There Are Subtle Differences

I'm going to dummy-up this discussion to protect the innocent while explaining to you how your merchandise assortment has subtle differences by channel.

A company had two skus that were quite similar.

• A "Minions" Child Blanket.
• A "Charlie Brown" Child Blanket.

When analyzed, each item was preferred by different customers.

• The "Minions" blanket was preferred by Product Listing Ad customers.
• The "Charlie Brown" blanket was preferred by customers placing phone orders at the Call Center.

What are the results telling us?

It's essentially the same item, same "style" if you will. One sku aligns with an older generation, one sku aligns with a younger generation.

Every one of you have items that appeal to different audiences. Knowing which items align with different audiences allows you to properly align your brand toward the future.

Optimal Page Count & Circ Depth Example

The catalog portion of my audience, if they're not already running this simulation for every one of their in-home dates ... will be running this simulation for every one of their in-home dates within a few months. It will become a necessity.

The simulation illustrates optimal profit levels based on page counts and circulation depth. Examples:

• 32 pages, 260,000 circ depth = $150,500 profit.
• 64 pages, 200,000 circ depth = $160,700 profit.
• 112 pages, 120,000 circ depth = $155,400 profit.
• 176 pages, 100,000 circ depth = $143,500 profit.

Each profit number above is the optimal level of profit given the number of pages offered.

Which strategy would you rather employ?

• 32 pages to 260,000 customers giving you $150,500 profit.
• 176 pages to 100,000 customers giving you $143,500 profit.

I get it - optimal profit is in-between there in this simulation. However, the point of this exercise is to help you understand what is coming. What's coming?

• Small Page Counts.
• Deeper Circulation.

This is a necessity, driven by increased costs and decreased productivity.

Run the simulation.

If you can't run the simulation, reach out to me and I'll set one up for you (kevinh@minethatdata.com).

Just Tell Me What To Do

When I arrived at Lands' End in 1990 (November), I recall furious analysis of our Holiday catalog and our Holiday prospect catalog. One had something like 192 pages, the other 64. We conducted an A/B test between the catalogs.

• Among equal customers, the 192 page catalog generated something like $4.00 per catalog mailed. The 64 page catalog generated something like $3.00 per catalog mailed.

I recall folks talking about how the bigger catalog "worked better". Sure, it generated more volume. But a funny thing happened when you calculated profit.

• 192 Pages:  $4.00 * 0.35 - $0.80 = $0.60.
• 64 Pages:    $3.00 * 0.35 - $0.45 = $0.60.

Essentially, each version generated the same amount of profit. Any customer worse than the average customer should, by default, get the smaller version.

Our Circulation Director would tell anybody who listened that she could pick the products and the creative that would be most profitable. Three companies later I worked with her and she could get 95% of the sales on half of the pages. She was that good.

Modern Catalog Marketing is a wasteful enterprise. You can feature items online for free, or you can pay a dollar to push 10% of the recipients to the website knowing that 8% of the recipients would have visited the website without a catalog. In the 1990 example I gave, at least 100 pages were fully wasteful - generating no useful benefit whatsoever. In 2024 it's much a more extreme problem with far more profitable answers available at every turn.

This is where somebody usually says to me ... "Just Tell Me What To Do".

Vendors will tell you that Direct Mail and Search are like Peanut Butter and Jelly. Let's assume they are correct. Why would you spend $1.00 on print to drive a customer to Google where you pay another $0.50 to re-direct the customer to your website? Wouldn't it make more sense to spend $0.60 on print with something with far fewer pages, chocked full of only your best-selling items and best-performing creative?

Why would you waste $1.00 sending a catalog to a customer who purchased via email marketing in the past nine months when you already speak to that very same customer every single day using the medium the customer buys from? Better to spend $0.60. Even better to spend $0.00, but at least meet the customer halfway.

If you know you have a customer who visits your website via social media on a monthly basis, why would you waste $1.00 sending a catalog to a customer who is already interacting with your brand, for free? Why not spend $0.60 instead? Even better to spend $0.00, but at least meet the customer halfway.

If you know you have a customer who visits your website via YouTube, where your in-house experts produce videos watched by hundreds of thousands of viewers each week, why would you waste $1.00 sending a catalog to a customer who is already interacting with your brand at no additional variable marketing cost? Why not spend $0.60 instead? Even better to spend $0.00, but at least meet the customer halfway.

In the example I gave earlier, from November 1990, this is the relationship between pages and demand per catalog recipient.

The relationship is, at minimum, similar today, and is likely more extreme. In 2024, with so many other marketing actions tugging and pulling at the customer, you no longer need to feature your entire assortment, or even a fraction of your assortment. Given the cost of mailing something in 2024, you are honestly limited now to featuring the best performing items using the best performing creative you have - allowing your free and nearly free channels to do the heavy lifting.

A less costly and more productive mailing allows you to mail deeper than normal.

A less costly and more productive mailing allows you to increase frequency among better customers.

All of these truths were self-evident in 1990.

They're more relevant today than ever before.

That's what I'm telling you to do.

Send me an email (kevinh@minethatdata.com) telling me why this strategy won't work.

 

Good Vendor Employees Are Working All Around You

So I'm on a Zoom yesterday, and the individual representing the vendor did SUCH a good job.

