Cutting The Marketing Budget

In my pricing / forecasting projects ($4,900 ... kevinh@minethatdata.com) I'm typically asked a common question.

• When we're facing tariffs or economic headwinds, it makes good sense to conserve money and not spend as much money on marketing activities, correct?

Well, this is the kind of question that made sense back in 1995, when we didn't have good tools to make decisions. In 2025, we have tools. The answer is "maybe". Your customer base and your p&l will decide the answer for you.

Let's say we simply pass the increase in cost of goods along to the customer. That scenario didn't look spectacular.

Demand/Sales don't look bad, but profit looks bad and the customer file contracts by about 2%. If your CFO is smart, she'll have you evaluate every marketing dollar to identify waste. If your CFO is not smart, he'll tell you to cut the digital budget by 30% ... just some dumb arbitrary number.

Well, we can simulate the 30% drop in the digital marketing budget. What happens?

All sorts of moving parts here.

• You spend $1.5 million less on digital marketing.
• You generate $1.7 less in demand/sales.
• Profit improves, and is now just 10% less than the year prior.

You likely noticed the problem, right?

• All of your good customer segments contract by about 4%.
• New buyers contract by 6% ... those digital dollars align with new customers, don't they?

Remember, these are simulated/modeled results ... we don't know that this is what will happen. We do have prior results that the simulation is rooted in. This is a better prediction than any guess anybody else is likely to come up with ... it's based on your actual customers and their behavior.

What is the right answer?

There is no right answer. There are hundreds of possibilities, all of them are bad, the more you eat the cost of goods impact the worse profit looks ... the more you try to mitigate short term profit pain you pay for it in the long-term.

But at least you have choices, right? That's what the pricing / forecasting simulation does for you. And I only charge $4,900 for it. Seems like a reasonable investment if you are going to be put in a spot where you are forced to pass along cost of goods increases to the customer.

P.S.: Next week we'll talk a bit about what happens to demand when you cannot physically sell products you planned to sell.

Prices Go Up, Problems Start Appearing

In my pricing / forecasting projects ($4,900 ... kevinh@minethatdata.com), I establish a base case. From there, the goal is to see what happens to the business as prices increase. Yesterday we observed that profit is harmed when cost of goods increase.

Let's say we pass the cost along to the customer ... a 15% cost of goods in this example is $2.97, we simply pass $2.97 along to the customer. What happens?

Ok, the simulator shows us that ...

• Rebuy rates decrease by 3%.
• New buyers decrease by 2%.
• Spend per buyer increases by 2%.

In other words, we're going to keep demand/sales at a reasonable level ... on the right side of the image demand/sales decrease by just 0.3%. However, you work your way through the p&l and you see we're still down $2.5 million in profit. Not down $4.0 million, but still down.

Your CFO probably doesn't like that outcome, right?

Your CFO asks you to run a scenario where prices increase by 15%, matching the cost of goods increase of 15%. Ready?

Things are getting interesting.

• Rebuy rates will decrease by 8%.
• New buyers are forecast to decrease by 5%.
• Spend per buyer should increase by 5%.
• Annual Demand/Sales decrease by $1.1 million.
• Annual Contribution/Profit decreases by just $530,000.

This might be an answer your CFO is comfortable with.

It might not be a solution the Analytics guru is comfortable with. Why?

• The twelve-month buyer file decreases by 5.5%.
• This means that the demand/sales stabilization observed this year will be erased next year. Next year, without enough file power, sales are doing to decrease, costing you top-line volume and profit.

That's why you run simulations ... you need to know what happens in the future, and you need to know that you're always going to pay a price, in one way or another.

Tomorrow we'll talk about reducing the marketing budget (hint - not a great idea).

We Start By Initializing The "Base Case"

In my Pricing / Forecasting projects ($4,900 ... kevinh@minethatdata.com), I start by initializing a "base case" ... what would happen under normal conditions, same prices?

This business is at equilibrium .... the customer file is at a comparable size year-over-year, which means sales/profit are comparably year-over-year. We now have our "base case".

Let's say your cost of goods increase by 15% this year. Let's say you keep prices the same, you eat the profit instead of the customer. Does the cost of goods increase eat up profit?

Look at that ... you eat $4,000,000 in profit.

You're not going to eat $4,000,000 in profit, are you? You'll pass the cost along to the customer. Tomorrow, we'll see if the customer is willing to eat up discretionary spend as a consequence.

As Prices Increase, Rebuy Rates Typically Decrease

When you hire me for a Price Impact / Annual Forecast project ($4,900), we evaluate the impact of pricing changes on categories over a three-year period of time. The data is noisy, understandably so, but leads us in a direction where we can measure the impact of prices on rebuy rates.

Here's an example for a company with seventeen categories across three years. I removed outliers, the relationship is not great but there is something here.

As prices increase, rebuy rates decrease ... as expected. In this case, if prices increase by about 20%, rebuy rates decrease by about 11%.

