Problem #9 = Discounts Drive Down Price Of Existing Winners
Problem #8 = Relying On 1-2 Customer Acquisition Channels
Problem #7 = Has To Be Right
I'm pretty sure all of you have run across this issue. Let me give you an example.
An Executive sits down next to me, and with a room full of subordinates eagerly watching, the Executive begins to try to trap me into an answer that verifies that the Executive is "right".
Exec: It's really becoming hard to find new customers, isn't it?
Exec: I thought so. And in order to grow, we either need new customers or we need existing customers to spend more, right?
Exec: But if it is hard to find new customers, then we are really left with one choice, and that choice is to get customers to spend more, right?
Exec: But you agree that it is getting harder to find new customers, correct?
Exec: Then it is settled. We need to squeeze more juice out of the lemon. Now what's the best way to do that? I think we need a loyalty program. You flew here on an airplane, right?
Exec: And you probably gave a frequent flyer number when you bought the ticket, right?
Exec: Because you want to be able to eventually earn rewards benefits. That's what loyalty programs are all about. What we need is a comparable loyalty program that rewards our customers for buying from us. Of course, we can't give away the farm, but we can give away just enough to make the p&l work. Can you give me a list of best practices we can employ from a loyalty standpoint, given that you agree that it is becoming really hard to find new customers?
Exec: Why not? You agree with me, right?
Kevin: You are in charge of merchandising. Why don't you just sell better merchandise and then everything takes care of itself - more new customers, more loyalty, more of everything!?
Exec: Because we're talking about implementing a new rewards program.
Kevin: That's what you are talking about. But you are accountable for offering merchandise that customers crave. Why not focus on that?
Exec: Even still, you agree with me that it is becoming hard to find new customers. So I'll mention that you are on my side at our next Executive Leadership Meeting. Our team will appreciate that an outside expert agrees with my thesis.
This Exec has to be "right". And he'll ask leading questions and manipulate situations in a quest to be right. Meanwhile, the area he's accountable for (merchandise) is suffering.
It's almost worse when a garden variety Analyst / Manager exhibits this behavior. Way back in the day at Lands' End I became a Manager ... and when that happened, people (some with more experience than I) just wanted to do their job ... and I boxed them into a corner telling them exactly "how" they had to do their job, from A to Z. I "had" to be "right". Never mind my staff (and co-workers and those above me) had better ideas, I "had" to be "right". Heck, I remember rambling on and on about some esoteric methodology and how it was the "right" way to do things ... another Manager from a highly credible competitor who recently joined my company looked at me and said "What is wrong with you?" I may have said something like "you just don't get it" ... but the better question was "What was wrong with me?!!"
I had to be right!
We're facing big problems ... catalogers are imploding courtesy of an unhealthy over-reliance upon co-ops ... retail foot traffic is imploding due to a lust to be "digital" ... and e-commerce is a mess with Amazon representing between $3 and $4 of every $10 for the ENTIRE E-COMMERCE INDUSTRY (just let that one sink in for a moment).
It's time to realize we aren't right and we sure don't have to be right.