What does doing a good job look like?

• Patient.
• Respectful of the Client.
• Tries to Help the Client.
• Translates Between the Client and Others.

The best vendors you work with are able to translate between Spanish and Portuguese. You'll have two parties speaking similar but different languages. Those two parties can run in circles for darn near infinity not understanding each other, unless somebody translates for one party in a manner the other party understands.

Maybe you have a, oh, I don't know, a paid search vendor, and you think the job of the vendor is to generate the best ROAS possible. You're not wrong. But you are also missing something if you view vendors under solely via performance.

In the case I'm talking about (from yesterday), the vendor did a fabulous job of bridging the gap between parties who viewed the world differently. Once everybody had a common definition of reality, there wasn't much to talk about. The problem was solved by the vendor.

There are so many good vendors ... there are also lousy vendors who hire great people ... align with the great people to overcome other issues.

I don't talk about it often, but I did spend a year at a retargeting startup back in 2000. We had some fabulous people working at this company ... brilliant people. But as a vendor, we were awful. I've told you about my product manager ... "It's my job to lie, it's your job to make my lies come true." That's what happens when you work for a bad vendor ... good people are swamped by bad culture. Still, if you are able to align with the good people, your needs are easily met.

If I had to boil my issues with vendors down to one problem, it would be lying. Too many of the public-facing individuals just bold-faced lie, and they taint all the good employees who work honestly, behind the scenes.

There are a ton of spectacular vendor employees working behind the scenes. Find them and work with them!

Mohawk Chevrolet

Here's a little bit of levity for a Monday morning (click here).

Going forward, you might think about how marketing efforts fit on this continuum.

Mohawk Chevolet is at a turning point ... opposite of paying third parties for customers, with the potential to become creative.

If you want to see what moving up the right arrow looks like, think about Progressive and their Flo and Dr. Rick storylines. Here's Dr. Rick on weather. I personally like the Keith character.

Having had a front row seat as analytics transformed marketing, there is a 'sterilization' process that happens when you start to measure things. Stuff you've always done now looks painfully expensive, and is immediately dropped in favor of sterile things (paying for stuff on Facebook). Soon enough, everybody is doing "sterile things" ... and the slightest deviance from sterile is viewed as being "creative".

Do I need to bring it back to headphones? Yes? Ok. Headphones are now measured on how similar they are to what is called a "Harman Curve". The curve is essentially an average that users set their equalizers at when asked to make sound "sound good". This introduction of analytics/measurement showed that humans consistently have a similar sound profile, with each person deviating modestly from the profile.

Now, if you were going to create a new headphone, would you create it similar to this curve, or very different from this curve, especially if you were trying to appeal to a mass audience? You'd try to come up with something similar to the curve. Now imagine what happens if every manufacturer tried to come up with something similar to the curve? Everything would be the same ... sterile, lacking creativity.

In fact, if you try to deviate from the curve, you'll have the curve people come after you. "Sub-bass is exaggerated and the treble is too spicy" (which is actually called u-shaped, FYI). People evaluate how close you come to the curve, not how good the unit actually sounds.

That's where we are at today in marketing. "Are your Facebook ads working?" is on the far left of the relationship depicted above. Mohawk Chevolet is at the turning point in the curve depicted above.

Yes, I get it, I'm about to get a message from a CEO about how wrong I am. It's ok. If you are on the left-side of this relationship and your efforts are working, yes, you are going to think I'm hopelessly wrong. As the late Don Libey often asked ... "what if"?

Cost Differences

Do you remember Bernie Mac in Oceans Eleven ... negotiating van prices? Muttering nonsense about Aloe Vera while squeezing the sales dude's hand so hard that the sales dude dropped the price of the vans another two-thousand dollars each?

It was a more enjoyable world when Bernie Mac was with in it.

Anyway, I get to see the advertising cost of mailings. One brand puts 84 pages in the mail for $0.95, another brand for $0.67. You might imagine that one of these brands has a different perspective on cost inflation than the other. 

Maybe one of these brands has Bernie Mac doing the negotiations.

If you are on the high end of the comparison above, might it be time to have a discussion with somebody? Or if volume is the problem, maybe it is time for twenty small brands to band together in some fashion (no, not co-mailing) to be treated better.

As the late Don Libey used to ask, "what if?".

My Twitter Readers Are Admittedly Biased Toward My Content

But the thirty respondents who voted, well, they voted with uniformity.

So why do you think it is that so darn much focus is on points, promotions, discounts, and campaigns?

P.S.:  I know what some of you are thinking ... "KEVIN, YOU IDIOT, WE ARE MARKETERS, WE DON'T CONTROL THE MERCHANDISE!". Well, if you love handing out points, why not hand out points to customers who buy specific new items upon new item introduction? Or why not hand out points to customers who buy in June when you are in clearance mode to help you get rid of stuff? Why not hand out points to customers who see your Instagram post and buy the featured item in the post? You have so many choices, choices that are merchandise-centric, right?

First Three Months After A First Order

By now, most of you have a separate and fully-developed program to convert a first-time buyers to a second purchase within three months of a first order.

You have one, right?

