November 15, 2018

Speaking of Omnichannel Theory

Have you ever purchased something from Apple?

Apple are Visual Merchandising experts. You might buy a lightning cable and you instead get a Tiffany's style presentation of your overpriced cable. That's the power of Visual Merchandising.

I ordered a rug from Home Depot. They outsourced delivery to a third party ... and the third party appears to have outsourced delivery to another party - a dude driving a Penske Rental Truck. I was supposed to sign for the item ... nobody rang the doorbell, I didn't sign, and as a consequence I didn't see what arrived until I saw the Penske Rental Truck pulling away from my home.

I opened the front door - and I was greeted by the image featured here.

The rug might have been dragged down a freshly paved road.

You can have the best omnichannel strategy on the planet ... but if you fail in any of the three key areas, your omnichannel strategy is utterly feckless.
  1. Merchandise. Yup, that's what customers actually purchase.
  2. Visual Merchandising / Creative. Does the rug above pass the Visual Merchandising test?
  3. Execution. Home Depot outsourced their execution to a third party that couldn't have cared less about executing properly. Which means that Home Depot isn't going to sell me any rugs in the future.
If you have great merchandise, and if you present the merchandise in a compelling manner, and if you execute well, you'll sell stuff. If you adhere to the omnichannel thesis and fail at merchandise / visual merchandising / execution, you have problems.

Focus on what matters for your business, ok?

November 14, 2018

Omnichannel Customers Are The Best Customers

Omnichannel customers may well be the best customers. But that doesn't mean that the omnichannel thesis caused customers to become best customers.

It can be hard to understand the concept of "incremental value". Simply put, incremental value is the additional value that you achieve, above and beyond what would normally have happened.

Let's say you have a customer who purchased online three times. This customer is about to purchase again, and wants to buy online. But the company invested money in a buy-online-pickup-in-store strategy (BOPIS as the pundits say), so the customer goes to the store and buys something. The customer is now an omnichannel buyer ... online and store.

Assume the customer would normally have migrated from 3x online / 0x retail status to 4x online / 0x retail status.
  • Annual Value increases from $76.79 to $98.59 ... $21.80 annual sales gain.
But instead the customer migrates from 3x online / 0x retail to 3x online / 1x retail status.
  • Annual Value increases from $76.79 to $114.81 ... $38.02 annual sales gain.
The incremental gain, of course, is the difference between what would have happened ($21.80) to what now happens ($38.02). The difference is $16.22 annual sales gain.

The $16.22 is the incremental annual sales gain caused by the omnichannel thesis. It is more than $0, so that tells us that the omnichannel thesis has some value. That's a good thing.

Then there's the bad thing.

First, we subtract cost of goods and we're left with maybe $6 of annual value. Then we subtract the incremental cost of transacting in a retail store ... that could (depending upon your CFO) include incremental retail employee costs, store rent, and potentially interest expense because the customer is now required to contribute to pay down the debt required to build the store. Worse, the customer has to pay for the incremental cost of the software required to make "BOPIS" possible in the first place. These costs are compared against online costs (pick/pack/ship) ... so you only assess the incremental above-and-beyond costs associated with moving the customer down this path.

This is where the "omnichannel posse" hops on Twitter and condemns the analysis. They'll say that there are customers who wouldn't buy, period, unless the BOPIS option was available. That's a hard one to prove ... but sure, go ahead and tell me how many customers fall into that category, and we'll give full incremental value to those customers and assign credit to the omnichannel thesis. This is a wild guess, of course, so we should discount the value of a guess, right?

From there, you run a profit-and-loss statement. Did the omnichannel thesis provide enough incremental profit to offset the costs associated with moving a customer into omnichannel status?

Show of hands ... how many profit-and-loss statements have you seen that factor in incremental value?

This is the style of analysis required to prove that the omnichannel thesis is appropriate. Go run it, ok?

November 13, 2018

Omnichannel Theory

Omnichannel Theory / Customer Experience Theory is predicated on the hypothesis that when a customer does "more" the customer becomes "more" valuable.

The data used to support the theory is highly fraudulent, to say the least. Typically, those promoting the theory average historical spend for all customers buying from one channel (i.e. $100) and compare it to average historical spend for all customers buying from multiple channels (i.e. $900). Those who promote the theory look at the ratio of spend (900 vs. 100) and say that the omnichannel buyer is worth 9x as much ... and then paint a picture where the "brand" is encouraged to convert as many customers as possible to as many channels as possible because the opportunity is a 9x increase in customer spend.

