$19.99 on Your Website, or $15.99 on Amazon? Same Product

Time for a little bit of marketing theory for you.

I won't mention the brand name here ... I'll get all sorts of emails filled with theory and none with reality if I do.

However, this brand sells replacement accessories.

• $19.99 on their own website, with 10% off if you sign up for email marketing campaigns.
• $15.99 on Amazon for the exact same product.

Think about the tax you have to pay Amazon for access to "their" customer. That tax eats into the $15.99 selling price, correct?

Let's assume that the cost of goods is $5.00. This means you might make $15 selling the item on your website, or you might make $6 selling the item on Amazon ... you give up margin dollars by selling for a cheaper price on Amazon and you give up margin dollars for the tax that allows you access to Amazon customers.

But you have to purchase the bags, regardless. So technically you don't need "access" to Amazon customers. Right?

We make tradeoffs every day. We seem pre-disposed to pay third parties taxes. Next time you are faced with yet another tax to a third party, ask yourself why you are paying the tax? Have a good reason, ok?

P.S.: This is an old-school story from 2001. I'm VP of Database Marketing at Nordstrom. Two members of my team are traveling with me to the "Catalog Conference" ... yeah, that used to be a thing. We'd meet with other brands, discussing how we were going to rent/exchange names with each other. In other words, we were granting access to our customers ... oftentimes for a tax.

The soul-breaking moment in this process was a meeting myself and two of my Managers were having with L.L. Bean. These meetings were occasionally (often) held in hotel rooms. My managers and I enter room 1433 or whatever room the meeting was in and we were greeted by thirteen individuals ... three from L.L. Bean and ten others ... list representatives from L.L. Bean and Nordstrom. To recap.

• 3 Employees from L.L. Bean.
• 3 Employees from Nordstrom.
• 10 Individuals representing the list brands that represented L.L. Bean and Nordstrom.

These are the moments you realize that taxes are in play. We were spending money, and that money was trickling through the ecosystem. Of course, that was old-school cataloging ... those meetings were "disrupted" by the co-op model of everybody dumping names/addresses into a common pool and then bellying up to the bar to take whatever you wanted at $0.06 a pop. And that business model was "disrupted" by Google/Facebook ... two brands collecting an awful lot of tax revenue still, in 2023.

Tax dollars have to provide a disproportionate return on investment. I once had a CFO who questioned a line item in my budget where I was paying a list brand more than a million dollars. He wanted to know what he got in return for that investment? Good question! I showed him a five-year forecast of where our brand would head if we didn't make that investment, and that was the last time the line item was questioned. If you have to pay taxes, pay them in cases where you make a disproportionate return on tax ("ROT").

The JBL PartyBox 310

When you live in Maricopa County, you largely live outside. Phoenix is the sunniest large city in the world.

If you live outside, you entertain outside. If you entertain outside, you need music. If you need music, you need a good outdoor speaker - not one of those tiny bluetooth speakers that, at best, provide ambient music for a gathering of three people. You need something that could be heard in Yavapai County if necessary.

Two-and-a-half years ago I shelled out cash for a JBL PartyBox 110. This thing sounded so good that numerous neighbors also purchased the speaker.

And yet ... it didn't sound "perfect". On a scale from 0 to 100, it sounded like an 88. That gnawed at me. Welcome to capitalism, Kevin!

Fortunately, JBL thought through this issue ... they anticipated that idiots like me would "want more". They complement their 110 model with better units ... the 310 ... the 710 ... the 1000 ... and the Ultimate! Each unit is incrementally better, and incrementally more expensive!

Now, the 110 and 310 can be plugged in or played via battery. The battery is so darn cool! You can pick up the speaker and place it by the pool or in your outdoor seating area. It can bluetooth to your tablet in your house if you want. The 710 ... it's not portable and there is no battery, but there is a video where a guy plays it at 100% volume, distortion free, and can hear it from four hundred feet away ... that's more than a football field. So yes, the 710 sounds incredible (I can't imagine what the 1000 or the Ultimate sound like), but for a residential back yard, it's probably not worth spending a few hundred extra dollars.

The 310, however, has proven worth spending $150 more. In my opinion, the sound quality improves from 88 to 94. For the average person, that level of improvement is nothing ... it's not worth spending extra money. For me, it's completely worth spending the extra money. The bass is better ... you can feel it in your chest if you turn the volume up. You can hear the speaker from several houses away ... good for the owner, bad for the neighborhood.

There are dozens of online videos comparing each speaker ... you're told to put your headphones on so you can "hear" the difference. These are outdoor music enthusiasts performing free marketing on behalf of JBL.

This brings me to your business.

Online, you'll read thousands of experts who tell you how to leverage marketing to improve your business. Almost none of the experts tell you how to leverage merchandise/product to improve your business. There's a good reason for this. It's HARD work, and it is "localized" work, meaning what works for one business might not work for another business. In other words, the JBL strategy of line extensions works for JBL ... but could it possibly work the same way for Orvis? Maybe yes, maybe no. Could it work for Coach? Absolutely!!