There's all sorts of fun things you can do. I know, you're about to say "PLEASE STOP WITH THE HEADPHONE STUFF", but here's what Headphones.com did last Saturday to me, a first-time buyer with recency = 20 days since a first purchase.

This stuff is particularly effective with first-time buyers or customers who just reactivated from 37+ month recency status.

I once had an e-commerce professional tell me that her brand "had more than enough traffic, we just don't do anything to convert the traffic to a purchase". Smart woman! Try something like what is illustrated above with customers who placed a first order within the past ninety days and report back here to tell us how the program worked.

When Winners Aren't Quite Winners

It's common to measure winners via total demand generated.

It's an easy calculation. But it's also the wrong calculation.

It's important to assess ad cost as well (and gross margin and marketing promotions, yup). Email marketing is inexpensive. PLAs are frequently expensive because they attract a disproportionate number of new/reactivated customers. Catalogs are ridiculously expensive in modern times. As a result, the item that is a winner may not be a winner after accounting for profitability.

In this example, the high-performing catalog-centric item is not as profitable as the email-centric item that generates 60% of the sales of the catalog-centric item. The PLA-centric item is much less profitable ... in part because of the customers the marketing channel attracts.

I've had requests to provide more "free tips" ... this is a whopper of a free tip, I'm helping you figure out the items that are true winners, the items that should be featured where possible across your marketing channels. Please take advantage of this "free tip" that you've asked for, ok?

Alex Morgan (Yes, This Will Be About Merchandise)

When the USWNT Olympics Team was announced, all-time great Alex Morgan wasn't on the team. Nor was she on the four player alternate list. The new coach stated she was taking the team in a different direction. Which, if you follow the team, is sad.

Alex Morgan was the youngest member of the 2011 World Cup team that lost to Japan, and was a central figure in the teams that won the World Cup in 2015 and 2019. She also made the 2023 World Cup team that did not medal.

In Merchandise Dynamics terms, she was a member of the Class of 2010 (when she joined the team), was a winner for nearly a decade, and now will not play for an opportunity to win Olympic Gold.

You have items in your assortment that are comparable. Maybe it's the Start Here Slinky Tank, or the Ruched-Waist Houndstooth Floral Dress.

You'll know you have a budding problem if you measure the "age of winners". You already do this, right? For each of the items you believe are "winners", you measure the number of months the item has been offered. If you have a problem, the problem looks like this.

• Through 7/10/2024 = Winners are 39.4 months old.
• Through 7/10/2023 = Winners are 33.2 months old.
• Through 7/10/2022 = Winners are 28.5 months old.
• Through 7/10/2021 = Winners are 27.9 months old.

This means your assortment is aging. You are not finding new items to replace the items that always worked.

Your assortment will always go through a transition, with best sellers extracting as much profit as possible from customers before tiring, before being replaces by up-and-coming items. You are no different than the General Manager of an NFL, MLB, NHL, or NBA team. In fact, you should have a prediction for every item in your assortment for how long of a life that item has left. You are no different than the Green Bay Packers, assessing the number of high-performing years that Aaron Rodgers had left, analyzing that against the upside potential of Jordan Love, and then making a decision that was very risky at the time and, in retrospect, pretty clever.

Does this make sense to you?

Measure the "age of winners", and let me know what you learn. Well-run brands may not analyze this specific metric, but they know what the metric means and they have a succession plan for every winning item in their assortment.

Focusing on Tiny Things

Sometimes on LinkedIn you'll see "all the good stuff" from the CEO. An image of twelve people sitting inside a restaurant, glasses of wine from a 2009 Paso Cab, half-eaten ribeyes and chicken piccata with nineteen dollar roasted cauliflower sharable sides, and a quote saying "My team and I are recharging before a big day tomorrow with Acme Industries!" The post will be liked seventy-nine times, with eight comments from individuals with titles like "Strategic Thinker" saying "this is what true leadership looks like". 

Oh, LinkedIn! How cute.

Conversely, I once worked for a President who sat at the cubicle of my forecast analyst for several days to watch all of the details of how the hourly call center volume forecast was created. He'd asked questions like "don't you think the forecast of 1,137 calls at 10:00am on Wednesday is 5% too high?" My analyst would look at me, pleading for help.

That is an instance of focusing on a tiny thing.

Increasingly, I'm seeing focus on "tiny things".

And I get it ... you focus on tiny things because it's easier to deal with the subject line on an email campaign than it is to deal with the existential/structural issue of paying the same amount of money for 25% fewer new customers with increases in marketing costs coming seemingly forever. Easier to put the forecast analyst on blast mode about hourly order forecasts than to figure out how those orders will be generated in two years.

Some CEOs are focusing on bigger topics right now. They have to do that. Every employee needs them to do that. The brand they support won't exist if they don't do that.

Catalog CEOs ... don't let your paper/print/postage partners push you toward small topics that keep their cash register dinging (kids - there used to be things called cash registers - you can still see them at your local grocery store). You need to be looking to the future, and you know your future involves much less print than it requires today. Could you go to Washington, DC and lobby for lower postage costs? Sure. Have dinner, enjoy yourself. But you are focusing on a small thing. No amount of work on that front matters anymore. The very organization that supported you for nearly twenty years removed the word "catalog" from the name of their brand. That tells you all you need to know. They're reducing their focus on tiny things.

