April 26, 2018

The Recurring Challenge

Since 2014, there has been a recurring challenge in my project work. Here's how events transpire over time.
  1. A business has a sales decline.
  2. Discounts / Promotions are offered. Sales rebound.
  3. Sales decline.
  4. Free Shipping is offered. Sales rebound.
  5. Profit suffers.
  6. To fix the profit issue, new merchandise is offered at higher prices and/or at the same prices with lower quality.
  7. Customers say "no" to the changes to new merchandise.
  8. Sales decline.
  9. Even more Discounts / Promotions are offered.
This is the time when new customers are needed the most ... new customers who do not have the baggage of 1/2/3/4/5/6/7/8/9 above.

Of course, Google + Facebook + (in catalog marketing, catalog co-ops) have locked-down new customer acquisition, making it terribly expensive to find new customers.

Since I've run across this problem 50ish times in the past four years, I'm familiar with what comes next.
  • How do we get out of this mess?
I've only witnessed two strategies that work.
  1. Innovative new merchandise that customers must have.
  2. Innovative low-cost / no-cost customer acquisition programs that bypass Google / Facebook and other expensive sources.
And when (1) / (2) are offered to the Professional, there is a predictable response.
  • There has to be another way. Isn't there a channel that delivers customers at low cost at "scale"?
If there were a channel that delivered customers at low cost at "scale" you'd be using it. And once you used it, everybody would use it. And once everybody used it, somebody would monetize the channel so that it wouldn't be a low cost channel anymore.

We're coming to a very unique inflection point in e-commerce. For more than twenty years, there was always hope in e-commerce ... sales grew and grew (usually cannibalized from other channels, but that's ok because lots of people made a career out of cannibalizing sales that would have already happened). The "hope" of e-commerce is ending. Amazon won. 

From here on out, it's hard work.

We've trained a generation of marketers to avoid hard work ... and yes, I realize that comment sounds "crabby" ... you have to work very hard to hustle Google and Facebook and retargeters and affiliates, no doubt about it. I'm talking about a different type of "hard work" ... the hard work traditionally performed by true marketers and gifted merchants.

  1. Innovative new merchandise that customers must have.
  2. Innovative low-cost / no-cost customer acquisition programs that bypass Google / Facebook and other expensive sources.
You are ready to deal with this challenge!

And if you aren't ready to deal with this challenge, it may be time to sell.

But I think you are ready to deal with this challenge!

Business Principle #1