We know the measurement strategy is highly flawed ... just look at Macy's, who have suffered through a 10% sales drop in the past few years while touting their omnichannel strategy. If the strategy worked, sales would have increased dramatically.

Tomorrow I'll explain a few of the metrics in the attached table. I analyzed customers who purchased up-to-five times historically, with at least one purchase in the past year. The story told in the table directly contradicts what those who promote omnichannel theory want you to believe, but directly support the fact that omnichannel brands don't enjoy sales increases.

November 12, 2018

Last Chance For 2018 Pricing

I have room for one more project for the remainder of 2018 ... one more! However, if you get your project in before Thanksgiving, I will honor 2018 "Total Package" pricing. In 2019, there will be a new pricing structure, so get your project in now to get lower prices ... and if you are first, you get your project completed in December.

2018 "Total Package" Pricing:
  • Annual Sales $1 to $9,999,999 = $9,000.
  • Annual Sales $10,000,000 to $29,999,999 = $15,000.
  • Annual Sales $30,000,000 to $59,999,999 = $20,000.
  • Annual Sales $60,000,000 to $99,999,999 = $28,000.
  • Annual Sales $100,000,000 to $999,999,999 = $35,000.
  • Annual Sales $1,000,000,000 and Greater = $40,000.

November 11, 2018

If You Thought 20% Off Was Bad ...

Remember our example from last week?

We were talking about 20% off, and we were discussing how you had to sell 83% more units to increase demand by about 46% to generate equal levels of profitability compared to selling at full price.

Of course, there aren't many of us who are out there selling at a paltry 20% off. And with Cyber Monday just around the corner and trade journalists screaming about discounts leading to "another record" event (which allows them to get clicks and to get paid by the vendors who support your CRM efforts to promote Cyber Monday discounts ... interesting, don't you think?) ... you're more likely to be closer to 40% off than 20% off.

In our example above, how many units do we need to sell if we bump things up to 40% off?

Hint - it's a lot of units.

We need to sell 11 times as many units, generating more than 6x as much demand, to achieve the same level of profitability.

In other words, one of three things (or all three things) are happening when you see a brand offering 40% off.
  1. The business is dying and nobody is buying the merchandise, leaving the company with no choice whatsoever but to discount heavily to move through inventory.
  2. The business has gross margins that are north of 70%, allowing for a cycle of fake markups and brisk discounts.
  3. The business employs professionals who do not understand math.
Keep 1/2/3 in mind when you look at discounts on Cyber Monday in a few weeks, ok?

Your job is to do what is right for your business, not what is right for other people.

Generate profit.

P.S.:  If you are frustrated with discounts about discussions (and my unsubs suggest you don't like it when I point out the math behind discounts), then read this from Stitch Fix ... about personalized communications (click here). There are so many ways to be successful ... ways that have nothing to do with discounting merchandise because customers aren't as responsive as you forecasted them to be. 

November 08, 2018

You Need To Move A Lot Of Units To Make The Math Work

"The Industry", largely comprised of your vendor partners, wants you to use discounts / promotions to tickle the buying bone of today's price sensitive customer ... or so they tell you. Just look at the lather they get themselves into talking about Cyber Monday, for instance.

But is discounting right for your business?

You need to move a lot of units to make the math work.

Here's our example from yesterday, taken one step further down to contribution. Look at how many additional units you have to sell at a 50% gross margin and 20% off in order to make the numbers work.

At just 20% off with a 50% gross margin and a $3 cost per item for pick/pack/ship, you need an 83.3% increase in units (which nets out to a 46% increase in demand) just to make the math work.

Just let that sink in for a moment.

In fact, let that sink in for the weekend.

I'll come back to the topic next week, ok?

November 07, 2018


Let's evaluate discounts / promotions within the context of the "Great Eight".

There's no greater temptation than to offer 20% off (or more) when business is not accelerating.

Your vendor partners love it when you discount, because you use their tools to sell more units in the process. Your merchandising team "might" appreciate the discounts as long as they move enough units to open up their buy for more new merchandise in the future. Your CFO likely doesn't enjoy discounting for obvious reasons.

