Accountability

Part of the system I advocate is a process that leads to Merchant Accountability.

This can happen in many different ways.

At Nordstrom, Blake Nordstrom published monthly sales comps, year-over-year. Email. At Executive/Leadership meetings. If you were in charge of Accessories, your name and department (Accessories) was on a dashboard for tens of thousands to see ... they saw that you were +9% vs. last year. The Men's Tailored executive might have been at -4%. That simple act ... a dashboard with every Merchant Executive pitted against each other, rank-ordered from best performance to worst performance ... that led to a whole lotta Accountability.  When merchants were let go or "retired" ... it wasn't hard to see why. Their name was at the bottom of the dashboard.

When I worked at Lands' End, there was an elaborate post-mortem process performed on all monthly core catalogs (you've heard me talk about this previously). Every spread in the catalog was posted on the wall. The tagboard color told everybody how profitable the spread was ... Gold = 30%+ Variable Profit, Green = 20% - 29%, Blue = 10% - 19%, Red = Below 10%. It was really, really easy to see the spreads that worked, and the spreads that didn't work. It was in those post mortem meetings that I learned about the importance of new merchandise. It was in those post mortem meetings that I learned about the importance of "selling creative" vs. the fecklessness of "branding creative".

But make no mistake ... when our Circulation Director would start criticizing the merchants and creative folks for butchering the first twenty pages of the catalog (which we learned were critically important), the merchants and creative folks did not take kindly to the feedback ... and for good reason ... they were being held Accountable for their decisions. Those folks would punch back ... "you are idiots, you mailed the wrong customers", to which our Circulation Director would retort "we mail the same 4,000,000 best customers every month, now let's get back to the decisions you made." 

Those were spirited meetings.

In most of my projects, I run Comp Segment analytics and Comp New/Reactivated Buyer analytics. Remember - for the Comp Segment framework, we select all customers who bought twice in a twelve month period, and then calculate average spend in the next month ($100, $0, $0, $0, $0 = $20 average). The data is run for the past thirty-six months, giving me twenty-four months of Comp Segment results to analyze. Similarly, I count the number of new/reactivated customers on a monthly basis.

As mentioned previously:

• Comp Segment results reflect strongly on merchant talent/results, especially when measured at a category level.
• Comp New/Reactivated results reflect strongly on marketing talent/results/spend.

In my system, it's pretty easy to see who needs to be held Accountable. Here's a case where the merchants are Accountable for poor performance.

• Comp Segment Results = -9%.
• Comp New/Reactivated Customer Counts = -6%.
• Merchant-Adjusted Comp New/Reactivated Counts = -6% - -9% = +3%.

In this example, the merchandising team is struggling, while marketing is performing reasonably well. In my system, I'd drill down into the -9% comp at a category level, then I'd run some "Class Of" reports, and within a few minutes I'd know what is going on.

Here is an example where marketing needs to be held Accountable. This example is happening all over the catalog marketing world right now as the catalog co-ops die a painful death.

• Comp Segment Results = +4%.
• Comp New/Reactivated Customer Counts = -24%.
• Merchant-Adjusted Comp New/Reactivated Counts = -24% - 4% = -28%.

The Merchant-Adjusted Comp New/Reactivated outcome of -28% is a catastrophe, and it's happening everywhere in catalog marketing. Too many catalog brands aligned with their "trusted partners" (agencies, paper reps, printers, USPS, catalog co-ops, list exchanges) ... and once the customer aged into his/her 70s everything collapsed. Without a strong digital marketing presence, the bottom is falling out. Catalogers are dying due to structural issues, and it is the marketing team that is to blame ... the marketing folks have had 25 years to figure out how to become strong digital marketers and instead adhered to the omnichannel thesis. Ooops.

Regardless, in my system it's important to determine who is Accountable for business challenges. In e-commerce it's frequently the merchandising team. In catalogs, it's the marketing team. In retail, it's a structural challenge (stores are dying).

Does that make sense to you?

Spending $4,000 to Grow a Community

Here's an example from my hobby (headphones ... click here).

• Time-Limited.
• Showing Number of Entries to Demonstrate Authority.
• YouTube / Instagram / Discord Integration.
• 20 Entries per $100 Spent (they're rewarding buying something a minimum of 20x as much as list generation activities).
• 3 Entries per Referral (they're rewarding spreading the word 3x as much as normal list generation activities).

They're giving away three iems for a total of about $4,000.

They're adding about 10,000 entries per day.

There are so many ways to build out your "prospect list", to use an old-school term, to avoid collapsing print response as well as troubles via Google/Facebook.

So many ways.

If Discounts Aren't Part Of The System, What Replaces It?

You might remember this presentation from May 2024 (click here).

Last week I visited their community forum, and on the website I looked at an item I saw mentioned in the community forum. Yes, I was logged in. So yes, they sent me an SMS message two hours later following up on product I looked at. You don't have to look at the item, either. They send SMS messages based on your community comments and interests, triggered by a visit to the community.

• They have a half-million registered community users. How many do you have?
• When a member of their community reads a post, they record the activity and act upon the activity. Do you do that?
• They are able to generate eight figure annual sales in a world where Amazon can deliver the same item at the same price immediately. That's an important test ... if a customer chooses you and your slower-than-Amazon delivery over Amazon at the same price for the same item, your "system" is working.

Now, I get it. You don't believe in communities, though many of you have thousands of people watching your videos (so you do have a community, you just don't call it one).

There are two additional things that are an important part of my "system".

• When a customer is inactive or lapses, record every possible interaction you have with that customer, because often the customer isn't inactive ... the customer is just not purchasing. You want a customer who has not purchased in 18 months if the customer is still interacting with your brand monthly.
• When an inactive customer decides to interact with you, ACT UPON IT!! This is where merchandise personalization is so darn important. Merchandise personalization adds 20% to 50% to your response/conversion metrics. You can double/triple response/conversion by acting upon an 18 month buyer who decides to interact with your community and you then personalize the merchandising experience for the customer.

Mass Discounts Have No Place in My System

Can I tell you a story about a brand many of you are familiar with?

