Imagine What You Are Truly Capable Of ...

This was the largest Elite Program run of the past four years. The run required an open mind, something that sometimes eludes me.

What did I observe during all of these runs ... all of these companies ... all of these challenges?

It takes a lot of courage to face great uncertainty, and then have to make significant decisions that could well jeopardize your future. You ... yes, you reading this ... you made important decisions. You could have been wrong, so wrong. Some of you were wrong!! But you made your choices, and you lived with your choices. Nobody ... not a soul ... has the right to judge you for making difficult decisions under such challenging circumstances.

You might feel comforted to learn that (by and large) your decisions were right. If you cut back on your marketing budget and you observed that you made a mistake, you corrected your course. If you saw that business was +40%, you reacted and harvested as many new customers as possible. If you were spending $100,000 with Google and the data said you should spend $200,000, you spent $200,000 ... and you made the decision from home knowing you didn't have the inventory to support every customer and you were willing to disappoint some customers for the opportunity to please many, many more customers.

You closed distribution centers and offices. You opened Zoom and Skype. 

Some among you exceeded 2019 sales by between 50% and 120% during April and May. Yes, you were blessed, but you took the blessings given to you and you amplified your opportunity. You did that. Nobody else did. You did. You turned +35% into +85%.

If somebody told you on Thanksgiving Day 2019 that, from home, via video, you'd transform your business and grow sales by 50% in April/May and you'd be in quarantine ... you probably couldn't have imagined HOW that was possible. And yet, so many of you pulled your brands through this mess. Yes, you. You did it. 

Some of you faced demand catastrophes ... -30%. You also dealt with this from home, and you didn't get any of the benefits your peers enjoyed. They'll be paid bonuses for amplifying good luck, you'll take home a 20% pay cut for mitigating a disaster. Congrats! In many ways, your work was more important. You kept a brand alive when it flat-lined. That kind of effort doesn't get covered in trade journals, but it matters.

Whether you were -30% or +120%, you changed how business will operate ... forever. You had to change it.

I must say, I am so proud of all of you.

We focus on our differences. We lambast our peers because 3% of their belief system is in direct opposition to our belief system.

But since March 11 (what I call "Tom Hanks Day"), alone, we all worked together, each of us trying to solve a complex puzzle with highly incomplete information. Regardless of the "results", all earned an "A" for the processes put in place ... a process you couldn't have fathomed on Thanksgiving Day 2019.

Imagine what you are truly capable of ... given what you accomplished in the past 3-4 months?

Downstream Value

Take every customer you acquired between March 11 and the end of June, and measure their future spend in comparison to customers acquired over the same timeframe over the past 3-5 years.

What does the result tell you?

I'll leave the analysis hanging right there ... you need to go do your homework. Elite Program members already have a good idea if a COVID-bump helped their business this Spring, and they have a reasonable idea if the customers acquired during the pandemic are off to a good start or not.

The Great Experiment

I am on the verge of finishing all of the Elite Program runs. 

There were a lot of them this time around, and for good reason. This time, we had to ferret out the impact of the coronavirus on business.

It's not easy to ferret out the impact of the coronavirus on business.

Why?

Because of "The Great Experiment".

Some of you saw the quarantine coming and decided to stop spending money on housefile customers.

Some of you saw the quarantine coming and decided to stop spending money on acquisition-centric channels (Google, Facebook).

Some of you saw the quarantine coming and decided to wait ... you decided to read what was happening and then react to it. This turns out to have been the right decision for most of you ... so many were suddenly blessed with what I called a "COVID-bump" and responded by pouring gas on the marketing fire, creating a blaze of new customers that will pay back for quite some time.

Some of you did nothing.

Some of you exhausted your inventory levels trying to fill every possible order ... you maximized your opportunity.

In this run, I saw many strategies employed. Nobody was smart enough to know what would happen prior to March 11. Everybody, however, had the potential to adapt quickly once data rolled in ... 

... and that's the lesson of this run.

Don't let your heart become hardened by what you think you should do ... watch what happens, and react accordingly.

Patterns Repeat

That's why we refer to them as patterns.

Have you ever noticed how feckless most loyalty programs are?

It's not the fault of the loyalty program, that's for certain. Or the marketer. The marketer is paid to figure out a way to increase loyalty.

No, customers aren't loyal because the brand offers merchandise that is purchased at infrequent cycles.

As a consultant, you see this pattern repeat constantly. You measure annual repurchase rates, and they're about 22%. Only 11 in 50 customers who bought in 2019 will buy again in 2020. That's not a high rate. The rate is usually a "merchandise-driven" rate. Maybe you sell gifts. How often does the customer need a Christmas gift? Once a year? Yeah, well, that right there precludes loyalty. The customer isn't going to buy in August.

These same patterns repeat in the majority of my project work. The brand I'm analyzing offers merchandise that is only "needed" once or maybe twice a year. The customer won't ever become loyal because the brand doesn't sell "repeatables" ... merchandise that the customer must buy over and over and over again.

If we want to increase customer loyalty, maybe we bypass the traditional loyalty program and instead focus on what we sell? I mean, these patterns just keep repeating ... over and over again, right?

Speaking of Patterns

Here's what a typical day looks like ....