Within the Great Eight, here's where discounting plays a role.

AUDIENCE:  Discounting fundamentally changes the audience. Ask Apple / Google if you want to understand the dynamic ... Apple owns affluent customers and most of the profit ... Google/Android owns a large swath of customers and the scraps of profit associated with a lower-priced category. Discounting pushes you into the "scraps of profit" audience. Full priced selling is MUCH harder and MUCH more profitable.

AWARENESS:  How are you going to communicate to those who don't buy from your brand that you are discounting?

ACQUISITION:  Google/Facebook want you to discount because that drives more traffic their way, which fattens their bottom line. The less profit you make, the more profit they make. Fun business, huh?

WELCOME PROGRAM:  Here's where your existing vendors love you ... now you leverage their tools (databases, campaign management systems, social, print, television, radio, billboards, retargeting) to communicate your wonderful 20% off opportunity.

ANNIVERSARY PROGRAM:  Again, your existing vendors love you ... you leverage their tools to communicate your version of Amazon Prime Day, and you give discounts to customers who haven't purchased in a year.

OPTIMIZATION PROGRAM:  Again, your existing vendors love you ... you might optimize your discounts using their tools, you might optimize customer long-term value, you might optimize the number of annual print pieces to send to a customer, you might optimize the number of email campaigns per week featuring discounts. In most cases, you'll be using vendor-based tools to get to a theoretical "optimal" outcome.

NEW MERCHANDISE:  Discounts can be used to move merchandise that isn't working, though there are many other ways to achieve a more optimal outcome (smarter inventory buys, using marketing spend to move units instead of discounts).

EXISTING MERCHANDISE:  See "new merchandise".

As you can see, discounts touch most areas of the "Great Eight" ... and are of particular value to the vendors selling solutions to you ... because smart discounting either requires you to use their tools or drives more units which results in their tools being more profitable to them. Vendors win when you discount. That's why you read so much about discounting and (in particular) loyalty programs.

Tomorrow, will talk about the other side of discounting ... profitability.

November 06, 2018

Carrying Capacity

In our simulation, we learn that there are different definitions of Carrying Capacity.

If the CFO demands that we maximize profit of acquisition based on one-year profit, then our Carrying Capacity is 37,678 new customers (at an investment of $500,000).

If the CFO demands that we maximize profit of acquisition based on five-year profit, then our Carrying Capacity is 45,000 new customers (at an investment of $1,000,000).

If the CFO demands that we maximize profit of acquisition based on ten-year profit, then our Carrying Capacity is 47,951 new customers (at an investment of $1,250,000).

Notice that the difference between spending $250,000 on customer acquisition and $1,250,000 on customer acquisition isn't great.

Notice that the difference between spending $250,000 on customer acquisition and $1,250,000 on customer acquisition is HUGE when evaluating 10-year profit.

In other words, we frequently optimize for short-term profit, and we wonder why our business never grows in a healthy manner.

Measure Carrying Capacity. If you want a healthy business in the long-term, you have no choice but to know what your Carrying Capacity is.

November 05, 2018


Here's an example of the concept of Carrying Capacity for a brand.

Yes, I know, it's hard to read and it is a tiny image. There's a lot of data there. Click on the image for more details.

This company is making a killing on customer acquisition. It's spending a million dollars a year, and is generating $1.6 million in annual profit from customer acquisition. This company is simply not spending enough money to acquire customers.

Let's try a simulation. Instead of spending $1.0 million, let's spend $1.5 million acquiring new customers, ok?

We're less profitable after on year. We're less profitable after two years. We're less profitable after three years. But we're more profitable in years four through ten. After ten years of total profit summation, this strategy is more profitable.

The new Marketing Leader runs a bunch of simulated outcomes, then sits down with the CFO and comes up with a sound strategy for the business - one agreed upon by both the CFO and the new Marketing Leader.

Tomorrow, I'll share what the carrying capacity is for this business.

November 04, 2018

Carrying Capacity

Here's the biological definition of Carrying Capacity (click here).

In marketing, the Carrying Capacity of a brand is the amount of new customers that can be acquired while satisfying short-term and/or long-term brand profitability requirements.

There are few things more important to the new Marketing Leader than knowing the Carrying Capacity of the brand on Day One of a new job. The new Marketing Leader first sits down with the CFO and learns what the short-term and long-term profitability targets are. Then, the new Marketing Leader runs a handful of simulations, measuring what happens to both short-term and long-term profit as customer acquisition spend is varied.

