March 27, 2016

Inventory Position = A Customer Acquisition Strategy


Here, in this image from Olive via their Facebook presence, a customer complains that items are always sold out quickly. The employee responds ... suggesting that the customer visit often, because the merchandise assortment is frequently refreshed.

There is a difference in how classic brands view inventory management, and how newer digital/retail brands view inventory management. The classic brand doesn't want to disappoint a single customer. As a result, the classic brand doesn't create urgency through inventory ... maybe via 20% off or 30% off, but not through inventory.

The modern digital/retail brand creates urgency via marginal inventory positions. When the brand has a reputation for running lean, purchases tend to happen NOW. Customers/Prospects visit more often. Inventory turns are faster. Liquidations are minimized. Profit is generated.

The downside, of course, is that the lean digital/retail brand misses out on purchases, simply because not enough inventory is maintained.

Urgency via Inventory Position is a strategy to convert prospects fast. You may or may not agree with the strategy. But at least think about it, ok?

MLV

Y'all have heard of Customer Lifetime Value (called CLV or LTV), right? Another 10% of you calculate the metric and know what the rig...