July 16, 2018

16 Business Principles: Hillstrom's Marketing Management

Over the next few weeks, I'm going to share the Sixteen Business Principles that make up what I'd call my "Marketing Management System".

Here's what I see happening. There's a decent amount of turnover happening at the Director / VP level. Lots of new Professionals getting their first chance to run something. I was there at one time (1998). It's a daunting opportunity. Nobody gets you ready for your opportunity, it's all up to you. And then you mess up, all over the place, learning on the fly. By the time you figure things out, there's a good chance you've made enough mistakes to lower the odds of long-term success.

As a consultant, the questions I'm getting in 2018 are different. They're not "How do I make Facebook work?" or "How do I leverage Machine Learning?". Instead, the questions are of the "How do I go about running my business given all of the static all around me?" nature.

That's a very different question ... a much smarter question.

In sports, it is common for teams / coaches to run a "System" ... an offensive or defensive way of doing things. About four weeks ago, I finished this wonderful book.


This is the story of how Hal Mumme borrowed aspects of an offense from Brigham Young in the 1980s, from Bill Walsh (San Francisco 49ers), and then created his own offense. His offense put up monster numbers. Nobody wanted to copy it. Nobody cared. Then he went to Kentucky and he beat Alabama in the late 1990s and folks started to take notice. By the time his protege (Mike Leach) took the offense to new levels at Texas Tech in the 2000s, elements of the offense were being copied by everybody. Today, a spread-passing attack is common, though Mumme's pure system is still truly leveraged by a half-dozen coaches. 

I also own an autographed copy of a book from Bill Walsh - where he outlines everything about the West Coast Offense that he created.


In sports, you have to have a solid system, a way that you do things that works for you and your team.

In modern Marketing? Vendors drive the "system" ... pure and simple. They want you to use their tools to pay for customers. Google and Facebook and Amazon are the primary beneficiaries of this system. Each created an ecosystem of experts who tell you how to use their platform for success. Of course, you have to use their platform for success, funny how that works!

What is needed is a Marketing Management System (MMS) whereby the new Director or VP or CEO has a set of Principles that drive how they approach everything they do.

Twenty years ago, Don Libey published his version of a Marketing Management System.


He traveled the country, using flip-charts and hand drawings to tell 1990s data-driven marketers how to maximize profit.

It's been my experience that modern marketers & analytics experts do not want to be told how to do anything. They don't want to be told what metrics to use or tables to create or channels to use ... they're the experts, thank you very much! What they do want to be told to do is this ... they want to be told how to be successful. They want to know how other people were able to change the culture within a company. They want to know how individuals were successful even though they were doing the same things that another individual did and didn't have success. In other words, folks want to know the secret sauce of success.

So I am in the process of documenting my own Marketing Management System (MMS). As part of this process, I have outlined 16 Business Principles. It's been my experience that the CEO / CMO / VP / Director who implements a comparable system has success.

And over the next few weeks, I will share each slide with you ... one slide for each of the 16 Business Principles that make up Hillstrom's Marketing Management system.

Click on the image each day, read the content, and tell me what you think. You're gonna disagree with some of it, you're gonna agree with some of it. Use what you agree with to form your own Marketing Management System.

If I were your new CEO or CMO, this is the system I'd install at your company.

Ready for fun?



July 15, 2018

Catalog Craig Paperman on the Amazon Toy Catalog

Yes, this is business fiction. If this isn't your thing, take a break and read this article about Build-A-Bear and their promotion that generated so much demand that they ran out of product and became the punching back of the trade journal fraternity for being so successful.


Kevin:  Craig, you look like you just found out that your adjustable rate mortgage is about to adjust to 10%. What's wrong?

Catalog Craig Paperman:  I'm just stunned.

Kevin:  Stunned?

Craig:  I can't believe that Amazon is going to put out a toy catalog. It's proof that the omnichannel thesis was right all along. 

Kevin:  Oh stop it.

Craig:  The catalog will be handed out at Whole Foods. It's pure omnichannel strategy played out on the World's Largest Stage.

Kevin:  You look like you are about to pass out.

Craig:  Can you imagine what happens when that thing drops? They'll need help. They'll need somebody like me to make sense of the catalog. Delivery stats. Do you think they'll be able to forecast what percentage of the book has been delivered by noon of Tuesday of the in-home week?

