Sell!

If you are an old-school / traditional direct-to-consumer brand, and you've enjoyed the fruits of a "COVID-bump", the window to sell is upon your Management Team.

Think of it this way.

Let's assume you were a $36,000,000 brand generating $2,000,000 earnings before taxes. At 5x earnings, you might be worth $10,000,000 to a potential buyer.

But now you have your COVID-bump and instead of being a $36,000,000 brand you are a $50,000,000 brand, and instead of $2,000,000 earnings before taxes you'll be at $5,000,000 earnings before taxes. At 5x earnings, you might be worth $25,000,000 to a potential buyer.

Sure, the buyer will likely discount the valuation due to the COVID-bump ... but be honest, when have you ever been in a position of leverage like you are now? Why couldn't you get $15,000,000 or $20,000,000 instead of the $10,000,000 you might have been worth in February 2020? Or if you don't believe in high valuations, you believe that the powers that be will discount the COVID-bump, so be it ... but if your $10,000,000 valuation is now $12,000,000, why not capitalize on a $2,000,000 opportunity.

And given the fact that, on average, the COVID-bump is not likely to last beyond mid-2021 (i.e. once there is a vaccine, things change once again and there will be a new normal), shouldn't you act now?

P.S.: Twitter didn't like this idea. No worries. Twitter believes your valuations will be "COVID-discounted". Let's assume Twitter is right. Your $10,000,000 valuation doesn't become $25,000,000 ... it becomes $12,500,000. That's still $2,500,000 of incremental cheddar in your pocket that you weren't planning for in 2019. That's why I am asking you to think. Please think.

Virtual Chief Performance Officer: When Shouldn't I Develop An Employee?

Oh, there's a lot of times when you shouldn't develop your employees.

Do you have an important project that requires time with a C-Level employee who has a reputation for being a &^$*??? Don't develop an employee, that project is for a seasoned Director/Manager.

Do you have a project with high sales potential? Don't develop an employee, that project is for a seasoned Director/Manager.

Do you have a project with Management Consultants? Don't develop an employee, there will be a stink tied to that project and you'll depress your employees. Give that project to a seasoned Director/Manager who knows how to balance internal resources with external expectations.

You know what to do. Go do it!

Virtual Chief Performance Officer: Development Projects

There's a large swath of projects that are what I'd call "Development Projects". You give these projects to promising employees to develop their skills.

Decisions like this are easy.

Say you are introducing a new line of widgets. Do you let your Chief Merchandising Officer / Chief Product Officer do this? Do you let one of her Directors execute the tactic? Do you let one of your promising Managers take this project over, or do you let a gifted beginner do this?

Most of you would likely have a Director execute the tactic ... boring the person to death.

Don't bore that person to death!! Let that person be a Virtual Chief Performance Officer. And bypass the Manager while you are at it. Hand the project to a promising beginner, and give the promising beginner access to the Director, bypassing the Manager.

I know, here come the complains.

But seriously.

Use logic and math to make the decision for you.

• If the sales potential of the new effort is low, Develop somebody.
• If the probability of success is similar to a coin toss, Develop somebody ... because if the odds of failure are 50/50, then you'll have a chance to teach somebody how to deal with adversity. If the odds of success are 95%, there isn't a teaching opportunity. You Develop somebody when there are better odds of a teaching opportunity.
• Does anybody care? Email personalization falls into this category. Here you have a 99% chance of success but nobody cares outside of 1-2 people in marketing and/or analytics. So Develop somebody.

Almost every project that comes across your desk should have a tag on it that says "SHOULD WE DEVELOP SOMEBODY HERE??" And the answer should typically be "YES", where possible.

What is Selling?

COVID is changing what sells.

Just a cursory view of merchandise division and/or category level data will show you that fact. It's common to see some categories selling 2x as much as in 2019, while other categories are selling less than last year.

Be VERY CAREFUL when interpreting this information. You might be able to ride these trends out well into 2021. Long-term, customer behavior is likely to change ... not going back to 2019 behaviors but will be fundamentally different.

It's common here in 2020 to see long-term winning items perform extremely well. Do not be convinced that this trend will continue and as a consequence you de-emphasize new merchandise. You're gonna need new merchandise to do well today so that you have something to sell in 2022 and 2023.

