This is Worth 11 Minutes of Your Time

In the English Premier League, Liverpool's Manager retired a few weeks ago. Here he reads email from his fans. 

• https://www.youtube.com/watch?v=vkW41T56euc&t=633s&pp=ygUaanVyZ2VuIGtsb3BwIG9wZW5zIGxldHRlcnM%3D

He was the public face of the organization. Interestingly, his owner is the character who uttered the famous speech in the movie Moneyball about the "first person through the wall": 

• https://www.youtube.com/watch?v=ZZ2sy_H2J54&pp=ygUkbW9uZXliYWxsIGZpcnN0IG9uZSB0aHJvdWdoIHRoZSB3YWxs

 

Maybe the owner knows something about running things.

Why am I sharing this with you?

Who is the public-facing person who represents your company? Thirty years ago it was the CEO writing the "Letter From The CEO" on page four of your catalog. Today, it MUST be somebody, and odds are it should be your most empathetic, kind, dynamic, brilliant, wonderful person ... the best communicator at your company. Odds are that person is a buyer in your merchandising division, or somebody on your creative team, but the person could be in marketing or at your call center or in finance or IT. The person is somewhere. And that person should be EVERYWHERE ... constantly communicating with your community.

And that person should come across like the Former Manager at Liverpool.

Speaking of That Community You've Grown ... Known As Your Email List

I'm analyzing a business, and here's what I see.

• 27% of the sales come from items selling below the historical average price point of the item, for the brand in total.  37% sell below this level within email marketing.
• The average price point of an item sold via email marketing is $6 cheaper than for the rest of the brand.
• Customers who buy less-expensive items are less likely to buy more-expensive items in the future.

In other words, this brand truly built a community ... it's a community of thrifty shoppers, no doubt, but it is a community. And it is a community that won't buy the new items you introduce at a higher price point because your cost of goods increased.

Treat your community like a little egg that you want to hatch at some point.

Contrasting Business Models

If you follow the omnichannel thesis as prescribed by "the experts", you'll end up like Staples. I was there on Saturday ... for an Amazon return. Here's the line waiting to return Amazon items ... I was 8th in line.

As you probably already know, Staples is in business to support their core business model. Here's what the public thought of their core business model.

So you're operating an 18,000ish square foot store, and customers are lined-up using 600 square feet to return something to Amazon, while 17,400 square feet dedicated to your core business model are sitting vacant.

Omnichannel!

Meanwhile, there are individuals who are actually creating the future, in plain sight, for all to see and experience.

I know, you watched Shark Tank and the Sharks would say she's not a brand she just has a product. 

You can align all of your channels in a large bowl of omnichannel soup that benefits Amazon while the pundits tell you that you are doing this to fight against Amazon. Or, you can create something called "MANDO" that eliminates odor in the bodily places that the woman creator in the commercial brazenly outlines.

Here's Ace Hardware ... did they take the fabled omnichannel route of Lowe's or Home Depot? Or, did they chart their own path? Read here and find out. https://www.cnn.com/2024/05/24/business/ace-hardware-staying-power/index.html

Readers, it's time to stop giving these experts your attention. They failed you.

P.S.:  I just read some of the editorial review comments about a new retail book. Enjoy the buzzwords. Time to make a bingo game.

• Revolution, essential, leaders, crossroads, innovation, bold choices, roadmap, remarkable, bold, decisive, transform, critical thinking, disruption, transformation, boldness, aim higher, move fast, turbocharge your business, emergent thinking, improvise, radical, future-proofing, conceptual framework, paradigm shift, seek higher ground.
• I mean, compare those words to the MANDO woman yelling "PITS, PRIVATES ..." into your surround sound system every fifteen minutes. She's really not applying "emergent thinking", is she? Is she seeking higher ground?
• She just wants to get the stink of all those management cliches off of your body.

Summer Schedule / Document Your Progress This Summer, Ok?

Most summers, I cut back on how often I publish. This summer will be no different ... and you may be subjected to a few videos instead of blog posts. All of us need to experiment more often, so when the toll collectors raise the price of their tolls we have options to bypass 'em.

Summer conveniently sub-divides into three events across 14 weeks.

• Memorial Day Weekend.
• July 4th.
• Labor Day Weekend.

We're at the point where we are filled with summer optimism. Let's document our accomplishments over the summer, and fourteen weeks from now let's look back and marvel at the progress we made in such a short, glorious period of time, ok? 

He Performs WHERE?

Here's a guy who does his comedy routine in your home for anywhere between $800 and $1,200 (click here).

Notice I used the YouTube style headline there.

That link is there to show you there are a lot of ways to figure out how to run a business. Commerce does not need to follow a cookie-cutter omnichannel approach that ensures that third parties get paid.

P.S.:  I received a communication from an individual over the weekend. I'll paraphrase:

• "You are talking more lately about communities. I'm here to tell you that none of that stuff will work. It's impossible for it to work."

Assume he is right. Keep doing what you've been doing.

Assume he is wrong. What are you missing?

It's your job to evaluate alternatives, to weigh risks, and to make good decisions. I'm asking you to think.