• October = 40% Off.
• November = 50% Off.
• Black Friday = 60% Off.
• Saturday After Black Friday = 60% Off ... Hurry, Ends Tomorrow.
• Sunday After Black Friday = 60% Off ... Hurry, Ends at Midnight.
• Cyber Monday = 60% Off Plus Free Shipping, Hurry, Ends at Midnight.
• Tuesday After Cyber Monday = Cyber Monday Extended!! 60% Off Plus Free Shipping.
• Wednesday After Cyber Monday = Cyber Monday Extended!! 60% Off Plus Free Shipping.
• Thursday After Cyber Monday = Cyber Week Continues!! 60% Off + Free Shipping $50+.

When I clicked through the Thursday email campaign to test their tactics, one hour later they sent me an email with 60% Off + Free Shipping No Hurdle ... I get a "perk" because I clicked through their email campaign.

Yeah, if you ordered Sunday because 60% off was about to end, you'd be upset to know that had you waited until Monday you'd have also received free shipping. Nice. 

I realize you're going to have to discount from time to time.

It should not be your reason for existing.

And you should never, ever ... ever ... mislead or lie to your customers. The above-mentioned cadence misleads customers. Explain to me, those of you who love discounts, why it is acceptable to mislead your customers? I await your response (kevinh@minethatdata.com).

In A Dying Industry, The Gatekeepers Consume Their Own Customers

Yeah, I got an email message a few days ago.

As linear television dies a slow, painful death, those still using linear television will pay more and more to offset what is being lost ... until the customers that are left say "enough" and move on.

It's no different for my catalog industry readers. I've told many of you privately that the end game for catalog marketing is Amazon paying tens of billions of dollars to mail infrequent catalogs in October.

In many recent video conferences, it's common for the business leader to suggest that "more juice needs to be squeezed from the lemon". That's code for "it's become really hard to acquire new customers". It's a trap ... honestly, it's a bridge ... you generate more from your existing customers to pay for what you are losing in customer acquisition, but the bridge you take maroons you on an island with few choices but to keep getting more from existing customers. What do you do when you can no longer squeeze more out of your existing customers and cannot acquire customers?

I've told you previously about the issue with so many of you accidentally sending me email messages not meant for me ... emails outlining your corporate strategies. It happened again last week. One of my favorites came two years ago.

• An email was mistakenly sent to me from a leading brand in the paper industry.
• The email had an attachment ... a presentation summarizing the past decade and the future as the paper brand saw it.
• The paper brand outlined that demand for "catalog paper" was down between sixty percent and eighty percent in the past twenty years.
• In response, the paper brand consolidated supply, closing plants.
• The presentation outlined how this "strategy" created false demand, allowing them to charge higher prices ... all of which benefitted the paper brand in 2021 when there simply wasn't paper available and demand increased modestly due to the "COVID-bump".

And then these people lie to all of you on LinkedIn ... #PRINTISBACK as they say. It is not back. I have the presentation. I have the receipts. But it is a great example of a dying industry where the gatekeepers consume their own customers.

Man, the stories you've told me about in the past year ... where the gatekeepers treat you the same way that cable tv networks and their service providers treat their customers.

2025 is going to be a wild year, as it becomes even harder to acquire new customers should Google/Facebook continue to perform worse.

P.S.:  We're talking about my "system" here as we wind down the year. There's a reason why you have to have your own system, one independent of the gatekeepers. You are like a 401k manager, diversifying your portfolio. You can't color-by-numbers according to industry best practices. You need your own system, your own way of doing things, one that is not highly reliant upon a small number of partners.

My Business Is Failing: Has To Be The Marketer's Fault, Right?

Maybe. 

But probably not.

In my system, I can immediately diagnose whether the marketer is failing or there is a merchandising problem.

• Hint: There is usually a merchandising problem when business does not meet expectations.

As you've repeatedly heard me say over nearly twenty (20) years, I use my Comp Segment framework to diagnose if there is a marketing/merchandising problem. A weak marketer / modern marketer is likely criticized by Management when business is bad, then performs a "deep dive" of traffic driven to the website, which is a mostly feckless exercise. A strong marketer using my "system" has a dashboard with comp segment metrics.

Let's say the metrics reveal this outcome for November.

• Comp Segment Performance = -11%.
• Comp New/Reactivated Buyer Counts = -9%.
• Net Marketing Impact = -9% - -11% = +2%.

The marketer immediately knows that there is a merchandise problem. The marketer goes to a comp segment dashboard to look at the -11% comp, understanding if it is across all merchandise categories or just within a couple of large categories. The marketer evaluates the metric for new items and existing items, discounted items and full-priced items.

Here is another example that happens, less frequently.

• Comp Segment Performance = -4%.
• Comp New/Reactivated Buyer Counts = -17%.
• Net Marketing Impact = -17% - -4% = -13%.

Comp segment performance isn't great, but the marketing team is the problem here. Marketing problems reveal themselves via new/reactivated buyer counts.

In my "system", a Comp Segment Dashboard quickly tells all employees "who" is causing the problem. It's usually the merchandising team, but it can be failures in marketing spend (i.e. reducing the marketing budget by 20%) or structural failures in new customer acquisition (i.e. catalog brands using failed catalog co-ops) that generate business issues.

The Mix of New/Reactivated Customers and Annual Repurchase Rate

Their annual repurchase rate was 31%.

• "Is that good?"
• "How do we benchmark against the competition? Can you be specific?"

These are the "wrong" questions. They are mainstream questions, the questions of thought leaders.

In my system, your annual repurchase rate is a function of two issues.

• Competent Marketing.
• Your Merchandise Assortment.

For instance, if you were incompetent, you wouldn't have an email marketing program, and your annual repurchase rate would be 20% lower. But you aren't incompetent, are you?

Your Merchandise Assortment determines your annual repurchase rate.

If you sell 100 skus, your annual repurchase rate will be lower than if you sell 1,000 skus, and your annual repurchase rate will be lower if you sell 1,000 skus than if you sell 10,000 skus.

• 20% Annual Rebuy Rate with 100 skus.
• 30% Annual Rebuy Rate with 1,000 skus.
• 35% Annual Rebuy Rate with 10,000 skus.

The 20% / 30% / 35% rates are driven by your merchandise assortment, they aren't driven by marketing strategy. Marketing has no control over 20% vs. 35%, that's dictated by your merchandising team.

Marketing has much more control over new/reactivated customers.

If your merchandising team only has 100 skus, yielding a 20% annual repurchase rate, your marketing team needs to be almost entirely focused on new/reactivated customers. And it will be harder for your marketing team to find new customers because you only have 100 skus.

