It's 1995, and I'm sitting in the office of a person named Jim Fulton ... at the time he was the Marketing Manager of the Kids Division at Lands' End.
In the early 90s at Lands' End, we had what I coined "Battling Business Units". Each business unit (Kids, Home, Mens Casual, Mens Dress, Womens Casual, Womens Dress) battled for the love of the same customer. Each business unit mailed the same customer ... grossly overspending to trade dollars back-and-forth between Battling Business Units. This caused Lands' End to be less profitable than it could be.
So again, I'm sitting in Jim Fulton's office ... he has thousands of lines of custom SPSS code that create multi-year customer forecasts. To be fair, he borrowed the forecasting idea from a company called Fingerhut, a company who had comparable reporting in the mid 80s ... if I remember correctly, their forecasts were called "Nameflow Models".
He shows me one of his findings ... he shows me that if a "Battling Business Unit" wanted to optimize profitability when housefile spend was sub-optimized, the Battling Business Unit could excel at Customer Acquisition. In other words, if everybody was Battling for the same customer, a Business Unit could help the overall brand by finding new customers that fed the entire ecosystem.
And he had thousands of lines of code to create the simulations that proved his point.
Did anybody listen to this person? Absolutely not!!!
Later that year I landed at Eddie Bauer. Once I got through the Byzantine structure of having to access data on a mainframe using COBOL, I created my own Forecasting algorithm. Once I had my own Forecasting algorithm, I (too) learned just how critically important Customer Acquisition was to a business.
I got to test my theories three years later. When I became Circulation Director at Eddie Bauer, I became responsible for the plan for the Home division. Home customers had low annual repurchase rates (25% - 32%, +/-). It didn't matter how many times we mailed these customers catalogs, they weren't going to buy anything. So I changed strategy. We created lean, thin catalogs with best merchandise, thereby increasing the productivity of the catalogs. Then, we shifted Circulation out of housefile mailings and instead focused on two key areas.
- Customer Acquisition (specifically Pottery Barn customers).
- The Three Months following a first purchase (more on this tomorrow).
Within a year, the Home division was growing and had the best year of profit in the history of the division.
Looks like Jim Fulton was right ... and while his ideas weren't embraced at Lands' End, his ideas were grafted on to my Marketing Management System, allowing the Home division at Eddie Bauer to have the best year in their history just four years later.
So far, we've covered three elements within the Great Eight.
- Audience (via my boss, the CMO at Nordstrom).
- Awareness (via Duluth Trading Company and a groaning audience at a conference).
- Acquisition (via the Customer Acquisition Simulations created by Jim Fulton).
I might talk about the Great Eight as if it were my idea ... but that's not true. I grafted ideas from smart people on to my own Marketing Management System.
Tomorrow we'll talk about Welcome Programs.