Compound Interest

There's the geeky math behind lifetime value ... data-centric folks argue about the "best" way to measure long-term value, but those arguments are largely irrelevant. Measure what happens after you acquire a cohort of customers.

When you acquire a cohort of customers, the cohort pays you back. Their payments are a form of compound interest.

As you head into Christmas, make sure you know why business is up (if it is up, as it is for so many of you). There are several things that could be happening, and it is possible that all of the things are happening at the same time.

1. You might be getting more new customers than expected because of COVID.
2. You might be getting existing customers to spend more than expected because of COVID.
3. You might be generating Compound Interest from COVID-newbies from Mar/Apr/May.
4. You might have merchandise productivity independent of (1) (2) (3).
5. You might have marketing strength independent of (1) (2) (3) (4).

Undoubtedly you've parsed these issues and know the answers. You know the Compound Interest generated by all of your COVID-newbies, and your CFO appreciates the gains being generated.

Lies Lies Lies Yeah

From the corrupt world of Influencer Marketing (click here).

Amazon Catalogs

When Amazon mails one (1) catalog, it does not mean that an old channel is experiencing a resurgence.

It does not mean that Amazon is embracing the technology they helped displace. At all.

It means they mailed a catalog.

Stop talking about what Amazon does.

Start focusing on what you do.

A Virtual Chief Performance Officer refocuses Leaders on what is important. Amazon mailing a catalog is NOT IMPORTANT. That catalog could do a billion dollars in annual sales and that would still represent just 0.3% of their total.

Focus on what you control. 

Internet of Things / Creative

The term "Internet of Things" is what happens when you use analytics to run all of your Creative people of out the world and are then stuck with asking the people who remain to come up with a name for an industry trend.

Oh, I get it. I spent plenty of meetings in my career just wishing that I didn't have to listen to another discussion about whether we could hire "Catherine" because her "essence" fit the "spirit of our brand" (fyi - I am aware of two companies that competed and both felt that the exact same model fit the essence of the spirit of their brand, and it was fascinating to know how each side felt given that each other side had no idea how the other side felt). But now we're in 2020, and I just wish there was one (1) Zoom where a Creative individual was even bothered to participate.

I had a discussion with a CEO ... and he told his team on the group conversation that all he needed was a product ... any product ... and with the right promotion he could get any customer to buy the product and didn't need marketing or creative or merchandising to be successful. At first I thought his thesis was ... well, I thought it was "out there".

But there is something to his argument as it related to a pre-COVID world. He didn't care about marketing, creative, and merchandising. He cared about the "offer".

Anytime the world changes, something is gained and something is lost. As Analytics weeded out all the waste in Creative, we lost the Creativity in our businesses. Maybe in a post-COVID world we can do something about that?

But First, 2021

Let's just use a simple example.

You'll have to forecast where 2021 is headed. It's probably not wise to forecast productivity gains (yet) until the customer proves that the customer spends more in January/February ... probably best to forecast 2019 performance.

But you have all these 2020 customers ... and they need to be forecast properly ... meaning that the QUANTITY of those customers needs to be forecast properly, but potentially using 2019 productivity.

Simple example.

• 2019 = 10,000 good customers spending $30.00 average in 2019. Value = 10,000*30 = $300,000 actual.
• 2020 = 10,000 good customers spending $45.00 average in 2020.  Value = 10,000*45 = $450,000 actual.
• 2021 = 15,000 good customers.

You have choices:

• 2021 = 15,000 customers * $30.00 spending average from 2019 = $450,000 forecast.
• 2021 = 15,000 customers * $45.00 spending average from 2020 = $675,000 forecast.
• 2021 = 15,000 customers * $XX.XX spending guesstimate = ????.

If it's me, I'm going with somewhere between $30.00 and $XX.XX. I'd probably sandbag my forecast and start with $30.00 until somebody in Finance / Merchandising screamed at me in-person or typed a message IN ALL CAPS ... and then I'd budge toward $XX.XX in a begrudging manner, clearly stating what my hesitancy was(is).

A Preview of What Will Be Needed to Be Successful in 2022.

Watch the entire 15 minutes here.

