New Merchandise Framework

There you are, the New Marketing Leader. You just inherited a hot mess of a brand. And within a few months, it's gonna be your fault that the wheels are coming off the bus ... even though the wheels have been coming off the bus for a half-dozen years or more.

It's been my experience that marketers have minimal experience dealing with merchandising folks. I'm on Twitter last month and a marketing executive tweets this to me ... "I always go under the assumption that the merchandise is awesome and it's my job to use the tools in my toolbox to get merchandise in front of people."

You're not going to make that mistake.

You are going to understand "why" your business is struggling. How can you possibly apply the right marketing ideas to your problem if you don't know whether merchandise is a problem?

This week we're going to talk about the long-term value of new merchandise. This is important, because if you don't know the long-term value of merchandise then you don't know how much new merchandise you need to be successful, and if you don't know how much new merchandise you need to be successful then you'll be the first one fired when merchandising issues spill over into marketing productivity.

The table above shows us how much downstream demand we generate by quarter, based on the quarter the new item was introduced. Tomorrow we'll convert the table above into something more useful.

A Final Situation

You, the New Marketing Leader, run your five-year forecast simulations, and you realize that you need a 30% increase in new customers in order to meet the sales goals your Board requires of you. This will require a 60% increase in your customer acquisition budget.

You sit down with your CFO and explain what must happen. Your CFO tells you, in no uncertain terms, that you won't get one extra penny from her, period. It's your job to figure out how to make due with what you have.

Describe how you would deal with this situation ...

How About This Situation?

You are the New Marketing Leader. You analyze comp segment productivity across your merchandise categories. Merchandise Productivity is absolutely AWFUL. In fact, you can pinpoint the moment (September 2017) when the wheels came off the bus. Your Chief Merchant was hired in February 2017, and September 2017 represented her first opportunity to "impact the brand". And impact it she did!

So you sit down with your Chief Merchant, and you share your data. She tells you to get the heck out of her office and go find new customers who love her "trend right" assortment.

Describe for our audience how you, the New Marketing Leader, will deal with this situation ...

Describe What You'd Do In This Situation

You are the New Marketing Leader. You suspect your merchandise assortment is harming the company. You need help analyzing the issue. Your analytics team operates in a "silo" that you don't have control over. You need the issue analyzed tomorrow. And your silo-based analytics team says your request is "low priority".

Describe what you'd do in this situation. And answer carefully, because you are setting a precedent that will impact your tenure as a marketing leader.

What Would You Do?

You become a New Marketing Leader ... let's say it is at an Apparel company. Two things are happening.

1. Womens Merchandise has a +3% comp segment performance.
2. Mens Merchandise has a -14% comp segment performance.

What do you, as a New Marketing Leader, do to solve this problem?

Discuss.

Price per Item / Units per Order

There's a relationship, as you already know, between how much an average item costs and how many units per order you generate as a consequence.

You have the data to measure the relationship. Use data by merchandise category, measure the change in price (i.e. 5.0 is a 5% increase in chance in price) year-over-year and the change in units per order (year-over-year).

Once you have the relationship, you can determine what the "optimal" price point is, or at least determine the impact of raising (or lowering) prices.

You do this stuff, right?

You have different merchandise categories - for each, measure year-over-year change in units per order and price per item purchased. Simple! Plot the result. Fit a line. Done.

Fabulous Article

This is maybe a year old, +/-, and is worth a year of consideration if you sell apparel:

https://www.bloomberg.com/graphics/2018-death-of-clothing

Doing The Hard Work

Let's think about this for a moment ... pretend you are a catalog brand that has survived twenty years of "disruption" ... and you hire a New Marketing Leader. You give your New Marketing Leader the following information prior to beginning employment:

1. Average Customer Age = 63 years old.
2. Catalog Response = -3% per year, every year, for the past decade (on average).
3. Online = 80% of sales. Website looks outdated, and for good reason, because it caters to a 63 year old customer.
4. New Customer Acquisition response is -30% the past two years.
5. It's hard to acquire customers via Google, and very hard / expensive via Facebook.
6. You are very worried about what your brand looks like 5 years from now.

Describe what your expectations are for your New Marketing Leader surrounding The Great Eight.