P.P.S.:  Look at the planning that goes into marketing the Toyota GR86 sports car ... they've created an entire racing series with a multi-year plan. Every time we ask Google for customers, or we ask Facebook for customers, we actively work against a multi-year plan that we could put together ... like Toyota is doing. Here's the article. 

https://www.nbcsports.com/motor-sports/news/toyota-gr-cup-single-make-sports-car-racing-gr86-david-wilson-tyler-gibbs-jack-irving-akio-toyoda

It's Time! Again!

Four months flies by in a matter of seconds, doesn't it?

It's time for the next run of the MineThatData Elite Program. Here are the deets:

• Cost = $1,800 for first-time members, $1,000 for regular participants.
• Five Years of Data Through 5/31/2024.
• Data Delivered to Me by 6/15/2024.
• Payment Must be Received by 6/15/2024.
• Analysis Completed by 6/30/2024.
• If you are a new participant, I'll send you the file layout I require - it's easy to assemble.

You'll get the typical Rolling Twelve Month Analysis, Comp New/Reactivated Customer Analysis, Comp Segment Analysis, Annual Repurchase Analysis, Rolling Rebuy Analysis, and the Demand Forecast for the Next 12 Months. And in this run, if you already provide me with attribution to email orders, I'll perform a very brief analysis of your better-selling items that align with email marketing more than other channels, just to give you the smallest sample of the mini-assortment work I perform. All for virtually no cost.

Send me an email (kevinh@minethatdata.com) and let's get busy, ok?

The Art of Coaching

You can see it periodically on the NFL Network if you still have linear television (here is a clip: https://www.nflfilms.com/work/belichick-saban-the-art-of-coaching).

That clip is about taking time off. How about you do that this Saturday / Sunday / Monday? It's a long weekend and it isn't meant for you to be checking in on the ROAS of PLAs.

In the show, there is a moment where Coach Belichick is talking about the plane ride home from a loss, and how his assistant coaches are buried on their laptops and tablets looking at advanced metrics. He gets visibly upset, and tells Coach Saban that if the players cannot do the simple things and cannot execute properly there is no amount of advanced analytics that can help.

The players are the product ... they are comparable to the merchandise you sell. If your merchandise stinks, there is no amount of "Breakthrough AI Leveraged At The Speed Of Disruption" that can help you. As George Costanza once muttered, "It's just something you say."

Coach Belichick's advice to Coach Saban (and he knew Coach Saban already agreed with this thesis) was for coaches to actually teach and develop players ... to "coach".

I know, somebody in New England is about to snap at me "oh yeah, how did that work out for him the past five years?" Great feedback. Thanks. Helpful.

I repeatedly talk about developing your merchandise. Do you develop the items you sell, as if they were a football player or basketball player?

And while many readers remind me that I harp on this too much, I have very little confidence that what I'm talking about breaks through. I'll subscribe to your email campaigns. I watch to see if you have welcome programs, if you work hard to promote new merchandise on a regular basis at full price, if you try hard to quickly make me happy after a purchase and then facilitate a repeat purchase within two weeks to three months.

Very few of you do this stuff (though I'm watching Lands' End try to reinvent their brand and reduce their dependence on deep discounts and promotions and I'll bet their community of discount-centric email subscribers is in revolt over this ... which in part is why you don't do this stuff).

Which means, in football terms, you aren't developing your players. You are instead looking at your analytics and measuring the ROAS of your campaigns and yee-haw, you keep paying tolls. That's what Facebook/Google wants you to do.

Are your sales down 10% this week? Have you ever tried to scrap your email campaigns and instead do something very different with your absolute best-selling items? When your feature your best-selling items, you should see a corresponding improvement in performance. Clients who do this see 10% to 50% productivity improvements. You're not really doing any extra work, and you get a huge amount of benefit ... by developing your best items to become mega-successful items.

Would you be willing to do me a favor?

For many(most) of you, summer is a time of low sales ... especially July and August. Would you be willing to take one email campaign per week, maybe your Wednesday campaign, and do something fundamentally different? Promote new items, expose customers to the very best-selling items that exist, take one campaign and do zero selling and instead tell a story about how one of your buyers fell in love with a specific product/item? I won't ask you to risk what you feature on your homepage until you demonstrate that you have success via email marketing.

One campaign per week.

Every Wednesday in July/August.

How about it?

If you want me to, I'll interview you and share your successes and failures - we'll just be open and transparent about the whole thing. I'll even interview you if you think I'm crazy about this concept, tell me why and I'll publish a video of our discussion.

P.S.:  I bring up this idea because awhile back I worked with an email service provider that was having a problem reactivating corporate accounts. They took my advice, tried stuff that made no sense whatsoever to reactivation candidates, and immediately saw a 20% increase in reactivations.

The Milkman

In the mockumentary "Unfrosted", Post and Kellog's are in an arms race to create the first unfrosted toaster pastry. Seinfeld's character (a marketer) says goodbye to his wife as he leaves the house, only to see a milk truck on the street. The milkman, played by Christian Slater, informs Bob Cabana (Jerry Seinfeld) that milk is required or bones will snap just like that (as he snaps his finger in Bob's face).

