Accountability

A couple of interesting things I heard in the past month.

1. It's not my fault, our merchants stink.
2. It's not my fault, my industry is dying (looking at you, catalogers).
3. It's not my fault, the CFO asked me to stop spending so much money.

Merchants always stink ... and merchants are frequently brilliant. They have a HARD job. When they fail at their job, it is YOUR job to optimize their failure.

Industries always die. Horseshoeing was a burgeoning industry at one point. In every dying industry, there are winners. Why aren't you a winner in a dying industry?

CFOs always try to reign in spend. It's their job to protect cash. When the CFO takes your budget away, it's your job to optimize what you "can" do. Leverage all the marketing that doesn't cost you anything. There's this channel called YouTube just waiting for you to build an audience. Get busy!

You are accountable. Yeah, you! It may not purely be your fault that your merchants stink, but it most certainly is your fault that you didn't do anything about it.

Doing Something Different

On a recent Supper Club Tour of Wisconsin, one notices all sorts of interesting things.

Yes, I said "Supper Club Tour". Your state doesn't have Supper Clubs. Wisconsin does. People line up outside of dive restaurants at 3:45pm to make sure they get a seat at McGregor's Blink Bonnie.

When you smell the sizzling steak being served ... when you see the smoke wafting nearby, you understand.

Stuff like garlic toast ... sets one place apart from another.

Bakeries serve peanut squares/cake. Ohhhhh boy!

Ishnala, the top Supper Club in Wisconsin, serves five hundred Old Fashioned drinks ... PER DAY! They expect to sell nearly 100,000 OLD FASHIONED drinks this season, at $9.50 each that's nearly a MILLION dollars a year ... on ONE DRINK! You have stores that don't do a million dollars a year selling six hundred styles.

We were told that Ishnala serves six hundred people per day. Our wait was 2 hours 25 minutes on one visit, 2 hours 49 minutes on the second visit.

There were three common themes across our seven-day Supper Club Tour of Wisconsin.

1. Merchandise (i.e. food ... like sizzling steaks with smoke filling the restaurant at McGregor's Blink Bonnie). Good food matters. A lot.
2. Scarcity that forces people to line up well before the restaurant opens because seating is limited. Why accommodate everybody then sit empty most of the time when you could have limited seating that forces people to line up at the door before you open?
3. A "hook" ... something that sets one apart from everybody else.

I'm sure I sound Old Fashioned (see what I did there), but we've kind of lost the plot in the past fifteen years. You see all the YouTubers doing things differently, you go out in the real world and see all these businesses doing things differently ... then we sit here and think to ourselves about how many tepid channels we can sell tepid products in at 30% off??

P.S.:  I frequently think about scarcity these days and how the omnichannel era ruined our businesses by demanding that all products be priced the same in all channels and are constantly available. Wrong! Look at soccer - especially now in the United States. When an MLS team used to share a stadium with an NFL team and put 27,000 people in the stadium it looked like the stadium was 2/3rd empty (it looked that way because it was 2/3rd empty). When an MLS team erected a purpose-built stadium that seated 23,000 fans, you had a sellout and 4,000 people who could not get in. The former situation is an "omnichannel" solution that makes the brand look unloved. The latter situation is a sellout!

P.P.S.:  It only makes perfect sense that if you want to make your email marketing program a robust one that "works", you'd use it to advertise the products that you only bought a few hundred units of ... then you create FOMO via email marketing (and social, the concept would work even better there) that the customer must act now or the items will not be available.

• Try it with a clearance item ... you have 200 of 'em left ... tell the customer that they're at 50% off and they'll be gone in an hour unless the customer acts now. Try it and see what happens. Don't be a Lemonhead!

Uh Oh

It's fifteen months after The Lemonhead was hired.

The results? They aren't good.

• Net Sales are down 12%.
• Comp Segment performance is up 4%, strongly suggesting that existing customers like what the brand is selling.
• New/Reactivated buyer counts are down 25%.
• Loyal buyer counts are down 5% even though The Lemonhead implemented a brand new loyalty program nine months ago.
• The Executive Team didn't earn an annual bonus, and that's a problem because the VP of Operations wanted to buy a new BMW.
• The Marketing Team has been gutted ... a team of eight individuals has been replaced by eleven individuals (three new people to manage the loyalty program) ... three employees from the old regime and five hand-picked mini-Lemonheads hired by The Lemonhead.

Four months later, an announcement is made by the CEO ... "The Lemonhead" is going to leave the company to spend more time with his family. The CEO thanks The Lemonhead for his service and for modernizing marketing efforts. At the same time, the Chief Merchandising Officer is taking a new role with a new line of business that focuses on "the digital customer" (i.e. the Chief Merchandising Officer has been demoted). The CFO will move to a new role to support this new line of business (i.e. she has been demoted).