It isn't easy to get customers to so enjoy a product line that they'll unnecessarily spend incremental dollars on "better" replacement items while performing marketing for you free of charge. But if you have a product line that can be extended with better items that cost more ... and if you have a portion of the customer base that CARES ... who willing spend more money to satiate a need ... who will also testify about satiating that need ... well, now you have something. You are now able to leverage product/line extensions to perform marketing functions at no cost. Now you'll acquire new customers without having to pay Facebook a tax.

If we don't have a product line that performs this function, well, maybe that's part of our failure as shepherds of the brands we manage, right? It's one thing to say WINTER SALE, TAKE 75% OFF!! It's quite another thing to have a random YouTuber explain your product line for you causing customers to spend money they wouldn't normally spend to acquire improved products that aren't improved enough to truly matter.

In 2024, you'll want to capitalize on this concept. Spend less time paying taxes to Google and Facebook. Spend more time exaggerating line extensions that are interesting enough to cause people to testify on your behalf.

Boxing Day

In the old days, I'd ask my readers to switch roles on Boxing Day ... here's a link from something I wrote back in 2006 asking readers to submit content that I'd publish. The reader could submit something and have access to 2,500 individuals.

You'd think a vendor ... any vendor ... would have taken advantage of the opportunity to market to their prospects for free.

That never happened. Given the choice between creating helpful content in exchange for access to 2,500 highly qualified prospects or paying Google a tax, vendors paid the tax. You'd likely pay the tax to a third party as well.

How many opportunities does your brand pass up because the opportunity would require some work, and because the opportunity is "non-traditional" and "unproven"?

There's a reason the service provider community loves the "omnichannel" approach to marketing. You, the reader, are constantly paying taxes. You pay your paid search vendor a tax to have the paid search vendor pay Google a tax, then you pay an attribution vendor a tax to measure how effective the tax was that you paid a vendor to pay to Google. You pay an influencer a tax so that the influencer says something on the socials causing the tax you pay the socials to drive traffic to your site that the tax you pay your attribution vendor measures.

The sources we pay taxes to need to perform better every year to prove their worth. When they don't perform better, we struggle. If we're dependent upon these sources, our businesses suffer.

If new customer counts are in decline and you are highly dependent on tax collectors for new customers ... well, that's a strategic blunder, isn't it?

Merry Christmas!

For the eighteenth time ... eighteenth time (showing up every day matters, folks), I wish you a Merry Christmas!

That was my corgi back in 2006 ... Bert! The happiest dog that ever lived, period.

Now we have Dash, and he's not the kind of dog that takes to a photograph in the manner Bert did. Dash has other gifts.

Yes, this relates to your business.

You have other gifts. You are not Amazon. You are not Target. You are YOU. Take full advantage of your gifts. Ask your employees what your company's gifts are if you as a Leader don't know them. Then capitalize on your gifts!

There is a Reason it is Called a SmartTV

Here you go (click here).

Who knows if any of it is true or not?

If you want to do a test, tell your phone and smart devices repeatedly that you are hungry for your favorite fast food establishment if you have one. "I'm really hungry for Taco Bell". Say it a few hundred times and see what happens.

Just Like Sports

The parallels between sports and merchandising ... they are many, and the lessons apply to our world.

Orvis is an example of a "draft and develop" philosophy. Product development is critically important - without the ability to develop your own winners, you're sunk.

If you are Nordstrom, you are largely dependent upon Free Agency. There are items and brands that you can pick from. You pay a price, of course ... in football, your salary cap limits what you can do. In retail/e-commerce, profit limits what you can do. Here, Nordstrom partners with L.L. Bean. L.L. Bean takes on the product development role, and if the merchants at Nordstrom are smart, they are picking good "free agent" items.

Neither approach is right/wrong ... both approaches have benefits and consequences.

When Orvis fails, it might take 2-3 years to recover. It's like being the Green Bay Packers ... if you don't draft well, look out. Regardless, Orvis largely controls its own destiny.

When Nordstrom fails, recovery could be fast if third-party vendors have alternatives that work. Still, Nordstrom is dependent upon third-parties. If customers don't like the Coach Tabby Pebbled Leather Crossbody Bag, Nordstrom suffers. It's not unlike being the NY Jets ... putting all your chips in the Aaron Rodgers camp.

Marketing/messaging is different in each case. Orvis develops products for the customer. Nordstrom selects products for the customer.

Know who you are, know your strengths and weaknesses, and act accordingly. Just like sports teams do.

Oh

Give this a few moments of your time today.

Great Moments in Omnichannel History

This is the Amazon + USPS episode (click here).

Try A Compliment

I was in a meeting last week where an individual tore through people and processes, lavishing criticism as if being paid by the critique.

After the meeting, I posted this poll on Twitter (click here). It only received 35 votes, but the outcome of the vote is what is interesting.

• Based on the structure of the question, it would take 10 compliments to equal the damage done by 1 criticism.
• One individual commented that "people are soft".

About a decade ago, I was in a meeting ... the department head joined me in the bathroom after causing a staff member to cry. What did this person say about it?

• "Why are people so soft?"

Not long after that meeting, the professional lost many members of the staff the professional was responsible for.