Tomorrow, I'll show you an example of what Carrying Capacity really means to the new Marketing Leader.

November 02, 2018


Every so often, I get one of those emails from the vendor community ... something about how print is critically important in a digital world. You know there is some sort of coordinated effort, because a popular vendor will say something and then a paper rep says something and then newsletters include the content and then consultants are talking about it and then clients say something to me about it ... see how that works?

So it got me thinking ... if print is in a period of resurgence as the industry says print is, then sales at RR Donnelley and Quad Graphics should be surging and those businesses should be healthy, right? Right?

Fortunately, each company issues quarterly sales updates and produces annual reports - in accordance with their status as publicly traded companies. And we're all able to read those statements and learn what is actually happening - as opposed to the content produced by the industry.
There are interesting comments in the documents. Here's annual sales at Quad:
  • 2013 = $4.7 billion.
  • 2014 = $4.8 billion.
  • 2015 = $4.6 billion.
  • 2016 = $4.3 billion.
  • 2017 = $4.1 billion.
  • 2018 = Trending toward $3.9 billion.
Oh oh.

Look at what Quad says on page 7:
  • "Over the past seven years, the Company has closed 41 manufacturing plants representing nearly 13 million square feet of under-utilized production capacity. This commitment to consolidating work into fewer facilities to maximize capacity is one key way Quad/Graphics maintains platform excellence and remains the industry's high-quality, low-cost producer."
Look at what Quad said about their 2018 outlook:
  • "In 2018, the Company expects net sales to range from a slight decrease to a slight increase as compared to 2017 primarily driven by organic growth in the International segment, partially offset by the anticipated continuing volume declines in the Variable Print segment and price pressures in most parts of the business."
A comment from RR Donnelley:
  • "The print and related services industry, in general, continues to have excess capacity and remains highly competitive and fragmented."
That only happens when supply exceeds demand - they built their infrastructure expecting a certain level of print volume and that level of print volume isn't happening.

Another comment from Quad - 21,000 employees as of today ... but 41 plant closures resulted in the elimination of 11,800 employees. That's a lot of contraction. A lot of that happens because of efficient operations. Some of that happens because print volume is in decline.

An RR Donnelley tidbit:
  • If you invested $100 in RRD stock in 2012 you'd have $94 today.
  • If you invested $100 in the S&P Small Cap 600 in 2012 you'd have $209 today.
Why share all of this information?

You can earn a TON OF PROFIT using a marketing channel that is in decline ... I've got many clients doing just that ... and Quad is generating profit in spite of the structural decline of the industry. Heck, people have been saying TV is dead for more than a decade, and it may well die sometime, but ask Fox News or CNN if they're printing money or not during this election cycle?

Make no mistake ... there isn't a resurgence in print. The industry is in structural decline.

The industry doesn't need to lie to you. If everybody operate with integrity, there'd be plenty of profit to go around, regardless of the long-term prospects of print.

Do what is right for your business. Make profitable decisions. That may include print. That may include other channels.

November 01, 2018

Macy's Is Doing Something I Agree With: Employee Influencers

I didn't think I'd be praising Macy's this week, but this is fantastic (click here).

300 employee influencers out of their employee base is close to nothing, but don't worry about that right now. You are potentially a new Marketing Leader, and you need to acquire new customers at low-cost / no-cost. It costs Macy's nothing to have employees perform AWARENESS work on their behalf. And if the employee actually sells something, the employee gets a percentage of the order.

Tell me why you aren't already doing this? You constantly ask for low-cost / no-cost ideas. Well, here you have one. Tell me what stops you from doing this?

October 31, 2018

Customer Experience

The omnichannel thesis, a thesis that failed in an epic manner, has been rebranded as ... the "Customer Experience".

One can look to Macy's to see how everything played out and now see how the thesis has evolved. Go read their annual reports, their 10-K statements (click here) ... you do this for all publicly traded companies in your industry right? Right??

I counted how often the phrases "omnichannel" and "experience" have been used in their annual reports. The counts tell us something about the rebranding of the failed omnichannel thesis.

2006 Annual Report = First Reference of "Multichannel" ... the original phrase that didn't work and had to be rebranded as "Omnichannel".