1. I write some code.
2. I run the code
3. It might take 5-10 minutes for the code to run.
4. I look at a curated list of "pundits" on Twitter, searching for themes among their missives.
5. 8 minutes go by and my program finishes running.
6. I analyze data.

It's in the eight minutes that a program runs that I look for patterns. I look to see what the pundits are saying. Are there themes in their comments? Is there news that they're responding to? Where are the pundits being led astray?

Pundits are always being led astray. The "news of the day" constantly pushes and pulls pundits in odd directions.

CNBC will report that Neiman Marcus is going bankrupt ... and the pundits respond with a "THIS IS WHAT IT MEANS" publication. It's almost never "what it really means", but it fills the void and allows the masses to feel like they're being strategic.

You've always got to look a few levels past what the pundits are saying. When a retailer goes bankrupt, you want to think ahead 3-5 years. Will the retailer still be in business? If the retailer is still in business, has anything fundamentally changed? Will the customer base change? Will the merchandise change? Will the expense structure change? Will the management team change? Is the fundamental flaw in the business model being addressed? What happens if the fundamental flaw in the business model is addressed but the competition fails, causing less traffic overall? These are questions you ask yourself ... you don't wait for a pundit to publish a "THIS IS WHAT IT MEANS" article!

Once you answer the question for yourself, once you develop your own thesis, you'll notice that there are patterns that are lying there, ready to be discovered.

You'll notice that A-level malls are likely to thrive ... while marginal malls are finished.

You'll notice that there are affluent customers who will keep affluent brands afloat.

You'll notice that there are lower income rural customers spending $250 a square foot at a Dollar Store ... and that pattern will reappear over and over and over again ... and you'll start asking yourself what that means ... not to Macy's or JCP ... but what that means to Target and Walmart? And you'll quickly realize that the darlings of 2020 ... Target & Walmart ... have issues in 3-5 years. You'll investigate 10K statements and figure out that Dollar Tree / Family Dollar do nearly $24,000,000,000 a year in net sales, and produce gross profits that are equal to or better than Target / Walmart, and that will cause you to really start thinking, because the pundits told you to focus on Amazon when you should be been focusing your thoughts elsewhere. The Amazon thought will lead you to the truth that these dollar stores didn't embrace e-commerce and therefore force the customer to shop the store and you'll immediately understand the feckless nonsense of the omnichannel thesis. Hmmmmmm.

You'll realize that these stores are being opened in areas where there isn't necessarily a nearby Walmart or Target to compete against a dollar store. You'll see inventory turns of 4x/year and then you'll think even more about the fact that you can't move your own merchandise that fast.

You'll realize that in an 83 page annual statement (click here) they mention the word Marketing one (1) time. Once. Won't that disappoint all of the digital marketing pundits out there?

You'll realize that the world changed and that the pundits almost never talk about dollar stores and you'll realize that the pundits are missing the story and you'll figure out the pundits don't really know what they're talking about.

That level of pattern detection will cause you to become a detective.

And by being a detective, your co-workers will perceive you as being "strategic".

Once you're perceived as being "strategic", doors will open.  

All because you are detecting patterns.

Pattern Detection

Back in the day my team supported an EVP of a business unit. This person had virtually no interest in us whatsoever. Oh, he enjoyed putting us through our paces ... the re-work ... the claiming that we never produced documents for him.

Once was what it was. The second time it happened you wondered what was going on? The third time? This was a pattern. And once you establish a pattern, it's up to you to figure out what to do about the pattern.

My team cleared our plans with the SVP of Marketing and the CEO. We didn't even share the plans with the EVP in charge of his own business until "his boss" approved the plan we authored.

Now this didn't go over well with the EVP of the business unit.

But it saved my team a lot of re-work.

And the performance of his business improved. Ultimately nobody cared that we cut the actual owner of the business unit out of the plans for his business, as long as we delivered acceptable business results.

If you want to be a Leader in business, you'll have to become good at detecting patterns. Customer patterns, website usage patterns, Executive Management patterns, they all become important as your career progresses. Start practicing this skill right now.

Pickleball Injuries

So our pickleball community opened up about six weeks ago. After being locked in a house for several months, people lost their minds. They played, and played, and played multiple times a day. They played ten (10) times a week, in temperatures over a hundred degrees.

For 3-4 weeks, that worked out really well.

Then the injuries started to pile up.

Calves.

Groins.

Knees.

Abdomens.

Back injuries.

Plantar fasciitis.

This happens in marketing all the time.

Does your average customer (notice I said "average") really need 18-24 catalog mailings per year? Not even close. But we overdo it, don't we?

Does your average email subscriber (notice I said "average) really need 250-300 pushed email campaigns per year? Not even close. But we overdo it, don't we?

My first job out of college was at the Garst Seed Company. My job was to analyze numerous experiments ... one of my favorite experiments was one where we "overdid it". We'd plant corn hybrid plants increasingly closer and closer to each other until they were so close together that they crowded each other out and generated no incremental yield. The plant breeder PhD's would take me out into the field to show how puny the crowded corn hybrids were vs. those spaced out properly. That lesson stuck with me ... to this day.

You cannot "overdo" it ... in anything.