Calculating Merchandise Residual Value

Let's work through a very simple example of Merchandise Residual Value.

Let's pretend you have five customers and three items that the customer can purchase.

13-24 months ago, here's how much each customer spent.

• Customer #1 = $100.
• Customer #2 = $200.
• Customer #3 = $100.
• Customer #4 = $300.
• Customer #5 = $500.

0-12 months ago, here's how much each customer spent.

• Customer #1 = $0.
• Customer #2 = $100.
• Customer #3 = $100.
• Customer #4 = $0.
• Customer #5 = $300.

There are three items that the brand offered (in this overly simplistic example). Here are the items purchased 13-24 months ago.

• Customer #1 = Item 1.
• Customer #2 = Item 1, Item 3.
• Customer #3 = Item 2.
• Customer #4 = Item 1, Item 2, Item 3.
• Customer #5 = Item 1, Item 2 (twice), Item 3 (twice).

Ok, we have everything we need to calculate Merchandise Residual Value.

The average 13-24 month value of customers buying each item was:

• Item 1 = $275:  (100+200+300+500)/4
• Item 2 = $350:  (100+300+500+500)/4
• Item 3 = $375:  (100+300+500+500)/4

The average future value (0-12 month) generated by customers buying each item was:

• Item 1 = $100:  (0+100+0+300)/4
• Item 2 = $175:  (100+0+300+300)/4
• Item 3 = $175:  (100+0+300+300)/4

We can now fit Merchandise Residual Value. We regress 0-12 month value against 13-24 month value.

The equation?

• -119.231 + 0.808*(13-24 Month Value).

We calculate the prediction and compare it to what we actually observed. The difference is the residual ... Merchandise Residual Value.

Item #1 caused customers to spend $2.97 less in the next year vs. normal.

Item #2 caused customers to spend $11.43 more in the next year vs. normal.

Item #3 caused customers to spend $8.77 less in the next year vs. normal.

If you had to protect an item, you'd protect Item #2 because it adds $11.43 of future spend (next twelve months) to each customer who bought it the year prior. Which of the three items would you feature in your next email marketing campaign?

This is how you calculate Merchandise Residual Value ... and it's a very important metric to know in a world where your cost of goods might (or might now) increase significantly in upcoming months. Make sure you know the specific items that cause customers to spend more next year, ok? And if you don't know this metric, contact me right now (kevinh@minethatdata.com) and let's get busy calculating it.

Merchandise Residual Value

Every item in your merchandise/product assortment has two key attributes.

1. It is purchased by newer customers, average customers, or loyal customers.
2. It either adds to the future value of customers, is neutral, or detracts from the future value of customers.

If you have to take a bath on an item because the cost of goods on the item skyrocket over the next few months (or it doesn't, who knows), take a bath on items that appeal to newer/loyal customers and/or items that add to the future value of customers.

Perform the analytics and know exactly who each item appeals to ... know if that item adds or detracts from future value.

A/B/C/D/F Channel Grade Opportunity

Let's try something low-cost to help you plan better for Q3/Q4.

• For $9,000 I will grade every customer in your database (A/B/C/D/F where "A" is best and "F" is non-responsive) for every large marketing channel you employ.
• You will receive a list of all 60-month buyers, all customers graded.
• I will update the list for you with data through August 1, and again with data through October 1 ... or alternatively, I'll update the list for you on September 1 ... whatever works best for you.
• This allows you to save $$$ by not mailing customers with D/F designations, especially among those with A/B/C email grades.

Those of you who leverage my catalog modeling efforts ($15,000 or $30,000) get a better and more actionable outcome paired with analysis of the importance of your print efforts ... hence, the higher cost. Your email grades are already built into how many catalogs to mail a customer on an annual basis. When I tell you to mail a customer "3" times, that is a highly actionable and prescriptive outcome, based on whether the customer is an email respondent or not, based on whether the customer buys from other digital channels or not.

This analysis ($9,000) is designed to get you an actionable and inexpensive outcome without compromising the integrity of the bigger projects I've performed over the past fifteen years. I want you to have an opportunity to "do something" to save you money during what could well be a spirited eight months to follow. I want to do something to help you. And it helps me, too!

You can click here for the file layout.

