October 17, 2017

Hillstrom's Optimizer: Oh, Maybe The Optimizers Were Wrong

Our base case:

Then here's what happens when you optimize every single individual year as each year comes down the turnpike:

The business is eleven million dollars more profitable by doing this than by following the base case. So, WOW! Life is good! The optimizers were right ... they optimized each year and made you a fortune.

One problem.

In our optimized solution, where each individual year is optimized, we aren't bringing on enough new customers. The "optimal" solution in an individual year was to cut catalog customer acquisition by 65%.

What happens if, instead of cutting customer acquisition spend via catalogs by 65%, we double catalog customer acquisition spend? I know, that's crazy ... that's not the optimal solution!!!

Oh. My. Goodness.

I mean, we optimize each individual year, and we get a better answer.

Then we sub-optimize the answer and we get an answer that is SO MUCH BETTER!!

So what have we learned?
  • Optimization is good.
  • Sub-Optimization is better, especially when it comes to Customer Acquisition.
The secret to business, then, appears to require us to optimize to a point. To a point. And then, we need to sub-optimize the areas of our business that generate new customers ... as long as we sub-optimize to the point where long-term value is maximized.

P.S.:  You've heard of You Goat Mail, right? No? Well go check 'em out. And when you either buy or receive a goat you become a member of the "Goat Herd" (click here). What do you see when you visit the page? You see a ton of low-cost / no-cost customer acquisition awareness. It's not hard to create a club that has no real meaning and no benefits, but is cute. Try something!

P.P.S.:  NEMOA Sponsorship Opportunities (click here).

  • $2,800 = Host a Roundtable Session.
  • $5,500 = Host a Roundtable, Introduce a Session.
  • $11,000 = Speaking Opportunity (Not Guaranteed), Host Roundtable, Introduce Session. One Table for Sales Materials.
  • $21,000 (5 only) = Private Board and Speaker Event, Speaking Opportunity (Not Guaranteed), One Table for Sales Materials, Video Clip played in front of General Audience. Conference Organizers will find a unique way to get Sponsor Noticed.
  • $26,000 (1 only) = Guaranteed Speaking Opportunity, Guaranteed Roundtable Speaking Opportunity, Video Clip played in front of General Audience.
  • Go to the last page ... 1 sponsor @ $26,000 + 4 sponsors @ $21,000 + 6 sponsors @ $11,000 + 13 sponsors @ $5,500 + 21 sponsors @ $2,800 = $306,300.
  • This is a very small ... humble conference ... and they're ranking in more than a quarter-million dollars from sponsorship. What is easier ... generating $306,300 in sponsorship fees or finding 400+ attendees? You already know the answer ... and now you know why conferences are overrun by vendor-centric everything ... and now you know why the attendees are folks who are dazzled by vendor-centric everything ... and now you know why conference topics don't align with the actual problems/challenges you face.

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