If your merchandising team has 10,000 skus, yielding a 35% annual repurchase rate, your marketing team can actually start to focus on loyalty efforts, because there will be more loyal buyers because there are more items that the customer can purchase, year-round. Also, it will be easier for your marketing team to find new customers because you have 10,000 skus!

In my "system", the merchant is in charge. The merchant dictates everything. The marketer "reacts" to what the merchant does.

• If you are a modern marketer, you likely fail if you don't accept that the merchant dictates everything.
• If you are operating within my system, the merchant dictates everything for you. Your strategy is a response. This is a good thing ... your job is well defined.

Is it any wonder almost all modern marketing fails? How could it possibly succeed when the marketer has no idea what constraints the merchandising team placed upon the marketer?

Let's Discuss The System

Last Thursday the Packers and the Lions played a highly entertaining game, won by Detroit 34-31 on the last play of the game.

The "easy discussions" surrounded Detroit going for it on 4th down five (5) times, succeeding four times. That's something that any muttonhead can talk about ... "I WOULDN'T HAVE DONE THAT".

Nuanced discussions focused on other topics. On Thursday both Detroit and Green Bay leveraged elements of an offensive philosophy from the 1930s - 1950s (and high school football in the 1990s) called the Wing-T.

• Detroit using elements of the Wing-T offense (click here).

Many teams are running variants of the Wing-T or Single Wing ... Green Bay won two games with a backup quarterback by turning the clock back seventy years ... Arizona uses Kyler Murray in variants of the Single Wing ... and of course San Francisco / Los Angeles Rams / Miami (and even Kansas City) heavily leverage these concepts.

These teams have an offensive philosophy ... they are running a specific offensive "system" (in general, Green Bay / Miami / San Francisco / LA Rams all come out of the Shanahan "tree"). They're generally good at running the football, and they use a lot of window dressing / motion to deceive the defense.

Yeah, this brings me back to you.

In the NFL, offenses look to target weaknesses in the defense.

In your business, the marketer is looking to take advantage of the strengths and weaknesses in his/her merchandising assortment. This is opposite of mainstream thinking, where you are trying to take "market share" from competitors.

• Example:  Mainstream thinking applies deep discounts to increase open rates / click-through rates in email marketing. In my system, the marketer identifies winning items (i.e. best sellers) that align with the purchase history of individual customers (i.e. there are different winning items that work with different customers), crafting a personalized email campaign to each customer that yields increased open rates, click-through rates, and purchases.

Do you see the difference?

A weak marketer applies a discount (hurry, 60% off will end soon ... yeah, same message for the past three weeks, thanks).

A strong marketer with a "system" uses merchandise, avoiding weaknesses in the assortment, attacking strengths at a customer level. Customer response increases (like yards per play increase in a football game). Your odds of winning (i.e. 10% pre-tax profit on an annual basis) increase.

More on the topic of a marketing "system" tomorrow.

Veblen Goods

You probably already know what a Veblen Good is, right? If not, read about it here. 

There are few things more destructive to overall marketing/merchandising strategy than Black Friday / Cyber Monday. It's a complete abomination perpetuated by low-functioning marketers who do not understand customer behavior. If you are angry right now, I'm talking about you.

There's a company most of you know ... they were 40% off before Black Friday / Cyber Monday, they were around 50% off on Black Friday, they were around 60% off on Cyber Monday (sorry you idiots who bought a few days earlier, jokes on you), and then they broke their promise by staying at around 60% off for most of the week following Cyber Monday.

This brand could care less about their customers ... they'd rather gamify some of the customers into a purchase that does not remotely optimize profit ... because ... well, it has to be because they could care less about customers and know nothing about marketing strategy or merchandising strategy.

It's at least 30 years ago now, but I distinctly remember a merchant at Lands' End communicating "assortment strategy" to me. Maybe you have somebody at your current company that cares about you and does something similar? He told me how his core assortment was around $40, stretched up to $80, and then he had items around $100 or $125 that served two purposes.

1. They anchored the rest of the assortment ... in the same way Safeway gladly puts a bottle of Caymus wine in the top row of their assortment for $89, hoping you'll think that $19 is a bargain.
2. Those items were "aspirational" ... meaning that "some" of his customers wanted the status of the $125 item and would gladly pay the money to gain emotional benefits. "I'm wearing a $125 shirt, and you aren't". As a result, he sold more of the $125 items than the math suggested you could sell.

Yea, that's the definition of Veblen Goods.

I recall my first year at Nordstrom ... locked into a conference room at 7:00pm as a new Vice President, while two Merchandising Executives battled each other in front of the Nordstrom family. One argued the importance of a $400 handbag (Veblen Goods), the other argued the importance of a $40 option. Both were ultimately right, neither understood the importance of a merchandising assortment that communicated a story.

I read your email marketing campaigns, folks. Almost all of you care about the cheap half of your assortment, and you are willing to make it cheaper via incomprehensible discounts and promotions. 

Too few of you understand the importance of a Veblen Good.

And maybe that's why you struggle to acquire new customers.

The Hillstrom System

For whatever the reason, this topic has come up many times in the past month.

• "We want to implement your system, the 'Hillstrom System' of analyzing customer performance and then integrate your work with our marketing efforts. Unfortunately, my Marketing Executive and our Analytics Director disagree with your system, so we never make progress. How can I get my team to embrace your system?"

Every Marketing Executive has her own Marketing System, her way for growing a business. You're not going to cause this person to change. It would be like asking Bill Walsh to embrace something other than the West Coast offense - he invented it, why would he go in a different direction? He wouldn't do that.

Analytics professionals dig their heels in much harder. Whereas the Marketing Executive almost always has "a system" unique to her history and skills, the Analytics professional generally cannot define what her system is ... she's never had to think about it ... she simply knows that other people are doing things the wrong way or in a sub-optimal way and has become very good at pointing out that fact. Some analysts possess empathy ... a combination of empathy and smarts is what you are looking for. But by and large, it's hard to find an Analytics professional who has a clear and generally easy to understand "system" to grow your business.

This is where Executives ask me for advice ... "is there an agency who thinks like you think, one we could work with to bypass our internal marketing/analytics challenges?"

There's one that seems to liberally copy many of my concepts ... they either copy them and understand them and bring the concepts of the system into the modern world, or they fully invented something on their own that so completely aligns with my worldview that there is a serendipitous outcome.