McDonalds

Let's use a Dale Carnegie technique ... show of hands, how many of you have eaten at McDonalds?

Now, how many of you routinely eat salads when you go to McDonalds?

You might enjoy this article, sent to me by an intrepid reader (my wife), about the de-emphasis of salads at McDonalds (click here).

One of the seminal moments in my career happened at Nordstrom in 2003. We were having endless meetings about shutting down the catalog division, and at one point I mentioned that the catalog generated $160,000,000 in annual sales and about $8,000,000 in annual profit. My boss said "who cares"? Stunned, I said something pithy like "shareholders care, it matters that we generate sales and profit." Her response was even better.

• "Kevin, we discontinue items every single day. Every single day. And yet, we somehow move forward. We can discontinue a marketing channel in the same way we discontinue products. Besides, we don't want that customer."

I went back to my office ... a naive 37 year old Vice President, pondering how stupid my company was to not want the profit from a catalog customer in North Dakota.

And then I thought about it.

• You can discontinue marketing channels, it's ok.
• It's ok to not want all customers.

So yeah, if McDonalds doesn't want the salad eater, that's fine. Go make the McRib customer happy. And yeah, they'll be told that they don't have healthy options. My goodness. There's an infinite world of healthy options. Salad and Go has 'em. Interestingly, they don't want the McRib customer.

Have you ever asked yourself who the customer is that Macy's wants?

Or how about your brand?

Min-Maxing

It's a concept from video games and baseball ... "What do you do best? Let's do more of it!"

It's a concept that came up twice in projects in the past six months (and yes, I'm about to dummy-up the situations to protect the innocent).

First, an e-commerce brand was exceptionally good at acquiring new customers via product listing ads. They were so good they kept growing and growing and growing ... until they hit their optimal level. From there, every additional dollar spent was sub-optimal, harming profitability. When I explained the concept to the Chief Marketing Officer, she said "what do I do next?"

Second, an old-school catalog brand was exceptionally good at (checks notes) cataloging. One problem. The paper/printing/postage ecosystem was increasing costs that the brand could not longer generate 10% pre-tax profit while maintaining net sales at a constant level. They could get to 10% pre-tax profit by reducing circulation by 30%, but that solution was unpalatable to the Owner. The Chief Marketing Officer looked at me on a video conference and said "what do I do next?"

In fact, the phrase "what do I do next" comes up repeatedly ... not just in the two projects mentioned above, but in 75% of my projects. In the first example, the e-commerce brand was good at one thing (product listing ads). In the second example, the old-school catalog brand was good at one thing (mailing catalogs).

Now, imagine being a major league pitcher. You are good at curve balls. You change spin rates, you change speeds, you change pitching angles. All of those tactics make your curve balls more effective. And yet, you can't throw curve balls on every pitch, or you will get lit up. So you should be good at something else as well to set up your curve ball ... not as good as throwing your curve ball, but you need multiple skills to maximize the one thing you are good at.

Imagine if the e-commerce brand or the old-school catalog brand were good at something else? They wouldn't ask me the question "what do I do next?"

If you are sitting in your office (home or work office) right now wondering "what do I do next?", you know that you have min-maxed one specific skill for your brand and don't have a backup tactic to help move you into the future. You've "min-maxed" yourself into a specific way of marketing, and once you've moved past an optimal situation, you are in trouble. This is why you'll hear e-commerce brands lament Google or Facebook or Apple (for shutting off the data pipeline to Facebook) ... they're good at one thing and when that one thing is sub-optimized, they don't have something to fall back on.

Be great at something.

Be good at a couple of additional things.

It's sort of like having a diversified 401k portfolio, right?

Amazon Continues A March Toward A 21st Century Montgomery Wards

Here's the article (click here). The sub-heading catches attention.

Separate from the Amazon connection ... there is a thrilling nothing-burger of a merger statement in the article ... "many in the industry have anticipated this transaction and the benefits it would drive for customers, partners, and employees." That is filthy nonsense. Please, describe the benefits. Fewer employees? How do customers benefit over what is currently being done? Partners without money when this ship goes down in ten or fifteen years? How exactly does a customer benefit?

Meanwhile, the best thing that happened to my time consuming practices in the past two years has been my gradual move from the increasingly toxic waste-dump formerly known as Twitter to Reddit. The past month has been something to behold. Across the subreddits I follow, somebody always finds a way to say this:

I'll restate the comment here:

• "Those prices are ridiculous cuz I seen a Vader for $15 on AliExpress."

Somebody posts a screen dump of prices of iems on Amazon, and the first comment is from somebody saying they've seen one of the items cost 1/5th as much on AliExpress.

Do you see what is happening? Venture out to Reddit and you'll see it.

• Amazon is playing a non-competitive role in the consolidation of previously proud mall-based retail brands. Exciting!
• Customers are comparing prices on Amazon with a hundred-billion-dollar-a-year overseas brand and finding Amazon to be (checks notes) ... uncompetitively expensive.

Commerce rhymes over time. It's unavoidable. You reach the mountain top only to find somebody else climbing a taller mountain and you end up trapped on your mountain, with no way off. It's coming, it's unavoidable, it isn't a near-term issue, and it is something you should be thinking carefully about if you call yourself a "strategist" or "strategic thinker" or a "thought leader" on LinkedIn.