If you think this story is a parable about modern marketing situations, trust your instincts.

The Damage Is Done Before The Results Are In

The Lemonhead has a playbook, tried and true, tested under the most intense of circumstances. 

It's the exact wrong playbook for 90% of brands, likely including the brand you work for.

The Lemonhead believes in Customer Loyalty. Of course he does ... he worked for a multi-billion dollar brand that sold addictive products on a daily basis ... so of course his formula of applying a loyalty playbook on your brand who sells sundresses that the customer only needs 1x or 2x per year will "turbocharge" your brand.

The Lemonhead immediately ends wasteful "customer acquisition" tactics, saving the brand a fortune. "WHY ARE WE DOING THIS?" The Lemonhead screams. Of course, this angers the long-term employees who know that without new customers the brand will never had loyal customers. The Lemonhead labels these employees "Luddites" ... "THEY DON'T GET IT!"

The Lemonhead celebrates three months in charge with a p&l that looks spectacular. Sales are roughly flat, maybe down a percent or two ("THE MERCHANTS DON'T GET IT!"), but profit is surging.

Everybody in Leadership is pleased with the results.

Several key employees on the marketing team elect to leave the company ("I'm not working for this stupid lemonhead"), taking a ton of institutional knowledge with them.

The damage is done before the results are in.

Next, we review results a year later.

The Lemonhead

This is a marketer (male, female, it doesn't matter) ... you've met this person countless times.

Your company is performing acceptably ... maybe you do $75,000,000 in annual sales, you've been growing at a 3% rate ... not great, but better than others. Then, somebody makes a mistake. It's often the CEO, though many on the Executive Team fall prey to the same logic ... they interview a Lemonhead.

By now you should be wondering what a Lemonhead is.

It's the unique person who is both a force of nature and is a moron. The kind of person who worked at Starbucks in 2005 when they were printing money ... the person had nothing whatsoever to do with their growth plan of putting three stores on a downtown block, but took full credit for it in subsequent job interviews. The kind of person who says that customer loyalty is "paramount" to success (yeah, people love hearing vapid nonsense like that). The Executive Team or CEO or Owner or Board are easily seduced by The Lemonhead.

That's when The Lemonhead begins a "transformation" project. More on that tomorrow.

Goat Yoga

Apparently it is a thing.

Before it was a thing, explain the best practice that existed that suggested that Goat Yoga would be a "thing"?

If you answered "there was no best practice", you are likely correct.

By the way, I asked ChatGPT to draw a picture of a person enjoying Goat Yoga. It came up with this. Apparently the fun part of Goat Yoga is AI envisioning that the goats stand on top of each other.

Always remember that when a marketing professional tells you that something is a "best practice", it likely wasn't close to a best practice when it was created and quite likely was something that practitioners sneered at.

File Power

I go through phases where I spend a lot of time talking about File Power. Then I go through phases where I read marketers babbling about nonsense ("your customers simply aren't engaged in today's complex media ecosystem") and I'm inspired to reintroduce the topic.

Let's put this in the simplest terms possible.

Say you have 100 customers. In the next year, 30% will buy again, spending $200 each.

Meanwhile, you acquire 70 new/reactivated customers each year, each spending $100.

Here's how you generate business:

• 100 Customers * 0.30 Rebuy Rate * $200 per Repurchaser = $6,000.
• 70 New/Reactivated Customers Spending $100 Each = $7,000.
• Total Sales = $6,000 + $7,000 = $13,000.
• Next Year's 12-Month Buyer File = 100 * 0.30 + 70 = 100.

This business is at an equilibrium point. As long as Merchandise Productivity and/or Marketing Productivity and/or Creative Productivity don't change, the business will generally book $13,000 per year and 100 customers per year.

This is the point in the story where the company hires a new CFO, and the CFO thinks the brand is spending too much money on marketing ... "our ROAS is too low"! The CFO demands that the brand spend less. Most of the marketing spend aligns with new/reactivated customers, but some of it causes existing customers to repurchase. The marketing team carries out the wishes of the CFO. Here we go:

• 100 Customers * 0.28 Rebuy Rate * $200 per Repurchaser = $5,600.
• 50 New/Reactivated Customers Spending $100 Each = $5,000.
• Total Sales = $5,600 + $5,000 = $10,600.
• Next Year's 12-Month Buyer File = 100 * 0.28 + 50 = 78.

We've arrived at the penultimate moment in the discussion. The year prior, we could expect 100 customers to generate $6,000. This year, we can expect 78 customers to generate $4,680. The brand lost $1,320 of "File Power". If the brand elects to reverse the decision made by the CFO, sales do not return to prior levels.

• 78 Customers * 0.30 Rebuy Rate * $200 per Repurchaser = $4,680.
• 70 New/Reactivated Customers Spending $100 Each = $7,000.
• Total Sales = $4,680 + $7,000 = $11,680.
• Next Year's 12-Month Buyer File = 78 * 0.30 + 70 = 93.