2009 Annual Report:
  • 0 Mentions of Omnichannel, 15 Mentions of Experience.
  • Sales = $23.5 billion.
2010 Annual Report:
  • 9 Mentions of Omnichannel, 22 Mentions of Experience.
  • Sales = $25.0 billion.
2011 Annual Report:
  • 11 Mentions of Omnichannel, 20 Mentions of Experience.
  • Sales = $26.4 billion.
2012 Annual Report:
  • 30 Mentions of Omnichannel, 22 Mentions of Experience.
  • Macy's brazenly calls itself "America's Omnichannel Store".
  • Sales = $27.7 billion.
2013 Annual Report:
  • 26 Mentions of Omnichannel, 23 Mentions of Experience.
  • Sales = $27.9 billion. Oh oh. Growth is Ending.
2014 Annual Report:
  • 31 Mentions of Omnichannel, 21 Mentions of Experience.
  • This is "Peak Omnichannel".
  • Sales = $28.1 billion.
2015 Annual Report:
  • 23 Mentions of Omnichannel, 22 Mentions of Experience.
  • Labels annual report as "Agility to Adapt", introducing another failed buzzword.
  • Sales = $27.1 billion. If omnichannel was so successful, why are they mentioning it less and why are sales now in decline?
2016 Annual Report:
  • 23 Mentions of Omnichannel, 32 Mentions of Experience.
  • Sales = $25.8 billion. Sales in the omnichannel era are now down 10%.
2017 Annual Report:
  • Just 12 Mentions of Omnichannel, 36 Whopping Mentions of Experience.
  • Sales = $24.8 billion.
"Peak Omnichannel" was 2014 ... sales of $28.1 billion.

In 2018, "Experience" is mentioned 3x as much as "Omnichannel" ... the branding is complete and done for a good reason ... sales are $3.3 billion (yes, BILLION) less in the three years after "Peak Omnichannel" happened.

When you listen to the "Customer Experience" thesis, you hear the same nonsense that you heard in the "Omnichannel" thesis ... great seamless/frictionless experiences across channels ... integrated marketing campaigns ... 360 degree views of the customer ... blah blah blah.

Your job is to sell stuff ... not to adhere to a vendor-driven thesis that used to be called Multichannel and then was called Omnichannel until Omnichannel brands saw horrific sales declines and then was rebranded as Customer Experience because nobody can argue with providing a great Customer Experience, right?

As a new Marketing Leader, you have to make a choice.
  • Do you follow the failed vendor-driven Multichannel / Omnichannel / Customer Experience thesis that has to be rebranded every five years because it doesn't work?
  • Do you follow the "Great Eight" and come up with a credible plan for your specific business?
Get the booklet for $0.99 (click here) and get started doing the latter.

October 30, 2018


A brand sends me a presentation deck from one of their vendors. One of the first slides outlines the average age of the customer base of the clients the vendor represents.

Guess what?

The vendor was lying ... badly.

In-house data showed that the average customer was 55-74 years old. Vendor data suggested the average customer was 35-64 years old. Obviously the vendor (a data broker) wanted to misrepresent the age of the customer so that they could make money off of the client.

We don't talk about Customer Audience very much. However, your Audience is critically important. You see a lot of online brands starting catalogs - not understanding that their 33 year old customer couldn't care less about catalog marketing. You see catalog brands with a 66 year old customer hiring "influencers" who are reaching a 33 year old audience. And you see vendors who happily lie in an effort to make money for their business while sub-optimizing your business.

Know your Audience.

Market to your Audience appropriately.

October 29, 2018

Road Show

The new Marketing Leader has a short window to make a difference, to set a tone for the upcoming year or two.

I took over a mess at Nordstrom in 2001. I had two vendors who were not meeting expectations. So I took my show on the road.

I visited the first vendor. I was not impressed. The vendor couldn't have cared less that I was there. I could easily see why this vendor under-performed. Within a year, my team de-tangled themselves from the vendor.

The second vendor didn't perform great, but the visit proved that they cared deeply about my business. As a result, I set clear expectations for the vendor. This vendor wasn't being led properly, and as a result the vendor made decisions that were not congruent with where I needed assistance. We eventually de-tangled ourselves from this vendor as well, but their performance improved enough to get us by for a few years.