Does this seem reasonable?

Send me an email right now (kevinh@minethatdata.com) and we'll get started, ok?!

Making Good Decisions

Those of you deciding to save money in upcoming months ... especially those of you in the print world ... will need to make good decisions. Really good decisions. Like not killing customer acquisition efforts. Like finding ways to keep customers buying whatever is available without spending a lot of money telling customers to buy stuff.

A good decision? Not mailing email buyers. Not mailing digital buyers. Not mailing 25+ month buyers. I've been telling many of you this for nearly twenty years. A fair number of you listened, hiring me to cut back on wasteful variable marketing dollars.

Now the rest of you are going to be forced down this path. Or not. Who knows?

But if you are forced down this path, score every darn customer in your database for propensity to purchase from different marketing channels.

Example:

• Print Customers ... top 5% = "A", 6% - 15% = "B", 16% - 35% = "C", 36% - 60% = "D", 61% to bottom of file = "F".
  
• Apply Same Modeling Logic to "Omnichannel" Customers (respond to print online), Website Customers, Email Customers, "Digital Marketing" Customers, and Social Customers.

You likely mail a TON of "D" and "F" customers. Don't do that!

Here's a great example of an individual customer from a large dataset:

• "F" for Print.
• "D" for Omnichannel (Print via the Website).
• "C" for Website.
• "B" for Email.
• "B" for Digital Marketing.

Catalog brands likely mail this customer 2-8 times per year. Stop it! The customer is in the top 15% for email marketing. You're already speaking to this customer 7-21 times per week.

If you want to conserve marketing dollars without putting the top-line at risk, here's the place where you can make a good decision ... so do it!

More News

An FYI.

Solving Two Problems At Once

I get two types of feedback these days.

• We need tariffs to even the playing field and not be taken advantage of anymore.
• My business is about to be clobbered for no good reason, my own Government is killing us.

Somewhere between those two comments ... surely ... must exist a reasonable solution. Right?

I mean, I've been to Tucumcari, New Mexico. Have you? Any reasonable solution must solve the "Tucumcari Problem".

This city is equidistant between Albuquerque and Amarillo ... cities north of 500,000 people and 200,000 people, respectively. Two hours east and two hours west, that's where the jobs are.

As you can see in the image/map above, the town is bypassed by I-40. If you're whistling by with a half-tank of gas, you don't need to stop at the "interchange commerce" resources (gas stations, hotels, fast food) at each exit.

Any reasonable solution should allow the residents of Tucumcari to earn an honorable wage, making a living doing something the residents want to do. Residents shouldn't have to move to Amarillo or Albuquerque because that's where the money is.

Of course, plenty of people do move, they do what they have to do ... which is why the population of Tucumcari is in decline.

I don't expect you to come up with a solution.

I do expect you to have some compassion for a town that was largely abandoned by the modern world the minute Route 66 was replaced by I-40. Somewhere between what we've done the past "x" years and the path we're taking is a reasonable solution.

P.S.:  If you want an example of how one town can be impacted by leadership and industry, allow me to present you with Green Bay, Wisconsin. Green Bay is hosting the NFL draft this weekend. Green Bay is a city of 107,000 people. That's it. The financial impact of having an NFL team in such a small town is felt region-wide. I grew up in Manitowoc ... any town from Sturgeon Bay to Manitowoc to Sheboygan to Fond du Lac to Oshkosh to Appleton to Shawano to Marinette/Menomonee ... any town in that region is impacted. Dollars come "in" to that region. In Tucumcari? Outside of interchange commerce, dollars go "out" of that community. We need to solve the problem of money leaving communities. Ok. I'm done now.

A Couple of Scenarios - Stop Wasting Marketing Variable Costs

When customers become less productive (as happened in April), decisions need to be made. Especially among lapsed buyers. These customers are, by definition ... lapsed ... and therefore are not terribly responsive.

When a customer is not terribly responsive, the last thing you want to do is spend a ton of money on the customer. It's just dumb. You can spend the money elsewhere ... find a new customer, make the best video about widgets ever.

Here's an example.

You could send a direct mail piece to the customer (assuming the customer is 60+ years old). Or, you could send an email campaign to the customer. One tool creates a good amount of lift, one tool creates very little lift. Take a look.