• Audience.
• Awareness.
• Acquisition.
• Welcome Program.
• Anniversary Program.
• Optimization Program.
• New Merchandise.
• Existing Merchandise.

Your expectation of your New Marketing Leader should be VERY HIGH. Your New Marketing Leader is going to do the hard work ... no magic.

When you interview the New Marketing Leader, you use the Great Eight as the framework of your interview process. The candidate should be able to articulate a strategy, supported by tactics within each category.

Right?

New Names From Co-Ops, Google, Facebook Is Not A Strategy

It's a tactic, no doubt about it. And it's a brain-dead easy tactic. Pay somebody, do very little, get new customers.

It's not being very strategic however, is it? I know, I know, here come the unsubs. But the New Marketing Leader has to have a toolkit full of ideas within each category of the Great Eight.

• Audience
• Awareness
• Acquisition
• Welcome Program
• Anniversary Program
• Optimization Program
• New Merchandise
• Existing Merchandise

For instance, if you are a catalog brand and you are generating 65% or more of your new customers from catalog co-ops, ask yourself a series of questions.

• Is this the audience you wish to speak to?
• Other than an expensive catalog plus merge/purge costs plus paying the co-op some cheddar, how do you plan on generating Awareness?
• What is your plan if the co-op mailed customer visits your website and leaves without buying something. Do you have a plan to capture information (at minimum)? Do you have a plan to capture an email address (at minimum)? Do you have a plan, period?
• In the unlikely event that the customer buys something, do you have a Welcome Program in place to get the customer to buy for a second time, quickly?
• What are the Anniversary events, the three or four big events you have each year, the events designed to maximize sales opportunities?
• Do you have an Optimization Plan in place to minimize over-mailing the co-op buyer who purchases after four website visits?
• Do you have a separate email marketing program that helps grow new merchandise performance via product categories adjacent to the categories the co-op buyer purchased from?
• Does the catalog front-load the first twenty pages with the absolute best items you sell, in an effort to maximize profitability?

Your co-op / Google / Facebook programs are not strategies ... they are a minor tactic within the confines of the Great Eight. The New Marketing Leader has answers to the questions I outline above, and implements a program unique to the industry.

Right?

Omnichannel Is Not A Strategy

Omnichannel is not a strategy. It's an optimization tactic, an important part of the Optimization component of the Great Eight, but it is not a strategy.

Strategies grow brands ... reference Amazon if you're curious about what a strategy looks like.

From 2013 - here's Macy's plan for omnichannel dominance (click here). How did that work out? Since the article was written, Macy's generated $2.5 billion less in annual net sales than they generated six years ago. That's what happens when you put all your chips on one tactic within the Optimization category of the Great Eight without having an overall (compelling) strategy.

The New Marketing Leader needs to have a comprehensive plan for each category within the Great Eight.

• Audience.
• Awareness.
• Acquisition.
• Welcome Program.
• Anniversary Program.
• Optimization Program.
• New Merchandise.
• Winning Merchandise.

Omnichannel has nothing to do with merchandise. It has nothing to do with an Anniversary Program that has several key events each year (think Amazon Prime Day or Nordstrom Anniversary Sale). It has nothing to do with a credible Welcome Program that quickly converts the customer to a second purchase. 

It "could" help with customer acquisition.

It "could" generate awareness, though it's a lousy way to run an awareness program.

It "could" resonate with your Audience, though if it did, sales would greatly increase instead of decreasing by 10% over time.

The New Marketing Leader has answers for each category within the Great Eight ... of which Omnichannel is a tiny, TINY component.

You have a comprehensive program encompassing the Great Eight, correct? Right??

Personalization Is Not A Strategy

Ok, we weeded out a bunch of followers who apparently didn't like the concept of implementing your own Marketing Management System.

But it's terribly important.

Why?

Check this out. In 2015 Pier 1 earned gushing reviews for implementing personalization initiatives (click here).

Check this out. In 2019, Pier 1 is about to see their stock delisted and they're struggling to survive (click here).

Personalization is not a strategy. It's a tactic ... a darn good tactic, an optimization tactic. But personalization doesn't lead to growth ... well, that's not entirely true. Tiny growth is possible. A pure e-commerce brand might see "some" growth. For a retailer? Not so much.