And if you don't have 15 minutes, then watch the final 1-2 minutes, because the punchline is offered there.

COVID is going to convince us that sales gains are easy for some brands for the next year. They're not easy. It's darn hard outside of a pandemic. The merchandising / creative factor is so important, so overlooked, so under-analyzed.

This (the video) is what it will take to win in 2022. Passion and Creativity and Attention to Detail. It was the path we were already headed down before a pandemic handed so many companies cement mixers full of money while forcing so many others out of business.

P.S.:  You'll be able to win in 2021. Realistically, we inherit the "new world" we'll live in going forward in 2022. We can't see it, yet, but once there is a vaccine we'll begin getting glimpses ... then we'll see it clearly, and Passion / Creativity / Attention to Detail / Merchandise take hold based on the rules of the "new world".

Interpreting Data

In sports, each team has an analytics department. They analyze data "their" way, as it relates to "their" system. Via this style of analysis, two department can use completely different analytics to evaluate two similar players in very different ways.

Modern analytics/marketing is framed by the concept of "best practices" ... you use Google Analytics or Adobe or Tableau (yes, I'm exaggerating here) and you analyze customers they way they tell you to analyze customers, end of story (yes, I'm exaggerating again).

The secret to success, of course, is to do something wholly different. Different software, different reporting, different modeling, different application of tactics.

If your goal is to find a case study of how "Brand X" leveraged Tableau to create a life-altering graph of data by zip code, you can go ahead and do that.

In this COVID-infused marketing world, interpreting data is darn important. Given that a significant fraction of companies are posting +40% gains without doing anything special to generate the gains, one can easily misinterpret the findings and attribute success to marketing and/or merchandising. Or, one could play the role of Virtual Chief Performance Officer, and figure out what might be happening behind the scenes. Interpreting data becomes more important when the herd all moves in one direction, wouldn't you agree?

Percolating

From startups looking to grow even faster to old-school catalog brands seeing sales double for the first time since the 1980s, as long as you aren't a retail brand or apparel seller there is a good chance that COVID is causing something to happen that many never expected.

For many, business is percolating.

And Professionals are playing offense.

You're being told that business won't revert to normal for maybe a year, maybe more.

It is possible that business will be percolating for another year.

Capitalize now. Change things now. Take advantage now. A year from now, the world is going to be different, and you may as well determine what "different" will be instead of letting others determine what "different" will be while you react to what they do.

Go ... take advantage right now.

P.S.:  I realize this stuff is really hard. It's a pandemic ... and we're ... well, you know what we "are". To cope, customers are choosing you. Or you sell something the customer absolutely needs at this awful point in time. Either way, your business is being fundamentally changed, so take advantage of your opportunity right now. Ethically. Honestly. With Kindness.

Case Studies

The Executive offered one of those salty, Zoom-based comments designed to "put you in your place":

• "If you the kind of Consultant you say you are, you'd have two dozen case studies on your website. You don't have any. You must not have any customers and you don't want anybody to know you don't have any customers. Interesting, don't you think?"

Yeah, interesting.

Here's the thing. Vendors lie. All the time. They lie to get business, they lie to sound important, they lie because they're generally honest but they hired a lying public relations professional.

When I worked at Nordstrom, we had a line in our NDA saying that vendors could not use our logo, period. Not on websites, not on external communications. No case studies. In fact, the vendor could not ever mention that the vendor worked with Nordstrom. I arrived at Nordstrom in January 2001 knowing this fact. So when a vendor called me (a warehouse / operations vendor) to "congratulate me for starting my tenure at Nordstrom", I found it interesting that the next day the Nordstrom logo appeared on their website. I called the vendor, and asked why our logo was on their website when we hadn't worked together ... ever?

• "Because we had a conversation yesterday, so we consider that 'working together', and as you can see, the text says 'brands we've worked with'".

A phone call is not "working together".

Furthermore, because we hadn't signed an NDA (there was just a phone call, that's all), the vendor wasn't subject to the Nordstrom rule of not disclosing the relationship.

In other words, the vendor found a loophole in the system, and used the loophole to their advantage ... misleading every visitor to their website into thinking they provided services to the brand logos displayed on the page.