I realize the pundits like it when a "strong leader" demeans others. Demeaning others leads to clicks, resulting in people getting paid or earning "engagement".

If you want to be an effective leader, try offering a compliment. Catch people doing good things, and say something about it.

Zulily

Born 2009/2010, Dead 2024 (click here).

This is a "compressed life" if there ever was one. From birth to public offering to sale to an established brand to sale to private equity to the end in a decade-and-a-half.

The day Amazon delivery trucks arrived in your neighborhood was the day that traditional e-commerce ended. Unless each and every one of us have a compelling differentiator that causes a customer to stay away from Amazon, we'll lose out to those delivery trucks sending inexpensive merchandise to our door just hours after we ordered it.

Traditional catalog brands were hobbled by e-commerce and are now being stymied by paper / print / postage partners.

"Omnichannel" retail was crippled by e-commerce. I mean, Macy's might be taken private and not for what they sell but for the real estate, well, that tells you everything you need to know.

E-commerce was thumped by Amazon. Zulily. Stitch Fix is falling apart.

We're headed in interesting and unusual direction in 2024-2025. Put your creativity hat on. This problem won't be solved traditionally. Nope.

P.S.: As we wind down 2023, I've been blessed to work with a significant number of newer brands. Everybody focuses on the big trees in the forest ... down at ground level, business is being reinvented. There are many positive stories coming, folks.

Upcoming Inflection Points

I spend several pages in Hillstrom's Business Review (click here) discussing Inflection Points.

The next two weeks represent a significant Inflection Point. Customers who purchase during the next two weeks and are not among your loyal buyers are "different" than everybody else. They are much less likely to purchase during the rest of the year, on average. Use your free and nearly free communication channels to speak with these customers during the rest of the year ... use expensive channels (i.e. print) to speak to those customers in Jan/Feb/Mar.

Yes, please, collect every penny of profit you can on orders placed over the next two weeks.

Then stop spending pennies on customers who are not interested in you early in 2025. The next two weeks represent an important inflection point.

Middling Items

Winners are obviously important, but your middling items ... those performing "in the middle" of your assortment, well, they are important as well.

I looked at items in the middle from five years ago, measuring the fraction of items that were future winners.

• Year 4 = 3%.
  
• Year 3 = 3%.
• Year 2 = 6%.
• Year 1 = 5%.

Not many advance to winning status. That's the challenge many of us face. It is hard, darn hard, to identify items that have the potential to be best sellers. As a consequence, we need many new items each year. With more new items, we have a good chance of having some that become winning items.

Too often, I work on projects where new item development was cut in half ... "we've got to squeeze more juice from the lemon." That works until all of the juice has been squeezed from the lemon. 

Then you need a new lemon!

Life Stages of an Item

You'll constantly hear about Customer Lifetime Value (CLV or LTV or whatever third parties want to call it). Customers go through different life stages ... from new to loyal to disinterested. Lifetime Value measures the future potential of a customer based on life stage.

Your merchandise goes through the exact same process. When you have a winning item, one customers love, the item has future value, just like a customer has future value.  Call it Merchandise Lifetime Value ... MLV!

Here are winning items from a brand from five years ago. Look at the sales from these items in subsequent years.

• Year 5 = $5.4 million.
• Year 4 = $5.8 million.
• Year 3 = $4.9 million.
• Year 2 = $3.7 million.
• Year 1 = $2.3 million.

You can argue that in the next four years winning items have a MLV of $16.4 million.

Each winning item has it's own trajectory. Own life stages. Here's an item that is dying. It was a winner five years ago. In the information below, I measure demand per thousand annual customers.

• Year 5 = $382.
• Year 4 = $248.
• Year 3 = $72.
• Year 2 = $43.
• Year 1 = $20.

Four years ago your merchandising team should have seen the writing on the wall, searching for a replacement item.

Other winning items have different trajectories. Again, I'm reporting demand per thousand annual customers.

• Year 5 = $398.
• Year 4 = $405.
• Year 3 = $336.
• Year 2 = $332.
• Year 1 = $462.

You'd craft entire merchandising stories around this item ... it is showing no signs of weakness. This item is in the prime of it's life. This item is printing profit for your brand.

Know the life stage of each item you sell. This style of marketing is the complete opposite of HURRY TODAY, 70% OFF EVERYTHING! This is hard work, but it protects the future health of your business.

What Is The Message?

Look at this sequence of email campaign subject lines from last week, sorted by most recent to oldest.

• 40%, 50%, or 60% off everything. 
• 50% off your order.
• Get up to 70% off everything.
• Save up to 70% on everything.
• Up to 70% off.
• Only hours left, up to 70% off everything.
• This is it. Up to 70% off everything.
• 60% off sitewide?
• Today only, 60% off sitewide is back.
• Cyber Monday early access. 60% off everything.

Tell me what the message is that this brand wants to communicate?

Winning Items

It's been nearly a decade now since I spent time focusing on what are called "Winners".

Winners are your best selling items. Winners are really, really important. They generate a disproportionate amount of your profit.