If you are a New Marketing Leader, yes, you'll have personalization as part of your "Optimization" category within the Great Eight (click here). But "what" exactly are you personalizing? And "why" are you personalizing anything? What does your personalization effort support?

Those questions need to be answered ... the New Marketing Leader has an entire strategy of which personalization is a tiny component.


P.S.: Personalization is darn important ... I have clients who increase email response by 20% and various online endeavors by between 15% and 50%. However, top-line sales are rarely moved a ton by personalization. You need new customers or merchandise productivity to move the top-line. But you already know that, don't you?

Describe Your Plan, Part 4

https://www.datamann.com/datamann-seminar-april-2019/

Let's assume you inherit a business with the following dynamics:

• +3% Overall Merchandise Productivity.
• +14% New Merchandise Productivity.
• -8% Existing Merchandise Productivity.
• -6% New + Reactivated Buyer Comps.
• 100,000 12 month buyers last year, 40% rebuy rate, 40,000 active buyers.
• 55,000 new + reactivated buyers last year.

Tell me what is wrong with this business, and tell me what kind of plan you'd implement to fix this business?

Describe Your Plan, Part 3

https://www.datamann.com/datamann-seminar-april-2019/

Let's say you inherit this type of business:

• -6% Overall Merchandise Productivity.
• -2% New Merchandise Productivity.
• -11% Existing Merchandise Productivity.
• -20% New + Reactivated Buyer Comps.
• 100,000 12 month buyers last year, 40% rebuy rate, 40,000 active buyers.
• 47,000 new + reactivated buyers last year.

This is one of the most common situations the new marketing leader inherits ... EVERYTHING is broken.

What this business desperately needs is a Leader.

That's where you come into play.

You need to have a plan for every one of the Great Eight.

You don't have a choice ... this business is fundamentally broken. You will address all eight tactics, and you will communicate clearly to every employee in the company that every single aspect of the business is broken and is FIXABLE!!!!

You are going to be the hero.

Get busy fixing things!

Describe Your Plan, Part 2

https://www.datamann.com/datamann-seminar-april-2019/

Let's say you inherit a marketing team, and your business possesses the following dynamics:

• +8% Overall Merchandise Productivity.
• +9% New Merchandise Productivity.
• +7% Existing Merchandise Productivity.
• -18% New + Reactivated Buyer Comps.
• 100,000 12 month buyers last year, 40% rebuy rate, 40,000 active buyers.
• 50,000 new + reactivated buyers last year.

What does this tell you?

• Your merchandising team is doing a fabulous job.
• The prior marketing leader messed up the business, bad.

Your first job is to fix customer acquisition. Period. Your marketing strategy is the problem. You are the problem. And in a month or so, you'll be the one blamed for business not meeting expectations.

It's on you to fix this problem, asap.

You'll focus on the following.

• Audience.
• Awareness.
• Acquisition.
• Optimization (i.e. search and offline advertising).

Quite honestly, this business is being held back by one person ... and that person is you. It doesn't matter what your predecessor did, you run marketing now and if you don't fix this problem, everybody suffers.

Get busy!!

Describe Your Plan, Part 1

https://www.datamann.com/datamann-seminar-april-2019/

When you take over the marketing department, you need to have a plan. A plan is critical. And you leverage the "Great Eight" to execute your plan.

Let's say you take over Leadership of the Marketing Team. You run your comp segment metrics and you learn the following:

• -4% Overall Merchandise Productivity.
• -14% New Merchandise Productivity.
• +2% Existing Merchandise Productivity.
• -3% New + Reactivated Buyer Comps.
• 100,000 12 month buyers last year, 40% rebuy rate, 40,000 active buyers.
• 62,000 new + reactivated buyers last year.

You basically have a ton of data, right there alone ... you can figure out what your brand needs to do.

What is wrong with this business?

This one is easy, isn't it?

Your merchandising team is imploding the business via new merchandise. Obviously you'll have to dig in deeper and figure out "what" the real problem is ... but you are not dealing with a marketing problem, you are dealing with a merchandising problem.

As a new marketing leader, you probably don't have control over what the merchandising team is doing. But you have analytics on your side, and you can act accordingly.

Notice that new + reactivated comps are -3%. If merchandise productivity is -4%, then adjusted new + reactivated comps are really -3% - (-4%) = +1%. It means that marketing efforts are performing accordingly.

