Accountability

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

This can happen in many different ways.

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

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

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

Those were spirited meetings.

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

As mentioned previously:

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

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

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

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

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

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

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

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

Does that make sense to you?