April 16, 2023

How Winners Impact Marketing Productivity

Ok peeps, we have our relationship.

Let's take a brief trip in the way back machine. It's 1993. I'm sitting in a conference room at Lands' End. We have all of our spreads from a catalog on the wall - each spread has a tag board color that represents how profitable the spread was. Now, we did this for all of our monthly catalogs, and over time we realized that if we populated the first twenty pages of the catalog with our absolute best sellers (called "winners"), the catalog outperformed catalogs where we dumped garbage in the first twenty pages. This fact applied in two different ways. First, you needed the best merchandise. Second, you needed the best creative. I recall one item which was re-shot with an employee instead of a model - and that item dropped in productivity by 30% while comparable items with model-centric creative performed on plan. So you needed the best products and the best creative. If you did both, the catalog "worked better", and as a result you could mail the catalog to more customers/prospects, which caused more customers which caused future catalogs to generate more sales.

Yeah ... a lotta "more" going on there.

That was 1993. It's 2023. Ask your e-commerce executive if she is featuring the best selling items with the best creative where possible? Too often, the answer is "no", and you'll get a flimsy answer in response to your question ... something about "defending the brand".

Even a five percent increase in productivity makes a difference. Here's an example.

Here a marginal five percent increase in productivity (due to featuring winning items and winning creative - not hard to do) turns a money-loser into a profitable endeavor. The incremental sales (in this case, your mileage will vary) are generated at a 54% variable operating profit (contribution) rate. Your CFO likes those situations.

Now that you are making more profit, you can spend more money to get near break-even.

You can spend an additional $4,000 ... 4% more ... because productivity is 5% better ... and you still end up making more profit.

If you work hard on Category Development, your marketing productivity improves. If your marketing productivity improves, you can spend more marketing dollars ... sales increase ... profit increases ... and you have more customers to market to next year.

Sounds like a good thing, right?

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