This is where things get interesting. If you lower the rebuy rate but you increase prices, you "can" make up the lost volume ... you can't make up the lost customers.

I model the impact on customer spend as well. Predictably, if prices increase, customers who do purchase spend more money.

We now have the pieces necessary to simulate what might happen in the next year if you are forced to increase prices. More on that topic tomorrow.

Email Click-Throughs

In a world where your business is being harmed on purpose (or not ... apparently tariffs may not apply to some iphones, for example ... hmmm, interesting ... wonder how that happens), you want the ability to not have to spend marketing dollars on your own customers while maintaining high levels of sales.

Email marketing gives you this blessing ... if you are a traditional catalog brand and you want to save money, segment your email subscribers as follows.

• Segment 1 = 2+ Purchases Via Email Marketing, Past Year.
• Segment 2 = 1 Purchase Via Email Marketing, Past Year.
• Segment 3 = 0 Purchases Via Email Marketing, 2+ Email Click-Throughs Past Year.
• Segment 4 = 0 Purchases Via Email Marketing, 1 Email Click-Through in the Past Year.

Any customer who fits into segments 1/2/3 does not need many(any) catalogs. Any customer who fits into segment 4 may or may not need 'em.

And while you are at it, when a customer clicks through one of your email marketing campaigns, it's time to kick off an Action Stream for that customer, correct?

It is time to fight back. You deserve so much better. Start doing smart things with your marketing budget!

Spilling Over

In my hobby (headphones), trouble caused in one area spills over into another area.

In other words, if you were looking for the very popular Fiio FT1 (which had already increased in price from $149 to $159), you better act now.

Also, since you are likely running a business, show your customers you are on their side. Headphones.com sent a text two days ago telling me that they were taking 20% off of expensive headphones (yesterday it was a rare flash sale) ... they shift the narrative in your favor. How you communicate over the next year goes a long way toward stopping the slop from spilling over into your business/customer relationship.

Finally - my goodness, how do you plan your business? You have no idea what your cost of goods will be. Unnecessary and capricious. Regardless, you have to plan your business, and some of you are going to do amazing work in upcoming months. You did it during COVID, you'll do it now. It's your turn to be a Leader, and we don't have enough Leaders right now. I'm going to be so proud of you!

Since You're Hunkering Down ...

Let's revisit something from three weeks ago.

Those of you who are cutting back on marketing spend will see a demand/sales shortfall, in all likelihood. Have you forecast what the shortfall will be? Do you have an idea how much "additional shortfall" could happen if prices increase?

Opportunity #1:  $4,990 for a high-level pricing impact study plus a five-year forecast of what happens if you cut back on marketing spend for the rest of the year. You'll see the short-term and long-term impact of your decisions, plus you'll get a clear idea of the impact of price increases on your brand.

Opportunity #2:  For my catalog audience, you're going to cut circulation by 30% and you'll likely not understand "what" impact that will have in the short/long term ... and worse, you may well choose to cut the "wrong" circulation. My typical catalog marketing project costs $30,000, where you get equations that tell you exactly how many times to mail customers on an annual basis.

• For $15,000, you get everything that happens in the $30,000 project except for the scoring equations. In this case, however, I'll send you a list of the customers you should cut back on, and in that list you'll see the customers you should never cut back on, so you can take action for the remainder of 2025. You'll make a ton of profit for just $15,000.

Let me know which opportunity you wish to pursue ... let's see if there are ways to mitigate the impact of the changes being thrust upon you. Contact me now (kevinh@minethatdata.com).

P.S.:  I don't know if you are fan of golf or not, but if you are, this song should soothe your soul during times of self-inflicted harm. It's a tradition unlike any other. Also - that song is written and recorded by Dave Loggins, brother of Kenny Loggins. It's smooth, smoother than Footloose or Danger Zone.

You Are A Media Brand

If you like weather, you know all about Ryan Hall Y'All. His team covers severe weather like nobody else. That's an angry tornado there, folks.

At the peak of his coverage last week, he had around 300,000 people watching weather on YouTube ... if you assume bots and some people outside the country, it meant that 1 out of every 1,500 people in the United States were watching ... him.

With the money generated from his broadcasts, his team created the Y'All Bot ... enabling 24/7 live presentation of weather, narrated by a bot.

Users donated money to the effort on the right side of the image ... the bot announces/recognizes each contributor.

That's a weather enthusiast becoming a media brand right in front of our eyes.

I frequently reference Headphones.com ... leveraging a fusion of media, community, and commerce. I doubt you have the patience to watch three hours of programming about headphone theory, but each Saturday they give you the opportunity to test your patience.

You can nerd out on frequency response graphs during a review of a new in-ear monitor (iem).

COVID accelerated the fact that you are a media brand. I gave talks about this concept a decade ago, but we needed technology to evolve a bit, and we needed an event that changed how people created content (i.e. being at home in 2020).

