ... brilliant people. But as a vendor, we were awful. I've told you about my product manager ... "It's my job to lie, it's your job to make my lies come true." That's what happens when you work for a bad vendor ... good people are swamped by bad culture. Still, if you are able to align with the good people, your needs are easily met.

If I had to boil my issues with vendors down to one problem, it would be lying. Too many of the public-facing individuals just bold-faced lie, and they taint all the good employees who work honestly, behind the scenes.

There are a ton of spectacular vendor employees working behind the scenes. Find them and work with them!

Mohawk Chevrolet

Here's a little bit of levity for a Monday morning (click here).

Going forward, you might think about how marketing efforts fit on this continuum.

Mohawk Chevolet is at a turning point ... opposite of paying third parties for customers, with the potential to become creative.

If you want to see what moving up the right arrow looks like, think about Progressive and their Flo and Dr. Rick storylines. Here's Dr. Rick on weather. I personally like the Keith character.

Having had a front row seat as analytics transformed marketing, there is a 'sterilization' process that happens when you start to measure things. Stuff you've always done now looks painfully expensive, and is immediately dropped in favor of sterile things (paying for stuff on Facebook). Soon enough, everybody is doing "sterile things" ... and the slightest deviance from sterile is viewed as being "creative".

Do I need to bring it back to headphones? Yes? Ok. Headphones are now measured on how similar they are to what is called a "Harman Curve". The curve is essentially an average that users set their equalizers at when asked to make sound "sound good". This introduction of analytics/measurement showed that humans consistently have a similar sound profile, with each person deviating modestly from the profile.

Now, if you were going to create a new headphone, would you create it similar to this curve, or very different from this curve, especially if you were trying to appeal to a mass audience? You'd try to come up with something similar to the curve. Now imagine what happens if every manufacturer tried to come up with something similar to the curve? Everything would be the same ... sterile, lacking creativity.

In fact, if you try to deviate from the curve, you'll have the curve people come after you. "Sub-bass is exaggerated and the treble is too spicy" (which is actually called u-shaped, FYI). People evaluate how close you come to the curve, not how good the unit actually sounds.

That's where we are at today in marketing. "Are your Facebook ads working?" is on the far left of the relationship depicted above. Mohawk Chevolet is at the turning point in the curve depicted above.

Yes, I get it, I'm about to get a message from a CEO about how wrong I am. It's ok. If you are on the left-side of this relationship and your efforts are working, yes, you are going to think I'm hopelessly wrong. As the late Don Libey often asked ... "what if"?

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?".

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?