Kevin:  Do you think they'll care?

Craig:  Key codes. Who is guiding them on their key code strategy?

Kevin:  What is this, 1998?

Craig:  How will they track how successful the catalog is? Do you think they know that they need a credible matchback strategy? And how will they acquire new names? Do you think they'll take names from the co-ops? Will they contribute their names to the co-ops? Will we finally get access to Amazon names? Oh my God, I'm getting dizzy thinking about the possibilities.

Kevin:  I'm sure they'll have sophisticated mail/holdout tests to read the results.

Craig:  No, I mean matchbacks. They need matchbacks. Mail/Holdout test results are for geeks. You lose demand when you hold out names. Everybody knows that.

Kevin:  If they mail the entire housefile then the matchback strategy will say that all orders in the United States are due to the catalog.

Craig:  Yes. YES!! Omnichannel strategy truly does work. Finally, finally we have validation for a decade of shouting into the wind.

Kevin:  And to think this may never have happened had Private Equity folks not employed an omnichannel strategy coupled with a debt load that allowed Amazon to take just enough share to plow Toys 'R Us into the ground.

Craig:  It's beautiful.

Kevin:  Is it?

Craig:  Yes.

Kevin:  Can you think three steps ahead and see what happens to a traditional catalog brand in 2021 when Amazon gets all the paper and the cataloger is priced out, or are you locked into an omnichannel gaze?

Craig is not responsive.

Kevin:  Craig?

Craig:  Do you think Amazon will offer me stock options if I consult with them?

Kevin:  Your vendors are killing you off while they boost up Amazon, can't you see that?

Craig:  $300,000 a year plus five million dollars of stock options paid out in 25% annual installments. Ohhhhhhhh.

Kevin:  Your printers constrain demand so that they can squeeze more money out of you and then Amazon enters the market and that will only cause paper prices to increase. How does that help you?

Craig:  Do you think Amazon has a credible square inch analysis strategy? In house? Would anybody there be smart enough to know they need one?

Kevin:  The USPS really seems to see that their future aligns with Amazon, don't you think?

Craig:  I could bring RFM to Amazon. They don't need AI or Big Data or Machine Learning. They just need RFM.

Kevin:  Alright.

Craig:  Do you think Amazon knows all the postal discounts they get if the ramp-up the page counts? Somebody has to tell them. That somebody could be me. Me!!

Kevin:  Can you imagine how quickly the Seattle-based paper rep will lobby to move into their offices on Pill Hill? 

Craig:  Do you think Amazon knows that they need to stuff the first twenty pages of the catalog with winners? Will they leverage URL callouts on the bottom of each page, driving customers to their website? Will an Amazon Go store know I've received the catalog when I enter the store? Ohhhhhhhhh!!!!

Kevin:  You aren't listening to a word I'm saying, are you?

Craig:  Maybe they'll ink-jet a message on the back cover to take the catalog in to your closest Whole Foods store to get a discount on organic orzo. Think of the omnichannel possibilities. Dot-whacks. They could employ snipes and dot-whacks. Targeted inserts. 

Kevin:  That's what you are thinking about?

Craig:  They could push a digital version of the catalog to my Kindle Fire. My knees just buckled.

Kevin:  Didn't you always hate Amazon?

Craig:  Who is going to manage their catalog request program?

Kevin:  You said that Amazon was the "Evil Empire".

Craig:  They'll keynote a session at Cohere One's event next year, titled "Catalogs, The Final Piece Of The World Domination Puzzle, Sponsored By Quad Graphics and Epsilon and Belardi-Wong and Forty Other Industry Vendors Who Want A Small Piece Of The World Domination Puzzle".  

Kevin:  That sounds about right.

Craig:  And you couldn't blame the vendors because they need to survive and Amazon could be their meal ticket to success.

Kevin:  That's how capitalism works.

Craig:  And then NEMOA, they'll be at Spring NEMOA 2019 and we'll give a 24 year old at Amazon an up-and-coming catalog professional award and the record-attending crowd of 1,740 will give Amazon a standing ovation. The industry will bathe Amazon with love.