Also notice that you started the year with 100,000 twelve-month buyers, and 40% repurchased, yielding 40,000 active buyers. Couple that with 62,000 new + reactivated buyers, and you grew the customer file by 2,000 customers (100,000*0.4 + 62,000 = 102,000).

This means that new + reactivated buyers are not a problem (unless management wants a lot of growth).

You've diagnosed the issue:

1. Your Merchants are harming the business with too little or unproductive new merchandise.
2. Marketing is managing the customer file appropriately.

Within the Great Eight we have options.

I'd focus my efforts on Awareness, Welcome Program, Optimization Program, and New Merchandise. I'd calibrate my email marketing program to focus on the new merchandise that is performing well, working hard to get 'em to winning status. Awareness programs will be important because the annual rebuy rate is at 40%. Welcome programs will be important because we want to convert the customer to a second purchase quickly given that rebuy rates are low. Optimization programs are important because with sluggish merchandise productivity we have to save every penny we have to protect the profit and loss statement.

Now you have a foundation to begin your tenure as the new marketing leader. And you can align the rest of the company around your initiatives. Get busy!!

Repost Due To Delivery Problem From Yesterday

I am re-posting this today given that 75% of yesterday's deliveries failed for some wonky reason that my email provider cannot explain.


How about joining me in Nashua on Thursday, April 18?? Click here to register!!

I'm taking a different approach to my presentation. In the past few years, I've asked organizations to change. That simply doesn't work. You can't present a bunch of ideas to a Director at Orvis and expect the individual to change the organization. The ideas aren't the ideas of the Director at Orvis ... they're my ideas. Why would a VP at Orvis adopt the idea of a speaker with no skin in the game?

So this year the presentation is all about you ... yes ... YOU! You are reading this because you are likely a Marketing/Analytics Leader, or you want to be a Marketing/Analytics Leader. 

In the past year or two, there's been a huge influx of new Leaders ... the Baby Boomer generation has had thirty years to dominate commerce, and they are now passing the torch to younger Gen-X folks or older Millennials. This is a very exciting and challenging time in the career path of a young professional. It's also a disorienting time ... you are new and a lot of people around you have twenty or thirty years of Management experience. They have their ways of doing things, and they're going to impose their style of Management upon you.

This became clear to me a few years ago ... I sat in a room while a Young Professional shared six months of findings about how to grow the business (not only how to grow it, but how she already grew it without anybody else knowing what she accomplished) ... when her presentation ended, one VP whispered to another VP "she's young, she'll come around to how we do things around here". In other words, the seasoned leaders did not respect what this person accomplished (and hint - this person grew sales by 10% or more, something almost nobody else accomplished at the company in the past decade).

The hour-long session just plain angered me. How could these Leaders treat this woman so poorly, given how good she made them look?

It became clear that the new Marketing Leader needs a set of tools to "set the tone" ... to diagnose real problems (not the problems people perceive to exist) ... and then to align the organization around what really matters.

I went through this process ... I didn't have a formalized process in 1998 at Eddie Bauer and I paid the price for being new and disorganized. I did have a formalized process in 2001 at Nordstrom and while some folks hated my process, the process worked wonders. And yes, the process generated enemies ... but it was so important to have a process in place and to constantly point back to the process and say "this is what we are doing, and this is why we are doing it" ... and to not get distracted by noise, even if the noise came from those who could fire you!!

I'll spend two hours sharing with you the process and diagnostics necessary to get you, the New Marketing Leader, set up for success.

This talk will be about you. No more sharing of tactics that you'll disagree with and say "Thank You, Next". This time you are responsible for doing something. I have faith that you are ready to do great things!

Join me in Nashua on April 18, ok?

Now Keep It Moving

How about joining me in Nashua on Thursday, April 18?? Click here to register!!

I'm taking a different approach to my presentation. In the past few years, I've asked organizations to change. That simply doesn't work. You can't present a bunch of ideas to a Director at Orvis and expect the individual to change the organization. The ideas aren't the ideas of the Director at Orvis ... they're my ideas. Why would a VP at Orvis adopt the idea of a speaker with no skin in the game?

So this year the presentation is all about you ... yes ... YOU! You are reading this because you are likely a Marketing/Analytics Leader, or you want to be a Marketing/Analytics Leader. 