The milkman eventually kidnaps and threatens Bob Cabana in an effort to protect the dairy industry, setting up this enjoyable exchange, as the owner of Friendly Farms addresses Bob.

Bob Cabana:  Are you a milkman?

Harry Friendly:  The name is Harry Friendly. And you might say I am the milkman. Do you know the first taste a human experiences at birth?

Bob:  Applesauce?

Harry:  Milk, Mr. Cabana.

Bob:  Right.

Harry:  And in the milk business, we are not just part of the American Dream, we are the white in red, white and blue. We are the cream that rises, so famously, to the top. And you, Mr. Cabana, have become the annoying white ring that sticks to the bottom. Because despite all of your years in the breakfast game, you seem to have missed something. There is no cereal business without us. So you can see how it really frosts my huevos to see you relieving yourself in our flowing rivers of white gold.

I thought of this clip (my wife saw the movie on my laptop and said "you're really obsessed with the Christian Slater character, aren't you?") when I saw this little ditty from the ACMA late last week.

Can you imagine the paper/printing folks reading that paragraph ... not written by me, an individual they'd dismiss as "not getting it", but from an organization that they would view as a trusted partner ... in the same way they told my clients they were trusted partners (while reducing supply/capacity and increasing costs). They'd be like the Christian Slater character above.

Sometimes you become the dirty white ring at the bottom.

P.S.: I promise you I won't be on this line of reasoning for long. But the disconnect between what is happening and who helped cause "it" is really big, and there just isn't enough accountability from those who helped cause "it". If I saw accountability, there would be empathy from me. Still will be if I see accountability. Otherwise it's trusted partners harming my clients, and I'm here to defend my clients.

P.P.S.:  This is the kind of thing you forwarded me a few years ago when there was no paper and no printing capacity and too few printing employees ... the paper/print folks just hung you out to dry, and you were told to work even more closely with your printer. No. They couldn't even guarantee that they'd print your job, and the paper folks couldn't guarantee that there would be paper for the print job that couldn't be guaranteed. It was time for you to do something different.

P.P.P.S.:  Some of you have grumbled about the decline of co-ops ... lower productivity multiplied by higher prices is a bad formula, right? That link is something that is on my homepage, and I wrote it nine years ago. These aren't new challenges.

P.P.P.P.S.:  Do you think there is any chance that the paper folks have re-configured their empire to make sure they provide Amazon with as many boxes as they need, in perpetuity? Do you think this happened at the very time they were telling you to keep mailing catalogs, saying things like "even if the customer threw them out there was a 100% impression rate because the customer had to look at the catalog to throw it out?"

P.P.P.P.P.S.:  Last point. Back in 2016 I got a call from an Executive at a boutique agency. She told me that her agency was taking over the direct marketing functions for a large account, that she was restoring all the catalogs I'd cut (catalogs that, when A/B tested, cost the brand millions in profit per year, every year), and that it didn't matter that it cost the brand millions, it was the "right thing to do" to put paper in the mail. She then informed me that my services were no longer needed, that I was being relieved of my duties, and she then accused me of harming "the brand" by removing six million brand impressions per year ... before hanging up the phone.

• I bring this up because this is what you are up against. Some of these folks are Christian Slater and the Harry Friendly character in Unfrosted. Some of them aren't. Work with those who aren't, ok? Value that audience. Demand accountability from the rest. It's time.

KimberBell

Here's what I noticed.

On March 11, 2024, we were all sent home for a few months due to COVID. Folks will say the world changed on that day, and they're not wrong.

E-commerce, however, changed that day, and almost nobody will talk about it. Sure, they'll bring up the fact that with higher interest rates you can't get funded by anybody anymore ... and that is right, but is misses what is actually happening. Maybe folks don't talk about you becoming a media company because they can't see it.

E-commerce didn't change for Amazon ... they're not really dealing in e-commerce, they're dealing in world domination. It's different for Amazon. But with tens of thousands of startup-minded folks sitting at home, e-commerce became something different.  It's easy to miss this fact. Once you see it, you cannot unsee it.

Let me describe commerce in my world. On March 11, 2020, I had very few competitors. I could charge $45,000 for a project and nobody would blink an eye. On March 12, 2024, I had 20x as many competitors, and those folks would charge $4,500 for the project I'd charge $45,000 for ... and some of you chose to hire those folks #costsavings. It took YEARS for you to figure out that those folks were charging $4,500 because they knew 10x less than other people knew. So in my world, there were a lot more competitors .... they marketed differently (and they marketed MUCH better than I did), forcing me to change how I do everything I do (have you notice there is a focus on merchandise these days?).

This brings me to KimberBell (click here).

Can I show you one of their email campaigns? I'll show it to you in several steps. Here we go. Click on any of the images to research a bit more, ok?

In the same email communication, they are promoting the following.

• Product = Mini Quilts.
• Inside the Hoop YouTube episode.
• Podcast on Machine Embroidery.
• YouTube Tutorials.
• New Blog Post.
• New Blog Post on 15 Machine Embroidery Projects.
• Sign Up for SMS Text Messages.