Kevin:  They'll give a standing ovation to the company who just two months ago the industry agreed was running them out of business?

Craig:  Yes, because Amazon will be part of the family.

Kevin:  What family?

Craig:  The Catalog Family.

Kevin:  That's what this is about?

Craig:  They're executing like we want them to execute. That's all that matters. That's why we've loved L.L. Bean and all of the other New England based catalogers all these years. 

Kevin:  #ohboy

Craig:  Catalog Craig Paperman ... Managing Editor ... Amazon Catalog Division.

And with that, Catalog Craig Paperman loses consciousness ... 

July 11, 2018

What Is Your Version Of The $1.50 Costco Hot Dog?


Now discuss what your version of the $1.50 hot dog is at the company you work for. 

Merchandise can be a low-cost / no-cost customer acquisition or customer awareness tool.

July 09, 2018

The Secret To Success In Business Is Doing Something That Nobody Wants To Copy



Time will tell if this yields sales/profit.

But it gets the job done in terms of low-cost / no-cost awareness.

And it's not something you are likely to copy, right?

July 08, 2018

Sales Tax

You've been told that having to collect sales tax will kill your business.

Think about it this way. You buy from Amazon ... you pre-pay for shipping, more than a hundred dollars a year ... then you pay sales tax in most states on many products, and you're not getting 40% off, are you? Has it stopped you from buying from Amazon? Has it stopped Amazon from becoming "Amazon"?

I've spent more than twenty years studying what happens when a retail brand opens a store in a new market and has to collect sales tax in that market (on online transactions). There's a modest, short-term hit to online business (mostly because customers shift behavior from online to the new store) followed by normal sales trajectory online.

When we sell something the customer wants to buy, sales tax is largely irrelevant. 

Don't let third parties freak you out. Their narrative/agenda is designed to improve their business. Your job is to improve your business. Find some merch that your customers love and try harder to sell it, ok?


July 02, 2018

What Is The "Right" Investment Window?

There are six sub-tables in the table displayed here.


The first sub-table shows you how much profit you generate per year by acquiring customers at a PPNC (profit per new customer) of +$10. This is a no-brainer, isn't it?

The second sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of $0. This is a no-brainer, isn't it?

The third sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of -$10. You lose money acquiring the customer, then you generate profit thereafter. This is also a no-brainer, you generate enough money within a year to offset the loss and still make money. Most of my client base is willing to do this.

The fourth sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of -$20. You lose money acquiring the customer, you break-even after a year, and then you make money in subsequent years. Most of my client base is willing to do this.

The fifth sub-table shows you how much profit you generate per year by acquiring customers at a PPNC of -$30. You lose money acquiring the customer, you do not make up the loss within a year, and then you make money in following years. Most of my client base is UNWILLING to do this.

Look at the sixth sub-table, at the bottom of the image.

When you sum all profit, you learn that the best thing for long-term health is to lose a ton of money acquiring customers. After five years, you make an additional $5.5 million by acquiring customers at a loss of $30. In order to do this, you have to sub-optimize your business today ... you'll lose more money this year in order to make a ton of money long-term.

This is the "Amazon" strategy ... losing money forever or breaking-even forever and then all of a sudden you own the world and everybody is stunned into silence.

You run these scenarios with your business, right?

RIGHT?

You have no choice but to run these scenarios for your business.

When you come back from the July 4 holiday, be sure to run the scenarios and find out what the best strategy is for your business, ok?

July 01, 2018

Investment Window

Let's run a little simulation, ok?

Let's say that you can acquire customers in 100,000 customer chunks. Your profit per new customer is as follows:
  • Best Sources = $10 profit per new customer.
  • Good Sources = $0 profit per new customer.
  • Average Sources = -$10 profit per new customer.
  • Below-Average Sources = -$20 profit per new customer.
  • Poor Sources = -$30 profit per new customer.
Let's also say that each new customer pays you back a specific amount of profit per year.
  • 1st Year after 1st Purchase = $20 profit.
  • 2nd Year after 1st Purchase = $14 profit.
  • 3rd Year after 1st Purchase = $10 profit.
  • 4th Year after 1st Purchase = $7 profit.
  • 5th Year after 1st Purchase = $5 profit.
What is the "right" new customer acquisition strategy to maximize the potential of your business?