Sure, Kick Me Out Of Your Community

This smells like a vendor-led strategy.

I'm not a fan of vendor-fueled strategies ... "we will scare the user into keeping the account active." Always interesting, because vendors use their thought leadership platform to recommend wing-nut strategies like this ... but you'll seldom see vendors use strategies like this, will you? It's like the paper/print folks ... telling you that you must continue to mail catalogs but they market to you via email. And by vendors, I don't mean you, the ones reading this. It's the thought leaders who tell you to purge names for no good reason so their articles earn clicks. Seriously, how much was I costing Garmin by being inactive, assuming they are being honest here?

What could Garmin have done?

They might have asked "why" it's been years since I've been active. They might have learned that I traded my RV in (one that did not have navigation) for an RV with navigation that is updated via memory stick. They might have learned I use Google Maps instead of the lousy software provided in the RV I now own.

But honestly, they likely know all of this. It's hard to be in an industry in decline.

So, instead, you treat the customer in a punitive manner.

10% Better, 30% Worse

Somebody somewhere once said that a good Coach / Executive / Leader makes things 10% better than a baseline. Meanwhile, a poor Coach / Executive / Leader makes things 30% worse.

I'll bet you've experienced this phenomenon.

I recall being in a meeting where the CEO made an employee cry. I went into the bathroom just to get away from the dysfunction, but the CEO followed me in, and that's where he shared stuff that would have made the entire room cry.

That business did not perform well. The CEO was a -30% Leader. He didn't have the ability to recognize it.

I have a client where the CEO/Owner is a +10% Leader. He hires good people, kind people, and he allows them to make decisions. This business messes up ... every 18-24 months they revert back to old behaviors, but the CEO nudges the brand back in a positive direction. They're not perfect. But they're 10% ahead of everybody else, and the interest in his investment compounds over time. It's a really, really good company.

I thought about the concept (I'm writing this on Monday night) after watching the USMNT lose to Uruguay. Here's a collective group that should perform better, and just ... doesn't. Outsiders can usually see the -30% in action ... if you are on the inside, you're working too hard to know if you are a -30% Leader or a +10% Leader.

Tomorrow is July 4 ... if your boss is encouraging you to put in some extra time on July 4, you might be working for a -30% Leader.

Tolls vs. Tribes

I will paraphrase the conversation to protect those involved.

Person A:  I think I want to get the Zero:2 iems. They're $15 on AliExpress and $25 on Amazon. Anybody else had an experience with AliExpress?

Person B:  Get them on Amazon. It's only $25. Why take a risk with somebody you don't trust?

Person A:  $10 additional dollars is important to me.

The world seems to change slowly, then it changes all-of-a-sudden. The conversation above (which happened three times in the past two weeks) is an example of the world changing slowly (it was an exchange between two individuals 1-2 generations apart). Person by person, day after day, new habits are formed. There will be a day ... maybe 5 years from now, maybe 12 years from now, when all of a sudden old-school folks will say "what happened to Amazon?". They'll realize Amazon became Montgomery Wards. They'll have no idea how it happened, they'll just look and go "wow".

It happens one fifteen year old at a time, trying to save $10, seeing that Amazon is too expensive.

Think about the last half of that sentence:  "... seeing that Amazon is too expensive". A sentence unthinkable twenty years ago when the argument was that Amazon could never be profitable being so inexpensive.

I've been waiting for something to happen since the death of "omnichannelism" nearly a decade ago. We're there now. Something is happening. It's the end of catalog-style print marketing from the 80s/90s. It's the "e-commerce is now mature and at risk" situation that ultimately happens to all incumbent business models - e-commerce is now old-school, ripe for disruption. 

We're transitioning from tolls (paying Google/Amazon/Facebook for access to customers) to tribes (Seth Godin would be so happy).

From tolls to tribes.

The older individual at the start of this post is willing to pay Amazon a $10 toll because he trusts Amazon.

The younger individual is part of a tribe that needs to save $10. This individual will form habits that send commerce in a very different direction.

Bypasses and Tolls

This is a map of Peoria.

Traveling East or West on Interstate Highway 74, you are given a choice outside of Peoria.

• Stay on I-74 and go through Downtown Peoria.
• Take the Bypass via Interstate Highway 474.

Be it life, marketing/e-commerce, or pickleball, I'm surprised how few people are willing to take the bypass.

I spoke at a conference pre-COVID ... the professional eagerly approached me and said "I am sure looking forward to hearing the best practices you'll offer us today!" Well, I don't communicate best practices. Best practices are for those who lack imagination. They are tactics vendors communicate to make sure you use vendor services.

Make sure you take the bypass before everybody else figures out that the bypass exists.

In modern e-commerce, once you figure out the bypass, somebody will tax it with tolls. Just like I-294 or I-355 in Chicago, somebody will figure out that the bypass is the better option and they'll charge you money to drive on it. Remember Facebook? You had all that organic activity back in 2009 ... and then POOF, it's gone ... you had to pay Facebook for access to the very customers you willingly steered to them ... for free. Omnichannel!!