In the past year or two, there's been a huge influx of new Leaders ... the Baby Boomer generation has had thirty years to dominate commerce, and they are now passing the torch to younger Gen-X folks or older Millennials. This is a very exciting and challenging time in the career path of a young professional. It's also a disorienting time ... you are new and a lot of people around you have twenty or thirty years of Management experience. They have their ways of doing things, and they're going to impose their style of Management upon you.

This became clear to me a few years ago ... I sat in a room while a Young Professional shared six months of findings about how to grow the business (not only how to grow it, but how she already grew it without anybody else knowing what she accomplished) ... when her presentation ended, one VP whispered to another VP "she's young, she'll come around to how we do things around here". In other words, the seasoned leaders did not respect what this person accomplished (and hint - this person grew sales by 10% or more, something almost nobody else accomplished at the company in the past decade).

The hour-long session just plain angered me. How could these Leaders treat this woman so poorly, given how good she made them look?

It became clear that the new Marketing Leader needs a set of tools to "set the tone" ... to diagnose real problems (not the problems people perceive to exist) ... and then to align the organization around what really matters.

I went through this process ... I didn't have a formalized process in 1998 at Eddie Bauer and I paid the price for being new and disorganized. I did have a formalized process in 2001 at Nordstrom and while some folks hated my process, the process worked wonders. And yes, the process generated enemies ... but it was so important to have a process in place and to constantly point back to the process and say "this is what we are doing, and this is why we are doing it" ... and to not get distracted by noise, even if the noise came from those who could fire you!!

I'll spend two hours sharing with you the process and diagnostics necessary to get you, the New Marketing Leader, set up for success.

This talk will be about you. No more sharing of tactics that you'll disagree with and say "Thank You, Next". This time you are responsible for doing something. I have faith that you are ready to do great things!

Join me in Nashua on April 18, ok?

The Great Eight

We spent the past two weeks talking about the events and influences that shaped what I call "The Great Eight".

My Influences:

• Audience = CMO Nordstrom.
• Awareness = Duluth Trading Company.
• Acquisition = Jim Fulton and Eddie Bauer Home.
• Welcome Program = Eddie Bauer Home, B2B Brand With A Great Program.
• Anniversary Program = Nordstrom Anniversary.
• Optimization Program = IBM/Lands' End, Client With Brilliant Website Personalization.
• New Merchandise = Bankrupt Client.
• Winning Merchandise = Failed Retail Brand.

The influences result in a style of performing work, a style that is fundamentally different than the style used by any other professional. Not only fundamentally different, but in theory useful. Once you know the importance of new merchandise, you approach marketing very differently, don't you?

Now, I'm not asking you to blindly follow The Great Eight. Instead, I'm asking you to create your own version. Look back on who your influences were. Who was the expert who shaped what you've become? Document the influences, and a story will drop into your lap. The story becomes your Marketing Management System, your own unique way of doing things. Don't borrow taglines from the vendor community, that's not your system, that's their system! Your system is unique to you.

Your system gives you a competitive advantage.

Document your influences. Create your own system. And when you get your opportunity as a Marketing Director or Marketing Executive, be sure to implement your system from Day One.

Winning Merchandise

I'm at Eddie Bauer, and folks from the "brand marketing team" enter my office.

They want to mess around with the catalog.

"If we can just add eight pages of new stuff to the catalog we can really reach out to younger customers and protect our brand."

They got their eight pages.

Those eight pages performed at less than half the productivity as the rest of the catalog.

Guess who's fault it was that the catalog didn't perform well?

At Nordstrom, retail folks wanted to put stuff in email campaigns that had no reason to be in email campaigns. The stuff got in the email campaigns. Those campaigns performed 20% worse than the baseline average. Retail folks weren't blamed for sub-standard performance.

I first learned about the importance of Winning Merchandise at Lands' End. We reviewed every catalog ... marketing, creative, inventory, merchandising, finance. One of our analysts put together a compelling story ... if two catalogs were equally merchandised, the catalog with winning items at the front of the catalog significantly outperformed the catalog with the same winning items in the back of the catalog. All things being equal, show the customer the winners, now.