Do your homework, and we'll look at possible results tomorrow.

June 27, 2018

AOV and LTV

In my lifetime value work, there are two consistent themes related to lifetime value.

  1. Larger first orders = Better lifetime value.
  2. More items in a first order = Larger first orders = Better lifetime value.
Interestingly, any time a human being touches a first order you'll see larger AOVs ... which lead to bigger/better LTV. So where it is reasonable and cost-effective, get a human involved in a first purchase, even if it means that a human is following-up to see if a first order met customer expectations.

But if a human can't be part of the first-order process, use #technology to cross-sell the customer so that the customer adds an item to a first order, ok?

June 25, 2018

Purchase Frequency, Rebuy Rates, and Lifetime Value

Here's what happens when customers shop infrequently.

  • Annual Rebuy Rate = 28%.
  • Annual Purchases per Buyer = 1.4.
  • Lifetime Value = Low.
Here's what happens when customers shop frequently.
  • Annual Rebuy Rate = 75%.
  • Annual Purchases per Buyer = 5.9.
  • Lifetime Value = High.
Which company is most dependent upon new customers?
  • Low Rebuy Rate, Low Annual Purchase Frequency.
Which company is penalized most in lifetime value?
  • Low Rebuy Rate, Low Annual Purchase Frequency.
Here's what is fascinating in my work. 
  • Companies who most desperately need low-cost / no-cost customer acquisition programs are those with low annual repurchase rates and low annual purchase frequency. They have no choice but to build their entire business model off of awareness that leads to new customers.
  • Companies who are most effective at developing low-cost / no-cost customer acquisition programs are those with high annual repurchase rates and high annual purchase frequency. The companies who benefit the most from plump lifetime value totals are the very companies who put programs in place to acquire customers at low-cost or no-cost.
The majority of readers manage a business with low annual repurchase rates and low annual purchases per buyer. These are the businesses that cannot afford to pay money for new customers. And yet, these are the businesses who enjoy paying for new customers.

June 24, 2018

Christmas Buyers

There probably isn't an easier time to acquire a new customer than at Christmas.

And that's the problem.

There's a price to pay when it is easy to acquire a customer.

In the case of Christmas newbies, seasonal buying trends eat up a lot of the lifetime value that would normally be generated.

When you acquire a customer in October, the customer is "recent" and ready to buy in November/December as Christmas ramps up. This maximizes lifetime value. It's common to learn that October newbies are worth 20% - 60% more than are Christmas newbies.

Where possible, acquire customers in the month or two before your biggest "season" of the year. If you are a gardening brand, you might acquire customers in February/March, just before April/May. If you are a gift brand, you might acquire customers in September/October, just before November/December. Take full advantage of the timeframes when your new customers are "most responsive".


READER COMPLAINT:  Here is what happens when I bring up this topic.
  • Reader = "Kevin's idea sounds great, but he's full of you-know-what. We've tried to acquire more customers in October, but we can't find enough customers to scale that strategy. His idea sounds good on paper, but doesn't work in reality."
KEVIN'S RESPONSE:
  • This is where your low-cost / no-cost customer acquisition strategy comes into play. Of course it's hard to acquire customers in "off months". You pay money, you don't get reasonable results, and you grumble. But if you had a low-cost / no-cost customer acquisition program in place, you'd be planting the seeds all year so that as you ramped-up the message in October you'd have built up enough awareness that you could generate new customers in October, and then you can harvest a second purchase in November/December.
READER COMPLAINT:
  • "I don't like that response."

June 20, 2018

Profit per New Customer

It's common for folks to measure cost per new customer.
  • Total Marketing Cost = $10,000.
  • Total New Customers = 130.
  • Cost per New Customer = 10,000 / 30 = $76.92.
It's less common for folks to measure profit per new customer.
  • Total Marketing Cost = $10,000.
  • Total New Customers = 130.
  • Average Order Value = $100.
  • Profit Factor = 40%.
  • Profit = 130*100*0.40 - 10,000 = ($4,800).
  • Profit Per New Customer = ($4,800) / 130 = ($36.92).
In our example, you had to give up $36.92 of hard-earned company profit in order to acquire each of 130 new customers.