It's common for outsiders to look at the lift observed in print and say "Look at that, you moved the needle!" And you did ... the customer (in the example above) would have averaged $1.60 in the two weeks after the piece was mailed ... but instead spends $2.40. You did move the needle ... a lot.

Outsiders will look at the $0.23 profit generated by the audience mailed and say, "see, that's a lot of profit". And they are right. But they are measuring things wrong. Compare the mailed group to the holdout group ... $0.23 (mailed) vs. $0.69 (not mailed). Which strategy yields more profit? NOT MAILING THE CUSTOMER!!

Now look at email marketing ... it barely moves the needle ($1.70 vs. $1.60). But ... but ... the end result is MORE PROFIT.

In 2025, it is FOOLISH to waste marketing dollars on customers not likely to respond. Go ahead and spend $$$ on customers who are responsive ... if the lapsed customer just visited your website, have at it, because the customer is temporarily responsive.

In 2025, you don't spend marketing dollars ... you spend marketing effort. Sure, pay for that silly click because the customer is responsive. Otherwise, leverage your YouTube presence, your social media presence, and your email marketing program to teach customers why they should buy from you at minimal/no variable cost.

We're not wasting variable costs anymore, got it?

And Away We Go!

 

File Power is Not Impacted By Your Decision to Hunker Down ... For Awhile, At Least

So you've decided to cut back on the marketing budget by 35% in an effort to conserve cash and "get through" 2025.

What's interesting, of course, is that as of today, you don't lose file power. Your customer file is still capable of generating volume, you're the one constraining the ability of your customers to deliver volume.

You can see the "File Power" section at the bottom of the table ... this is what your twelve-month buyer file is capable of (sales in thousands).

• $29.2 million through today.
• $29.5 million through the next year.
• $29.4 million for the year after.

If you decide to take a hatchet to the marketing budget, you impact the size/quality of the customer file a year from now ... which means your customer file has less "File Power".

Notice how File Power changes for the period of 1-2 years from now?

• $29.2 million through today.
• $29.5 million through the next year.
• $27.5 million for the year after.

The top-line contracts by eight million in the next year because the marketer and CFO decided to conserve cash. Then, the business contracts by another $1.9 million the following year solely because of reduced "File Power".

You'll want to be very, very careful about how you approach conserving money in upcoming months.

What Happens When You Sell 100 Items And You Can't Fulfill 40 Of Them?

A few days ago I shared with you how many of my items in my "shopping list" on Amazon are no longer available ... the logical outcome of tariffs ... some items will be more expensive, and when tariffs are too high other items simply aren't available anymore.

Hopefully you aren't exposed to China. Some of you are woefully exposed.

In my project work, I'm sometimes asked to demonstrate what might happen if items are simply no longer available. If a brand had 100 items and our geopolitical environment took 40 of those items away, would sales drop by 40%?

Probably not. There's a lot of product overlap.

On one recent dataset, the relationship was noisy. By product category, I measured total annual sales and total skus sold that accounted for 90% of total sales in the category (to eliminate onesey-twosey issues) ... the relationship looked like this:

It's not a perfect relationship by any stretch of the imagination (an R-Squared of about 0.50). But the relationship suggests the following:

• If you could only sell 20% of your skus, you'd generate 32% of sales.
• If you could only sell 40% of your skus, you'd generate 53% of sales.
• If you could only sell 60% of your skus, you'd generate 70% of sales.
• If you could only sell 80% of your skus, you'd generate 86% of sales.

If you worked for this brand, you'd have a reasonable idea what would happen if your exposure to China created a nightmare for you.

Of course, your mileage will vary. That's why you'll contact me (kevinh@minethatdata.com) and have me run an inexpensive pricing/forecasting project for you.

What I'm Hearing

From your emails and comments from various professionals, in early April business took a -5% to -10% (ish) turn. Some are hopeful the shift in the Easter Holiday played a role, most of you tell me a different story.

Fortunately, nothing is permanent. Things could get worse, they could get better.

Last week we discussed the impact of increased prices. Would you like to see what your next issue could be?