Take a look at this (click here) ... it's as close to my worldview as anybody has come to embracing it. Tell me what you think (kevinh@minethatdata.com).

P.S.:  Often, the Executive who wants to implement the "Hillstrom System" is actually looking to implement dashboards. In upcoming posts, I'll tell you more about the "Hillstrom System", but the marketer is often looking for dashboard reporting that the analyst won't provide, and the analyst upon seeing dashboards refuses to program them. Happens all the time. It's why I stay away from "dashboard reporting requests" and "can you help us execute campaigns" requests. Both are symptoms of marketer/analyst disfunction.

This Statement is Accurate, and it is Inaccurate

Here's the link for all of you who love print and think #printisback, which most obviously ... is ... not ... back.

https://www.paperage.com/2024news/11-21-2024afpa-printing-writing-paper-report.html

Back out the impact of the election, and what do the numbers look like? You already know the answer.

#printisnotback

P.S. Ask yourself why the author of the article did two things to tell you that #printisback.

1. Why did the author not send this to you via print, if print is so viable?
2. Why is the author forcing you to PAY for access to the information? If print is so valuable, wouldn't you want every human being to know about it? Why demand that people PAY for it?

P.P.S.:  Some of you are going to argue that you perform matchbacks that prove that #printisback. My condolences to you. There is nothing in marketing more misleading than a matchback analysis among housefile customers. Nothing. It's completely corrupt. It's a confection of vendors in the print industry who want you to think that EVERY order generated by customers is linked to customers who received print. Look at your mail/holdout results, project those findings, then compare to your housefile matchback results. You'll find that you are overstating the impact of #printisback by between 100% and 500%. Yes, that much. You've been lied to that much. Ask yourself why you've been lied to, ok?

Enough Said Yes

Enough of you said yes to an offer to host a Happy Hour in January that I'll give it a try!

Amazingly, I had unsubs from this ... which is interesting ... why would that be the thing that causes somebody to say "ENOUGH OF THIS IDIOT!"?????

Your Thoughts: A Happy Hour?

Ok, tell me if you think you'd want to try this?

I follow sportswriter Molly Knight (https://bsky.app/profile/mollyknight.bsky.social), and from time to time during the baseball season she has chats and meetings for her subscribers. Well, I'm not a guy who'd make you pay for that kind of thing, but I thought it might be fun to test a video conference Happy Hour.

If you are interested, send me an email message (kevinh@minethatdata.com) and even suggest a topic that we could use to kick off Happy Hour. If there is enough interest, I'll pick a day in January to try the concept out.

Sound ok?

No Marketers

Oh, I get all sorts of "pitch emails" ... people who are confident they have the next big thing (which is usually not the next thing, and is usually not big).

I look for trends. If I see common themes repeated, yeah, I pay more attention.

A common theme you should think about?

• "My name is Bill, and my company AISource (not the real name) is going to revolutionize marketing. Seriously. We're going to eliminate all marketing employees in the future. Our AI-based solution will do all work - no marketers. An executive will set goals, then AI will adapt and change strategy based on market costs, targeted customers, and company goals."

It is easy enough to dismiss this message ... the odds of "AISource" being around in ten years are close to zero. The odds of "AI" greatly reducing marketing employee costs? Kind of high, don't you think?

If you are sixty years old, so what?

If you are thirty-three years old?

Technology comes for all of us. I recall being shown a distribution center a decade ago ... the Operations Executive was thrilled that he reduced expenses via technology - virtually no employees, virtually no mistakes. He was right, there wasn't a person to be seen anywhere. Today you drive on Loop 303 across the West Valley here in Arizona and it is an endless array of distribution centers and not many cars in the parking lot.

With technology, something is gained and something is lost. There's a reasonable chance that repetitive marketing jobs are going to be lost. All of us will be required to demonstrate the unique value we provide.

Rivalry Weekend

One of the few interesting things about retail / e-commerce is the fact that, at times, commerce becomes an awful lot like College Football (do not lecture me about the fact that College Football has become an awful lot like commerce ... that's a topic that everybody else gets to discuss).

There's so much fun in College Football, mostly in the last weekend of the season (mostly, because those who allegedly run college football took Washington - Washington State, Oregon - Oregon State, Iowa - Iowa State among others and shoved them into September).

• Ohio State and Michigan play a game that, for the first time, resulted in a flag being planted firmly in the home field of the losing team. Interestingly, a half-dozen games had similar outcomes.
• In the Midwest there is Farmageddon (Iowa State - Kansas State).
• Two teams play for an Old Oaken Bucket (Indiana - Purdue).
• UTEP and New Mexico State play for a Shovel!
• Auburn - Alabama sure don't like each other.
• Minnesota - Wisconsin play for Paul Bunyan's Axe.
• Georgia and Georgia Tech decided to determine their outcome after eight (8) overtimes.
• Here in Arizona ASU clobbered the Wildcats, though Arizona fans erupted in a loud and singular roar when ASU missed a kick that clanked off the upright, making the loudest sound in football history. DOINK.
• There are three dozen or more other rivalries being played out at the end of the season.

In retail / e-commerce, it should be duly noted that our version of Rivalry Week is held around the same time. It's called Black Friday - Cyber Monday.

Oh, it used to be better in the old days. In the spirit of Wicked, I once had a Department Director who called her counterpart at a competitor the "Wicked Witch of the West". At Eddie Bauer we had a "competitive analyst" working in the marketing department routinely get chased out of Gap stores while taking pictures of the merchandise layouts.

Those rivalries are now moved into the Black Friday - Cyber Monday window, and they're fought with p&l busting discounts and promotions ... mutual self-destruction.

I sat in a meeting on Cyber Monday (I've told you this story) where somebody walked into the Executive Boardroom with a piece of paper ... the CEO read the contents on the piece of paper, then immediately demanded an additional 10% off in the emails sent that day in an effort to "remain competitive". What, exactly, was the CEO "competing with/against"? Who could lose the most money and feel good about it?

I watched a brand spend Monday going from 50% off to 55% off to 60% off as the day progressed. Shame on you for purchasing at 9:00am, for you were a fool. You lost, the brand "won", and I'm not sure what the brand won giving away nearly every penny of gross margin.

I watched a brand who claims to have "promotional integrity" scream about 60% off clearance from the highest rooftops. An NFL Team offered "25% off Nike" ... Nike loves that stuff. Another company offered free shipping with a $50 hurdle on three consecutive email campaigns on Monday morning only to offer free shipping no hurdle at 7:15pm. To heck with the customer who paid for shipping at 6:46pm, there's Cyber Monday that needs to be "won".

