August 21, 2016

Moving Sideways

This is a perfect example of "moving sideways".

The term came from an article about Wal-Mart's e-commerce business ... an employee discussed doing things that are completely unproductive but cause everybody to feel busy, to feel like they are being strategic.

Look at the postcard once again.

Look at the dot.

"Check your email for your 10% off promo code."

Do you understand how hard it is to generate profit? Of course you do. You measure profit, right? RIGHT?

Pretend that the postcard costs $0.29. You have to increase the effectiveness of your email marketing campaign by a factor of 3.9 in order to generate the same amount of profit. Take a look at this example for a home-based brand.

What are the chance of quadrupling response?

And why spend $29,000 to quadruple response in an effort to generate the same amount of profit? What else could you do with the money? Something innovative? Or something like this, where you are moving sideways?

You can't listen to your vendor partners when it comes to marketing strategy. Of course your paper rep wants you to spend money on a two-step conversion process. Of course your printer wants you to spend money on a two-step conversion process. So you pay each party $29,000 and what do you get? Nothing. Not a penny. And that's assuming that you increase response by a factor of 3.9. You have to quadruple response just to break-even.

What in the heck are we doing?

Who are we listening to?

Now yes, there's a chance that response increases by a factor of 8x and this works wonders.

But on average, there's only a 10% to 20% chance that happens. The other 80% - 90% of the time, the paper rep and printer get paid, and all we get for our efforts is a shiny postcard with a two-step conversion process tied to a discount/promotion. What does that have to do with the merchandise we sell? Do we have any passion about the merchandise we sell? Think about it.

My goodness.

We're better than this.

This isn't a Wayfair issue. This is an industry issue. Our industry has been taught to believe that two-step processes tied to discounts are good strategy. A good strategy, of course, is to feature merchandise the customer has to purchase right now. And if you don't have merchandise that the customer has to purchase right now, well, you've identified the problem with your business, haven't you?

1 comment:

  1. Anonymous12:46 AM

    Your admonition rings so true Kevin! Your effectiveness table ought to be among the FIRST things a brand does to model the ROI of their channel efforts and the efficiency of their spends. How often do you see that happening these days? I sure don't see it happening often enough.


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