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.