Vendors lie about case studies. When I worked at Eddie Bauer, a statistical software provider asked me to offer a few quotes about our relationship. Then they showed me their "case study" ... full of misleading statements. I asked to have the statements corrected, and the vendor obliged. A month later, I left Eddie Bauer. Two months later, I noticed that all of the lies had been republished, attributed to "me". I called the company, telling them that while I no longer worked at Eddie Bauer, I didn't want lies attributed to me. The software company did two things.

1. They instead attributed the lies to my boss.
2. They published a version of the case study / lies attributed to my name in Japan, thinking I'd never see that version (Narrator:  He saw that version).

To this day, I can perform a Google search and find versions of the lies.

There are reasons you won't find Case Studies and References on my website.

1. Most NDAs (especially with large brands) require that I keep the working relationship quiet.
2. Most of my Clients don't want you to know that we worked on a specific project, because knowledge of that fact means the Client loses their competitive advantage. If JCP knew that I worked with Macy's to improve profitability by $10,000,000, JCP could hire me to perform the same work. Why would Macy's ever want that to happen? Discuss.

I spent nine months working at an internet startup that later became known as the "retargeting industry". I was part of a team of five ... we had a Product Manager who repeatedly told our team ...

• "It's my job to lie. It's your job to make my lies come true."

Be careful when asking for Case Studies or asking for References. Lies have become a best practice, as we see each and every day. But that doesn't mean that everybody lies.

Amazon Prime Day

The Virtual Chief Performance Officer quickly shifts the focus on Amazon Prime Day away from "pop retail" concepts.

• "How much business will Amazon do?"
• "How will 3rd party sellers perform?"
• "Can the last mile delivery system handle all the packages?"
• "How will Walmart and Target respond?"
• "Will this impact Black Friday?"

All of that is utter nonsense, and if you're having discussions about those topics, please stop now. That's what lesser-skilled professionals focus on. You are NOT a lesser-skilled professional. You possess gifts. Not one of those issues above impact you. Not one. They're noise designed to make trade journalists $$$ ... not you.

What should you be focused on?

• What is our special annual event?
  
• If we don't have a special annual event, what in the name of all that is good are we doing?
• How do we generate A TON of attention for our special / annual event without spending any money whatsoever? (because as you know, that's how you generate A TON of profit).

If you don't have answers to the three bullet points above, why not spend Amazon Prime Day in your War Room coming up with answers to the three bullet points above?

Secret Shopper / Competitive Research

Early in my career when I worked at Lands' End we focused on stuff that was within our control. We'd analyze each catalog spread like our lives depended upon it (and while our lives didn't depend on it our careers kind of did depend upon it). Our circulation director micro-managed circulation managers to the point of exasperation ... "find out from Finance if your assumption of a 59% gross margin is 59% or 59.5% and if it is 59.5% redo the entire seasonal plan by Monday morning". There was a lot of work being done, and it was all based on how "we" performed. We responded to ourselves.

Then I arrived at Eddie Bauer.

There was a team at Eddie Bauer responsible for our Secret Shopper program and Competitive Research program. We had a younger employee ... and this poor guy ... it was his job to go into Gap and J. Jill and J. Crew and take pictures of the assortment without being noticed. He'd occasionally buy merchandise so that we could analyze it and figure out how we stacked up against Gap on the exact same item. He'd occasionally be chased out of the store by a wily store manager who "knew" who he was and what he was up to.

Assuming this poor guy didn't end up in jail, he'd put together presentations showcasing how our competitors presented the same merchandise we sold ... he'd analyze price points and presentation style, setting off an in-house firestorm of criticism ... "just because they sell that item at $49.99 doesn't mean our $59.99 price point is wrong, it just means we know how to bundle more value out of the item than they bundle." Those meetings were a real treat ... as opinions crashed up against opinions. Not enough data to conclude anything, just enough data to rile up everybody. We'd be at $59.99 and 20% off (meaning we were really at $47.99), they'd be at $49.99 at full price. Who was "right"?

Our Market Research Team would combine secret shopper data with competitive research / surveys. They'd ask me to link PRIZM Cluster data to this information. We had personas ... and wait for it ... wait for it ... the best persona was a woman named "Karen" ... and they'd convert all findings into what Karen believed. You can only imagine what this was like in a meeting ... "How do you know that Karen feels this way, how could you possibly know?"