Winners are different for different brands. If you manage a fashion brand, a winner might be a new item that explodes in the first month of life, generates sales for two months, and then is discontinued. For another brand, a journey is involved ... new item that performs well for a year, becomes a contending item in the second year, and then is a winning item for years 3/4/5/6 before slumping and ultimately being discontinued in year nine.

A professional once asked me if $0.11 per email delivered was a good metric or not? I asked the individual if they feature new items or winners in their email campaigns? The person couldn't answer the question. That is one of the "sadnesses" of 2023. It would be like a chef asking a diner if the chicken parm tasted good, and the diner said "what spices did you use?" and the chef said "I don't know". In other words, if you populate email campaigns with winning items, you might generate $0.18 per email delivered ... if you populate email campaigns with new items, you might generate $0.08 per email delivered. Performance isn't a function of the channel. Performance is a function of what you show the customer.

If you are a marketer worth your chops, you spend a disproportionate amount of time focusing on two things.

1. Promoting new items that have potential so those new items have a chance to become winners.
2. Promoting winners to squeeze as much profit out of your customer as possible.

Email Marketing and AOV

If you don't think you play a role in how a customer purchases, think again.

Here's a common outcome.

• All Other Channels
• Items per Order = 2.0
• Price per Item Purchased = $40.00.
• AOV = 2.0 * $40.00 = $80.00.
• Email Marketing
• Items per Order = 2.3.
• Price per Item Purchased = $33.00.
• AOV = 2.3 * $33.00 =  $75.90.

It's a smaller AOV for email orders ... but how we get to the smaller AOV is more interesting! Those shopping via email marketing are buying more items at significant discounts.

In other words, the marketer either changes customer behavior or attracts a customer with different behavior.

I realize many of you view email marketing as a "throw away channel". I received an email from an e-commerce brand offering 60% off on Cyber Monday (Last Chance for 60% Off), then they offered 60% off on Tuesday ... and they then offered 70% off on Wednesday. So yeah, they were just lying. This brand views email marketing as a "throw away channel".

Email marketing metrics are the outcome of the tactics you use. If you constantly promote discounts via email marketing, it should not surprise you that email buyers purchase more items at lower prices, resulting in a lower AOV and presumably less profit.

Looking Ahead

Those in the audience that manage catalog-centric e-commerce models ... here's an interesting one for you.

• "Brand X" has a 25% annual repurchase rate. Projecting to the start of 2024, "Brand X" will have 100,000 customers.
• Brand "X" averaged 75,000 new/reactivated buyers over the past four years. In 2024, with it being extremely hard to acquire customers via print, the brand is forecasting 40,000 new/reactivated buyers.

If this trend continues ... we can see how many customers we'll have by year.

• 2023 = 100,000 customers.
• 2024 = 100,000*0.25 + 40,000 = 65,000 customers.
• 2025 = 65,000*0.25 + 40,000 = 56,250 customers.
• 2026 = 56,250*0.25 + 40,000 = 54,063 customers.
• 2027 = 54,063*0.25 + 40,000 = 53,516 customers.

This is the forecast you need to show your paper rep, your printer, the USPS, your co-op lead. This is what they're doing. In the example above, they're cutting "Brand X" in half.

Yes, you have all these digital channels and offline non-print channels to use ... you've had them for a couple of decades for the most part. You are accountable. But your service providers are accountable as well. Show them what they're accountable for.

New Customer Acquisition Strategies ... The Story of 2024

I spend a disproportionate amount of time watching professional pickleball. An unhealthy amount to be fair.

The PPA (the most influential professional pickleball organization) aligned with Tennis Channel. Instead of publishing their content on YouTube (Google), they (the PPA), they now publish their content on their own website (https://pickleballtv.com/) and on Amazon Prime ... specifically, on Prime's Freevee service.

How exactly does an e-commerce brand compete against a pickleball channel broadcast on the biggest e-commerce competitor in history, paired with non-stop informercials about products you can purchase on Amazon? No amount of "omnichannel strategy" competes against Amazon. None.

Back in 2016 I toured the Country (and Europe) telling the audience that customer acquisition tactics were going to be the most important thing they could ever focus on. It didn't go well.

Companies in attendance back in 2016 recently asked me how to acquire customers in 2024.

That's the story of the upcoming year. Some of you have spent the past decade preparing for this day.

if you haven't spent the time preparing for today, you can be very successful. There's time. There will be top-line contraction, obviously, but there is time. Get busy! Use 2024 as an R&D year.

Cyber Monday

If I have to hear one more quote from a trade journalist suggesting that you "must win Cyber Monday".

Fools.

Do they ask you to win January 17?

Do they ask you to win February 9?

Do they ask you to win March 21?

Do they ask you to win April 3?

Do they ask you to win May 24?

Do they ask you to win June 19?

Do they ask you to win July 30?

Do they ask you to win August 20?

Do they ask you to win September 1?

Do they ask you to win October 14?

Do they ask you to win November 18?

Do they ask you to win December 13?

If the answer to those questions is "no", then stop adhering to their program. Stop listening. Stop reading.

Winning in Business is a 365 day endeavor.

Fools.

