- 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.
November 29, 2023
November 28, 2023
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.
- 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.
November 27, 2023
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.
November 26, 2023
If I have to hear one more quote from a trade journalist suggesting that you "must win Cyber Monday".
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.
Do not execute the tactics that create clicks for trade journalists. Execute the tactics that generate profit for your business.
Send me sales/profit calculations (email@example.com) if you feel differently.
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.
November 23, 2023
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."
November 21, 2023
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?
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.
November 20, 2023
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 (firstname.lastname@example.org). It's a Black Friday / Cyber Monday special for you!
November 19, 2023
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!
November 15, 2023
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.
November 14, 2023
Something different for you 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.
November 12, 2023
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.
November 08, 2023
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.
November 07, 2023
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."
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.
November 06, 2023
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.
November 05, 2023
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!
November 02, 2023
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.
November 01, 2023
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.
October 31, 2023
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.
October 30, 2023
When I perform my Merchandise Forensics work, there are two common mistakes that are very hard to come back from.
- Discontinuing items that were "winners".
- Not introducing enough new items.
October 29, 2023
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 (email@example.com) with your specific questions, and we'll see if we can't figure something out, ok?
October 26, 2023
- 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.
October 25, 2023
October 24, 2023
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.
October 23, 2023
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 firstname.lastname@example.org).
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.
October 22, 2023
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?
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.
October 19, 2023
One of the components of our Elite Program is a forecast for demand/sales for next year.
I've had recent requests for a quick forecast to compare my customer-centric view of next year's business projection to your process. So, let's try something. If you want me to compare my view of customer-generated demand next year to your view, it'll cost $1,999 to run the analysis above and see where you are at.
Contact me now (email@example.com) and send me five years of purchase history (file layout is listed here). After all, it is FORECASTING SEASON!
October 18, 2023
Across thirty-five years, I've been able to quantify a bunch of relationships. There's a reason why loyalty efforts are so darn feckless. The reason is in this table.
This is one of my favorite tables of all time, and for good reason. The table demonstrates why so many e-commerce brands attempt loyalty programs ... and nothing happens.
Pretend your e-commerce brand has customers with a 30% annual rebuy rate. This is one of those moments when somebody on your Executive Team suggests that "we'll just make 'em more loyal." #Sigh.
The reason customers possess a 30% rebuy rate is because they don't need what you sell more than 2 times per year, if that often. It's what you sell that causes the problem, not some marketing solution including discounts.
It's what you sell that causes the problem.
If you are a department store, you might be failing, but the customers still purchasing merchandise want/need what you sell often. Your rebuy rate might by 70%, the customer might purchase six times per year.
The 30% rebuy rate brand generates $70.49 per twelve-month buyer at the start of the year.
The 70% rebuy rate brand generates $512.25 per twelve-month buyer at the start of the year.
That's a big difference.
The 30% rebuy rate brand generates 22% of annual sales from loyal buyers (0-12 month 5x+ LTD frequency).
The 70% rebuy rate brand generates 79% of annual sales from loyal buyers.
What you sell determines your annual rebuy rate.
What you sell determines if you have a large number of loyal buyers.
One of my favorite tables of all time makes this story crystal clear.
October 17, 2023
As is customary for loyal, long-term blog readers, I offer you an opportunity.
Through October 31, send me an email saying you purchased the new booklet (click here) and you can have my new project offering ... Hillstrom's Business Review ... for 30% off as an introductory offer. I always offer new projects at a savings for my loyal readers. (Click here for pricing).
It is FORECASTING SEASON after all, so why not take advantage of a new project offering and get a head start on understanding what 2024 will deliver to your brand!
October 16, 2023
It's been a long-time coming, but building the core of my Marketing Budget Experiments framework wasn't done in an evening. I introduce to you ... Hillstrom's Business Review (available on Amazon - hint, the print version will be easier to read, the Kindle version is gonna have a lot of tiny numbers).