Where am I going with this?

All data / information has two components.

1. Weight / Importance.
2. Half-Life.

Making a decision based on how a person feels about a visit to your website has minimal importance and virtually no half-life.

Making a decision based on the fact that first-time buyers are always responsive in the first 0-3 months following a first order has high importance and a long half-life. In other words, you can make your company a fortune here, even if the work isn't glamorous or popular or isn't something that your "competitors" are doing.

Focus on important stuff with a long half-life. Seductive analytics based on weak information gets you nowhere.

Follow 'em

Let's say you acquired 2x or 3x as many new customers in May 2020 as in May 2019, on the same marketing spend.

Clearly you enjoyed a COVID-bump.

Pay attention to downstream spend.

Follow the cohort by month, averaging how much is spent each month thereafter, and compare it to prior year cohorts.

For instance, you analyze your May 2020 newbies and you measure future spend.

• June 2020 = $9.00.
• July 2020 = $8.60.
• August 2020 = $10.25.
• September 2020 = $9.85.

And compared to the year prior, you see the following trend.

• June 2020 = +31% vs. last year.
• July 2020 = +24% vs. last year.
• August 2020 = +9% vs. last year.
• September 2020 = +3% vs. last year.

As long as these customers maintain spend going forward, all is good. In September 2020, spend has been maintained.

If these customers begin spending less, you have a forecasting challenge that will spill into your 2021 forecast and will hurt performance thereafter ... counts will help you, but spend "could" mitigate the gains from new customer counts.

Follow 'em ... analyze 'em. Simple enough?

The Bully

There's a subset of "The Know It All" segment that we've all had to deal with in business ... this person is "The Bully".

It's important to figure out if the Know-It-All is a Bully or not. The Know-It-All cannot be reasoned with. However, if the Know-It-All is just a Bully, well, you are in business! You immediately assess if the Bully backs down when presented with facts.

I face this when I play pickleball. There's a bully, and at first it is intimidating to play against the bully. The person hits the ball HARD and pushes you around and makes you play a style that he wants to play. However ... however ... if you push back immediately against this person and set the tone from the first point, the bully backs down.

The Virtual Chief Performance Officer "tests" the bully, right from the get-go.

As a Consultant, you face bullies all the time. In fact, the Consultant is frequently hired because a bully is making life miserable for his/her co-workers, to the point where nothing gets done. I've made a living because of this dynamic.

Assess if the Bully backs down when presented with facts. 

Assess if the Bully storms back with theory when presented with facts ... this is the same as backing down. If you present facts and the bully comes back with "WHAT ABOUT THE BRAND, WHAT ABOUT THE BRAND?" in all caps (as happened repeatedly when I worked for a client back in 2008), you have a bully. In marketing, the word "branding" or "brand" is code for dealing with a bully. Branding is not rooted in customer facts, branding is an opinion. When a marketer tells you that the marketer won't do something because it will "hurt the brand", the marketer is being a bully, and is choosing marketing faith over marketing science. The marketing leader just opened the door, and it is your job as the Virtual Chief Performance Officer to drive a ton of customer facts through that door, right now.

Merchants employ comparable techniques, talking about a "trend-right assortment". That's the merchandising version of "branding". It's merchandising faith, and it opens the door for you to drive a dump-truck full of customer facts through the door. Do it.

CEOs will bully you incessantly if you let 'em. They will combine their knowledge of their company with CNBC-fake-facts (i.e. "the industry" is really struggling right now) and Woodside Research reports to triangulate into a position that aligns with his/her worldview. When the bully does this, you have the bully "backing up" ... drive hard to the basket with customer facts.

In general, I've found it counter-productive to deal with the Know-It-All head-on. However, I've found it highly-productive to deal with the bully head-on. Bullies back down in the face of an onslaught of actual, actionable customer data.

Identify if you have a Know-It-All or a Bully.

All Those COVID Customers

If you aren't a retail brand forced to close down stores, you may well have experienced a COVID-bump this Spring.