Do not execute the tactics that create clicks for trade journalists. Execute the tactics that generate profit for your business.

My goodness.

Send me sales/profit calculations (kevinh@minethatdata.com) if you feel differently.

Storm Clouds

Starters:  Read this word salad of nothingness. My industry is about out of gas. The needle is below empty.

If Amazon represents 37% of e-commerce, is it any wonder that some e-commerce brands are struggling? Do you ever stop and think about that metric? It's a whopper! Kohl's says that e-commerce is dragging them down. No kidding. You turn your stores into Amazon returns centers and you wonder why your own customers won't use your website? You told them not to! You told them to buy on Amazon and then you'll clean up the mess when the customer isn't happy with (checks notes) Amazon. It's hard to think of a bigger Management blunder ... except the industry cheers this on as an example of Omnichannel brilliance. Hint - it is the opposite of brilliance.

Of course, none of the content in the paragraph above is as bad as what vendors are doing to catalogers, who are dealing with 10% to 20% annual inflation thanks to the efforts of paper folks (constrained supply), printers (constrained supply), and the USPS (gotta make a profit). All three are conspiring, in unison, to create a "spiral to singularity". What does that mean?

• Pretend you send 500,000 catalogs.
• With 10% to 20% annual inflation thanks to your vendors, you reduce circulation to 425,000.
• Next year, with circulation reduced to 425,000, your vendors increase prices again, causing you to reduce circulation to 350,000.
• Next year, with circulation reduced to 350,000, your vendors increase prices again, causing you to reduce circulation to 275,000.
• At some point, you will mail one catalog that costs $500,000 to one productive customer. That's the spiral to singularity.

You don't need to be a wizard to see what Amazon is doing to e-commerce ... to see what vendors are doing to end cataloging (and yes - some of you will say it ended 13 years ago and that's a funny line and all that, but that doesn't mean it isn't a profitable discipline ... it just means you can tell a joke).

Storm Clouds are brewing.

2024 is the year you are required to find clever ways to find new customers ... ways that do not depend upon the forces tearing your business model apart.

Amazing Project Run Happening Right Now

I never expected 2023 to end this way. Here's a common comment the past two weeks, all from new clients.

• "Would you be willing to run your Elite Program for us off-schedule? We're seeing something really odd in November performance and we want it diagnosed."

We have catalog brands being destroyed by third parties (USPS, Paper Brands, Printers) ... we have e-commerce brands being challenged by Amazon. If you fall into either category and want me to run my Elite Program code for you off-schedule, I'll do it. For new clients, this is an $1,800 request. Contact me (kevinh@minethatdata.com) and I'll fit the run in for you, ok?

Inflection Points: Thanksgiving

The next six days offer a bounty of Inflection Points.

You have discounting information in your database. You have prior Black Friday and Cyber Monday information in your database - undoubtedly you have 1/0 indicators in your database saying whether a customer purchased on both Black Friday and Cyber Monday, right?

Right?

So why in the name of Don Libey are you sending five "blasts" to all customers offering 50% off for Black Friday and Cyber Monday? Why wouldn't these "blasts" be targeted based on the 1/0 indicators in your database? Why do you want to convert a full-priced August buyer into a Black Friday buyer at 50% off?

Why do you want to convert any full-priced buyers to 50% off fake-holiday buyers?

The next 5-6 days are full of Inflection Points. Your database should have indicators that allow you to take action on these Inflection Points.

Right?

Here We Go!

Your friends in the trade industry are ready for their Super Bowl. They want you to sell at 60% off, they want you to increase your marketing budget by 60%, and if you don't increase your sales you are an idiot. They'll write all about it. That's how they make money.

You're going to hear all sorts of comments ... hourly diagnostics ... "At 11:00am EST Black Friday is trending 3.43% below last year. Marketers need to react immediately to these trends if they want to reap the rewards of this critically important season."

Utter gibberish. All of it.

You sell the way you want, when you want. Do what is best for your business. You are under no obligation to do what an "expert" at Woodside Research tells you to do.

Two stories. The first one I've told you previously. I'm sitting in a meeting on Cyber Monday with an Executive Team. It's 8:30am. The CEO is at the head of the table. A non-descript individual walks in, whispers into the CEO's ear, then hands the CEO a small piece of paper. The room sits in silence. The CEO turns to the room, and in a graven voice says "Brand X is at 40% off for Cyber Monday. We have to remain competitive. Effective immediately, we will be at 45% off." The Marketing Executive says something along the lines of "our email blast goes out at 9:00am, we cannot react that quicky". The CEO says something like "oh yes we can", causing the Marketing Executive to head out of the conference room with hair on fire. It's moments like that that your service providers / vendors are not compensated properly. The email was delivered, at 45% off.

The second story is about a smart client of mine. I analyzed the future value of customers who purchase on specific days of the year, after controlling for the quality of the customer purchasing. Two of the worst days to generate business? Black Friday, and Cyber Monday. Customers purchasing on those two days were so much less valuable than customers buying during other times of the year that you could practically shut the website and stores down those two days and be more successful during the rest of the year. This brand chose to not discount on Black Friday and Cyber Monday. Sales still came in the door. Those sales were much, much more profitable, however.