Old-school catalog brands have always been media brands. It's been baffling to me that these companies willingly chose to not advance their media chops.

Look at Patagonia (click here). This is a media brand.

I know, you'll tell me that you aren't Patagonia. True. But you are certainly like Headphones.com or Griot's Garage, your sales are likely comparable to their net sales, correct? You could have created April Fool's content like Griot's Garage did. Look how cold, cloudy, and clammy it is in the South Sound in March.

You are a media brand. The advantage of being a media brand is that you don't have to pay Meta/Alphabet Facebook/Google for new customers. You put those platforms to work on your behalf when you are a media brand. I mean, seriously, you can't trust Meta with anything ... here's another example. Why do you pay them for anything?

Anyway, something to think about as you watch your retirement funds literally evaporate in real time.

P.S.: For those of you who are "hunkering down", it's really important to be a media brand. If you're spending 30% less on marketing, how do you increase sales to increase profit to offset increased costs? You better leverage your free channels at extreme levels. Your live and recorded video presence cost you almost nothing. Get busy!

Tariffs

I've written multiple versions of this post. None are sufficient. Heck, this image from Monday morning won't be sufficient by the time you read this.

Your emails to me are pointed, bitter, sarcastic. Most of you providing feedback simply cannot believe your businesses are at risk. I've yet to receive one (1) email where the professional is happy with the current direction of things.

Many of you remember 2007-2008. Festive times. You could get a $500,000 mortgage without income verification. The first act from This American Life from October 2008 represents an enlightening listen (click here) ... discussing how the global economy as we knew it nearly ended.

Calamities ... real or self-inflicted ... represent opportunities. Amazon exploded out the ashes of the dot.com collapse. Social/Mobile thrived coming out of 2007/2008. Shopify was born in 2006. The replacement of list/click forms of customer acquisition with community / video / live video came out of COVID ... TikTok thrived coming out of COVID.

You're going to be told to hunker down. You'll send me your data and I'll forecast where your customers are taking your business based on external cues. Contact me right now (kevinh@minethatdata.com) and let's get busy.

Some of you are going to create the future over the next 1-2 years. Any time there is a disruption to the "system", business leaders take commerce in new directions.  New directions surprise those who hunkered down.

Seriously ... ignore all the noise. You're prepared your entire life for challenging situations. Your skills are needed now. Be a Leader.

Wine and Steak

I was struck by this image from NEMOA last week.

This image was from a post that was liked 45 times as of Friday. I've given you every piece of knowledge I have for nearly twenty years (for free ... for free) and nothing I've shared on LinkedIn has been liked 45 times ... even though what I've shared will make you 450,000x more profit than the image above.

One of the pure joys of being in business is being part of a team. The image above represents a team. Do they all work for the same company? No. Do they work together to create their version of the future? Absolutely! One of the spoils of working together is spending a tiny fraction of the profit generated by a team on "the finer things".

In the era of videoconferencing, teams changed. In catalog marketing, it's common to see employees feel like their vendor partners are more of a "teammate" than are co-workers. You'll spend more time on video conferences with vendor partners than with merchants / creatives / web ops etc. This dynamic, of course, creates conflicting incentives. Your company pays your salary and bonus, so it's your job to maximize profit for your company. Your "team", however, does not share your incentive structure. Each member of your team has different incentives. Does your paper rep care about your bonus structure? Kind of. But she cares far more that you use more paper ... her incentive structure requires her to generate more profit for her than for your brand. If you lose more money by not moving into the future, she makes more money. That's a problem. It's unavoidable.

In order to optimize the profit of your informal "team" across vendors, your brand likely makes less profit. You're not trying to make less profit, of course, but it's the nature of the beast. Everybody has to be successful. In a perfect world, the relationship is symbiotic. In the real world? No.

Modern business sure is fascinating, isn't it?

P.S.:  I realize this happened 24 years ago, but it happens everywhere, both in e-commerce and in catalog marketing. When I was brought into Nordstrom with the immediate request to turn a $30,000,000 loss into profit, I cut circulation by 20%. I was ruthless. Our paper rep called me and said "I can't let you do that". That's the problem with cross-functional teams across vendors and your brand. Yes, you can let me do that, because that is what is best for my business and if you don't let me do that I'll let your competitor do that on my behalf.

Sometimes You Have To Let People Do What They're Going To Do

I recently played bocce ball with new players.

#ohboy

One of the new players was in a particularly interesting situation. He wanted to roll the ball at 74mph, blowing everything up. The "right" play was to gently roll the ball between the other balls to achieve the desired result.

No amount of communication or logic could convince this inexperienced player to do the right thing. He had a theory (maybe). He wanted to test his theory. Maybe he just wanted to see what happened if he invoked the nuclear option.

He rolled the ball at 94mph. He looked stunned when the outcome was opposite of his pre-conceived notion of the outcome ... ultimately causing his team to lose.

These are the kind of situations that come up every day ... in government, in business, in public health, in your personal life.