And I get it, you worked REALLY hard to make this happen, given the awful reality of COVID. But now you have all these customers .... customers who didn't buy from you because of your carefully curated catalog or because of the magic of your personalization program. They bought from you because your merchandise solved a COVID-related problem.

Now, what are you going to do with all of those COVID-related customers?

The first thing you are going to do is block out all of the in-house noise.

Instead of focusing on the four people in your company who are not on your side, focus on the 1,004 people in your company who are on the side of the customer. There, you will find a path to the future. And the future includes managing all those COVID customers who will pay you back, with interest, in 2021 and beyond.

Triangulation

Maybe "triangulation" is the wrong term. But you know what I mean.

Let's say you want to implement an idea ... maybe you want to do something interesting with your new merchandise assortment, fusing it with email and your best customers.

Certain employees present problems for you.

Your CEO is "The Lizard". He only wants to sell and only wants to maximize sales. He won't let you take a step backwards and generate less revenue by featuring new merchandise.

Your Chief Merchant is "The Know-It-All" ... she "knows" that new merchandise and best customers are a bad mix and she wants new merchandise featured on the home page where EVERYBODY gets to see it.

Your Chief Marketing Officer is "The Climber" ... he's on a fast track to working for a major brand and he doesn't have time for anything as boring as email marketing.

You pull out your Crayons and you color in the area where you might have room to wiggle.

That's you ... you are in the white area ... that's what happens after you triangulate between the forces working against you in your company.

Fight back. You can fight back and stay within that tiny white area in the diagram and you can learn enough to make a difference.

1. If email is boring to your Chief Marketing Officer, make sure you have budget to do something, and then do it ... do something ... because your CMO just doesn't care. Do what your CMO asks you to do, but you have latitude to do something.
2. If your Chief Merchant thinks new merchandise and best customers are a bad mix, personalize your email targeting strategy to new merchandise and new customers, and provide that you can help out there. You get to test your strategy while avoiding an angry Chief Merchant.
3. if your CEO thinks it is bad form to feature new merchandise in emails because you lose sales, sample a small audience for your prototype. Nobody, and I repeat NOBODY is ever going to notice if you sample 10% of your email list and test your ideas among that audience. NOBODY WILL EVER NOTICE THE DIFFERENCE. Nobody.

Now go test your ideas, learn, and triangulate your way toward an answer. Build a case. And instead of asking permission to do exactly what you want to all customers, you bring FACTS regarding how customers CONVERTED when you executed your own ideas.

Those are the kind of things that a Virtual Chief Performance Officer (hint - you) does to move a business forward in a red-tape-fueled environment.

Oversimplification

This is the part of the story where you suggest that I've over-simplified things.

Well of course I've over-simplified things!

You have to over-simplify things in order to make a larger point.

The larger point being, of course, that the Virtual Chief Performance Officer is fusing the following concepts into an actionable direction.

• Customers: Explaining how customers behave in a way that sets a direction for the company.
• Merchandise:  Outlining the role that new/existing products have in fueling business success.
• Management Analytics:  The fusion of customer analysis and merchandise analysis.
• Coaching:  Setting up employees to be successful, even when they are faced with intimidating internal forces that are there to block what you want to accomplish.
• Goals and Objectives:  Giving employees clear direction on what they need to accomplish to be successful, then rewarding employees when they do well or holding employees accountable when they fail to perform.

That's what I'm looking to do ... I am fusing Management Analytics, Coaching, and Goals/Objectives. Based on the past thirteen-plus years of Consulting work, this "fusion" is missing. It's a pothole that somebody should fill. Why not me? Why not you?

The Climber!!

Some personality types are very challenging to work with. The "Climber" doesn't have to be one of 'em.

We've all met The Climber. She's young and on a meteoric rise to the top of the Corporate Ladder ... your Ladder or one pre-defined by the Industry you work in.

The Virtual Chief Performance Officer happily ties cargo to this rocket ship. Find areas where you and The Climber agree, and then let The Climber get credit for agreed-upon ideas. Just like that you're getting stuff done.

Oh, I know, nobody likes this idea, because YOU deserve credit. Well of course you deserve credit! But that's not what a Virtual Chief Performance Officer does. The VCPO makes sure that the company performs at a high level.