February 25, 2008

Hint To L.L. Bean: Giant Whooshing Sound In Chicago

L.L. Bean to open a store in Chicago, courtesy of DMNews.

Hint: The giant whooshing sound L.L. Bean leadership and database marketing professionals could hear is the transfer of catalog and online customers from the direct channel (online, catalog) to the retail channel.

One of my five favorite projects of all time was understanding the shift in customer behavior at Eddie Bauer when new stores were opened in new markets (the forerunner to Multichannel Forensics).

As is often the case in Multichannel Forensics, direct-to-consumer channel customers make a bold move to retail. The new retail customers are unlikely to buy online or via the catalog. This pattern happened at Nordstrom, and consistently happened in the Multichannel Forensics projects I worked on in the past year. Retail is a drug ... for customers and executive leadership.

There are exceptions to every rule, of course. Ultimately, all one really cares about is driving incremental profitable revenue, even if cannibalization of the direct channel occurs. The analytical folks at L.L. Bean have a reputation for understanding cannibalization issues. This particular challenge is tailor-made for Multichannel Forensics.

Business Principle #2