On online auction site offered to discount items 25% and cover the difference for the seller. Just a big 'ole bonfire fueled with money going on there.

On LinkedIn a fuming poster commented that Amazon was ripping customers off by charging $40 for something they charged the customer $29 for a month ago. A quick check of the website showed that Amazon was selling the item for $29. But the angry outrage, how much fun is it to scream at injustices ... real or perceived ... on LinkedIn? Thought Leadership is fun!!

A headphone brand decided to mislead customers by sending an email offering 29% off a set of their headphones if you bought the headphones via their website ... which is generous ... but you could save an additional $10 buying them at Best Buy and an additional $50 buying them on Amazon. Omnichannel!! Just think about that ... only the loyal customer who subscribes to emails is misled. It's Cyber Monday, now support us by clicking through our email campaign and pay more for our merchandise you idiot!!

Walleye Direct offered free Walleye Strips, which, actually, is quite a good deal ... a good deal for everybody because you still have to order $200 of delicious perch, walleye, crappies, bluegills, pike, and whatever else to get free shipping.

Trade journalists will dissect the winners and losers of Black Friday - Cyber Monday, not realizing that nobody (outside of Walleye Direct) is a winner, everybody is a loser, customers included. Customers repeatedly overpaid by acting early, brands repeatedly torched the p&l by giving away more and more and more.

The theme shifts tomorrow to "will I get my package in time for Christmas?". I spoke with an Amazon delivery driver on Friday ... he's retired and is wintering in Arizona to help his daughter who has terrible health issues. And because she doesn't have good health care, he's doing the Amazon delivery job to help pay for her bills. Keep both of them in your thoughts, ok?

Friday Notes

Vendor Communication to me on Thanksgiving:

• "Hey Kevin, I hope you just demolished a turkey. Would you like to save $100 on one of our events?"

Vendor Communication to me on Thanksgiving:

• "I can design flyers that will increase your revenue by 2x to 3x."

I'm gonna be rich saving money on conferences while increasing revenues by 2x to 3x via the creation of a (checks notes) flyer.

Meanwhile, Macy's is busy trying to rehabilitate their reputation by having Jim Nantz say positive things in a "Nantz voice".

See the QR code there? Somebody has to analyze that thing tomorrow. 

Speaking of an omnichannel approach to selling.

Somewhere the Omnichannel Steering Committee (#OSC) is clinking a glass of champagne after overriding the digital marketing team on this ad. Lawyers, Omnichannel Management (who operate in a matrixed org structure, not reporting to anybody - just like the customer who doesn't report to anybody), and the Marketing Promotions Team can all agree that this is beautiful.

P.S.:  This recipe is bound to become part of your beloved family-based Thanksgiving Day tradition going forward.

Butter Corn

• One Bag of C&W Petite Yellow Sweet Corn (don't compromise here).
• One Stick of Tillamook Creamy Salted Butter.
• Place stick of butter at the bottom of a pan.
• Pour bag of frozen corn over the stick of butter.
• Heat on low heat, stirring occasionally, until mixture shows the slightest hint of becoming "bubbly" - then immediately pull from heat (to prevent corn from softening).
• Serve hot - I recommend not using a slotted spoon. Generously salt your serving should you not suffer from heart-related maladies. 

The Rehabilitation Campaign Began Yesterday

It took Retail Trade Journalists exactly one (1) day following the "Mistakes Were Made" event to act as an affiliate-PR department on behalf of Macy's. One (1) day.

In 2007, Macy's generated $26 billion in net sales. Last year Macy's generated $23 billion. If we adjust for inflation, that's likely between $15 and $17 billion in 2007 sales. In other words, Macy's doesn't know much about storytelling.

But a day after weaving a story that a lone gunman hid more than a hundred million in expenses, maybe they are getting good at storytelling?

P.S.: What is the point of this? It's obvious ... be careful who you trust. There's a reason Macy's is constantly referred to positively by trade journalists.

P.P.S.:  The unsubs I received following the Macy's announcement are hilarious. This is the breaking point for some of you? Seriously? You support retail fraud?

Oh, Macy's ... Nicely Done!

It was just one employee (click here)!!!!

KPMG audits Macy's ... so are we to believe that Macy's Finance Team / CFO didn't see errors totaling more than a hundred million dollars over multiple years and KPMG didn't see it either? Sure, they may have missed it ... at which point (if true) you should change your line of questioning to be "what value does KPMG actually provide?"

The Reddit accounting message boards find it implausible that this was the act of a lone gunman. It seems unfathomable that Management didn't know about this. Side Story:  In the early 1990s at Lands' End, our owner held a Management Meeting to communicate quarterly results, then promptly (and very publicly) scolded the Finance Team for exchange rate issues regarding our business in Japan. Management knows, folks. Management knows.

In July 2015 Macy's stock traded for $72 as they celebrated their status as "America's Omnichannel Store". It trades for around $16 today.

Retail trade journalists adore Macy's ... they almost act as an affiliate-PR department for the brand. They're promoting the "one-employee" thesis today. "Mistakes were made!!"

They sure were.

There's just a lot of slippery, corrupt behavior out there. Be on the good side of the financial ledger, ok?

I Don't Believe You

All consultants hear this sentence. There are a thousand reasons why the sentence is issued, no time to go into them here,

When you hear this sentence, think carefully whether the person saying it has a point or not.

Facts represent a classic instance where the person saying "I Don't Believe You" loses credibility. For instance, you execute an email A/B test. Your email list has 1,000,000 addresses. You split the list 500,000 for "A", and 500,000 for "B". You learn that "A" performs 12% better. It's going to be hard for the employee to say "I Don't Believe You". If you had 20,000 customers in each group, sure, there's a lot of variability, the employee isn't necessarily wrong. But at 500,000 / 500,000? The employee isn't saying "I Don't Believe You" as much as the employee is saying "I Refuse To Change".

I frequently get feedback that is similar to "I Don't Believe You" in catalog marketing ... it's the "The Catalog Has Intangible Value That You Cannot Measure" refrain, which is just pure nonsense. Think about it this way. Here are catalog results for a comp segment in five-year increments.