You probably already run the query to see how valuable customers are in the next year based on the day customers purchase merchandise. You probably already know you'd rather generate an incremental order on April 27 than November 27, much less an incremental order on November 27 that is at 40% off.

If you don't run this query, send me some data and I'll run it for you for the low cost of $1,800 (kevinh@minethatdata.com). It's a Black Friday / Cyber Monday special for you!

Vipers

In the New Testament, vipers were individuals filled with malice.

Do you know of anybody in your workplace that you'd refer to as a "viper"?

Your trade journals demand that you be a leader, that you "embrace change", that you "transform your brand".

I'm not convinced all of these people have met up with "vipers" in an e-commerce and/or retail world.

It's the merchant who blames you because you aren't bringing the "right traffic" to your website.

It's the marketer who says the "imagery" fails to convey the "key tenants of the brand".

It's the CEO who lambasts the inventory manager because ... well ... she "can".

It's the creative professional who wants the IT professional to "throw the 'book of work' away" and re-prioritize his work.

Politics ... on both sides ... are full of vipers. That's why the discipline (at a National level) is now so loathsome. 

And at work, you probably know who your vipers are. You probably have informal processes in place to work around these individuals. Good for you!

Making The Best of a Bad Situation

That was the theme of yesterday's post featuring "Helen". (P.S.: I had one unsub because of yesterday's post ... apparently a blind cow was the line in the sand for that individual!)

Back in the late 1990s, I worked at a challenged company called Eddie Bauer. The brand had smart employees working in a dumb culture. There was no way to explain to the employees that the culture was dumb. 

So you stop trying to fix the culture.

You fix what you own, what you control.

In 1999 a $15,000,000 online business grew to $65,000,000. We forecast this in 1998, so we planned 1999 with this knowledge. We cut expensive print activities, especially within our customer acquisition efforts (because so many of the new online buyers were actually new to the brand, and were honestly being acquired without marketing expenditure ... yeah, 1999 was a groovy ride). If I had a 176 page catalog, it became a 160 page catalog ... I didn't let our merchandising team add pages they couldn't generate profit off of. When we had a 160 page catalog and a 64 page "prospect" catalog, I made sure most of our customers got the 64 pager (whereas in the past most customers got the 160 page catalog).

These were decisions I had the accountability to make. Sure, folks disagreed. Loudly! Regardless, I controlled my area of influence, making as much profit as I could within my control.

It turned out to be a lot of profit, once 1999 played out. Record profit, in fact.

About a decade ago, I consulted with a company that had a lousy culture. Nobody would take accountability for anything. I mentioned to the Executive Team that they performed like a 4-12 NFL team. Well that got their attention! They set up a war room to address issues. A month later, they fired the Chief Marketing Officer. Sometimes you aren't capable of fixing what you own.

Now go back to that video about "Helen". Her owners created the best possible environment so that Helen, the blind cow, could thrive.

You can do the same thing within your sphere of influence. Make the best of a bad situation.

Helen

Something different for you today.

This is Helen. Getting to know her will be the best three minutes you'll spend today.

Not all of us get to work at a glamorous brand. Sometimes we inherit an unloved customer file or an unappreciated merchandise assortment. Like in the video, there's a lot we can do to make the best of the situation we inherit.

Simple Mistakes

I've shared this image with you previously. It's the classic "Class Of" report that illustrates when there are problems with new merchandise and/or problems discontinuing existing winning items,

This company messed up the Class of 2021 and the Class of 2022. New item sales are about 60% of what they were in 2020.

When new item sales struggle this year, the "class" of items struggle in the future. You'll suffer for a couple of years until you find a class of new items that perform well.

So often, it's simple mistakes like this (not introducing enough new items) that cause multi-year headaches.

Welcome to Wrexham

Have you watched this series?

Now - spoiler alert, this season is going to turn out wonderful.

But my goodness - it is so hard to be excellent.

Yes, this applies to your e-commerce business.

You can do all the right things and things still go horribly, horribly wrong. No amount of "six best practices to increase conversion rates" solves the horrible things that go wrong when you do everything right.

Stay positive! You got through 2020-2021. You can get through anything.

The Look

I only spent one year working for an agency. Wowzer. There were times when the Executive sitting across the table from me would look at the team of people brought in to "pitch" different ideas and offer this glare (bonus points if you know which commercial this is from).

People either come to you because of your message, or you go to people to push a message. You take a risk when you push a message. You don't know what the person across the room / across the Zoom really wants, and they didn't ask you to be presenting in front of them in the first place.

These vendor / client "pitches" are wonky things, aren't they?

I recall in my "agency year" flying to Los Angeles for a client "pitch". We had our sales person, myself, and three "digital" analysts. On the plane to Los Angeles our three digital analysts saw me rehearsing my presentation. One of the analysts said "we're going out tonight, we'll put our presentation together before our 9:00am meeting, heck, it's just our standard deck so it isn't like we have to work that hard."

Alright.

Needless to say, their half-hour "pitch" didn't go very well.