This certainly comes up in e-commerce. Somebody is hired, they have theories that are untested, they have a lot of confidence, and then their results aren't good. Sometimes you have to let these people do what they're going to do. You can make a really good living cleaning up the messes left by fools.

Fools. You can't talk them out of wreckin' things.

For My Catalog Readers: Catalog Keynote Presentation #2

It's lunchtime at NEMOA, which means it is time for my second keynote (click here). My advice is for several of you to sit around a table with your iPhones, perusing the content. Have a group discussion. Sound good?

Do You Want A New Metric?

Try this one on for size.

• YouTube Index:  Total Subscribers / (Annual Net Sales / 1,000,000).

Let's consider two companies.

Company #1:  JCP. Approximately $11,000,000,000 in annual net sales, 61,900 followers on YouTube.

• YouTube Index = 61,900 / (11000000000 / 1000000) = 6. Six subscribers per million in annual net sales.

Company #2:  Griot's Garage (I've used this example frequently ... and I don't know their annual net sales, let's say it is $20,000,000). 39,300 followers on YouTube.

• YouTube Index = 39,300 / (20000000 / 1000000) = 1,950. One thousand nine hundred and fifty subscribers per million in net sales.

Now, Griot's Garage could have double that volume in net sales or half that volume ... it doesn't matter. They have a video following. JCP does not. Griot's Garage customers/prospects care.

If you are a traditional catalog brand, your days of lists and co-ops are ending. They ended years ago to be honest. You'll move over to Google/Facebook, but your merchandise assortment (catering to a 60-84 year old customer) won't align with prospects in that realm. You'll be disappointed. You'll tell me that digital doesn't work very well. It works fine. It's a merchandise / channel alignment that flummoxes you.

Meanwhile, Google/Facebook become more expensive as time passes ... and the competition out there dilutes response. Acquiring new customers? It gets harder every day.

This is why community matters. In 2025, Community is your prospect list ... it's the place where you interact with both best customers and prospects ... it's the place where best customers and prospects interact. It's a living, breathing ecosystem that doesn't cost you much but pays you back handsomely.

YouTube is just one aspect of community, but it is a reflection of how much prospects and customers want to come along for the ride with you. In the example I gave above, the Griot's Garage customer/prospect is 300 times more interested in going along for the ride than is the J.C. Penny customer/prospect.

Your YouTube Index matters. It tells you how much your customers and prospects care.

If your YouTube Index is over, say, 200, you've got a fighting chance. Though these numbers aren't set in stone.

What is your YouTube Index?

For My Catalog Readers: Catalog Keynote Presentation #1

Here's the link to Keynote #1 ... tomorrow we focus on Keynote #2. It's lunchtime at NEMOA, so it's a good opportunity for you to gain a different perspective! Gather 'round your garden salads with chicken breast, fire up your noise cancelling headphones, and watch the keynote on your iPhone.

Reminder: Happy Hour on April 3 at 8:00pm EDT / 5:00pm PDT

Send me an email (kevinh@minethatdata.com) to get your link for the 50 minute event on Thursday night!

Great Moments in Omnichannel History

Joann Fabrics: https://www.msn.com/en-us/money/bankruptcy/how-joann-fabrics-went-from-a-cult-favorite-retail-darling-to-a-bankruptcy-disaster/ar-AA1BTmh7

Elite Program participants know all about the "COVID-bump", correct?

MLB

When you pay $150ish for the MLB package and it is opening day, you expect the service to work.

Now, when my internet cable is out for the better part of a day, my cable company could care less ... deal with it, moron.

So at least give MLB props for trying to make amends.

How did they make amends?

• Take $10 off your purchase of $25 or more at mlbshop.com ... here's the code: EFW5WFYSTF.

You know what this means, right? If we assume they have 65% or higher gross margins, they're making money off of their mistake.

Outside of my marketing audience, much of my former readership on the old Twitter had contempt for marketing professionals ... and we get another example here why that's the case. Not only do you not get a pro-rated credit for the service they couldn't provide, they have to make money off of the crumbs they do offer you.

Ok, I'm done now.

Mushrooms

First, you should read this because the next time you walk through a forest you'll view the forest differently.

Importantly, there is a quote in the story that should resonate with every one of you who strongly believes in marketing attribution.

• "When we try to pick out anything by itself, we find it hitched to everything else in the universe."

I'm frequently exasperated by the marketing attribution solutions y'all employ. I fully understand the reasons for having a version of truth. I have full contempt for the corrupt manner in which marketers and their service providers measure "truth". Like the boutique vendor some of you use ... suggesting that most in-store orders from the three weeks after a catalog was mailed are "catalog driven". Ha! I wonder who benefits from that version of "truth"? Or the retargeting executive who told me he wanted credit for $314,000,000 of sales (95% of what the brand actually generates) because his insipid surveillance tool planted at least one ad in front of 95% of buyers in the past year ... and he wanted credit regardless whether the customer saw his nonsense or not.

