March 26, 2015

Gliebers Dresses: Poor Customer Acquisition Performance

As you know, Gliebers Dresses is a fictional story of a Catalog Executive Team dealing with modern marketing challenges. If a brief fictional story doesn't meet your expectations for a Friday morning in late March, please read this article, an article with omnichannel repercussions (click here).

Glenn Glieber (Owner, Chief Executive Officer): Ok, ok, enough discussion about the basketball tournament. My bracket is officially broken, and I don't need additional heartache.

Lois Gladstone (Chief Financial Officer): Roger, who is the young lady sitting next to you, and why is she attending our Executive Meeting?

Roger Morgan (Chief Operations Officer): She is beautiful, isn't she?

Ashley Cole (Vice President, Client Relations, Omicron): Roger, stop it.

Pepper Morgan Pressley (Chief Marketing Officer): Her name is Ashley Cole, and yes, Roger, why is she here?

Ashley Cole: Roger invited me to talk about some of the new developments at Omicron.

Glenn Glieber: What is Omicron?

Ashley Cole: We are the leading provider of name services in the omnichannel industry.

Glenn Glieber: I have no idea what that means.

Pepper Morgan Pressley: Omicron is the leading co-op in the catalog industry. We give Omicron our most recent buyers, on a weekly basis, for free.

Meredith Thompson (Chief Marketing Officer): For free?

Pepper Morgan Pressley: Don't worry, it's a catalog marketing best practice.

Meredith Thompson: What do we get in return?

Pepper Morgan Pressley: We get the right to select recent names at a cost of six cents apiece, and then we get to mail the names exactly one time. If the customer purchases, we get to keep the name and address in our database. If the customer doesn't purchase, we have to go back to Omicron and purchase names again for the next mailing.

Lois Gladstone: And again, and again, and again, in perpetuity.

Roger Morgan: The bean counter exhibits her bias.

Lois Gladstone: I have a bias against wasting money, yes.

Roger Morgan: How else are we going to acquire new names? Our customers are too old to shop the internet. We failed to craft a reasonable omnichannel strategy, so now we're at the mercy of Omicron.

Ashley Cole: I think what Roger meant to say is that Omicron is a valued business partner.

Meredith Thompson: Vendor.

Ashley Cole: Excuse me?

Meredith Thompson: Business partners don't rip off clients. Vendors rip off clients.

Ashley Cole: We don't rip off anybody.

Meredith Thompson: Oh come on.

Ashley Cole: You get a good customer discount of a quarter of a cent per name. We're adding a lot of value.

Meredith Thompson: Tell me this, Ashley. I recently purchased from a handbag catalog. Two weeks later, I'm on Facebook, and my content seems to be mysteriously skewed to online handbag companies. Tell me how that happens?

Ashley Cole: That's all part of our "symbiosis" model. We work terribly hard to get you the most responsive names in our database. In return, you agree to allow us to generate revenue by offering your names to leading online marketers looking for access to recent purchasers.

Lois Gladstone: You are renting our names to Facebook and to online marketers?

Ashley Cole: Absolutely.

Lois Gladstone: Are you nuts?

Roger Morgan: Lois, be professional.

Ashley Cole: I'll address the question. Our symbiosis program allows Omicron to better understand the complex relationship between catalog marketing activities and subsequent online marketing behavior. We use this information to better inform derived attributes in our symbiosis model.

Lois Gladstone: So we give you names for free, correct?

Ashley Cole: And we appreciate your partnership.

Lois Gladstone: Then you sell comparable names back to us at six cents apiece, is that right?

Ashley Cole: You're not paying six cents. You are leveraging your catalog marketing program to generate new customers that have a lifetime value that more than offsets the cost of cooperative renting.

Glenn Glieber: Sounds good so far.

Lois Gladstone: No, not good. We give names for free, then we rent names for six cents a piece, over and over and over again, right?

Ashley Cole: Correct.

Lois Gladstone: We could rent the same name thirty times a year, if the name doesn't respond, is that right?

Ashley Cole: It's been that way for more than twenty years, and nobody complains.

Lois Gladstone: I'm complaining.

Roger Morgan: Same old same old.

Lois Gladstone: Can we see reporting that helps us understand how many times we repeatedly rent the same names from you?