I'd advise not being an expert at presenting a standard powerpoint "deck".

Humans are interesting creatures.

Yes, This Is Worth 7 Minutes And 26 Seconds Of Your Time

How many Executives have you worked with that you'd run through a wall for (click here)?

And if you got that far, here's another person who was in the same meeting (click here).

I remember my wife and I hosting a department Christmas party in 2001. About 2/3rds of the way through the party, my wife looks at me and says "My God, these people hate you."

Now, it was my job to fix a $300,000,000 annual net sales division that was losing $30,000,000 a year, so I wasn't there to be anybody's best friend. But clearly I had failed.

Maybe a third of you reading this are in the final few years of your career. You've had your chance to be "relatable". You know what it takes.

Maybe a third of you are in the first ten years of your career. I cannot stress enough the importance of building an emotional connection with those you support. Not a fake one. A real emotional connection.

I'm running pickleball ratings for my club this year. Maybe a quarter of our members absolutely detest what I've done (implement computer ratings instead of a rater with a clipboard determining your fate). But they don't hate me, they hate what I've done. So I guess that's progress.

It's really important for those you support to know that you care about them, you care about their development, and you care about linking them to success.

The Most Enjoyable Business Models To Manage

You've analyzed my table showing how order frequency, average order value, and share of volume from loyal buyers changes as rebuy rates increase.

Most of my clients have a +/- 30% annual rebuy rate.

At a 70% annual rebuy rate, things really start humming!

However, at a 50% annual rebuy rate, "everything" matters. Everything! Your customers order just often enough to have a loyal audience that delivers 70% of your annual sales. When you acquire new customers, they deliver substantial long-term value.

These businesses are so darn much fun to manage!

Amazon Buyers

You already know this ... when you sell on Amazon, those aren't your buyers. Yes, they're buying your merchandise. But they won't ever be anywhere near as loyal as the customer who goes to your website to purchase something.

Now, if you can make the numbers work and the transaction is highly profitable? Sure, have at it!

But go in knowing that you are to Amazon as Coach is to Nordstrom.

Times Have Changed

When you are up to sixty percent off on November 1, you realize that times have changed.

I realize their business model is in the spirit of Macy's (fat list prices, significant discounts). I also realize business isn't as good as the year prior (click here).

It's hard to run an e-commerce business in 2023. Customer acquisition is much more difficult than it used to be. When customer acquisition efforts suffer and/or merchandise productivity isn't as good as it could be, you end up being up to 60% off on November 1.

The Green Bay Packers

This relates to e-commerce. Hang in there for a second.

In 2018 the Green Bay Packers were not a good football team. They fired their thirteen-season head coach, and started over with a new coach that had no head coaching experience. The new coach brought in a new offensive system. While 2019 was a bumpy offensive ride, the team was good, reaching the NFC Championship Game. In 2020, the offense clicked on all cylinders, and the team again reached the NFC Championship Game. A special teams catastrophe ended the 2021 season.

After losing their best wide receiver and dealing with injuries on the offensive line, the team was not great in 2022.

After losing two of three starting wide receivers and a Hall of Fame quarterback, the team is a dumpster fire in 2023 (so far).

How does this relate to e-commerce?

The same coach ... the same offensive philosophy that delivered fabulous performance in 2020 - 2021 exists today.

The players do not exist. They're gone. They players brought in to replace those who left or were injured are too young (so far) so perform consistently.

Yes, this is a discussion about what you sell. It doesn't matter what marketing talent you bring in, what vendor talent you outsource key functions to ... if you sell stuff the customer doesn't want to purchase, you will struggle. You will be the Green Bay Packers.

You'll Never Make It Up

When I perform my Merchandise Forensics work, there are two common mistakes that are very hard to come back from.

1. Discontinuing items that were "winners".
2. Not introducing enough new items.

We've all been part of merchandising regimes that kill off winners. It typically happens when a new team replaces a team ... those times when the previous management team is thrown out, the new CEO comes in, brings in a new lead merchant, and s/he has utter contempt for what used to sell well. "It's ugly!" Come fall, the "ugly" item that used to generate $794,000 in annual sales is gone. It's replaced by something that is "trend right" and generated $194,000 in annual sales. "Give it time!" we're told. No matter how much time you give the clunker, you never make up the $600,000 you lost.

Not enough new items ... there are logistical reasons why not enough new items were introduced, like the 2021 - early 2022 COVID period. That's mostly not your fault. But there are all the other times where the merchant just loses track of what is important. If the marketer needs enough new customers to fuel the future success of the business, then the merchant needs enough new items to fuel the future success of the business.

Say you generated $10,000,000 via new items two years ago, and those items produced $8,000,000 the year after. Now say this year you generated $6,000,000 via new items. What are you going to get next year from these items? Probably +/- $4,800,000. You give up another $3,200,000. No bueno. You'll never make up the loss.

If you don't work with me on a Merchandise Forensics project, be sure to have your analytics team focus effort on new customers and new items, ok?

Mentoring Your Marketing/Analytics Team

Hello Readers!

I am considering a consulting project where I mentor your analytics and/or marketing team, helping guide them toward answering the questions you have for them.