On Amazon, I maintain a "Hobbies" shopping list ... stuff I'd like to purchase someday. Here's a portion of my shopping list. Do you see prices next to each item?

I've wanted that aune Flamingo DAC/Amp for a half-year! When I click on it, here's what I see.

Currently unavailable!

Many favorites are not available ... the stuff from China simply disappeared. That means containers on ships are going to disappear as well. Which means what if you are driving trucks on I-10 or I-40?

Here's another one a reader sent to me (by the way, notice the "community" link at the top of the page #justsaying).

Have you given any consideration to what happens when you sell 1,000 items ... and you can't sell 350 of them because you can't get access to those items anymore? Or you sell an item that is the composition of thirty-eight parts and you can't get access to seven of the parts anymore?

You're going to make interesting decisions ... some of you might be in a situation where you cannot sell a third of your assortment. You'll probably want to know what impact that has on your business.

Or, everything will turn out just fine. We don't know what will happen.

But we have to plan on two things happening.

1. Prices are likely to increase.
2. Items may not be available, limiting your product assortment, constraining your ability to meet your sales/profit goals.

My guess is you'd rather have answer to those questions, right?

Believe it or not, I have to spend time reading about freight these days. Yeah ... freight.

I mean, read through this guy's timeline (click here). That's some fun stuff. Bookmark freightwaves.com for more details.

Other fun stuff is on the horizon ... some of you are telling me that you are "hunkering down". This is what "hunkering down" looks like.

You probably have many people working through potential challenges.

You probably have statistics folks analyzing how the customer is going to respond, right? I mean, that's what I do for a living. You are undoubtedly crunching every conceivable number right now, correct? You kind of have to be doing this, right?

What are your thoughts? (kevinh@minethatdata.com).  Do you have a different perspective?

Saturday Semi-Off-Topic: Pickleball!!

This post will come back to marketing in a moment ... I'm nudging you in a direction here.

Pickleball!

Can I show you a few things? Just watch a few points from a 2016 pro women's bronze medal match (click here) ... watch up to maybe 60 seconds. It's a slow-motion low-skill train wreck. At that time, this was pickleball at the highest level. My wife and I play close to this level today. Now, if you were "born" into the pickleball community from 2010 - 2018ish, this was the "best practice" ... you hit a soft third-shot drop, you ran up to the kitchen, and you tried to out-dink each other. Notice the low camera angle to capture all of the dinking "action".

Something happened in 2019 that lurched the game in a completely different direction. That thing? A precocious twelve-year old woman who won a National Championship with her Mom as partner. What did they do different? Watch a few points here ... what shot are they attempting on their third shot? They're blasting their third shots ... hitting drives until the opponent makes a mistake. You don't see them doing a lot of "soft" play unless they are forced into it ... otherwise it is bombs away.

It shouldn't surprise you that "everybody" took notice. Within a year, the style of pickleball changed. Yes, players adhered to the "old style" ... those players lost games. An awful lot of players told those employing the new style that they were "doing it wrong".

Do me a favor here. Watch just this one point from a pro match a few weeks ago (click here). I mean, the game isn't even recognizable from a few years ago, is it? Hands are fast, there are extended gunfights, you have to be able to execute soft play, you have to be able to execute power, you have to be able to play excellent defense in the transition zone, and you have to have a ton of strategy. Also - the twelve-year-old from the second video is playing in this match as an eighteen year old ... and ultimately loses!

Did you notice something across the three videos?

One of the players is playing in each video ... Catherine Parenteau. She's playing at the highest level in each year, and her playing style in 2025 looks NOTHING like the tepid, gentle, unrefined style she leveraged in 2016. As the game changed, she changed.

By now you're probably saying to yourself "What in God's name does this have to do with marketing and e-commerce?"

Plenty.

Look at how the game evolved over just nine (9) years.

Your business is likely to be "evolved" over the next nine (9) months. This means you get to be Catherine Parenteau in the videos above (constantly growing, changing, improving, evolving). If you don't evolve through the challenges coming our way, you'll look like the video of game play in 2016. During COVID, we re-invented how we work. During tariffs, we'll re-invent how we merchandise our brands. This isn't something we "hunker down and get through". Nope. Not at all. Hopefully I'm proven wrong. If proven right?

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?