• 2004:  $/Book = $4.00. Profit = $0.90.
• 2009:  $/Book = $3.40. Profit = $0.62.
• 2014:  $/Book = $2.80. Profit = $0.34.
• 2019:  $/Book = $2.20. Profit = $0.06.
• 2024:  $/Book = $1.60. Profit = ($0.22).

Those are facts. Worse, the facts point to the end of an era. When somebody tells you that "The Catalog Has Intangible Value That You Cannot Measure", the person is saying "I Refuse To Believe Reality" and is willing to make up a seductive sounding sentence to continue to view the world the way the professional wants to view the world.

We go through these cycles in business all the time ... we don't have facts so we derive fables ... then we obtain facts and many don't like the facts because facts shift power ... so we create different fables to disregard facts and give us peace.

Fortunately in business there is always the profit and loss statement ... you can't suggest that efforts that are not profitable will escape accountability. The p&l statement demands accountability. It's cold. It's ruthless. It's controlled by the people who give you money.

You might not believe the messenger. That doesn't mean the messenger is wrong. Does the person delivering the message possess facts?

Upsets

On Saturday night, long after most of you went to bed, New Mexico scored what would become a game-winning touchdown with twenty-one seconds left while playing ranked Washington State. New Mexico struggles to beat teams like Wyoming, they're not supposed to beat the former Pac12 team from Pullman. And yet, they played a gritty game and came from behind in the second half. They're the reason you play the games.

Aside: If you ever get the chance, take US-195 from Pullman to Lewiston/Clarkston. There's a view of the Snake River from high above the cities that is one of the neatest views you'll ever see.

The best way to describe an upset is that it is a "result that was not supposed to happen" or was "unlikely to happen".

Upsets happen in business all the time. You don't test putting socks on the home page, you just do it on May 18 and it "works" and from there it becomes a "best practice". Six months later, you wonder why conversion rates are down? Maybe it is time to fire the marketing team ... they're generating bad traffic.

Even in a testing environment, upsets happen, all the time. They happen for two reasons.

1. Random Variability.
2. Your Sample Size is Too Small

My favorite sample size error happened awhile back. The analyst would take a segment of maybe 8,000 customers, split it into two groups (7,000 mailed, 1,000 not mailed), then measure results (mailed group = $20.00 average, not-mailed group = $18.40 average), run a statistical significance test, realize the results were not statistically significant, then say "we shouldn't mail this segment because the not-mailed group performed the same as the mailed group and therefore we simply wasted $0.60 sending print to this customer.

Had the analyst split the segment 4,000 mailed and 4,000 not-mailed, the same difference would have been statistically significant, and the analyst would have recommended mailing the audience. The analyst made a mistake, then an apparent "upset" happens, and the analyst costs the brand money because the analyst acts on an upset (no statistical significance) instead of crafting a credible experiment. 

Worse, the analyst made a mistake that had "cascading consequences". Random outcomes would constantly happen because control groups had too few customers, meaning that each of a couple-hundred mailing segments were constantly being flagged as "not profitable", and therefore were not being considered anymore. Had the analyst been given another three years to pursue this approach, the analyst would have gotten the entire department fired - because nobody would have been deemed "mailable" anymore.

Upsets yield all sorts of unusual decision making in the future, in response to the "upset".

How many unusual decisions have you made, or your Management Team made, in response to an "upset" ... a business result that wasn't supposed to happen?

Story Time - About Analysts

Let me tell you a story.

This one is from Lands' End, nearly thirty (30) years ago. I'm 29 years ago and dumb as a box of hammers. Oh, I have the data on my side. The data tells us that if I send 80 pages of Men's Tailored merchandise in a standalone catalog I am heavily cannibalizing the same product (and other products) in my core monthly catalog. If the catalog is forecast to generate $5,000,000 in sales and $750,000 in profit, the reality is that 70% of the $5,000,000 would happen anyway if the catalog was not mailed - it would happen in the core monthly catalog instead. So the $5,000,000 catalog with $750,000 in profit is, in reality, a $1,500,000 catalog that is losing $250,000 of profit.

As a young analytics manager, I hold the moral high ground here (at least that's what I believe). I've tested the results. I have #facts on my side. Any other form of analysis is inferior to the repeated A/B test results which consistently tell the same story, over and over and over again. I'm brilliant, everybody else is an idiot. I'm ready to die on this hill.

One problem. The company moved on. The folks who manage these individual catalogs "won". The CEO who supported integrating the business units was fired, replaced by a person loyal to the individual catalogs. No amount of shoving facts in people's faces is going to matter. None. The issue has been decided.

In the meantime, my Marketing Director hires a Manager from Fingerhut. A very talented woman. Kind. At the end of a meeting we're idly chatting about various topics and I decided to go into a rage about how right I am regarding circulation strategy. I can tell this new hire feels uncomfortable. Hint - if you are a male in a meeting and you are causing a woman to feel uncomfortable, you're doing something wrong.

The new marketing manager looks at me and says "I realize you might be right, but the company moved on, and I simply don't understand why you keep trying to fight a battle you already lost. Worse, the way you argue reflects poorly on you. Why would anybody listen to somebody as angry as you are?"

The fact that I'm sharing this with you twenty-nine years later tells you how much of an impact this woman had on my career. She was right, I was wrong.

If you are an analyst you likely feel as if you are "right". For good reason! You have facts on your side, everybody else has gut feel. You have solid methodology on your side, everybody else leverages faulty methodologies. If somebody else comes to you with "a way" of analyzing something, you're probably quick to point out the flaws in that style of analysis. After all, you are "right" and they are "wrong".

This is where you have to be really careful.

Putting somebody on blast mode because they don't analyze things the way you'd analyze them might feel good, but it doesn't do anything for your credibility. If anything, it just causes the person receiving your feedback to think you are a jerk. You want the opposite to happen - you want the recipient of your message to think you are a genius.

Just because you are "right" doesn't mean you are "Right".

There's a reason I was required to attend Dale Carnegie training around this time in my career. I had to learn how to become a salesperson. I had to convince somebody who wasn't on my side to execute my tactics.

It is difficult to be an analyst, to convince people to do things that work against their instincts. It's hard to be smarter at something than somebody else, only to have "somebody else" question you or recommend tepid ideas that won't work. It's also hard to understand your blind spots. All of us have weaknesses that we simply cannot see, but are obvious to anybody working with us. Learning what we're good at ... that is an important skill ... and then not straying outside of what we're good at ... that's valuable to the companies we work for.