Attribution is the act of trying to pick out anything by itself. In doing so, the beauty of your business is erased. The critical role of "what" you sell is replaced by a "guess" of "how" something sold.

Obviously, I'm not saying you should have a quality attribution solution.

Obviously, I am saying that if you don't step back and understand the beauty of your business via the merchandise you sell, you are missing out on all of the mysteries of why you business is successful (which means you are missing out on the reasons why your marketing tactics work).

Cross Channel Attribution

Last week's article.

A sampling of the ingredients.

• Complex
• Powerful
• Comprehensive
• Touchpoints
• Holistic
• Customer Journey
• Sophisticated
• Data-Driven
• Visible
• Actionable
• Optimize
• Insights
• Crucial
• Temporal
• Privacy
• Strategic
• Evolve
• Essential
• Forward-Looking Brands
• Complex
• Competitive Advantage
• Rich Insights
• Customer Engagement

Yes, as J. Peterman said to Elaine ... "that's a lot of words".

Some words/phrases were missing.

• Sales/Profit increased by 15%.
• The specific math and necessary techniques used to perform the analytics.

One of my clients said something particularly smart a few weeks back.

• "This represents our version of truth".

Cross Channel Attribution, at best, is a "version of truth". Think about it in terms of gravity ... there is a specific mathematical equation that represents gravity. If you asked 100 people what the equation was, maybe five would know it, but everybody would understand the general idea of how gravity works. Of the 95 who didn't know the actual equation, there would be a handful of people who would be very confident their equation would be close to accurate and better than everybody else ... they'd yell stuff like "Pi-R-Squared". If you aren't in the five who know the actual equation for Newton's Law of Universal Gravitation, "Pi-R-Squared" might sound complex, full of rich insights, maybe even temporal. But without any details and actual knowledge of the truth, how do you know "Pi-R-Squared" is right?

April 3: The Next MineThatData Happy Hour!

Let's go with 8:00pm EDT / 5:00pm PDT, 55 minutes. Send me an email message (kevinh@minethatdata.com) if you want to join us, and I'll send you a link. 

Where Should I Implement An Action Stream?

Here's a customer who just purchased for the fifth time ... via models, the customer is expected to become less responsive with each month that passes.

In my projects, I leverage "Action Segment Levels" to dictate when Action Streams are implemented. Among twelve-month buyers?

• 75% Annual Rebuy Rate = Elite Customers.
• 60% Annual Rebuy Rate = Loyal Customers.
• 40% Annual Rebuy Rate = Quality Customers.
• 20% Annual Rebuy Rate = Average Customers.
• 1%+ Annual Rebuy Rate = Struggling Customers.

Among lapsed buyers?

• 15% = Lapsed Spend Money
• 5% = Lapsed Experiment
• < 5% = Lapsed Save Money

Looking at the graph above, there are several places where Action Streams make sense.

• Month 4 when the customer is about to drop out of Loyal status.
• Month 8 when the customer is about to drop out of Quality status.
• Month 11 when the customer becomes responsive due to an Anniversary event.
• Month 17 when the customer is about to drop out of Lapsed Spend Money status.
• Month 23 when the customer becomes responsive due to an Anniversary event.
• Month 33 when the customer is about to drop out of Lapsed Experiment status.

In those months, you work outside of your normal email/sms program, kicking off automated campaigns designed to keep the customer at the higher level of responsiveness. Most email service providers have these capabilities, they're just waiting for you to use them! Hire me to perform the research, we'll have your ESP implement my equations and we're off and running!

Low Lifetime Value

In maybe 80%(ish) of my projects, there are a handful of high-selling items that bring in a disproportionate number of new customers.

Those items, of course, frequently bring in new customers that have low lifetime value.

I once worked with a Chief Marketing Officer who refused those customers ... he wouldn't pay for them. "Let somebody else have them, I only want high-value customers" he said to me. His business, of course, struggled to grow.

I'm perfectly fine with you paying less for those customers. Have at it.

I'm even better with you setting up an Action Stream for your new customers. Get busy! Identify the items on a second order that launch some of the low-value customers to average-value status, and market those items in your Action Streams.

It's not hard to do.

It makes common sense.

So go do it!

Discussing Lands' End with ChatGPT

Y'all realize, of course, that your utter dependence on Facebook/Google for new customers puts the future health of your business at serious risk, right?

Here's a discussion I had with ChatGPT.

Kevin:  Lands' End seems to rely heavily on discounts and promotions as part of its core business strategy for several reasons:

1. Perceived Value Strategy

Constant discounts create a sense of getting a deal, which encourages customers to buy more. If customers feel like they’re getting high-quality products at a reduced price, they’re more likely to make a purchase — even if the "original" price was inflated to allow for the discount.

