July 07, 2014

Tactics That Only "Work" For Big Businesses

If you're an analyst, there are two environments where your improvements really make a big difference.
  • Startups.
  • Mega-Brands.
Let me give you an example.

My team at Nordstrom found a way to use targeting to improve overall email-generated sales by about 2%. Now, as a percentage, the number was pointless. But because Nordstrom generated $200,000,000 a year from email marketing alone, the percentage became meaningful.
  • $200,000,000 * 0.02 = $4,000,000 in net sales.
  • $1,100,000 in profit (Earnings Before Taxes).
When I communicated the benefit to company leaders, I'd communicate a 2% increase in sales that yielded $4,000,000 in net sales and $1,100,000 in profit. Folks certainly heard the end of the sentence.

This is the advantage that the big-company analyst possesses.

The small-company analyst isn't so lucky. She generates a 3% lift in sales - she does 50% better than the analyst at a large company. Her company is a $60,000,000 company where email is responsible for $6,000,000 in annual sales. Here's her reward.
  • $180,000 in annual net sales.
  • $54,000 in annual profit.
The message is so much less powerful ... she increased email sales by 3%, and her efforts, while far better than the analyst peer at a large company, are simply not noticeable.

This is the problem with personlization, relevancy, omnichannel, digital, social, optimization, engagement, and any of the trendy topics of the day. "If" they work, they work at a level that benefits mega-brands.

If you work at a small company, focus on the merchandise you sell. Identify what is working, and find ways to get more of that merchandise in front of customers. You have no choice but to find 10% or 20% gains, and those gains do not exist in personalization, relevancy, omnichannel, digital, social, optimization, or engagement initiatives. Those gains do exist by finding merchandise that works.

2 comments:

  1. Your arguments about merchandise are consistently growing more compelling Kevin. What search terms, books/sites or authors (apart from yourself) would you recommend for learning more about the imperative to produce new merchandise?

    "10% or 20% gains..." Whoa.

    Cheers

    ReplyDelete
    Replies
    1. You're not likely to find any mainstream information that is useful.

      Look for articles related to a "Chief Merchandising Officer" or "Divisional Merchandise Manager" or "Group Merchandise Manager" - those are the jobs in my industry (retail, e-commerce) that are leadership focused and have accountability for dealing with increases in sales due to merchandise strategy.

      Delete

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