Do you promote your YouTube episodes via Email?

Do you promote your Podcast via Email?

Do you promote tutorials via Email?

Do you promote new blog posts via Email?

No?

What do you promote via Email?

I love how the "omnichannel" folks put you on blast mode for not doing what they demand, and yet, they never demand video tutorials, podcasts, blog posts, community etc. They just want you to send information via paper, they want you to keep expensive stores open, and they want you to discount anywhere between 30% and 70%. "Spend Monday with us as we critique Cyber Monday deals!"

They are wrong. I mean, what you see above is a stunning display of "omnichannel" strategy ... honestly, I call this "hustle". KimberBell is hustling.

People started building modern e-commerce businesses on March 12, 2020. They were at home, they were bursting with creativity.

Today, too many of us are so ... far ... behind the curve ... me included! I've failed. I mean, why am I writing this to you? I let people with 30 years less experience charge 1/10th as much for the project work I perform ... and some of you chose them. Ask yourself why?

It's time to get busy. You are a media company ... with the notable difference that you shift monetization from advertising to e-commerce.

Send me your thoughts (kevinh@minethatdata.com). You are not allowed to say "this won't work for us". Do you see yourself as a media company? You are allowed to answer "no".

P.S.:  I've mentioned my headphone obsession many times ... much of it happened because I watched YouTube videos produced by Headphones.com. I've explained through the years that you are a media company, and as such, your responsibilities have changed. Here's an article (free link to the WSJ article click here) that helps you understand what is happening with YouTube (and this is just the app on televisions ... not counting laptop, desktop, or mobile hours spent on YouTube). You are a media company.

P.P.S.:  Speaking of being a media company, here's what I'm watching right now ... these folks are spending 3 hours talking about headphone amps in a live stream watched by 16,000 people out of 120,000 subscribers. I mean, think about those numbers. It's just silly. You are a media company. And yes, I am a NERD. But being a nerd doesn't mean I am wrong.

Mini-Assortment

Well, some of these recent articles (communities) (prohibitive catalog costs) are really resonating with readers, nearly 10,000 views across platforms. It has become very obvious that e-commerce brands are feeling advertising pressure (Facebook, Google), and legacy brands (i.e. those with a catalog heritage) see the end of their craft on the horizon (not because it doesn't work ... because it costs too much) ... heck, even the ACMA removed the word "catalog" from their name.

Be careful listening to the responses of the paper / printing / postage folks, and the boutique agencies they own. The messages I'm seeing from that world are not aligning with your emails to me. You are preparing for the future. They ... and if I were in their shoes I'd be in a tough spot, want to protect their short-term future. As a result, the messaging is fully opposite. I'm not sure I've seen it be more opposite in the 17 years I've run my consultancy.

You are looking to combat ridiculous marketing inflation. You are looking at what you sell. You've figured out you are a merchant, you are not an omnichannel brand doing everything the same way in every channel. You've learned that "channels" will inevitably let you down. The wild ride of the past 4+ years taught you that what you sell is far more important than how you sell it.

You are now realizing that, within each channel, you sell what I call a "mini-assortment" ... yes, you sell everything, but your customers have preferences. Understanding the "mini-assortment" of each channel helps you understand what to feature, what products generate long-term/valuable customers, it helps you understand what your purpose is in a world where third parties charge too much for the channels they promote.

We'll talk more about mini-assortments going forward. They may well be the story of 2024.

You're Already Doing It!

Yesterday I talked about the importance of building a community. There's a line of reasoning that fails the logic test ... here's the reasoning.

• "Communities don't work. Don't you think everybody would be doing what you said if they worked? They reason we pay tolls is because we want to find qualified buyers who want to purchase right now."

Do you see where this line of reasoning fails the logic test?

I'll show you.

Do you execute email marketing campaigns?

Yes?

Do you have an email marketing list?

You do?

Guess what?

You've built a community!

Now, you may have built exactly the wrong type of community ... one that participates because you offer 40% off, 50% off, 60% off, or 70% off. But it's a community, nonetheless.

I have e-commerce clients where 40% of annual net sales come from email marketing. Does that seem like a powerful community?

Catalogers misstate what they generate via email marketing ... via flawed matchbacks they'll take an order generated by the community (the email marketing list) and "attribute" the order back to those who received the catalog. Wrong. We've known it is wrong for 25 years.

But your community cares.

So there, you're already managing a community. Why not take it to the next level?

Ryan Hall (y'all)

Last week parts of the Country experienced three days of exceedingly severe weather (yes, this topic will eventually angle back to you).

If you spent your formative years in the 1980s and you liked weather, you were mesmerized by the concept of somebody broadcasting weather on cable television ... all day ... every day.

And eventually coverage evolved so that Jim Cantore could be filmed standing outside a hotel while a hurricane hit. Times change.

Several years ago Fox began broadcasting their own weather network. Viewers on other systems could watch the Weather Network ... so there's competition, sure.