2. Customer Conditioning

Over time, Lands' End has trained its customer base to expect discounts. If you know there’s always a sale around the corner, you might hesitate to buy at full price — but you'll jump at a 40% off email. This creates a shopping pattern where customers are almost waiting for the next sale to make a purchase.

3. Competitive Market Pressure

The apparel industry is highly competitive, especially in the mid-tier, classic, and outdoor clothing markets where Lands' End operates. Competitors like L.L.Bean, Eddie Bauer, and even department stores frequently run sales. Lands' End likely feels the need to match or exceed these offers to stay relevant.

4. Inventory Management

Frequent sales help clear out seasonal and excess inventory. Lands' End sells a lot of seasonal clothing (coats, swimsuits, etc.), so offering regular discounts helps prevent stock from piling up and reduces storage costs.

5. Catalog and Email Marketing Dependence

Lands' End has always leaned heavily on direct mail and email marketing. Regular discounts give them a reason to send those emails and catalogs ("Get 30% Off Now!") and drive immediate sales spikes.

6. Margin Cushioning

Lands' End likely sets its initial prices higher, knowing that a large percentage of sales will happen at a discount. That way, even after applying a 30%–50% off promo, they can still maintain a healthy profit margin.

🧥 Bottom Line: It’s a mix of customer psychology, competitive pressure, and strategic pricing. If Lands' End suddenly stopped offering promotions, many customers might stop buying altogether because they’ve been conditioned to expect a discount.

Kevin:  Does Lands' End sell outerwear that would fit me?

That depends — what’s your size and fit preference? Lands' End is known for offering a pretty wide range of sizes, including:

• Regular, Petite, Tall, and Plus for women
• Regular, Tall, and Big & Tall for men
• Some outerwear even comes in extended sizes up to 3X (for women) and 4X (for men)

They’re also known for more relaxed, classic fits rather than slim or trendy cuts. If you prefer a roomy, comfortable fit, you’ll probably have good luck. Plus, they tend to use quality materials (like down, PrimaLoft, and waterproof fabrics) at reasonable prices, especially when you catch one of their sales.

What kind of outerwear are you thinking — a winter coat, rain jacket, or something lighter? 👀

Kevin:  I need a rain jacket, mens, size = 3x.

Got it! Lands' End does carry men's rain jackets in 3X, and their outerwear tends to be pretty size-inclusive. Their Squall® jackets are a popular choice — waterproof, windproof, and lined for extra warmth. They also have some lighter rain shells if you’re looking for something less insulated.

Want me to check what’s available right now or help narrow down the options? 🌧️😊

Kevin: Yes, and please recommend cheaper options from competing brands (links and images were provided, FYI).

Certainly! Here are some men's rain jacket options in size 3X, including selections from Lands' End and more affordable alternatives from other brands:

Lands' End Men's Big Waterproof Rain Jacket
This jacket features a wind-and-waterproof 2.5-layer shell with a breathable, moisture-wicking interior membrane. It includes an adjustable hood, front and chest zipper pockets, and underarm zippers for ventilation. Available in size 3X.

Portwest US440 Classic Waterproof Rain Jacket
An affordable option, this jacket is waterproof with sealed seams and a pack-away hood. It's available in olive color, size 3X.

Frogg Toggs Men's Rain Suit
This rain suit includes both a jacket and pants, offering waterproof protection. Frogg Toggs is known for lightweight and breathable rainwear. Sizes up to 3X are available. 

Columbia Men's Rain Jackets
Columbia offers a range of waterproof and breathable rain jackets. Some styles are available in extended sizes, including 3X.

REI Co-op Men's Rain Jackets
REI carries various men's rain jackets from brands like Marmot and The North Face. Some options are available in size 3X.

When selecting a rain jacket, consider factors like waterproofing, breathability, and additional features such as adjustable hoods and ventilation options. Lands' End offers quality options, and brands like Portwest and Frogg Toggs provide more budget-friendly alternatives without compromising on essential features.

Now, I'm asking questions like a moron, not like a human being. But please pay attention to the judgments that ChatGPT makes about Lands' End and other companies (calling Portwest budget-friendly).

Imagine the content that ChatGPT had to "steal" to train itself to make judgments about who Lands' End is, who they compete with, and the give-and-take between catalogs / email / discounts?

From a commerce standpoint, Google and Facebook are "dead men walking" ... via their current business model. If you are having conversations with AI and AI is steering you where it wants via judgements made by equations that are easy to create but hard to understand, you won't sit in front of a laptop typing questions on Google then visiting landsend.com, will you?

That personal relationship you have with your customers ... either via the community you created, or via your own email/sms marketing program ... are about to become critically important. Ultimately, your email/sms program is going to be replaced by something interactive, but until then that personal relationship is going to be so darn important.

Also ... what do you do when AI makes judgments about your brand that you don't like?

Gonna be a wild ride.

