Returns

You're probably already doing this, but you evaluate the future value of customers who return merchandise, correct?

Thirty-one years ago I built a model that evaluated future return rates for customers. This was about three years before e-commerce began playing a role in B2C brands, which meant that the way a customer bought something was to receive a catalog. My model showed that if a customer bought three times and returned 60% of what the customer purchased, the customer would be unprofitable moving forward.

Guess what? We stopped mailing "some" catalogs to high-value but high-returns customers.

Let's just say that customers HATED me for doing this! We eventually had to override my model for a handful of customers who berated our call center employees.

In modern B2C marketing, you are under no obligation to spend ANY marketing dollars on a high returns customer. Don't do it. Your website is open for business 24/7/365.

So stop it. Stop spending controllable marketing dollars on customers who harm your profit and loss statement.

Now, for some fun ... here is Tico, and he's a really good singer (click here) ... 475,000 subscribers good.

Epic Gardening

When I do this, I get crabby executives at traditional print-centric brands telling me why this won't work. If I didn't get crabby feedback, I would be doing something wrong.

If you are in the gardening world, you probably know about Epic Gardening (click here). In particular:

• 3.01 million YouTube subscribers.
• 1.49 million Instagram followers.
• 3.00 million TikTok followers.

There's a continuum ... on the far left you have print and lists ... center-left is class digital marketing and search ... center-right is video and social ... far right are communities. It can be daunting to migrate from Print/Lists to Social/Video and then to Communities ... they're on opposite ends of the marketing spectrum.

And if your customer is 65-79 years old, the customer does not want to move to the right.

Conversely, if you are targeting a 25-49 year old customer, the customer does not want to move all the way to the left.

It's a fun time to be an operator ... there are many ways to approach success.

P.S.:  Here's a message I recently received ... "We only had 443 people watch our video. Video doesn't work."  To the 443 people who watched it, it worked. Come back to me after you've done 600 videos and let's see if 443 people are watching or if it is 44,300 people. You're running a marathon and then quitting after running a quarter mile. Don't do that. You're not a quitter! You know how many people read my very first blog post? About 10. Here I am 18 years later, and if I do a good job between the blog, emails of the blog, Twitter, and LinkedIn I'll get about 2,000 views. But it started with 10, and stayed there for months.

P.P.S.:  Just put the bears at Katmai National Park on your big screen for an afternoon while you are working from home (click here). Fabulous salmon-eating nature happening there.

The Best Item You Can Sell Is One That Isn't Attributed To A Marketing Channel

Spicy take forthcoming.

I once had a discussion with a Professional who told me his goal was to 100% attribute every single order to a marketing channel.

I couldn't possibly disagree more with anything in marketing/analytics than that take.

The percentage of orders you attribute to marketing is inversely proportional to the popularity of what you sell.

Now, some of you in the studio audience are going to say, "Hey, Meatball, word of mouth is a marketing channel and if you could properly attribute orders to word of mouth you'd realize word of mouth was the most powerful marketing channel and you'd want to give word of mouth credit for orders." You might be right. But we don't live in the world you created for me.

When I run a Marketing Budget Experiments project, it's always sad to see 90% of new customers attributed to paid search / PLAs / paid social etc. It suggests that the brand has so little to talk about (from a customer standpoint) that the brand must spend money to generate conversations that result in sales. It might be a VERY profitable approach to running a business, but it is not reflective of the brand selling anything compelling that a customer truly cares about.

When I analyze product preference, it's always fun to look at the items that sell by marketing channel, and where possible, to look at items that sell without attribution. Every single one of you should have a report at your disposal that rank-orders item sales by attributed / unattributed status.

If you possess that report, look at items that you deem to be "winners" and are sold at high levels without marketing attribution. Those are the items that people talk about. Those are the items that matter. That's the best item you can sell - you don't give up gross margin dollars via marketing efforts to generate a sale.

Your Customers See You In A Way You Didn't Intend For Them To See You

About a decade ago our small town (2,700 people) held an event where 8-10 year olds could come sit on a tractor or a grader or fire truck. When my wife volunteered to bring our Winnebago ERA to the event, we thought it might be a fun way for us to spend a few hours.

What's the worst thing that could happen when a handful of nine year olds are crammed into eighty square feet inside an RV?

You'd think the kids would line up to enjoy a fire truck.

You'd be wrong.

The first sign of trouble happened when one of the intrepid youngsters asked me to turn on HOT 104, because, as the young man said, "They're number one for all of the hits." For some reason the kids didn't feel the vibes of the soft favorites I chose to play.

I turned HOT 104 on the radio.

Ninety seconds later the decibel level of HOT 104 went from 50db to 90db.

It's amazing how 90db of "Worth It" by Fifth Harmony attracts the youngsters.

I noticed that all of the shades had been pulled down. I hopped in the RV, asked everybody to leave the shades open, opened them all, then fought through eight more kids entering the vehicle as I tried to get out. In the driver's seat sat a kid who had to be smaller than the steering wheel. He told me that he was going to "Hijack this thing to Mexico".

As I exited the vehicle, about ten parents had lined up to watch the festivities. "It's so nice of you to do this!" Days earlier I thought the same thing. While speaking with the parents, I noticed another five or six kids enter the rig, and as Maroon 5's mega hit "Sugar" blasted out the speakers I saw the shades get pulled down again. Seconds later, my RV was rocking side-to-side, with kids singing lyrics that, quite honestly, they shouldn't be singing. The parents didn't seem to mind ... "if the house is a rockin' don't bother knockin'".

Well, the house that was rockin' was MY house!

I entered the vehicle to see fifteen or twenty kids singing loudly. One of the little boys winked at me during the chorus like he was in a music video. These kids were, as Arianna Grande would say, "vibing".

The kids also vibed a melted chocolate bar all over the floor of the RV. I mean, what an unholy mess that created.

That wouldn't be the only unholy mess they created.

Ten minutes later twelve kids ran out of the vehicle at the same time, some gagging. "Hailee just made a mess in the bathroom!" She made a mess all right. I didn't turn on the water pump because, I mean, why would I need to? So when Hailee made a mess in the bathroom, there wasn't any water for Hailee or anybody else to resolve the mess created minutes earlier.

These kids were my customers. In no possible way did they view my "product" the same way I viewed it. Nor did their parents.

It's common to do these Zooms and hear comments from folks about their business. One Executive described his business to me as being "modern". He had a 1-800 number prominently featured all over his home page. His business may be modern, his customers are not, they're 65-79 years old. He views his customers differently than his customers view his brand.

I worked with one company who learned via testing that the models used to feature merchandise had to be 15-20 years younger than the core customer. They didn't assume they knew the customer ... they let the customer tell them how the customer viewed herself.

It's awfully hard to view your business the same way your customers view it. Had I viewed 40 kids destroying my RV ahead of time, I wouldn't have brought my RV to the event.

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.