I worked with a large retail brand. A new Leadership team took control over this brand. This Leadership Team HATED the winning merchandise being sold. "Outdated". "Frumpy". They killed the winners.

Guess what?

The demand that would have been generated by winning items disappeared.

New items did not succeed. Customers just vetoed them. And customers had no winners to buy. So customers just stopped buying. Not 100% of demand, but the 15% required to collapse a brand.

I had more than twenty-five years of data to prove that winning merchandise mattered deeply. But one consulting project a few years ago caused the concept of Winning Merchandise to be included in The Great Eight. A retail brand, destroyed because Winning Merchandise were sent to the curb.

Don't kill your winners before they deserve to be killed.

Your winners contribute a disproportionate share of profit and customers.

My Influences:

• Audience = CMO Nordstrom.
• Awareness = Duluth Trading Company.
• Acquisition = Jim Fulton and Eddie Bauer Home.
• Welcome Program = Eddie Bauer Home, B2B Brand With A Great Program.
• Anniversary Program = Nordstrom Anniversary.
• Optimization Program = IBM/Lands' End, Client With Brilliant Website Personalization.
• New Merchandise = Bankrupt Client.
• Winning Merchandise = Failed Retail Brand.

New Merchandise

This is where twelve years of consulting work come into play.

I spent eight or nine years trying to solve problems from a marketing standpoint. What a fruitless endeavor that was, my friends.

I wrote more than a million lines of code trying to figure out a marketing solution to merchandising problems. I probably wasted six years trying to find marketing solutions to merchandising problems.

It was a disaster.

I had a client that went bankrupt while I was working with them. I structure my projects so that the client pays half up-front, half upon project completion. This client didn't pay the final portion of the project because they went bankrupt during the project. That project showed that the brand (out of business halfway through the project) had a serious new merchandise issue.

• Comps on existing merchandise were positive.
• Comps on new merchandise were seriously negative.

That project cost me a lot of $$$.

That project still pays me to this day. Why?

Because that project caused me to shift the focus of my work from marketing to merchandising.

If a company went bankrupt because their merchandising team committed the capitalistic version of malpractice, was it possible that other companies could be saved before hitting the wall?

Absolutely.

In response to losing a lot of money due to bankruptcy, I wrote this (click here). One of the reviewers hated the booklet, so please don't buy it.

From that point forward, half of my work has been merchandise-centric. Not centric-enough for merchandising folks and pundits. More than "centric-enough" to identify if new merchandise is a problem.

New merchandise is a huge problem. In 80% of my projects, there is a serious merchandising issue holding the company back. It's almost always a new merchandise issue that eventually becomes an existing merchandise issue. From there, the marketing team is blamed, and the blame leads to all sorts of reckless behavior ... from overspending on Google/Facebook to 40% off plus free shipping to surveillance via retargeting to just about any marketing mistake you can possibly think of.

This keeps the blame game away from those who've earned blame ... merchants ... and more importantly, Leadership.

In more than three decades of work, there isn't a more seminal moment than the moment when a bankrupt client did not pay me. The moment was life changing ... career altering.

The moment became an integral part of my Marketing Management System ... the Great Eight.

My Influences, To Date

• Audience = CMO Nordstrom.
• Awareness = Duluth Trading Company.
• Acquisition = Jim Fulton and Eddie Bauer Home.
• Welcome Program = Eddie Bauer Home, B2B Brand With A Great Program.
• Anniversary Program = Nordstrom Anniversary.
• Optimization Program = IBM/Lands' End, Client With Brilliant Website Personalization.
• New Merchandise = Bankrupt Client.

Optimization Program

Two things really stand out here, one recent, one old-school. Let's begin with the old-school example.

Twenty-five years ago at Lands' End we had about 50 catalog in-home dates. As we've learned in the past few months, you can have 50 in-home dates as long as the vast majority of customers get a handful of mailings and only the very best-of-the-best get fifty. But when half of the customers are being clobbered with 25ish contacts, well, a funny thing happens.

• Every catalog circulation decision, evaluated independent of every other catalog circulation decision, looks profitable.
• When you try to optimize the decision on an annual basis, you realize you made a TON of bad decisions.

We were going to implement an optimization algorithm, one that determined the most profitable strategy. This tactic required each business unit to work together for the benefit of the profit-and-loss statement. It meant that a customer might not get six Home mailings ... instead the customer might get two Home mailings but the company would be more profitable. 