And then, hiding in plain sight on YouTube, you have Ryan Hall. When there is a severe weather outbreak, more than a hundred thousand viewers will watch his twelve-hour live streams, paired with four or five or six storm chasers and actual meteorologists describing the physics of storms. It's a stimulating broadcast.

While this is happening, his viewers raise money for storm victims ... last week it was around a hundred thousand dollars a night ... certainly not enough to rebuild towns leveled by tornados but it is more than $0. He has a community, and the community rallies around bad situations.

As you watch on YouTube, you can comment on the broadcast, and if your comments are reasonable, your comments will be mentioned on-air.

As of a few years ago, The Weather Channel might average 140,000 viewers, +/- ... undoubtedly that number goes up doing storms. So the fact that this guy had more than 100,000 viewers each night last week is saying something. Undoubtedly ... the demographic is very different as well.

Oh, he's got critics (click here). He's not a meteorologist, so the online folks with weather training tend to view his efforts negatively. Every one of us has experienced this form of criticism ... "You don't have a Masters Degree in Statistics ... you are not an Omnichannel Marketing expert ... you are not a good enough pickleball player to help others ... you don't have fashion merchandise training ... you are not a digital marketer so you don't know anything, you're old-fashioned".

Welcome to the modern world.

It's been estimated that Ryan Hall makes +/- $250,000 per year via his community ... YouTube puts ads in his programming and gives him a cut. I have no idea if the $250,000 per year figure is true or not, but he's got nearly 2,000,000 followers now so if that figure is remotely close to true he's earning maybe $0.12 per community member per year ... again, those are wild guesses designed to make you think.

Back to you and your business.

E-commerce evolved, and as I said eight years ago, e-commerce brands were going to become media brands. The e-commerce brand monetizes the world differently from media brands.

• Media Brands create content, content attracts viewers, viewers attract advertisers, advertisers pay Media Brands a toll for access to viewers. Media Brands ultimately depend on Advertisers, but without a community (viewers) there are no Advertisers.
• E-commerce Brands sell products, products attract a community, the community pays the E-commerce Brand by purchasing products. E-commerce Brands depend on Customers, and Customers are part of a Community.

Based on some of the work I've done this year, you need +/- 30 members of a well-developed community to generate one annual customer. Yes, this research is going to constantly change. So think about it this way ... if you created a community and had 100,000 registered users who actually cared about your community, you could theoretically generate 100,000/30 = 3,333 customers each year ... if a customer spent $200.00 a year, you'd have $666,600 in net sales.  That would be $6.67 per community member.

If you do a great job, you might get 1 customer per 10 community members, maybe 1 customer per 7 community members. Heck, I have a community of over 10,000 followers between Blog/LinkedIn/Twitter, and anywhere between 15-40 clients per year. That's 1 customer per maybe 363 community members ... but my AOV is huge, so I can get away with a "low level of engagement". 

I was never a big "community" marketing advocate ... I spoke at a conference more than a decade ago, and it was my job to poke holes in the community marketing model. That was 2011ish. By 2016, I could see the light. In 2024, you kind of have no choice. Worse, if you don't build out your own community, your customers will do it for you off-platform ... they'll talk about you on the socials, out of your control.

When I think about traditional catalog brands, I realize the catalog industry didn't focus on building communities. The "community" by default became the shared pool of 65+ year old customers who liked buying via catalogs, and a small number of data-centric brands collected the data from catalogers (who sent their own customer data to these brands at no cost - imagine the insanity of that sentence), mixed it up and re-sold it back to catalogers, which meant catalogers were constantly paying the data industry a toll for access to their own community. That's a bad business model for catalogers. That's a great business model for data brands.

One you have this realization (that traditional catalog brands were paying a toll to third parties for access to the community they built), you cannot unsee the unfairness of the situation. Yes, there were catalog executives who made horrible decisions in the 2000-2005 timeframe that led to the community being a toll-based community, but it doesn't have to stay that way. The future is yet to be written.

Now that you see it this way, you see that all of catalog marketing is a ridiculous toll-collecting process ... it's the opposite of community building.

• Pay a toll to co-ops.
• Pay a toll to your paper brand.
• Pay a toll to your printer.
• Pay a toll to the USPS.
• Pay a toll to your favorite consultancy who is now owned by your favorite paper brand.

And if you want to be viewed as a digital marketer to complement your old-school efforts, it's just as bad.

• Pay a toll to Shopify.
• Pay a toll to your Search Vendor.
• Pay a toll to your Email Vendor.
• Pay a toll to your Retargeting Vendor.
• Pay a toll to Google.
• Pay a toll to Facebook.
• Pay a toll to an Influencer.

Do you see it?

You can't unsee it once you see it.

Google/Facebook are simply "communities at scale", and all of us are paying them tolls for access to our own customers ... customers that we lazily didn't adhere to our brands because our community building efforts failed miserably (or were never initiated in the first place).

You're going to have to build out your own community, going forward. Why are we constantly paying tolls?

The toll collectors will be angry. They'll tell you that you are stupid (how can you avoid Facebook, all of your customers are there?).

