May 18, 2015

You Are A Doctor, Not A Pharmacist

The modern theme of marketing misses out on all of the magic and glory bubbling within your merchandising ecosystem. You are asked to market in all channels (#omnichannel), and you are asked to pay tolls (Google, Facebook, Abacus) in an effort to get customers to purchase.

In other words, the industry wants to help you prescribe a drug ... the industry wants you to count pills and put the pills in a bottle and then communicate side effects (omnichannel sales gains).

Your job, quite honestly, should be the opposite. You should be a doctor. You should diagnose problems, and then you, yes you, should prescribe the solution.

Do not be a pill counter. (in the medical world, by all means, I fully encourage you to be a pharmacist - I'm talking about marketing, not medicine).

We don't have enough doctors in our industry.

Let me give you an example. Let's go back to 1998. Yes, I'm at Eddie Bauer, Director of Circulation, fingers in every pie. The Home business was awful. Those folks always lost money. And those folks somehow kept their jobs in the process ... posting -10% earnings before taxes year after year. But now that I'm the circulation director, I'm accountable for that -10% as well. I don't want to be responsible for posting -10% earnings before taxes. 

Bad business is not going to be my fault.

*** Here is where the vendor community will tell you that I'm using math incorrectly - patiently listen to their complaints, then get busy implementing solutions ***

I created a series of logistic regression models. The independent variables were demand spent by twelve-month buyers, by merchandising category, in 1996. The dependent variables were 1/0 indicators ... did the customer purchase from a series of merchandise categories in 1997? Each logistic regression equation featured prediction of a 1/0 buy/no-buy variable regressed against demand spent the year prior in each merchandise category.

Have you ever run these equations? The coefficients reveal the secrets embedded within your business!! The coefficients tell you why some categories never grow, while other categories grow by default.

In the case of the Home division - the coefficients told a very interesting story.
  1. Existing Eddie Bauer customers did not want to buy Home product.
  2. Home customers, after buying Home product, did not want to buy Home product. Home customers wanted to buy Apparel next.
When you see (1) and (2), what would you do to grow the home business, knowing these two facts?


Heck no.

Here's what I did:
  • I rented every single Williams Sonoma and Pottery Barn name I possibly could. Often. All of them.
In fact, half of my circulation plan (it took WS/PB two years to figure out what was happening) consisted of Williams Sonoma and Pottery Barn names. 

Oh, I caught heck within Eddie Bauer for doing this. "Why aren't you mailing our own customers, you idiot?" Well, I'm not mailing them because our own customers won't buy the product, that's why!!

Not surprisingly, the business went from losing a couple million dollars a year to losing a hundred thousand dollars within a year. The business wasn't fixed - but the business was no longer floundering into oblivion, either.

Do you understand, dear marketers, that you have power? You - yes you - can fix major problems on your own, if you simply act as a doctor and diagnose a problem instead of being a pharmacist who counts omnichannel pills.

Tomorrow, I'll share more information on the methodology I used at Eddie Bauer, way back in 1998. Vendors will tell you that I'm using math incorrectly. I'm here to tell you that I work in the real world, and the technique works very, very well in the real world.

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