Is it worth it to give up $36.92 of hard-earned profit to acquire a customer?

It depends.

If the customer pays you back $65.00 profit in the first year on the file, you absolutely want to give up the profit, because you will make more profit in the next year, with the net of the relationship being a profit increase.

If the customer pays you back $11.00 profit in the first year on the file, you have problems, don't you?

You can't possibly know whether a cost per new customer of $76.92 is good or bad. You just know that the figure looks expensive.

You know all you need to know if you have profit per new customer coupled with lifetime value.

Show of hands ... how many of you measure profit per new customer and combine it with lifetime value to know which tactics you need to employ to be successful?

June 18, 2018

Pay Attention To Winning New Item Trends

Here's something I see all the time.

2017 New Items.
  • 4 Winners.
  • 12 Contenders.
  • 403 Others.
  • Total Demand = $15,000,0000.
2016 New Items.
  • 6 Winners.
  • 10 Contenders.
  • 388 Others.
  • Total Demand = $15,700,000.
2015 New Items
  • 8 Winners.
  • 18 Contenders.
  • 357 Others.
  • Total Demand = $17,300,000.
You probably create these tables in your sleep, #amirite?

As a marketer, this level of merchandise performance harms your marketing activities.

And so darn often, the marketing team gets blamed for this stuff.

Pay attention to winning new item trends. Is your merchandising team launching your business into the stratosphere (which happens often), or is your merchandising team slowly killing your business (which also happens ... often)?

June 17, 2018

How Rebuy Rates Are Impacted By Price

Look at annual rebuy rates by items purchased last year and average price per item purchased.


As prices increase, the probability of repurchase decreases, albeit marginally.

As the number of items purchased increase, the probability of repurchase increases.

Look at some of the key relationships.
  • 1 item at $100 = 14.8% rebuy rate.
  • 2 items at $50 = 17.7% rebuy rate.
  • 4 items at $25 = 22.1% rebuy rate.
This is a repeated theme across project work. If you have a choice, you want a customer to buy four low-priced items instead of one high-price item. This gives you file momentum, it helps grow your customer file over time (which protects the health of your business).


June 14, 2018

Supper Clubs

Wisconsin (especially the northern half of Wisconsin) is home to a proud tradition ... the Supper Club (buy a book about Wisconsin Supper Clubs on Amazon ... click here).

The process is simple. The Supper Club opens between 4:00pm and 4:30pm. You arrive, you sit down at the bar and you order a drink ... typically an Old Fashioned or something comparable. You put your name in, and then somebody typically walks over and takes your order.

When your salad is ready, somebody whisks you away from the bar and to your table, where your salad awaits. But wait, there's more! You'll be offered a relish tray, buns, crackers, and up to 65 pads of ice-cold butter to use on the four buns.

Then your meal arrives ... a steak or walleye (Central Wisconsin) or perch (Eastern Wisconsin) or whitefish (Door County).









After dinner you can relax by purchasing a grasshopper or a pink squirrel.


Then, you stagger back to your car, call your cardiologist, and schedule bypass surgery.

There used to be thousands of Supper Clubs all across Wisconsin. In the past few years, the quantity decreased to maybe three hundred or four hundred. And when you look at who is eating in a Supper Club, you won't find #millennials. By and large, it's an over-55 audience who visit because of tradition and personal relationships.

Sound familiar?

This is what happened to the catalog industry.

If you met with a Supper Club Proprietor, you'll hear a lot of interesting excuses. One told me that he's gonna close for six months because there isn't enough business to be had. He told me that "my patrons have a lot of ideas to increase traffic, but I'm not gonna listen to them, I'd rather just close."

Sound familiar?

You could tell the Proprietor to open for lunch or breakfast ... and you'd be told that this is a "Supper Club, we only serve Supper".

You could tell the Proprietor to create a family-friendly environment instead of the adult-caloric crowd ... and you'd be told that the whole purpose of a Supper Club is to cater to the adult-caloric crowd.

You could tell the Proprietor that a meal with 3,493 calories might be just a bit overboard for just $13.95 ... and you'd be told that the whole purpose of a Supper Club is to enjoy 3,493 calories.

You could tell the Proprietor that a vegan menu might bring in more customers ... and you'd be told that the tradition of a Supper Club is in lake-caught fish and fatty steaks.