Part of becoming a Media Brand is crafting a community that others pay you for access to. For e-commerce, you don't need to give anybody access to your community ... the community will pay you for access to what you sell.

Every week, somebody contacts me asking to pay me for access to you. You are my community, and they don't want to do the hard work of building their own community ... they want to pay me a toll instead. Lazy marketers, every one of them.

You're going to have to do the hard work of building your own community. That way, when the toll collectors charge you 15% more for the same access next year, you can ignore them.

You are a media brand. How well-developed is your community?

Send me an email (kevinh@minethatdata.com) with your thoughts.

Doing The Opposite

A while back, I was on a call with an Executive who wanted to keep all sales data private ... including when items were sold out. "Nobody needs to know that".

Here's an opposite approach ... showing the customer what the best-selling items are, proudly displaying that items are sold out (creating FOMO).

If you are stuck in a circumstance where you have to pay third parties tolls to draw customers to your website, consider doing the opposite. Here, we see the best sellers (now you know what everybody else is buying), and they're demanding that you act right now or one of the best sellers will be sold out and you won't get it.

Marketing has been going through a quiet revolution since 2014. Behind the scenes, business leaders are quietly doing the opposite of what you're told to do. When I probe my e-commerce clients who are successful about their tactics, I'm here to tell you, they're doing things differently ... in some cases, they're doing the opposite.

A Presentation For You

I'll likely annotate this presentation as a video at some point, but for now I wanted to get the slides in your hands.

I get a lot of feedback from readers asking for examples of brands that are "doing something different". Now, when I share the information I've research and answer the question, the most common response I get is "that won't work for us, we're unique, and we're special".

Well, if you are so darn unique and special then you shouldn't need to pay tolls to Google, to Facebook, or if you are a legacy catalog brand you shouldn't have to pay tolls to paper / printing / postage folks. Right? I mean, you are unique and special. Customers should just find you because you are unique and special. Right?

If you want to see an example of how a brand does something different, then click here for this presentation about headphones.com ... an eight year old brand that is up to $20,000,000 to $50,000,000 (ish) in annual sales competing against Amazon who sells the same products at the same prices with the same warranty and has faster delivery. How do they compete? Read the presentation.

And when you need somebody to analyze the intersection of your products and customer behavior, contact me (click here) and we'll get busy, ok?

It's A Rule For A Reason

When my CEO required I attend Dale Carnegie sales training classes in 1993, I learned quickly that you should ask questions that the audience will respond to with an important word ... "yes". He encouraged getting the "other side" to start saying "yes" immediately.

Which brings me to this subject line from Best Buy.

I'm not sure I've told you the Dale Carnegie story. I think I have. It was 1993, I've been an analyst for three years at Lands' End, and my salary is stagnant. I'm walking down the hall and I hear a conversation between my boss and the CEO. Like a good gossiper, I stop walking and listen. I hear the CEO say, and I'm paraphrasing here, "Kevin will never be a Manager, he doesn't have a Master's Degree and he's not a good communicator and he doesn't sell his message well."

Yeah, that comment corked me off!

The CEO recommended I take Dale Carnegie sales training ... it's a lot cheaper than trying to earn a Master's Degree at night. He'd pay for it. Sounds good.

There were three things that really stood out in the class.

1. Always smile.
2. Always ask people about themselves.
3. Ask questions or frame comments that cause somebody to say "yes".

It probably took me 20 years to figure out how to smile regularly.

The last point was really important. On the surface it sounds like a simple concept. In practice, it requires a very different style of communication. It requires the presenter to build a story, starting simply and then leading to a conclusion. If you start simple, and earn a "yes", then lead to a more complicated concept and earn a "yes", it's easier to earn a final "yes" when you get to the key point you want to make.

In five years without this information, my salary and bonus increased by about 45% ... not bad.

In the seven years after knowing this formula, my salary and bonus increased by a factor of 8 ... yeah, eight ... and I went from Analyst to Manager to Director to Vice President ... one significant promotion approximately every-other-year.

Turns out I didn't need a Master's Degree.

I just needed to figure out how to frame issues in a way where the audience would say "yes" if I asked the audience if the audience agreed with me.

So, when I see your email subject lines and how awful they position issues, I can't help but wonder why so many of you tell me that email is an old-school technique that doesn't work. If you're asking me if I've been looking for a freezer, you're going to get a NO as a response. Correct, the discipline doesn't work ... as currently being executed.

How Discounts Are Administered/Analyzed Matters

Yeah, typical feedback after my post yesterday (click here).

• "Kevin, you bought those items because HeadAmp offered you discounts and promotions. Discounts and promotions work"

Discounts and promotions can work, yes, absolutely.

The secret for a discount/promotion to work is incrementality ... did the action cause something to happen that wouldn't have happened otherwise? It's hard to measure this stuff ... you kind of need A/B tests to know for sure, but it can be inferred in many instances. Sadly, most discounts/promotions do not add enough incrementality to create a profitable outcome.

If you analyze the discount from an incremental standpoint, you get a different result. Here's an example where the promotion was 40% incremental instead of the 100% incremental that almost every marketer assumes in their analytical work.