If you are interested in performing a trial of this concept between now and January 31, please email me (kevinh@minethatdata.com) with your specific questions, and we'll see if we can't figure something out, ok?

Last Chance

Last chance for the opportunity to benefit with new projects introduced in Hillstrom's Business Review, available (click here) on Amazon.

• Tell me you bought a copy of the booklet, and you get 30% off (click here) any/all of the projects discussed in the booklet.

Remember, it is still FORECASTING SEASON so Hillstrom's Business Review and Marketing Budget Experiments have never been more important. My Elite Program runs demonstrate that many businesses are turning the corner now ... things are about to get very interesting in 2024!

Third Parties

They are critically important.

We need Google/Facebook, or at least we perceive we need them.

My catalog clients need Quad, they need their Paper Rep, they need the USPS.

In mature industries, third parties seek to close out their competition. When successful, they are able to increase prices. When they increase prices, you suffer, and you don't have alternatives.

The "suffering" is what drives innovation. You need to come up with a new solution when your service providers pin you into a corner.

It's that time, folks, based on what so many of you are telling me.

You are now a media brand. You have to control your own generation of prospects who eventually become new customers.

It's time.

Call 'em

When you run an Inflection Points analysis, you quickly see a first-time buyer relationship that is impossible to miss.

The customer is hyper-responsive for, at most, two months.

If you know that ahead of time, what can you do to encourage more of these customers to purchase, before they hit an "inactive" inflection point?

One client had a model ... based on the attributes of the first purchase, if the customer fell into the top ten percent of first-time buyers based on model score, the client performed an outbound call to the first-time buyer within 10 days of a first purchase. It was a simple script:

• Did you receive your order?
• Was there any problem with your order?
• Is there anything you should have purchased that you didn't purchase? Because if the answer is yes, we'll expedite shipping to your home/office.

Just stupid-positive results. I saw the results. Stupid-positive.

Tell me what stops you from executing some version of this analysis?

Yes - I'll create a model for you to identify the best first-time buyers if you'd like to go down this path with your Inflection Points analysis. Email me now (kevinh@minethatdata.com) ... and if you purchased a copy of Hillstrom's Business Review you get a 30% pricing benefit through the end of the month ... a process I've always done with new products and especially new booklets.

Remember ...

Since it is FORECASTING SEASON if you need me to validate your annual forecast vs. what you see happening, it's just $2,000 to run the analysis (email me at kevinh@minethatdata.com).

And if you are interested in a Business Review, Marketing Budget Experiments, Inflection Point, or Merchandise Forensics analysis ... you get 30% off if you have purchased the booklet. Click here for pricing. Click here to purchase the booklet.

Ready For Some Wisdom!

Here's a quote from Twitter. It relates to talent development vs. talent identification. The context of the quote comes next. Ready for some wisdom via the world of sports?

Tom Byerトム•バイヤー

@tomsan106

Can’t beat teaching the basics, it’s highly underrated.

While Nike, post Michael Jordan, scoured the U.S. in search of the next Michael Jordan, foreign countries were focused on teaching young kids the basic fundamentals of ball handling. Currently, 1 out of 5 players in the NBA are foreign players. The past three MVP winners — Giannis Antetokounmpo, Jokic and Joel Embiid — are all international players. That group will include Luka Doncic someday as well. Talent Identification vs Talent Development, the later usually wins out in the long run. Football is no different. Raising the the bottom always pushes the top. Countries are too fixated on Elite Player development. Tiny countries are being taught how to identify potential talent from the tiniest of player pools instead of focusing more on Developing an army of kids who can just master a ball, the basics. This will automatically increase the Elite player pool organically. Many countries search for their Messi or Ronaldo. China searched for several years until they wised up and realized, out of their population of 1.4B people, they couldn’t find what they didn’t have. Same in India and Indonesia. Countries with the most populations seem to do the poorest when it comes to developing top players because they are being sold outdated models for development and not realizing their treasure chest are the millions of young kids that they need to just focus on, the basics! So yes, learning how to tie your shoes correctly before entering the court, is by far the most basic of basic skills needed before trying to learn how to dunk a basketball! (John Wooden, famous basketball coach, taught each player the proper way to tie shoes on the first day of practice each year).

Ok, I'm back! Do you know where I'm headed with this quote? Let's go to one sentence:

• Talent Identification vs. Talent Development, the later usually wins out in the long run.

Loyalty Programs are Talent Identification programs. You query your database, you identify the best customers, and you try to squeeze more juice out of the lemon.

Customer Acquisition efforts are Talent Development programs. You create awareness, the awareness leads to prospects, some of those prospects become customers, and some of those customers get to a point where Talent Identification determines those customers belong in a Loyalty Program.

I recall the blank stares I received thirty months ago when I posted that the best way to increase the number of loyal buyers is to increase the number of new customers. You could increase the number of loyal buyers by 10% or 20% via a loyalty program. Or, you could increase new customers by 20% every year and double the number of loyal buyers in five years.

I know this isn't what you want to hear - but we're marketing the wrong way, and your industry doesn't want you to know that.