• Why did you ever let Facebook get away with that stunt?

There's a whole side of the vendor world that wants to help you. Then there's the minority of vendor professionals who want you to pay a toll. They want to get paid for your hard work.

When the route through town becomes too congested, you take the bypass.

When they place a toll on the bypass?

You build a new route.

This is where we are now.

• The paper/printing/postage folks want more from you to maintain their craft.
• Facebook / Google want to extract every penny, within reason ... they know the exact balance required to make them money while optimizing how much they can get from you.

It's time for you to build a new route.

It's Not Even Available

The omnichannel thesis demanded that you sell the same items in every channel at the same price ... and if the item is backordered you pull it from your website so you "don't disappoint the customer". Which of course was "code" from vendors to use software to improve your supply chain and then have outstanding website functionality that required more 3rd party payments.

Others stuff omnichannel theory in the meat grinder. Headphones.com (yeah, them again) has been hyping this new iem for a month ... it was available for the first time two weeks ago. It's draped all over their home page.

Buy it now? You bet! Look what happens when you try to buy it now.

Oh, it's sold out. If you want it, you can pay now to reserve it.

It is really that popular that they couldn't procure enough units to get through the first week? A quick check of the internet suggests other websites are backordered as well ... however ... this could be a marketing ploy to limit inventory to create a buzz. If so, it's another hybrid marketing/merchandising tactic to create FOMO.

I wanted to see if Headphones.com posted a review of the item. When I get to the review page, I find a new review (via an in-house influencer) of a seven-year-old item (click here: https://headphones.com/blogs/reviews/sennheiser-hd-569-sennheisers-best-kept-secret). They're reviewing items that are seven years old. When is the last time you bothered to communicate to your customers how much you love seven-year-old items you sell?

A few weeks ago, an Executive emailed me, telling me he was "locked into his paper contract for the rest of the year". Think about that statement for a moment. Catalog brands are locked into inflexibility ... meanwhile your online competitors are creating FOMO over a brand new item (which is allegedly sold out) and a (checks notes) seven year old item.

• Brand A is marketing to satisfy a paper rep.
• Brand B is creating FOMO over new items and seven-year-old items (the older item being hyped by an in-house influencer), sans paper.

This is where some of my readers will tell me that the print-centric brand "can" hype new items and seven-year old items. True. Describe why it doesn't happen.

These are subtle differences in selling that result in big differences in how a brand is perceived.

P.S.:  Did you read about the omnichannel catastrophe known as Walgreens (click here: https://x.com/cnnbrk/status/1806299944929611811). A quarter of their stores are unprofitable, many of those stores will be closed. Apparently things aren't great at the corner of happy and healthy. Meanwhile, have you heard the Amazon Pharmacy commercial on (checks notes) radio? On radio! They talk about standing in line at the pharmacy, hearing the guy complain about his gout ... "the only thing more painful than gout is having to listen to somebody talk about gout". Amazon is using (checks notes) radio to force Walgreens to close more stores. Omnichannel!!

You Wake Up One Day, And You Realize Change Happened To You

Can I show you what I watched on Tuesday night while writing Elite Program papers?

It sure wasn't linear television via YouTube TV.

I start with an eight minute daily show outlining the world of dirt late model racing and dirt sprint car racing.

I know, I could do screen shots on my laptop, but you have to remember, I'm writing Elite Program papers right now.

Up next? Watching a 5.0 level 13 year old play pickleball with his Dad.

Then it's a half-hour daily show from an ag company outlining weather patterns across the United States, the Pacific, and the Atlantic.

And finally, it's the Men in Blazers featuring an appearance by Michael Davies, sporting his L.L. Bean attire.

All this seemed perfectly normal to me until I realized that prior to COVID, I would have done NONE OF THIS WHATSOEVER. I'd be reviewing a network television guide featuring a prime time game show called The Quiz With Balls (yes, that's a thing).

I realized that change happened to me. It happened slowly, then all at once.

It's like all of a sudden realizing that Alibaba is doing more than a hundred billion dollars of worldwide commerce.

My working hypothesis is that when we were sent home for COVID, we immediately began inventing the future. It took years for all the puzzle pieces to fit together, but when it finally fit together, wooo boy did things change. It happened behind the scenes ... and then all of a sudden ... there it is!!

You'd be interested to know that my client list is a U-shaped curve right now ... either performance is awful, or performance is off-the-charts spectacular ... very few folks in-between. Those on the positive side of the "U" are doing things differently. They have a marketing hook, they have a product hook, they have a community hook (which is why I keep talking about this), and they often have an in-house influencer who is the "expert" of the brand ... is the person who is trusted, is the person who potential customers look up to. They've accepted change.

The "community hook" is something I will continue to share with traditional brands who view customers as "lists" or as a "housefile". Your community represents your better customers who want to interact with your brand and help potential customers. You community solves problems. Your community recommends new products/services. You have at least one individual, often a half-dozen +/- who manage the community. Think of the community as your "list" of great customers, brand advocates, and future customers. When you think of it that way, you become very interested in managing your community, right?

Anyway, 2024 is one of my favorite years in marketing, to date. It's just so fun to see what people are doing.

History Repeats ... Change is Coming

I see this ...