Ashley Cole: Oh heavens no. We cannot do that.

Lois Gladstone: You cannot do that, or you won't do that?

Ashley Cole: It's not part of our business model. You just need to trust the models.

Meredith Thompson: Pepper, how are Omicron names performing?

Pepper Morgan Pressley (thumbing through a thick stack of documents): In 2014, Omicron names performed eighteen percent worse than in 2013, and in 2013, Omicron names performed fourteen percent worse than in 2012.

Meredith Thompson: For the love of God.

Roger Morgan: Don't bring religion into this, we'll get Glenn started and he won't quit.

Glenn Glieber: What?

Meredith Thompson: So your names are down about thirty percent over a two year period of time? That's horrible. It's any wonder our business is taking. It's your fault.

Ashley Cole: It's hardly my fault.

Meredith Thomspon: Well it isn't Roger's fault, we know that.

Roger Morgan: Thank you.

Meredith Thompson: And it cannot be my fault, because our housefile names are performing at comparable levels to 2013 and 2012. We offer the same merchandise to prospects as we offer to housefile names. That's puts accountability for business performance squarely on you.

Ashley Cole: How am I accountable for your problems?

Meredith Thompson: Your symbiosis model is clearly not working properly. And then you take the names we contribute, and you sell them to online marketers. You're probably shifting our business to online marketers.

Ashley Cole: Online marketers don't compete with you.

Meredith Thompson: Roger has spent six years telling us that all omnichannel businesses compete against each other, so don't tell me something I know that Roger believes to be a fact because he purchased a white paper from Woodside Research.

Roger Morgan: So you have been listening to me!?

Meredith Thompson: Do we earn any list income when you sell our information to online marketers?

Ashley Cole: That's not the purpose of a symbiosis model.

Meredith Thompson: Is the online marketer required to contribute their names to your database, so that we can have access to those names?

Ashley Cole: Absolutely not.

Meredith Thompson: Why not?

Ashley Cole: They wouldn't rent our names if we forced them to contribute their names to the database. Companies like are not stupid!

Lois Gladstone: You must think we are the dumbest marketers on the planet!

Ashley Cole: I think you are being distracted by minutia.

Lois Gladstone: I am being distracted by your hubris.

Ashley Cole: There is nothing wrong with renting our names to online marketers.

Lois Gladstone: She said our names, as if we share them.

Meredith Thompson: Let's follow the money. We give you names for free. You sell names back to us. You then model our names and rent them to online marketers. You get paid twice. We get performance that is down thirty percent over the past two years.

Ashley Cole: You need to give this symbiosis model a chance.

Pepper Morgan Pressley: Ashley, we've used the stupid model for two years - the exact two years when our performance slumped!

Ashley Cole: Pepper, we've had this discussion every month for the past two years. I keep telling you, you have to trust the model. Trust the model.

Pepper Morgan Pressley: I don't have time to trust the model. If I keep working with your organization, and I keep delivering horrific business results, I get fired.

(nobody says a word ... nobody defends Pepper ... not even Glenn Glieber)

Lois Gladstone: Ashley, can you tell us the attributes that are in the symbiosis model?

Ashley Cole: I can't do that. If that information got out, we'd lose our competitive advantage.

Lois Gladstone: So you cannot tell us how you select names in a symbiosis model?

Ashley Cole: Correct.

Lois Gladstone: And you cannot tell us if we have rented the same names from you for each of the past thirty mailings?

Ashley Cole: Correct.

Lois Gladstone: And you are going to continue to rent the names we give you for free to online marketers, but online marketers are not required to give you their names for free so that we can rent online names from you because online marketers are not stupid?

Ashley Cole: Correct.

Lois Gladstone: And you are not going to share the list income you derive by renting our names to online marketers, names we give you for free. Instead, you will keep all of the list income for yourself, correct?

Ashley Cole: Correct.

Lois Gladstone: What kind of car do you drive?

Roger Morgan: She drives a Tesla. You should see it!

Lois Gladstone: I'll bet she's a beauty.

Roger Morgan (glowingly beaming at Ashley): She sure is!

Lois Gladstone: Maybe Pepper or this vendor needs to be fired.