What Reactivation Looks Like by Visit Segment

If you looked at, for instance, 13-18 month 1x buyers (one purchase, last purchase 13-18 months ago), you might find that in the next month this cohort has a 1.1% chance of buying again. That's a percentage that is generally too low to impact your business, consequently, you don't pay much attention here ... other than offering this segment 40% off or 50% off or 60% off ... then you'll tell me that you are being "strategic" by offering discounts.

If you break the data down based on "what" a customer did in the past month, you see a different story.

Turns out that, in this example, thirteen (13) percent of this lapsed segment wasn't actually lapsed at all ... they're interacting with your brand.

Your web analytics package already captures the non-Community  information above ... if you hosted a community forum on your platform, you'd see the 2,026 people who also interacted with your brand. If you have an email address for these customers (which you'd likely have because you'd require these customers to log into your platform with an email address), you'd look at "what" the customer did last month and then send email marketing content that is relevant to the products the customer likely wants to purchase based on community interaction.

It's not hard to do, it's stuff that retailers were doing in the mid-2000s.

So go do something with this information ... right? Get busy!

Why Are You Generally Against Reactivation Via Community?

Maybe you aren't against it, but my metrics suggest you are.

Last week I wrote about Wool& (click here). As you might surmise, when I talk about various topics I put links into the post, and then (unsurprisingly) I measure how often you click on links. For instance, here the Velocity Sellers spend fifty-four minutes telling you how to "crush it on Cyber Monday". Several hundred of you will click on that link, and then a small piece of my soul will turn to omnichannel dust. Thank you.

A total of fourteen (14) of you (quite possibly seven people clicking twice each) clicked on the community links in the Wool& post above.

Knowing that a customer who hasn't purchased from you in anywhere between 3 months and 48 months is suddenly interacting with your brand is ... really, really important. When I measure this stuff via logistic regression response models, an interaction with your brand can vary between a 1.5x increase in reactivation (community) to a 3.5x increase in reactivation (email click through) to a 5x+ increase in reactivation (shopping cart). All you have to do is record this stuff as an attribute in your database - that's it. And then act upon it.

And yet, when I speak of using community as a reactivation tool, you could care less.

Is it the hard work required to perform this work at a functional level?

Is it because your technology team could care less about it and therefore you have no chance to do anything innovative and fun?

Is it because you think I'm just plain wrong?

Send me an email and tell me why you don't do this stuff? (kevinh@minethatdata.com)

eBay

When I worked at Nordstrom, there was an eager and bright professional who worked for one of the catalog co-ops. In modern terms, she'd be called a "Thought Leader". She always had ideas, and she always insinuated that my team and I were ... not smart ... let's leave it at that.

After an hour where she continued to suggest that she was smart and we were just dumb retail employees, I asked her a question.

Kevin:  "Have you ever worked in retail? Brick 'n Mortar?"

Co-Op Professional:  "No"

Kevin:  "Then how could you possibly know how to navigate more than ten thousand employees to get your ideas implemented, and how could you possibly know the intricacies of retail to know if your ideas will actually work or not?"

Yes, there was silence.

From there, I'd use the query often with angry thought leaders who had all the ideas but none of the experience to know if their ideas mattered.

This brings me to eBay.

You already know I enjoy headphones, both open-backed headphones and iems. I've maintained a limit ... six in my collection. When I get to seven, one has to go. I sell the seventh pair on eBay.

eBay is a fabulous place to learn about copywriting, imagery, pricing, and customer service. On eBay, I have a competitor ... as best I can tell when somebody returns a Truthear Nova to Amazon or another brand, that brand sends the returned unit to this guy, who then sells it as an "open box" item on eBay. I've bought a couple of headphones from this guy.

So this guy "sets the market". Maybe the Truthear Nova sells new for $159. If he's selling an open-box version for $95, that's it, that's the ceiling of the market. I've tested selling above his price ... crickets. I've tested selling below his price, and it has to be 20% below ... you list 10% below to 20% below. If you price 20% below you charge shipping. If you price 10% below you absolutely need to offer free shipping.

I take pictures of the headphone or iem, of all of the tips, the box it came in, possibly the new headphone cable that I put on the iem that the buyer will get for free (to set the item apart from other units with stock cables). Pictures matter. They matter more than keywords matter, that's what I've learned.

Good reviews matter. How do I get a good review?

• I put a handwritten note in most outgoing packages.
• I sometimes offer headphone amp recommendations so the user knows what to buy next.
• In the case of the iPad I recently sold, I put a series of connectors (and an Apple Pen) in the box that didn't need to be sent to the buyer. I later learned that a woman bought the iPad for her Dad, and he liked having the bonus items to get started.

The handwritten notes ... that little touch, that matters. I'll tell a story of how I used the item and what I liked about it.

My stuff sells, quickly, usually within a day, normally in 3-5 days. I don't have to pay to have my items promoted.

If you are a service provider (and up to a third of you reading this are) and you want a taste of what your clients go through, and you don't have any direct e-commerce and/or retail experience, sell things on eBay (or Facebook Marketplace). You've got things lying around the house, unloved things ... sell them and test your ideas about pricing, creative, copy, and customer service. You are guaranteed to learn something new and interesting!

Small Apparel Brands Bucking Trends

I talked earlier this week about the feedback many of you provided to me recently ... "apparel is dying". I responded by suggesting this is part of a natural rhythm in business ... brands eventually commoditize an industry (Amazon, Walmart, Target) leaving low prices mega brands and fashion / high priced brands.

Then the middle fills back in with brands that "add something" to make mid-priced merchandise amenable to the customer. I asked you to forward me examples of apparel brands that are smaller, that "add something" to support mid-priced merchandise.

I'll list a few of your recommendations here (there weren't a lot of submissions), then do a deeper dive on one sent in by a reader from a client I've had a relationship with for fifteen years.

• Fair Indigo:  Sustainable, Fairly Made.
• 80s Tees:  Gen-X Pop Culture.
• Lascana
• Creation L
• 32 Bar Blues

Let's spend a few minutes on one brand sent in by an employee of a client I've had a relationship with for fifteen years.

The apparel brand?  Wool& (click here).

The reader cited the marketing hook that makes this brand worthwhile.

• "Wear one of their dresses for 100 days straight and Wool& will give you a $100 gift certificate".