 

... and I think back ... for instance, to 2007, when Don Libey discussed exporting knowledge of how to execute direct marketing to people in China and India: https://www.dmnews.com/libey-says-rate-increases-declining-prospecting-monster-dm-trends/.

He also nails the challenges associated with the paper / printing / postage ecosystem and third party vendors.

Yeah, in 2007.

History repeats.

P.S.:  Watch the Euro soccer matches and you are inundated with AliExpress ads. These folks have more money than the GDP of Bolivia. I sense a seismic shift in e-commerce is on the horizon. While you raise prices to counter inflation, the complete opposite is happening elsewhere. Surely Amazon sees the future. And yet, you're helpless to fight the future.

I See Dead People

From LinkedIn, where I wrote this on Sunday: 

https://www.linkedin.com/posts/minethatdata_kendrick-lamar-starts-his-screed-against-activity-7210702809925570560-Fhwi?utm_source=share&utm_medium=member_desktop.

Yes, I'm testing something here.

An Example of Hopping on to Chat With Your Community

Do you have a community?

Do you have one off-platform?

Here's an example of a Sennheiser product manager hopping on Reddit to chat with his community. It went well (click here).

Every one of you has a product manager / marketer / merchant who would love to have individual communications with your community. What stops you from doing what Sennheiser did here?

P.S.: I share this stuff because the number one complaint I get from readers is that marketing channels are now too expensive and unreliable. Agreed. So work around them. Invest in alternate methods today so you aren't dependent upon high cost channels tomorrow.

P.P.S.:  They also have 140,000 followers on YouTube and have a nice series called "Beyond the Curve" (click here). You are a media company ... start acting like one.

Do You Want To See What You Are Interested In?

The stats below represent data through about Noon Pacific Time on Thursday.

Ok, I wrote about the E-Commerce Priority Grid (click here). There were a whole bunch of links in the post ... I put the links in there to measure what you are interested in. There is what I want you to be interested in, there is what you are actually interested in. Those things don't always align, and it causes me to be flummoxed when you aren't interested in something central to the plot.

Here are the number of actual clicks ... actual clicks in this post are about 1/3rd of normal, and that fact alone causes me sadness.

• 38 Clicks on the Actual E-Commerce Priority Grid.
• 33 Clicks on AliExpress.
• 27 Clicks on Temu.
• 38 Clicks on The North Face.
• 0 Clicks on Lume.
• 58 Clicks on In The Company of Dogs.

This was my expectation.

• 20 Clicks on the Actual E-Commerce Priority Grid.
• 100 Clicks on AliExpress.
• 100 Clicks on Temu.
• 20 Clicks on The North Face.
• 150 Clicks on Lume.
• 50 Clicks on In The Company of Dogs.

The point of the article was to get you to think about AliExpress / Temu / Lume. I mean, Lume went from $0 to $100,000,000 in seven years. Do you want to grow at that rate?

Your preferred path was In The Company of Dogs / The North Face.

Interesting.

E-Commerce Priority Grid

In my project work, it is increasingly clear that there are four types of e-commerce businesses. I represent each business in the grid below.

Let's think about each business model.

Pay 3rd Parties For Customers / Focus on Promotions/Campaigns

• "I see dead people".
• This is the land of AliExpress (owned by Alibaba) and Temu. Two days ago each brand offered an iem headphone that cost $15.99 on Amazon for $5. Marketplaces!
• It's over. Not just for you, but eventually for Amazon. These folks will gamify you (and Amazon) into oblivion.
• You cannot compete when you are in bidding wars for customers against enormous brands possessing bottomless budgets. It's over.
• You cannot compete when you sell something for $19.99 and Amazon sells something comparable for $14.99 and AliExpress/Temu sell something comparable for half the price Amazon sells the item for as part of their endless item-level promotions.
• DO ... NOT ... TRY ... TO ... SUCCEED ... IN ... THIS ... REALM.
• "I see dead people".

Pay 3rd Parties For Customers / Focus on Merchandise.

• This is the common e-commerce business model ... where the "digital experts" roam the Earth.
• Think of The North Face as an example. Yes, there is a brand-centric selling approach to their merchandise, maybe that is necessary when you focus on merchandise and don't focus on discounting. You'll pay for success somewhere in the p&l.
• Lume is another example. You can't avoid that woman yelling PITS, PRIVATES at you on commercials if you still watch linear television. They're north of $100,000,000 in sales in seven years. And interestingly, they have some semblance of community on Instagram (194,000 followers ... think about that). Go to their website, you immediately see a focus on best sellers (hint - they care about merchandise).

Generate Your Own Community / Focus on Promotions/Campaigns

• REI and their co-op model, paired with promotions and campaigns (20% off Experiences, Earn 5% via their Loyalty Program, their Outlet etc.

Generate Your Own Community / Focus on Merchandise

• Apple
• Lululemon
• Headphones.com
• GoPro

I get it ... those who generate their own community also pay Google/Facebook for customers. But they don't "have" to do that ... they already have a community of avid customers and prospects.

Let's think about an example ... how about In The Company of Dogs.