Meredith Thompson: I agree.

Roger Morgan: Oh come on, you can't be serious?

Ashley Cole: Roger brought me here to talk about some of the exciting new products we have in the works for later this year. Are we ever going to get to the topic I was asked to address?

Pepper Morgan Pressley: Why do you want to fire me? Fire Roger. He brought Ashley to our meeting. He isn't even responsible for her.

Roger Morgan: You cannot fire Pepper. Pepper is following established industry best practices. Nobody should be fired for following established industry best practices.

Meredith Thompson: Then we have to fire Omicron.

Roger Morgan: We can't do that!

Meredith Thompson: What you do mean? I fire vendors every day.

Roger Morgan: We don't have a credible method for replacing the names Omicron finds for us. Am I right, Pepper?

Pepper Morgan Pressley: Strangely, yes.

Meredith Thompson: So what you are saying is that, without Omicron, we cannot acquire enough new customers. We need Omicron, and the more we need Omicron, the more money Omicron makes by selling our need to online clients?

Roger Morgan: Bingo!

Meredith Thompson: That's disgusting.

Ashley Cole: It's hardly my fault.

Meredith Thompson: It's 100% your fault!

Ashley Cole: You have had twenty-five years to diversify your new customer portfolio by finding new customers online. Online companies thrive by finding low cost new customers in digital channels. In many ways, online acts as a form of free marketing.

Glenn Glieber: I love free marketing!

Ashley Cole: Twenty-five years, folks. And instead of finding new customers via online channels, you chose us. Granted, we're happy about that. But you should have pursued an omnichannel approach to new customers.

Roger Morgan: Bingo again!

Lois Gladstone: This comes back to Pepper. She's accountable.

Pepper Morgan Pressley: Where is Dr. Gene Feldman when you need him? Why isn't he here?

Glenn Glieber: Feldman? I fired him yesterday. He wanted to open stores in Canada. He thought Montreal was a logical extension of the New Hampshire core customer audience.

Pepper Morgan Pressley: Isn't that what an Executive Vice President of Global Brand Direction is supposed to do? Isn't he supposed to author Global Brand Direction?

Glenn Glieber: I don't even remember why I hired him anymore.

Ashley Cole: By firing him, you deny yourself an opportunity to find new customers via an omnichannel approach.

Glenn Glieber: By firing him, I don't have to hear him drone on and on about how he invented menu items when he worked at Taco Bell. There are only so many ways to pour hot cheese food over a corn chip.

Ashley Cole: So you fail to acquire customers online for twenty-five years, and you fire a guy who wants to consider opening stores in international markets. Your response to not diversifying your customer acquisition strategy is to chew me out for twenty minutes and to then consider firing the Chief Marketing Officer, a woman who has no choice but to use my services because you take away any other opportunity for her to find new customers. Is that how things work around here?

Roger Morgan: They've been mocking me about omnichannel strategies for a decade.

Lois Gladstone: I think we're a bit off topic here. How are we going to reverse the decline in performance of Omicron names?

Ashley Cole: Trust the models.

Lois Gladstone: That's it?

Ashley Cole: That's it.

Glenn Glieber: I'm glad we settled that topic.

Meredith Thompson: We haven't settled anything. Somebody is accountable for ruining our ability to acquire customers. I think it is Ashley.

Lois Gladstone: Financially, we cannot allow this to happen. If Meredith's merchandise productivity dropped by 30% over two years, she'd be fired.

Roger Morgan: And under what circumstances would you, Lois, deserve to be fired?

Lois Gladstone: That's the great thing about finance, Roger. You get to point out what everybody else does wrong, and unless you do something unethical, you're in good shape.

Roger Morgan: We should not beat up Pepper.

Lois Gladstone: Who, Roger, is going to reverse this trend? Not Ashley. She says we should trust her, even though her work resulted in a 30% drop in names over two years. If Pepper isn't willing to make a change, then something needs to happen to Pepper.

Pepper Morgan Pressley: We get 70% of our new names from Omicron. Who else is going to deliver names to me? Show me!

Meredith Thompson: I think it's obvious who is accountable here. It's Omicron.

Lois Gladstone: It's Pepper.

Glenn Glieber: I think we're done here. I know what I need to do.

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