P.S.: This is the point where some of the hounds come after me ... "Kevin, Meta isn't stealing content, they're using readily available information to train AI to be smarter." Well, I searched LibGen to see if Meta used my information, and yes, they used several of my booklets to train their AI. Which, of course, is stealing. And yes, there's nothing I can do about it so complaining is meaningless. I have to adapt and move on. ChatGPT tells me that it makes a distinction between creating new ideas and synthesizing existing ideas. Oh. Great. Also faulty logic.

#16 Seed Upsets the #1 Seed

It's NCAA tournament time, women and men. Sixty-eight teams are whittled down to just one, one heartbreaking moment at a time.

You have a veritable plethora of new products. What stops you from creating a tournament bracket of sixteen new items, and then for fifteen days you pit those items against each other via email marketing ... rank order them based on predicted volume or just assign random seeds, whatever you want. Schedule the matchups, one per day, on March 24 / 25 / 26 / 27 / 28 / 29 / 30 / 31.

• Day 1 = #16 vs. #1.
• Day 2 = #9 vs. #8.
• Day 3 = #13 vs. #4.
• Day 4 = #12 vs. #5.
• Day 5 = #15 vs. #2.
• Day 6 = #10 vs. #7.
• Day 7 = #14 vs. #3.
• Day 8 = #11 vs. #6.

There's your first round. The items that generate the most sales for that day advance to the next round. Schedule these matchups on April 1 / 2 / 3 / 4

• Day 9 = Day 1 Winner vs. Day 2 Winner.
• Day 10 = Day 3 Winner vs. Day 4 Winner.
• Day 11 = Day 5 Winner vs. Day 6 Winner.
• Day 12 = Day 7 Winner vs. Day 8 Winner.

After Day 12 you have whittled the field down to the Final Four! It's time for the semi-finals. Schedule these matchups on April 5 and April 6.

• Day 13 = Day 9 Winner vs. Day 10 Winner.
• Day 14 = Day 11 Winner vs. Day 12 Winner.

Now we're down to the Championship! Schedule it on April 7, the day of the actual Men's National Championship Game.

• Day 15 = Day 13 Winner vs. Day 14 Winner.

The whole thing will last you two weeks. During those two weeks, you feature sixteen new items, with the best sellers being featured three or four times. Maybe the #16 seed will upset the #1 seed, who knows? Your customers will decide.

What is the downside of doing this?

P.S.: I'm told one of the downsides is "telling the competition how many units you are selling". My goodness. Nonsense. Have you ever performed a search on Amazon? Try this one for the Sennheiser HD600. They tell the world they sold at least 400 of 'em in the past month. They also sold more than a thousand of the lower cost (but still good sounding) HD560S according to the search. The company pounding you into submission gladly shares how many units they sell.

P.P.S.:  Somebody will tell you not to do this ... "people will just buy items and return them to game the outcome." Yeah, there probably are five customers who will do this. Now you have a data attribute to append to your "customer data lake" to make sure you never spend money marketing to those customers again.

She Said She Liked AI Because "It Worked"

Her company hired a vendor, and the vendor did a really nice job of building a model to determine which customers they should target.

I asked her, "What are the attributes of the customers that the model preferred?"

She said, "I don't know and I don't care, it worked."

With every advance in technology, we gain something and we lose something.

In this case, her company gained profit.

Of course, she lost knowledge.

There is going to be an opportunity over the next five years to be the person who "knows things". As we embark on a mission to transfer knowledge from employees to computers, the employee who "knows things" will be able to solve problems. For instance, what happens when AI tells you that you should reactivate a specific cohort of customers, and eighteen months later those customers have no future value? Do you blame AI? Or does the employee who "knows things" protect the company?

Be the person who "knows things".

An Offer For Blog Readers: Pricing Analysis

I've had several inquiries in the past two weeks about the impact of prices on customer behavior.

Specifically, you are asking what happens to customer behavior if prices increase by 10% to 20%, through no fault of your own.

We have a lot of data from 2021-2022 to guide us in this endeavor. Here's the process I went through three years ago to address the issue.

1. Let's say you have 15 merchandise categories. When you send me five years of purchase history, I have four years of year-over-year pricing comparisons times fifteen merchandise categories, for sixty (60) data points. That's enough for me to do some damage.
2. I'll compare year-over-year impact of prices (say, +10%) on rebuy rates (say, -5%), annual orders per buyer (maybe flat), annual items per order (say -2%) ... which leads us to what I call demand per inventory (-7%). If prices increase by 10% and customer productivity decreases by 7%, you know that the top-line won't be hurt, but you'll have 5% fewer customers repurchasing, which means you'll have a contracting business.
3. I'll perform the same analyses on new/reactivated buyers. Pricing issues typically hurt new/reactivated customers more than they hurt existing buyers.
4. Given what I observe, I'll forecast the next few years as a consequence. You'll have a good/directional idea whether price increases will hurt your business.

The core part of the analysis that informs the work I perform is in orange-ish cells below.