• No social media presence to speak of (so they're not a community-based brand, are they?).
• 40% off on the home page.
• Sale on the home page.
• Sign up for emails (that's a community) and get 10% off your first order (that's a promo).
• Click on item after item after item and you'll see at the bottom "write the first review" in small print. No community.
• You can get free catalogs on their website, so they are focused on promotions/campaigns.

In all likelihood they are a bottom-right quadrant brand.

• "I see dead people".

Unless there are changes, they're dead, they just don't know it yet.

Where does your business fall on this grid?

I Just Don't Understand It

E-commerce pros ... I'll address you tomorrow.

Can I share something with the rest of you?

I'm as busy right now as I've been in six years. It's because of you. All of the catalog professionals who read this, who are dealing with a lot of moving parts right now, who are frustrated, who want to know what the next several years look like. You are worried that the 30% cost inflation you've experienced over the past three years ends your discipline in three more years. 

You already know the answers to your questions.

Online, in the socials, I run across your support network ... paper reps, printers, boutique catalog vendor professionals. Their communications are in stark contrast to your concerns. I just don't understand it. They craft narratives.

Narrative: The USPS is the problem, not us. We're all in this together ... against them.

• I'll let them have that one. But it's such a tiny, tiny issue, and it cannot be solved. No amount of trips to Washington DC, no matter how holy they make you feel, will make any difference on the future. And it doesn't change all of the other issues, all of the other ways your paper partners and printers sent you down the river.

Narrative: The reason direct mail (and specifically, catalogs) don't work is because marketers don't know how to use them properly. Marketers are the problem, not the discipline.

• This is such a poor response. Empty. Lacking understanding. Lacking empathy. Fully incorrect. It allows the vendor to hold the moral high ground.
• One of your "trusted partners" told me this (marginally paraphrased) ... "It is true, they just don't know what they're doing in direct mail and catalogs and they're part of the problem. If they did things the right way, there wouldn't be a problem".

This narrative is everywhere right now. They write about it frequently. Check LinkedIn for a cooking reference, FYI.

Narrative:  Direct Mail works.

• Direct Mail can (should) work with customers age 65+.
• Direct Mail can work when communicating overwhelming benefits to a customer that the customer cannot ignore (i.e. Nordstrom's Anniversary Sale).
• Outside of those situations, it no longer works. It's over. If print worked, you'd see it everywhere. Instead you see contraction. The paper/print industry contracted dramatically in the past 15 years. Just ask them. And where it hasn't contracted, it evolved toward supporting Amazon (i.e. boxes).

Narrative:  All generations love Direct Mail.

• Wrong.
• The laptop started the fire, the iPhone burned everything down. It's over.

Narrative:  We can help you be effective.

• For some companies, yes. Go get 'em!!
• For most companies, absolutely not. It's over. It's over. Admit it.

Narrative:  We can cost engineer marketing to make Direct Mail effective.

• No.
• 2-3 years ago paper didn't exist for catalogs. That's on your paper rep. It's his fault. Fully on him. His industry contracted and couldn't handle a small bump in demand, forcing my clients elsewhere. 
• 1-3 years ago printers couldn't even schedule your circulation job. Printers fired my clients (my clients have the receipts).
• It's hard to be a cataloger if you can't get paper.
• It's hard to be a cataloger if printing capacity doesn't exist and your printer fires you.
• It's hard to be a cataloger with 30% cost inflation over the past three years.

I'm fully on your side, catalogers. You've been treated poorly. You can see what is coming. You are making changes. And no amount of industry narrative to spin the truth otherwise will dissuade you from advancing into the future.

Paper Folks, Printers, Boutique Catalog Vendors - please join us.

P.S.: You're probably wondering what the future is. Nearly fifteen years of catalog optimization projects clearly outline the future. Here's what is coming.

1. If you have 100,000 twelve-month buyers today that you mail, you will mail 10,000 of them in three years.
2. If you mail 100,000 twelve-month buyers eight times per year today, you will mail 10,000 twelve-month catalog-loving addicts twenty-four times per year in three years. You might mail them catalogs, you might mail them loyalty information, but you will only communicate to a small number of customers who care. Everybody else is digital, and you will have to spend very little money on them to be profitable (hint - you'll be a media company to your community).

Disagree? Send me an email (kevinh@minethatdata.com) with your thesis.

P.P.S.:  Don Libey would be 80 years old, +/- today ... and he'd have a field day calling out the vendor industry on how they damaged my clients. It would be breathtaking.

P.P.P.S.:  I bring this up (and the amount of time I'm spending on this going forward will decrease, significantly) because I'm tired of you being blamed and criticized for something fully out of your control.

Just ... Classic

This happened about a decade ago ... a CEO hated, and I mean HATED "old fashioned" merchandise sold by a brand. So the CEO discontinued a bunch of long-term winning items, replacing them with what were called "fashion forward" items.

Sales dropped, almost immediately, by about 10%. The CEO pressured everybody to figure out "what was wrong", but everybody knew what was wrong.

Think about McDonalds ... what happens if they discontinue the Quarter Pounder with Cheese? It almost wouldn't matter what they replaced it with - they're gonna suffer a sales decline.

Anytime you want to reinvent your merchandise assortment you almost have to reinvent your customer file / community at the same time. Ticking off your existing customers while failing to cultivate new customers is just a classic recipe for trouble.