Understandably, if you were in the Home divisions you'd be upset if you had to contract your business in the name of "Optimization". As a result, the program was not implemented. A few months later I interviewed for a job in Dallas with IBM ... they were going to take their knowledge combined with our proposed strategy and create a product to help catalogers optimize their businesses.

That business still exists today ... and the vast majority of catalogers still don't trust 'em. That's what happens when you use math that takes control away from Business Leaders.

Speaking of math that takes control away from Business Leaders, I sat in a meeting where the Online Marketing Manager explained how she worked with a vendor to boost conversion rates by about 25% (sometimes much higher) by optimizing/personalizing the merchandising assortment customers saw when they visited the home page or key landing pages. She made her company Brinks Trucks worth of coin. She wasn't even looking for credit, she just wanted to do what was right for her business. She gets done with her presentation, there's a smattering of applause, and then one Exec leans over and whispers to another Exec ...

• "She's only been here six months. Eventually she'll figure out how to fit in here."

My goodness ... this young lady just made sure that the Exec would earn a six-figure (or better) bonus payout and the Exec ... well, she sure missed the point of the whole exercise.

Optimization isn't about fitting in.

Optimization isn't about pleasing everybody.

Optimization is about NOT WASTING RESOURCES. If you can get 20% more customers to buy something, you're not wasting money on Google & Facebook, are you?

Optimization is all about generating more profit/cash, cash that you get to fatten the wallets of shareholders (I know, you don't like that) ... or more importantly, cash that you get to use to grow your business via new initiatives. If you waste money today, you have less money to spend on something clever tomorrow.

It's been my experience that Optimization requires collaboration and compromise. Not everybody is thrilled with collaboration and compromise. In fact, the only person thrilled with optimization is the person doing the optimization.

And yet, it's a fundamentally critical part of your Marketing Management System. If you don't have a credible Optimization Program, you aren't a credible Marketer.

My Influences, To Date

• Audience = CMO Nordstrom.
• Awareness = Duluth Trading Company.
• Acquisition = Jim Fulton and Eddie Bauer Home.
• Welcome Program = Eddie Bauer Home, B2B Brand With A Great Program.
• Anniversary Program = Nordstrom Anniversary.
• Optimization Program = IBM/Lands' End, Client With Brilliant Website Personalization.

 

The Anniversary Program

I had to confirm that the numbers were truly that stunning. But they were. Oh yes, they were that stunning.

I came to Nordstrom via Eddie Bauer and Lands' End. You couldn't sell anything in July or August at those two companies.

But upon arriving at Nordstrom, I looked at daily sales numbers (that was my job, of course).

• We sold as much merchandise on July 25 as we sold on November 25.

Turns out that if you never discount and can count the number of sales you have on one hand, you can do Christmas level business in late July by offering 20% off on the newest fall styles.

Oh, we promoted the living daylights out of this. You can promote the living daylights out of something if you limit the number of events you have. There's a reason sports and entertainment focus on Anniversary Events ... some sports use media to promote a big event (Wrestlemania for instance), and then via FOMO the customer spends $59.99 (oh wait, high definition is $69.99 ... ok, sign me up). Look at what the NCAA does with Men's Basketball ... a four month lead-up to the announcement of 68 teams, and then you fill out your own bracket to see if you can outperform millions of other people (which means you likely pay attention to the games which gets everybody paid, one way or another).

I was in a meeting at Eddie Bauer back in 1998, when business was awful. We had something like 30 week-long promotional windows. There were (are) only 52 weeks in the year. I remember our CEO telling the folks in the room ... "we've only got room for a few more events before they all lose their luster." 

Oh, they'd already lost their luster.

There's a reason the NFL doesn't host a monthly "playoff" leading to a monthly "champion".

And in business, there's a reason you create an Anniversary Program ... an event so big and so crazy that your customers have no choice but to shop.

My Influences, To Date

• Audience = CMO Nordstrom.
• Awareness = Duluth Trading Company.
• Acquisition = Jim Fulton and Eddie Bauer Home.
• Welcome Program = Eddie Bauer Home, B2B Brand With A Great Program.
• Anniversary Program = Nordstrom Anniversary.