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%.

Hillstrom's Action Streams Is Available on Amazon!

Finally!

I had some free time to get this little 48 page booklet processed via Amazon. The booklet summarizes my thought process over the past two months ... specifically the need to create community (replacing the renting of lists in old-school marketing and complementing Google/Facebook in e-commerce), the need to capture community engagement and then link it to your customer database, and finally the opportunity to leverage Action Streams to either stop a customer from further response decline or to convert the customer to a purchase following online engagement.

As always, you have two choices.

• Print via Amazon:  $9.99 (I make about $2.50 per book sold, Amazon gets $7.49).
• Amazon Kindle:  $2.99 (I make about $2.00 per unit, Amazon gets $0.99).

Looking at the pricing above, it's obvious what happens when you depend upon third parties. Is there a parallel for your business? 

Project Opportunities:

• A Full Action Stream Analysis and Attribute Development Project = $20,000.
• Action Stream Attribute Development Only = $10,000.
• Monthly Update of Your Action Stream File = $5,000 (Annual Fee).
• Action Stream Consulting? Contact me (kevinh@minethatdata.com).

Ready For Something Different?

If you aren't in my catalog audience, move on, we'll talk to you tomorrow.

Those of you in the catalog audience might be attending NEMOA (click here) on April 1, April2, and April 3. How about I contribute from three thousand miles away? I'll offer two keynote presentations.

1. April 2, 1:00pm EDT:  The State of Catalog Marketing. In this presentation, Kevin (that's me) will share with you an unbiased and honest view of modern catalog marketing, based on analysis of billions of purchase transactions over the past eighteen years of consulting work.
2. April 3, 1:00pm EDT:  The Future of Catalog Marketing. In this presentation, Kevin (me again) will share the end-game for modern cataloging. Some of you will like this message, because you've crafted a catalog program designed to survive the next ten years. Others need to look to a different and somewhat uncomfortable future.

Both presentations will be emailed to my subscribers (that's you) at 1:00pm on April 2 and April 3. You don't have to do anything ... other than watch each Keynote.

Mini-Project Opportunity

Let's try something. I have a brief hole in my calendar for the first week of April.

Some of you (in recent weeks) have mentioned to me that it feels like you are managing several different businesses simultaneously. Hint - you are! It gets hard to manage a half-dozen businesses that are loosely connected via "your brand". 

Here's what I'll do.

• Project Cost = $4,500. Virtually free.
• For every item customers purchased in the past year, I will create a "profile" of that item for you. I'll tell you the marketing channel that the item skews to. I'll tell you if new customers prefer the item, customers early in the customer life cycle prefer the item, or if loyal customers prefer the item. If you have zip code available, I'll tell you if there is a geographic preference for that item.
  
• Based on the item profile of each item, I'll create nine "mini-assortments" for you ... items that behave similarly across channels, customer behavior, merchandise categories etc.

Let's remove the hurdle of a more expensive Action Streams project. I have room for several of these projects in early April. Send me an email (kevinh@minethatdata.com) and I'll get this going for you. Offer ends March 21. Are you truly managing many different "mini-businesses" under one brand umbrella? Let's find out!! Hint - you are managing several small businesses simultaneously. The fact you are managing several small businesses simultaneously is the reason why you struggle to obtain reasonable customer response in any one channel ... you're trying to offer products that customers within a channel aren't thrilled about.

Layoffs / Downturns / Opportunity

The most February layoffs in sixteen years (click here).

My stock portfolio is down 10% in the past month.

Opportunity is rampant during a downturn, regardless of the cause of the downturn. Social/Mobile exploded after the near collapse of the global economy seventeen years ago. Modern (nimble) e-commerce brands flourished after being founded during COVID. Turns out it is fun to start a business while trapped in your home.

Yes, some of you are preparing to head into the bunker for awhile.

Those of you who capitalize on opportunities are doing the opposite. You're preparing for what comes next, and you'll be years ahead of the competition as a result.

Did you read the nonsense today from Macy's? Give it a read (click here). This is what heading into the bunker for awhile looks like ... sales declines and rampant contraction while praising a small number of stores that are essentially holding flat or are up a percentage point. Anytime you capitalize the phrase Bold New Chapter, you aren't launching a Bold New Chapter. "We're going to contract and then dress up our best stores a bit" sounds like logic used by Sears, doesn't it?

You might be preparing to launch your own version of a Bold New Chapter. This is a great time to do that. Don't tell anybody. Sneak up on folks and surprise them.