Let's try something ... I'll do this for $4,990 as a test, prepaid. This is likely going to be way too little to charge for something like this and I'm going to feel like I ripped myself off. It's not a typical $15,000 pricing project, of course, but for nearly free you get to learn the likely impact pricing increases would have in your business, should they come to fruition.

Contact me now (kevinh@minethatdata.com) ... offer ends on Friday.

Burn It Down!

I'm reminded of JCP about fifteen years ago. Was the company ill? Absolutely. Did Management understand what the problem actually was, much less the solution? Nope. As a result, they burned the brand down to the ground, taking eighteen billion in net sales and turning it into thirteen billion in net sales. The five billion in sales never came back.

Should we find ourselves in a recession in the next few months, somebody within your company will want to "burn it down". Not on purpose. They'll think they are helping. "We need to conserve money, let's reduce the marketing budget by 40% and figure out how to be more efficient, yeah, that's the idea, and let's cut back on new product development by 30%, that'll save some money and we'll create an efficiency director position to facilitate our transformation during these economic headwinds." They're not helping. They're burning it down.

The people who burn things down are not the people who build things. You don't hire the people who blew up the Kingdome to build T-Mobile Park, do you?

Back in the dot.com implosion I was asked to downsize my team by the CFO. We were losing $30,000,000 a year on net sales of $300,000,000 so you can't really argue with the logic, but I did challenge the individual to demonstrate that my staff were the reason we weren't profitable ... I could prove my entire team was generating profit. That line of reasoning didn't go well, but the CFO did demonstrate to me that he wasn't trying to burn it down. One of the people I fired, as her final sentence as an employee, said to me ... "I used to believe in you". The sentence haunts me to this day, and for good reason.

If recession arrives tomorrow or in a few months, make sure the decisions you make align with "building something". There's no reason to burn it down ... if burning it down was the right decision, there was nothing to stop you from burning it down six months ago when the economy was humming along, right?

Hunt Brothers Pizza

An appropriate topic for pi day (3/14).

Are they retail experts? Absolutely! 9,500 locations, nine-figure sales. You can't toss a wind-blown tumbleweed without hitting a Hunt Brothers Pizza location in the Southern Plains, Central Plains, Midwest, and Ohio Valley. Here's a video about the company (click here). Locations in rural communities with minimal competition. Meanwhile you're competing against (checks notes) Amazon.

Seriously, watch the video. So many of you talk about your "Product Listing Ad Strategy" ... that's not a strategy, that's a tactic, and a small one at that. The video clearly tells you what an actual "strategy" looks like.

If Hunt Brothers can pull off what they pulled off, you can certainly take lessons from what they did and apply the lessons to e-commerce ... right?

Recession

It's time for you to be a Leader.

It's not time to hunker down. It's time to start thinking.

Every one of you should have your Comp New/Reactivated customer count reporting and your Comp Segment reporting at your disposal ... monthly at minimum, weekly if necessary. If you don't have the reporting available to you, send me a message (kevinh@minethatdata.com) and I'll produce a special run for you ... just $1,800 for first-time participants, $1,000 per run thereafter.

If a recession comes to fruition, what will it look like? Let's look at Comp New/Reactivated Customers.

Look at January/February in the table above. That's what a real recession looks like assuming comparable year-over-year marketing spend. If you cut back on marketing spend, you just make it that much worse. I realize you've been taught to cut back on marketing spend during an economic downturn. You're just amplifying the problem if you do that (though you might be more profitable in the short-term ... you harm yourself in the long-term).

Recessions show up first among the customers least likely to embrace your brand ... new/reactivated customers, to be specific. Those are the customers (prospects) who ignore you first when times get tough. You'll know right away if a recession is going to impact you, and you'll have an indication of the depth of the potential recession immediately. What you see above is a catastrophe. This business generated tepid increases in new/reactivated customers for nearly two years ... then? Womp womp. 

• A Mild Recession?  -3% to -8% compared to your baseline. If you were already -10%? Then expect to be -13% to -18%.
• A Banger of a Recession? -15% to -25% compared to your baseline.
• Then you make it worse by cutting back on marketing spend, which is typically the "best practice" and is almost universally the wrong thing to do. Spend the marketing money to clear out products without discounts/promotions, and you acquire a customer in the process.

New/Reactivated customers are the canary in the recession coal mine. Measure the living daylights out of Comp New/Reactivated Customers and Comp Segment Customers (measuring those with exactly two purchases in the past year, quantifying how much those customers spend in the next month).

From there? Be a Leader. Smart companies find ways to not hunker down ... they figure out how to keep new customers flowing while everybody else hunkers down, giving them a huge advantage when the recession ends. We saw this in 2002, we saw it in 2010.

P.S.:  Well run business frequently evade recessions. I say this to offer you hope. You're smart, you're well prepared. There's few things more gratifying than posting a +2% on comp new/reactivated customers while everybody else is -14% ... and then continuing to post a +2% comp when everybody else cuts back on marketing spend and -14% becomes -29%.