Most of us would evaluate the promotion and say "it worked". On an incremental basis, only 40% of what we think happened was caused by the promotion ... that 40% was not profitable.

We have to offer discounts/promotions that actually cause a customer to do something the customer wouldn't otherwise do. If you can prove you're doing that on an incremental basis, by all means, have fun!

This Happens in Your Business, Too

A month ago I started a relationship with HeadAmp. I was looking to purchase the Meze 109 Pro headphones, but I didn't want to pay $799. Fortunately, HeadAmp had an open box unit for $649, and a first-time buyer incentive for $20, so I paid $629.

From a Merchandise Dynamics standpoint, there are several things we want to record here.

• Kevin purchased via a discount ($20).
• Kevin didn't pay $799 for the item, bought an open-box version cheaper than the average historical price point for this item.
• Kevin bought one (1) item, not a multi-line order, not a multi-category order.
• Even at $629, this is a high-price-point headphone. I will behave differently than a person purchasing a $49 in-ear monitor.
• Kevin is a new customer ... need to convert Kevin quickly to a second purchase.

Next, HeadAmp promises me $50 if I write a review of the item. Ok. I already planned to purchase an dac/amp. Done. I write the review. The promo is sent to me via email.

Ok, the dac/amp. It's normally $89, but they have an open-box version for $84, and I have $50 off, so I'm paying $34 for an $89 item. 

• Kevin purchased via a discount ($50).
• Kevin didn't pay $89 for the item, instead buying an open-box version cheaper than the average historical price point for the item.
• Kevin bought one (1) item, not a multi-line order, not a multi-category order.
• Kevin has now purchased from a low-middle price point band and a high price point band.
• Kevin is an existing customer.

We already know a lot about Kevin. He doesn't pay full price, he only purchases when something is discounted, he only buys one item, he buys from multiple categories but not in the same order, he purchases high-price-point items and medium-price-point items, he purchased items about 30 days apart (i.e. high velocity ... you measure purchase velocity, right?).

These are the attributes I look at when measuring future value for somebody like Kevin.

I also apply these attributes to each item, and measure "who" buys the item and I measure something called "Merchandise Residual Value". You've heard me talk about it previously, haven't you? The concept here is simple ... if a customer buys an item that causes the customer to buy more merchandise in the future, then the item has positive MRV. If the customer buys an item that causes the customer to stop spending in the future, then the item has negative MRV.

Every one of us manages a business that sells items that have negative MRV. My business operates this way. Clients who craft ad-hoc projects outside of my product offering tend to not come back very often ... the ad-hoc project has negative MRV ... my Elite Program projects have high positive MRV because they bring in brands who then upgrade to more expensive projects. Maybe you are a gift brand ... you sell a gift to a customer in the 2nd week of December at 40% off and free express shipping and the customer never comes back ... that gift has negative MRV.

In my example above, two things happen.

• The Headphones have positive MRV - I purchased an amp a few weeks later.
• The Amp has negative MRV - I'm done buying from HeadAmp for the forseable future.

An item with negative MRV is an acceptable item. But it is important to understand the role that item plays in your assortment. In the case of HeadAmp, they're more than familiar with the Headphone/Amp/Dormant cycle.

Next step for HeadAmp? Since (if they perform Merchandise Dynamics analysis) they know that I'm headed for a dormant period, it's important to not spend valuable marketing dollars on me, but instead use free channels like email and videos to encourage me to do one of three things.

1. Upgrade to more expensive headphones (which people do all the time).
2. Cross-Shop into a different branded headphone with a different sound signature. This is where marketing matters ... it takes marketing chops to convince me to buy something I don't need. Marketing isn't setting up a retargeting program, marketing is convincing me to do something I don't need to do.
3. Migrate me into iems (in-ear monitors), which are a different category and are considerably cheaper, a category where I could easily purchase six or seven iems that cost the same (in total) as my $629 headphone.

Please tell me you think this way with your products/merchandise.

That's how you use Merchandise Dynamics findings and Merchandise Residual Value at your brand. You have countless examples of items with positive and negative MRV. How often are you using MRV to make better marketing decisions?

If the answer is "we're not using it", contact me right now and we'll get busy (kevinh@minethatdata.com).

P.S.:  If you are a traditional catalog brand reading this stuff, this is your future. As your catalog discipline becomes too expensive to execute, you'll have to apply these concepts in a digital realm to maintain relationships with customers.

Special Offer For Readers: An Amazon / PLA / Search / Paid Social Customer/Product Evaluation

Yesterday's posting about where the catalog industry has been and where it's likely to head was about as popular as anything I've written in the past three years (click here). Yes, a little LinkedIn promotion didn't hurt.

Non-vendors have a very different set of questions/comments from what the service provider community has to say. Non-vendors want to know about the customers who buy from digital channels and the products purchased from digital channels ... specifically, "are the products purchased in, say, paid social, different than the projects purchased through print"? Yeah, that's a good question, because it speaks to how a brand might merchandise a "future world". Good question, smart readers!

Let's do something, given what is happening to so many of you right now, and what so many of you are asking about.