• P.S.:  In the February run of the Elite Program, I saw all sorts of signs of my clients turning the corner. They're not out there bragging about it. They're out there executing. They'll execute right through this coming downturn as well. Make something happen while nobody is paying attention.

Did You See How 2x - 3x - 4x - 5x Buyers Evolve?

Remember our graph from yesterday?

Once the customer purchases for the second time, the customer is ready to roll!

• 2x Buyer:  Quality to Average.
• 3x Buyer:  Quality to Average.
• 4x Buyer:  Mostly Quality.
• 5x Buyer:  Loyal to Quality.

Here's an important point ... the customer doesn't achieve Loyal status (in this case) until a fifth purchase. Even then, the customer is at Loyal status for one (1) month, that's it ... then the customer quickly slides into Quality territory.

I repeatedly see mistakes with businesses who try to push loyalty initiatives at customers who simply aren't even close to becoming loyal customers. Don't do that. Use Action Streams to nudge the customer along, ok?

How Much Worse are First-Time Buyers?

Much, much worse.

The secret to success in e-commerce is getting a customer to a second order. From there, the customer has significantly better long-term value.

Look at the blue line in the image above. These are first-time buyers ... even at the very moment the customer purchases for the first time, the customer only has a 23% chance of buying in the next year. From there, the customer continually becomes less responsive. This is why having a Welcome Action Stream is so darn important ... your odds of converting a first-time buyer are best at months 0/1/2/3 after a first purchase.

After a second purchase, the customer is reasonably responsive. In the image above, a 24 month 2x buyer is as responsive as a 1 month 1x buyer.

In my projects, I create Action Segments. For twelve-month buyers, here's what the segments look like:

• Elite = 75%+ Chance of Buying Again Next Year.
• Loyal = 60% - 74% Chance of Buying Again Next Year.
• Quality = 40% - 59% Chance of Buying Again Next Year.
• Average = 20% - 39% Chance of Buying Again Next Year.
• Struggling = 0% - 19% Chance of Buying Again Next Year.

It's easy to see that the first-time buyer starts in the Average segment, then quickly fades into the Struggling segment. You immediately need a Welcome Action Stream to prevent the customer from falling into Struggling territory ... at which point the newly acquired customer is already at risk of being lost.

Taking Advantage of the Plus Indicator

The 2x customer is at 7 months of recency, and has the following repurchase metrics.

• 35.2% chance of buying again in the next year.
• 3.0% chance of buying in the next month.
• Average Action Segment.

However, you send the customer an email campaign, and the customer clicks through the campaign. Yeah! Repurchase metrics change.

• 37.2% chance of buying again in the next year.
• 6.0% chance of buying in the next month.
• Average Action Segment.

The "Plus" indicator kicks in. You now have a few weeks to kick off an Action Stream to capitalize on the fact the customer visited your website.

Do you see how different this style of marketing is compared to typical marketing campaigns?

I'm not saying you shouldn't execute your marketing campaigns.

I'm asking you to complement marketing campaigns with Action Streams that capitalize on Plus/Minus customer states.

Taking Advantage of the Minus Indicator

Here's data for customers with two life-to-date purchases. We're measuring the probability of the customer buying in the next year.

The arrow is important ... that's where the customer slumps to a lower Action Segment. At four months of recency, the customer has a 39.2% chance of buying in the next year. The customer just dropped from what I call a "Quality" Action Segment to a "Average" Action Segment.

• 1 Month = 46.1% Rebuy Rate, Quality Action Segment.
• 2 Months = 43.2% Rebuy Rate, Quality Action Segment.
• 3 Months = 41.1% Rebuy Rate, Quality Action Segment.
• 4 Months = 39.2% Rebuy Rate, Average Action Segment.
• 5 Months = 37.9% Rebuy Rate, Average Action Segment.
• 6 Months = 36.6% Rebuy Rate, Average Action Segment.
• 7 Months = 35.2% Rebuy Rate, Average Action Segment.
• 8 Months = 33.8% Rebuy Rate, Average Action Segment.
• 9 Months = 32.6% Rebuy Rate, Average Action Segment.
• 10 Months = 32.0% Rebuy Rate, Average Action Segment.
• 11 Months = 31.1% Rebuy Rate, Average Action Segment.
• 12 Months = 30.4% Rebuy Rate, Average Action Segment.

At three month of recency, the customer is about to drop to a lower Action Segment. This is where the "minus" indicator kicks in, causing you to kick off an Action Stream to try to prevent the customer from falling to a lower-value segment.

Does that make sense?