March 11, 2019

Describe Your Plan, Part 1
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!!

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