A new Marketing Leader needs to quickly identify if existing vendors are there for the long-haul, are "transitional vendors" who will ultimately be replaced, or are vendors that need to be fired. It's one of the most important things a new Marketing Leader does.

October 28, 2018

A Twitter Follower Was Critical

I know, it's hard to believe somebody on Twitter was critical. You are dumbfounded.

From 2001 - 2004, I hosted a day-long session with a terribly boring name ... called a "Vendor Summit". My key vendors paid their own airfare and hotel. In the morning, they heard from a member of the Nordstrom family, they heard from key Merchandising and Creative leaders, they heard from the Digital leader, and they listened as I presented where my team was headed for the upcoming year.

In the afternoon, each vendor gave a 30-60 minute presentation. Some were spectacular, personalized for Nordstrom, full of research and facts and ideas. Some were downright awful, canned presentations featuring buzzwords and tepid ideas promoted by the vendor community in an effort to make money for the vendor community.

I shared the concept with followers on Twitter ... and received a bit of criticism.
  • "Not fair to put vendors through that and make them pay their way. Poor form. Bad way to treat a vendor."
I never thought that I was being cruel. The intention was to facilitate a two-way conversation ... we'd share our plans, our vendors would demonstrate their knowledge, and the bottom vendor or two would expose themselves as not possessing the leadership necessary to help my team. It was the latter that the Twitter follower objected to.

When you are a new Marketing Leader, taking over a broken department, you have to set a tone from Day One. It's important to teach your staff what a quality vendor looks like (quality performance + Leadership). It's also important to teach your staff what a sub-standard vendor looks like (tepid performance and minimal Leadership). 

The new Marketing Leader has a short window to set expectations ... for both employees and for vendors. Take advantage of the tools at your disposal. In modern marketing, you cannot achieve your goals without significant vendor assistance. Your vendors are an extension of your employee base.

October 25, 2018

Amazon Prime Day

Remember what I call the "Great Eight"?
  • Audience.
  • Awareness.
  • Acquisition.
  • Welcome Program.
  • Anniversary Program.
  • Optimization Program.
  • New Merchandise.
  • Existing Merchandise.
The new Marketing Leader needs an answer to each of the Great Eight. The Anniversary Program is one of the hardest for my client base to wrap their brains around.

There are at least three ways that Anniversary Programs pay off.

First, customers typically possess an element of seasonality. The customer who buys Outerwear in October is often likely to buy Outerwear the following October. The smart marketer takes advantage of this fact.

Second, customers who buy at Christmas typically buy at Christmas the following year. Everybody knows this and takes advantage of it, no need to spend more time on the subject.

The third component of a credible Anniversary Program is an event that moves the needle. I experienced this first-hand at Nordstrom with their Anniversary Sale. Go look at their 10-Q statements and look at July sales. It's stunning. Nordstrom does Christmas business in July. Does your brand generate Christmas business in July?

If you don't like the Nordstrom example ("Kevin, you are biased by your history, nobody else can do the kind of business you did, your example is unique and special, give us an example that is guaranteed to work for us, ok?"), then just look to Amazon Prime Day.

Do you realize that the first Amazon Prime Day was in 2015?

And today Amazon does Christmas-like business in July.

Sound familiar?

If you are a credible marketer, then you have your version of Amazon Prime Day or Nordstrom Anniversary Sale. If you aren't credible, then you grumble and blame somebody else.

The new Marketing Leader crafts an Anniversary Program plan from DAY ONE. This is purely a marketing-driven endeavor, so it's on the marketer to get something credible done early in his/her tenure.

October 24, 2018

It Couldn't Make More Sense

Remember what I call the "Great Eight"?
  • Audience.
  • Awareness.
  • Acquisition.
  • Welcome Program.
  • Anniversary Program.
  • Optimization Program.
  • New Merchandise.
  • Existing Merchandise.
In the booklet, I ran a Life Table for customers after a 1st / 2nd / 3rd / 4th purchase.

Look at the first three months, across the board. This is the time when you have to get the customer to repurchase, period.

A new Marketing Leader implements a credible Welcome Program from DAY ONE. It's almost irresponsible not to implement a credible Welcome Program. Just as important - the new Marketing Leader communicates to every single employee why Welcome Programs are critically important.