Sound familiar?

Industries live and die by adapting to changing times. 

I worked with a company that had a 90% organic percentage ... if you took away the catalog, 90% of the sales would still exist and the company would practically print 20% pre-tax profit rates. The company would be so wildly successful that it couldn't help itself but throw money at employees and the ownership team. What do you think happened?
  1. Nobody believed the results of the year-long test, but folks loved to talk about how they were "data-driven".
  2. Catalog-centric Executives said "but what would I do for a job if the catalog didn't exist" even though every online process (which were responsible for driving 90% of the sales) wouldn't change one bit. One bit!! They might even improve without the handicap of a catalog to reduce flexibility.
  3. Catalog vendors lost their ever-loving minds. They told the Executive Team to "not believe the results of the test" and sold the Executive Team on the merits of a sound catalog program, citing the fact that catalogs "stood out in a crowded online marketplace", whatever the heck that means. Paper reps locked the company into an onerous annual contract. Printers offered myriad technologies to make the catalog stand out. Co-ops demanded deeper prospecting levels to "tickle the buying bone of today's fickle consumer", whatever the heck that means. Vendors rushed to protect "their" business, not the business of the catalog brand.
Sound familiar?

Don't become a "Supper Club". Evolve. Change. Do something!

Or, ride it out and take market share from dying catalogers. That works, too. For awhile.

June 13, 2018

Impact of Price Purchase History on Future Performance

Here's a table ... customers are segmented based on their average historical price point. Then I measure in the next year the percentage of demand they spend by price point band. Tell me what you observe.
What do customers who buy from very cheap price points do in the next year?
  • 44.3% of future demand is from price points >= $50.
What do customers who buy from very expensive price points do in the next year?
  • 79.9% of future demand is from price points >= $50.
In my project work, "brands" are constantly trying to push customers into new price point bands.

Too often, customers don't want to move into new price point bands. The example above is actually a "good" outcome ... the disparity isn't huge, is it? But it is there. If the merchandising team tries to introduce new merchandise in expensive price points, then Management has to be ready to accept the potential of a sales decline.





June 11, 2018

Digital Index

What is your "digital index"?

How do I compute the "digital index"?
  • Step 1 = Sum all non-digital advertising spent during the past twelve months.
  • Step 2 = Sum all digital advertising spend in the past twelve months.
  • Step 3 = (Step 1) / (Step 2).
Here's an example.
  • Annual Catalog Spend = $10,000,000.
  • Annual TV/Radio/Non-Digital/Non-Print Spend = $3,000,000.
  • Annual Digital Spend = $4,000,000.
  • Digital Index = ($10,000,000 + $3,000,000) / ($4,000,000).
  • Digital Index = 3.25.
If your digital index is close to zero, you are a strong digital brand.

If your digital index is close to one, you are a balanced brand.

If your digital index is > 2, you are an old-school brand.

The value of the index isn't good/bad/otherwise ... it just helps you understand where you stand. I keep hearing from folks who think that having a website and mobile presence and being on Instagram means that their brand is "digital" ... and then their Digital Index is 4.93.

Calculate your Digital Index.

What does your score tell you about your brand?

June 10, 2018

One More Example: Duluth Trading Company

I know, I know, the New England portion of my audience doesn't like it when I talk about Duluth Trading Company.

Why do I talk about Duluth Trading Company?

Here's their won-lost record over the past four years.

  • 2017 = 12-4.
  • 2016 = 12-4.
  • 2015 = 13-3.
  • 2014 = 14-2.
They're as good as the New England Patriots.

That's why I talk about Duluth Trading Company.

Sales have nearly tripled in just four years ... a compound 30% annual growth rate.

But can you see trouble brewing on the horizon?
  • The rate of performance gains is decelerating.
So maybe in 2-3 years you'll be able to point to an 8-8 Duluth Trading Company season and say "see, they stink".

Until then?

June 06, 2018

What "Perspective" Looks Like

I've shown you what bad performance (Macy's, JCP) looks like.

I haven't shown you what good performance looks like.

Here are half-year results from Stitch Fix for the past two years.