I'll create a new product just for my readers (that's you), people who have been loyal for as long as nearly twenty years now ... and offer it at a highly significant discount for a short period of time to help you out. I won't publish it on my pricing page, it's something just for you.

I will produce a special analysis of customers who shop what I'll call "alternate channels" ... channels that are not really within your control or who buy from email marketing.

• Amazon.
• Other Marketplaces.
• PLA Customers.
• Search Customers.
• Paid Social Customers.
• Email Marketing Buyers.

I will measure how much "less loyal" these customers are, moving forward.

More importantly, I will evaluate the products these customers purchase, comparing them to your core e-commerce shopper or email buyer. In most of my projects, these customers buy "something different" and it impacts how these customers behave in the future when you present them with your full assortment. This will include a portion of my Merchandise Dynamics work ($15,000).

Finally, I will take a modest slice of my Marketing Budget Experiments work ($20,000) to see how these customers evolve and change over time compared to your core buyer.

As long as you respond by May 24, I will only charge you $9,900 for this analysis. If we have demand, I will build this into a full-fledged project, potentially including a new booklet to pair with the project. And yes, if it becomes a full-fledged project, it's going to cost close to double what I'm offering here. 

So act, now.

You have until May 24 to take me up on this $9,900 offer. Click here for other projects and file layouts. Contact me immediately (kevinh@minethatdata.com / 206-853-8278) and secure your spot before my bandwidth is consumed, because I expect this offer to be VERY POPULAR given what you're all telling me right now. My legacy clients simply cannot sustain the paper / printing / postage inflation they've experienced in recent years, going forward.

The Catalog Industry: A Thirty Year View And Then Looking Forward

This article was forwarded to me this weekend by one of our intrepid and now retired advocates (click here).

Plow & Hearth going away (old news) should cause catalog professionals to go ... hmmm?

Let's step back for a moment. Here's what an awful lot of you in the catalog world are experiencing. This is what net sales look like over time.

Click on the image for a bit more resolution. Notice the COVID bump in 2020, and the dramatic deflation of the COVID bump in 2021-2022. On October 29, 2020, I told you to SELL (click here), to take full advantage of that gigantic peak in the image. Remember that?

Did you listen?

On August 2, 2021, I told you about the evaporation of your COVID bump via my forecasting methodology (click here). I told you what was coming ... and did so repeatedly since. 

Did you listen?

Look at the image above ... notice that sales generally stalled after 2014, and if you remove the COVID bump from the image you see a general trend happening ... and it isn't positive.

Now let's adjust the image above for inflation. Tell me what you observe.

You see constant decline from 2006 forward. Remember 2006? 2006-2007 was when the list industry consolidated. The trend, after factoring inflation into the mix, is a consistent downturn ... from 2006 forward. A mature industry hit "retirement age" in 2006, and has been contracting ever since.

Since then, you handed the keys over to the co-ops, who squeezed your data for every penny they could and optimized their algorithm to the point where the algorithm shoveled every 70 year old name they could at you at the very time when you needed 35 year old customers. This further accelerated the inflation-adjusted demise.

Behind the scenes, your trusted partners ... paper folks and printers ... they were contracting in response to declining demand for their products. Sure, publicly, they told you all was well. They demanded you continue to put paper in the mail as part of a vibrant "omnichannel" strategy. They had to tell you this. They had to stay in business. As a paper rep told me in 2019 ... "I'm not going to let you take food off of my table, even if you are right."

The contraction of the paper/printing world was revealed in late 2020 and 2021 when catalogers suddenly had twelve-month buyer files that were anywhere between 20% and 100% bigger than they were a year prior. Catalogers needed paper. Paper didn't exist. Printers couldn't handle the increase in workload even if paper did exist. From a customer standpoint, being locked in your home for two months will fundamentally disrupt an industry. Supply exceeded Demand. 

Paper/Printing costs increased, paper availability decreased. Tack the USPS increase on top of that, and yeah, there's trouble brewing.

Subsequent inflation and industry dynamics yield a world where paper/printing/postage costs are +15% per year, every year, for several years. This doesn't work in a contracting industry with old (70 year old) customers.

It doesn't take a rocket scientist to correlate contracting businesses with increasing costs and a very old customer base ... you correlate it and you get Plow & Hearth. They said it to you, using actual words, in the link above. Read it.

Unless you are a strong digital marketer catering to a 35 - 55 year old customer (which many of you are, fortunately), your future may well include an exit strategy or becoming a third-party seller on various marketplaces. It's survival, yes, but it is a lot less work than figuring out how to get a Google customer to click through a PLA and trust your website via multiple visits to finally purchase and then send catalogs or emails or SMS messages to beg the customer to come back and buy again before finally paying Google/Facebook another set of tolls so you can get another customer.

Think carefully, folks. This is a major inflection point in the trajectory of your brand. I advised you for (literally) decades at no cost. I wouldn't say what I'm saying if this weren't a major inflection point. And I wouldn't lead you astray.

There's nothing wrong with adapting, changing, and moving forward. Get busy moving forward. I have faith in you to move your brand forward. Let's go!