Here is more on the 100 day dress challenge (click here). They suggest that 7,000 customers completed the challenge. Read the criteria for completing the challenge ... you give them your email address, you've already had to have purchased a dress, they encourage you to wear the dress eight hours a day to get the most out of it (100*8 = 8,000 hours, yeah, that's getting some mileage out of the dress). They ask you to promote the challenge on social media ... free marketing! Then you have to email them date-stamped pictures of all one-hundred wearings.

Also notice the "Why 100 Days" quotes.

• The challenge proves that wool is a performance fabric.
• The challenge proves that wool is remarkably odor-resistant.

Finally, there are 413 comments in the post about the 100 day dress challenge. I've talked about the importance of hosting your own community-based forum. Here's one. Every time you log in an participate, they capture information about you that tells them you are interested in them in-between purchases. They may not even use it, but if they worked with me, they'd use it! Who would you rather have on your customer file ... a customer who last purchased 18 months ago that you know nothing about, or a customer who last purchased 18 months ago and interacts with your community?

If 100 days is too long, they offer a 30 day challenge and a $30 gift card. Compromise!

They have community meetups. Twenty-five years ago at Eddie Bauer we had a "field marketing" team ... it was their job to foster what is now called "community". It turns out people want to feel like they are part of something. Who knew?

Here's their Facebook community ... it's private, 25,800 strong. They tell you it is, and I quote, "The Nicest Place on the Internet".

So, yeah, this is what "plus something" looks like. You add all of this and all of a sudden you can get away with mid-priced or even non-fashion expensive-priced items. You're not competing against Target. You carefully define your corner of the world.

I know, I know, this is where you tell me that I'm crazy, and you tell me this is too much work, and you tell me there is no guarantee of success. If that's how you feel, tell me how your call-to-action A/B creative test on Facebook worked, because you're left fighting for customers in a soulless digital landscape, all-the-while being pressured to lower your prices to Amazon / Walmart / Target levels.

You Reacted!

Talk about catalog marketing dying and you'll get feedback, pro and con.

Talk about apparel dying? Overwhelmingly positive feedback, and plenty of it! As much as I've received from a post in a decade.

One of our readers offered an interesting thesis ... "There is a proliferation of $5 million to $10 million apparel brands online ... There is no one place to see them like ... Amazon".

Let's test this thesis. Send me an email (kevinh@minethatdata.com), listing a small apparel brand you shop from. You are also required to tell me what the marketing hook is that they use to give you a reason to purchase from them. If I get enough responses, I'll share your perspectives.

So, please, overwhelm my mailbox with the small apparel brands you are buying from and the "hook" they use to cause you to avoid luxury apparel or commodity apparel. Go!

Apparel (Not All of It) is Dying

Many of my clients sell apparel ... often Women's Apparel.

And many of you are telling me that Apparel is dying.

Some of you don't say it specifically ... you tell me things like "Our sporting goods business is solid but apparel just keeps losing ground". There is some synergy between apparel losing ground and catalog marketing now in a free fall ... both interact with each other in a negative feedback loop.

A decade ago I consulted with a business that ended selling casual apparel (which was a reasonable percentage of the business), favoring outdoor apparel instead. Lots of internal strife ... "this is the end of the brand".

• Narrator:  "It was not the end of the brand."

Sure, the brand got smaller, but then the brand stood for something, and moved forward. Their marketing tactics changed. Their creative treatment of products and personas completely changed. They were free to be "who they wanted to be" because they didn't have to constantly cater to a casual apparel customer that was ... well ... different.

As we ease into 2025, we're at an inflection point if you are an apparel brand. You are being squeezed into oblivion.

• Amazon / Target / Walmart:  They commoditized apparel. Why should I pay $79 for something from Under Armour or Nike when I can get something that is 85% as good from Amazon for $19 and if it fails I can get two more and still have $20 in my pocket?
• Fashion:  Meanwhile, some brands think they can get you to spend $149 on a dress. They can. A "comparable" item might cost $25 on Amazon ... it's not comparable, but it is comparable enough that most traffic heads to $25 while a small fraction spend $149. But it is the "right" traffic for that brand. They are competing on a very different level, and they have to pay for that, don't they? But they made a choice.

So, if you are Lands' End and you have a comparable dress for $89 at 40% off for $54, where do you fit? Why should the customer pay $54 when the customer can pay $25 and save money? Why should the customer pay $54 when the customer can pay $149 and get the ooohs and aaahs from the public? Financial benefits on one end. Social/Emotional benefits on the other end. What does $54 buy you?

One of my favorite books is The Demography of Corporations and Industries. One of the chapters deals with beer. There used to be hundreds/thousands of breweries ... which all were whittled down to a handful of "macro-breweries" by the 1990s. Bud or Miller. Enjoy! If you sold a middling beer at a middling price? Good luck, you were doomed. Only a handful of breweries existed by the mid-1990s.

What happened next? Micro-breweries. Walk down the beer aisle at Safeway in 2024 and you'll see a small area of macro-brews and an extensive array of micro-brews, all generally more expensive than the macro-brews that wiped out the beer industry thirty years ago. Who would have thought that "Summer Shandy" would command a higher price and that people would want beer that tasted like (checks notes) a lemon?

• You have luxury beers.
• You have quirky beers ... the "Summer Shandy's" of the world.
• You have commoditized beers.

When apparel reinvents itself over the next decade, it will likely take the "Summer Shandy" path ... it will be apparel ... plus something ... like beer plus lemon, for instance. Might be quirky, might be different. 

I can't tell you what that "plus something" is ... that's your job, that's what you get paid to do. You don't get paid to send money to Facebook in exchange for customers, a bot can do that.

Apparel isn't the only thing that is dying. Gifts are dying. Home products are dying. Electronics already died years ago (commoditized to Best Buy and Costco and Amazon). I speak often about headphones ... headphones are being re-invented after the market was decimated by Apple and Beats and Noise Cancelling offerings from Bose / Sony / Sennheiser. Go buy a Zero:2 iem for $25 and tell me why you'd buy a Beats headphone for $200 - $300 ever again?

It's your job to find the "plus something" that causes an item to be appealing when compared to "monopoly brands" like Apple, Target, Walmart, Amazon, Best Buy etc. I know, you don't want to hear that, some of you will email me and tell me I'm wrong. That's ok. But you can't fight progress, and if you don't figure it out, somebody else will, at your expense.