  • 2017 Net Sales = $474 million, Pre-Tax Profit = $25 million.
  • 2018 Net Sales = $591 million, Pre-Tax Profit = $36 million.
  • Won-Lost Record = 11-5.
Lots of sales growth.

Decent (but not great) pre-tax profit rates (which drag the 11-5 down from the 13-3 or 14-2 that is "could" be).

Long-term catalogers should look to Stitch Fix as a target ... this is what is possible. This is what winning looks like.

Will Stitch Fix win forever? Heck no! There will be a day when it all comes crumbling down. But for now, this is your target. You probably won't achieve sales growth like this. You can certainly achieve better pre-tax profit performance.

June 04, 2018

Gliebers Dresses Won-Lost Record

Gliebers Dresses performance is consistent with many catalog brands analyzed in the past three years.

The Management Team will tell you that 2017 was a "pretty good year".

What does the "data" tell us?
  • 2017 = 7-9.
  • 2016 = 4-12.
  • 2015 = 6-10.
  • 2014 = 5-11.
2017 was so good that the team posted a losing record ... four bad years in a row that (in sports) would get a lot of people fired.

We're lacking "perspective".

In two days, I'll show you what "perspective" looks like.

June 03, 2018

It's Time For The Next Run Of The MineThatData Elite Program!!!

For just $1,800 (and $1,000 ongoing thereafter) you get my standard comp segment analysis, rolling twelve-month analysis, annual view of key customer metrics, and in this run ... you get a pricing analysis. I'll look at your customer base, dividing it into customers who buy at low price points, average price points, and high price points. Then, I'll measure whether your customer base is willing to make changes, or I'll measure the fact that your customers are stuck in various price bands and are unwilling to move.

Key Deadlines:
  • Decide to participate by June 10.
  • Data to me no later than June 20.
  • Results forwarded no later than July 4.
  • Send five years of purchase history (I'll forward you the file format if you are interested).

May 30, 2018

J.C. Penney Won-Lost Record

You keep hearing about the "Retail Apocalypse" ... a term leveraged by a handful of trade journalists to earn clicks by describing the sadness of the current state of retail.

But if you go back a decade or so ... you'll learn that the "Retail Apocalypse" has been in fine form for a long-time.

Here's the won-lost records for J.C. Penney ... for the past decade:
  • 2017 = 4-12.
  • 2016 = 5-11.
  • 2015 = 4-12.
  • 2014 = 3-13.
  • 2013 = 1-15.
  • 2012 = 1-15.
  • 2011 = 4-12.
  • 2010 = 6-10.
  • 2009 = 5-11.
  • 2008 = 6-10.
  • 2007 = 8-8.
You can see the impact of the Ron Johnson era (back-to-back 1-15 seasons in 2012 and 2013 ... that's Cleveland Browns bad).

But then a "turnaround" was initiated.

How did that work out?
  • Not very well ... 3-13 then 4-12 then 5-11 then 4-12.
If you translate sales/profit data into something that the common professional can understand, you clearly demonstrate how woeful retail is (for some companies) ... and has been for a very long time.

May 29, 2018

Macy's Won-Lost Record

At a recent industry conference, there was a lot of talk about how great Macy's is performing as they "rebuild" their brand.

Macy's gets a lot of positive press ... it's hard to find an industry article that is critical of the brand.

And yet, when we convert their 17-year trajectory into an NFL-style Won-Lost record, we're left unimpressed, aren't we?
  • 2017 = 7-9.
  • 2016 = 6-10.
  • 2015 = 6-10.
  • 2014 = 7-9.
  • 2013 = 7-9.
  • 2012 = 8-8.
  • 2011 = 8-8.
  • 2010 = 8-8.
  • 2009 = 6-10.
  • 2008 = 5-11.
  • 2007 = 6-10.
  • 2006 = 9-7.
  • 2005 = 12-4.
  • 2004 = 7-9.
  • 2003 = 6-10.
  • 2002 = 6-10.
No "winning seasons" since 2006.

My goodness.

And the improvements and positive press? It's reflective of a 2017 where Macy's posted a 7-9 season ... a losing record.

See how the formula helps us see if a company is "winning"?

Want to know your Won-Lost Record over time?
  • Send me annual net sales.
  • Send me annual earnings before taxes.

Business Principle #2