The booklet combines three key areas of analysis over the past three years.
- Marketing Budget Experiments.
- Merchandise Productivity.
- Inflection Points.
October 15, 2023
Exhibit #14,943 ... JCP decides to pay Amazon for access to NFL viewers.
Amazon has spent the past twenty years ending JCPs business model, and JCP responds by paying Amazon to divert customers to, what, shop in a JCP store? And they aren't advertising anything. It's "remember us??"
Every single one of us now operates our own media brand. Amazon does. They had 10,000,000 to 13,000,000 people viewing Thursday Night Football on their platform. Think about that.
JCP has a YouTube channel with 700+ videos and ... and ... 46,000 subscribers (click here).
Tiny little Griot's Garage has 35,000 subscribers (click here).
We are all media brands. What we do to entertain our customers and prospects when they aren't purchasing (which is 363 out of 365 days a year) matters.
It's an uphill battle to pay the brand that is putting you out of business because you don't have a credible media strategy with reach.
October 12, 2023
FYI - I'm about to complete a new booklet called "Hillstrom's Business Review". This booklet links my Marketing Budget Experiments work with Inflection Points and Merchandise Forensics.
One of the fun aspects of my work over the past two months is the development of an Inflection Point strategy for companies. I build models that predict how likely a customer is to purchase in the next year, the model is converted to a segmentation strategy that is generally used in email marketing to better target customers.
That's an oversimplification illustrated above - this stuff is performed/modeled at a customer level, so you know the appropriate strategy for every single customer within every single email campaign.
I know, most of you are just blasting 1-2 messages per day and wondering why response is so tepid. I get it. With a little bit more work, you can perform an awful lot better than you perform today.
NOTE: If you want to get ahead of the curve and get in on a "Hillstrom's Business Review" project before I announce the beta, you'll get the absolute best price ... better than the beta/pilot price that will be announced in 1-2 weeks when the booklet is available. Contact me for details (firstname.lastname@example.org).
October 10, 2023
Next week I begin analyzing a ton of Elite Program projects.
And unfortunately, sometimes I see something that looks like this.
That's a comp segment analysis ... I've been talking about comp segment analytics for a decade, as you are painfully aware. Here's a case where merchandise productivity crumbles in March, slumps even more in September, and is just an all-around disaster by the end of the year.
This tells us that the merchandising team messed up.
How did the mess up? Take a look at new merchandise.
My goodness. What a mess. The merchandising team just plain failed to properly manage new items (or failed to introduce enough new items or did both).
How about existing items?
They don't have a problem with existing items.
It's a new merchandise problem.
You're probably already running this table, right? If you aren't (for some reason), let me know and for just $1,800 as a new client we'll get busy with this run of the Elite Program.
October 09, 2023
In a recent project, customers buying from the following months were worth 10% less in the future:
October 08, 2023
Want a search-related inflection point?
When analyzing inflection points, I measure the impact of orders attributed to search on future response. Here's a fun tidbit:
- Search can be a strong positive on a first order.
- By the time the customer orders for a third time, the fact that the order is attributed to search becomes an inflection point ... the customer is frequently less responsive going forward.
October 05, 2023
It's 2006, back in the stone ages. Gnarls Barkley sang "Crazy" and the song ended up being the top ranked song of the year. You could get a loan for a home by breathing on a mirror to demonstrate condensation. Amazon was becoming a force.
My team at Nordstrom had massive catalog mail/holdout tests. If our circulation was 2,000,000 catalogs, we held out 200,000 customers. Yeah, 200,000! This allowed us to measure lift at a segment level.
We also had a proprietary credit division at Nordstrom. This meant that if a customer purchased at Amazon (or Neiman Marcus or Target or your local gas station) using our credit card, we could attribute purchases to our mail/holdout test.
Yeah, that's good stuff!
So good, in fact, that we learned the following fact.
- For every incremental $1.00 we generated at Nordstrom from mailing a catalog, we drove $0.20 to Amazon.
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