October 23, 2018

Acquisition - Everybody Has A Program

Remember what I call the "Great Eight"?
  • Audience.
  • Awareness.
  • Acquisition.
  • Welcome Program.
  • Anniversary Program.
  • Optimization Program.
  • New Merchandise.
  • Existing Merchandise.
We've talked about Audience and Awareness, with the latter being particularly important and frequently ignored.

Almost everybody has a credible Acquisition program. It's not like there are companies who don't know how to leverage Search, or Facebook. Most folks don't want to use TV or Radio or Billboards, but that's a personal preference thing. You've got the retargeting folks hounding you and watching your every more at every step, many folks do this of course.

In other words, Customer Acquisition isn't something that you do and other people don't do and therefore you have a competitive advantage.

What most people don't understand is the relationship between customer behavior and customer acquisition. Let's look at a couple of examples from the booklet. Check out this image, showing annual customer behavior.

First, look at the annual repurchase rate - it is 36.9%. This is where you are going to disagree with me (you always disagree with me on this topic, and I know this because I've received your feedback over a dozen years) ... but this company is NEVER going to have loyal customers, and is NEVER going to push the annual repurchase rate north of forty percent or forty-five percent. 

Given that this brand is never going to move the needle like a Starbucks might, the new Marketing Leader already knows what the #1 priority has to be ... it has to be Awareness + Acquisition. Period. Not Loyalty. Nope. No.

Stop arguing!

Next, you look at how many new customers are being acquired today and what impact it has on the business. You run your five-year forecasting simulations, right? RIGHT??

The new Marketing Leader should immediately make Customer Acquisition priority number one - no questions asked. She needs to teach ever Executive Team member why Customer Acquisition matters so much. In this case, Customer Acquisition matters so much because without a significant increase in new customers this business is going to slowly die.

The new Marketing Leader needs to run scenarios on DAY ONE - scenarios that show what must happen if the business is to grow at a healthy rate. A scenario like this one, for instance.

This company needs to increase new customers by 23.5% in the NEXT YEAR ALONE if the brand wants to grow by at least 5%.

That's a tall order.

And that's what the new Marketing Leader must get everybody in the company aligned to do.

Everybody has an Acquisition Program.

Not everybody knows what they need to do from an Acquisition standpoint. Show of hands - how many of you pair the five-year forecasts with your Acquisition strategy? I've been talking about this for twelve years, and yet it's much more common to not have the forecasts than it is to pair the forecast with strategy.

The booklet goes into details about Lifetime Value (hint - it wasn't sufficient for this brand to drive huge Acquisition gains, which really puts the new Marketing Leader in a dilly of a pickle).

Your Acquisition Program includes all the basic aspects of Acquisition that you already employ coupled with five year forecasts and Lifetime Value. Buy the booklet and learn more about the topic, ok?

October 22, 2018

Awareness - Much Needed

Remember what I call the "Great Eight"?
  • Audience.
  • Awareness.
  • Acquisition.
  • Welcome Program.
  • Anniversary Program.
  • Optimization Program.
  • New Merchandise.
  • Existing Merchandise.
Today we talk about Awareness.

In less than a paragraph, describe how a shopper who has never heard of your brand before learns about your brand?

If your answer is any of the answers below, you don't have an Awareness Program.
  • Keyword Search via Google.
  • Mail a Catalog via a Co-Op.
  • Subscribe via Email Marketing.
The new Marketing Leader needs to quickly (within 30 days preferably) establish the Awareness Program (and associated costs) she will implement.

The best Awareness Programs are low-cost / no-cost, or are mid-cost but generate large quantities of prospects. Read what companies like Stitch Fix, Duluth Trading Company and Wayfair say about Awareness ... you'll hear comments about large quantities of new customers who are not tracked ... if your Customer Acquisition program tracks everything, your Awareness program is worth nothing.

Content brands and Vendors are soooooo much better at Awareness than are most of my client base. Think about a company like Civic Science - an individual on Twitter said I had to get on their email list, and I could only do that by sending an email to the founder. Ok. I did that.

A recent email campaign referenced a Forbes article (click here) which I'm reasonably confident wasn't authored out of goodness of heart. 

From the email campaign, you can see research - not everything of course (click here), but something. When you get to the research, you can participate yourself ... and you can sign up for various email campaigns.

Vendors / Content brands are very good at Awareness Programs. Many in my client base have an opportunity to implement Awareness Programs. Look to the B2B folks for inspiration.

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