Even when the brand reverses direction, sales do not get back to prior levels, and customer counts are short of where they used to be.

This is File Power.

The decisions you make today have a lasting impact. They don't just impact 2025, they impact 2026 and 2027.

Catalog Review

I'm going to have some time in August for something different. Normally, I analyze catalog businesses via actual customer transactions. Those projects are a bit more costly ($15,000 to $30,000 ... as you already know).

If you'd like me to look over your existing reporting and existing segmentation for the past several years to see what trends I can identify ... and how those trends impact the future, contact me (kevinh@minethatdata.com). This would be a week-ish (timeframe) review and would cost considerably less than the normal month-long project that you're familiar with.

Making a Delicious Omlette

Last month I told you about Fallow.

Today, I share with you one of their videos ... how to make an omelette like a chef.

First of all, I followed the instructions ... and the omelette was SENSATIONAL! My goodness. I was enthralled with the folding process ... you fold the omelette by one-third, then fold the remaining two-thirds over the top of the one-third, and then you turn it over, hiding any sins associated with the folding process. Just like that the omelette has five layers (egg / filling / egg / filling / egg), which makes it both fluffy and elegant at the same time.

They teach you how to do this, for free.

They teach every competitor how to do this, for free.

They don't lack for business. They are using Customer Media Marketing to fill their restaurants.

What is the parallel for your business? Discuss.

Northwestern Steak House

In Mason City (Iowa) there is a century-old restaurant that has the formula for success nailed down. The restaurant? Northwestern Steak House (click here). It's not located in a modern building ... or a large building.

They break rules. You cannot make a reservation until 4:30pm of the day you want to eat, and guess what? If you make a reservation, you'll eat late, because there is a line outside the door. On the day of our visit, the line formed at 3:45pm.

When you enter at 4:30pm, you are pointed to a table. By 4:31pm (I checked on my watch), the restaurant is full ... those still in line are asked to go to the upstairs lounge where they can enjoy a beverage and wait for a 5:45pm - 6:00pm seating.

Our order was taken at 4:37pm. By 4:50pm they were taking reservations for 8:00pm.

They serve the classic tiny salad with pickle wedge and hard boiled egg ... in this case with French Dressing ... the same salad they served me in the late 1980s.

Why do people keep coming here? They serve a buttery Greek mixture that they pour on top of the side of pasta or rice you get with your meal (along with some parmesan cheese) - they also serve the buttery greek mixture with your steak. It's to die for!!

By they way, that's the petite filet pictured ... the walleye had to be the size of Lake Erie.

They embrace tradition ... same food they've served for decades, they have a hook that is different than everybody else (buttery Greek mixture), and they break rules by not taking reservations until they open ... meaning they have a line out the door that forms at 3:45pm.

What is the "hook" that makes your business special?

Is there a way to ignore the omnichannel nonsense of always having inventory in stock in all channels in an effort to create urgency?

I mean, this business is 100 years old and they're packing the place. Your business has traditions, right? Use 'em to your advantage!!

P.S.: One of the blatant errors of the omnichannel era was the concept of having products always available, in all channels, at all times. There are times when that is a valuable concept (i.e. you have a check engine light and the Ford dealership has your part in stock). But there are times when you need to sell out of something valuable ... quickly ... and the customer needs to know that, prompting the customer to act immediately.

The Peak of the Omnichannel Era, in One Simple Graph

Nordstrom became a private company several weeks ago. I saved the multi-year trend of their stock price. What year was the peak of the "omnichannel era"?

If you answered "2015", trust your instincts.

From 2016 and beyond, the loss of traffic in stores became untenable.

• It was too easy to buy online.
• Amazon absolutely mulched everything in their sights.
• Generational shopping differences cut off younger customers from older brands (I'm looking at you, Macy's).
• What I now call "Customer Media Marketing" began to take shape in this timeframe.

I was in meetings in this timeframe with retail brands ... Executives were furious that store traffic was SO BAD ... they'd bark at the Online Marketing Director that thirty years of store presence caused the online channel to succeed, not a banner ad on a shady website where the marketer couldn't possibly track down the bad players who were siphoning marketing dollars from the brand. They'd spend all this time trying to attribute (sound familiar) online sales to the store that likely "caused" the online order.

Eventually, CFOs figured out it was all nonsense, they told the world that square footage was untenable in the modern world, and the omnichannel movement ended.

Our world evolves, in an unending manner.

• Startups need funding from VCs.
• VCs need to get paid via IPOs.
• Banks lend when Publicly Traded brands fail to grow or need to grow in an expensive manner.
• Private Equity scoops up the remnants when brands begin to die, allowing banks to get paid while not having to publicly publish failures anymore.
• Private Equity (sometimes) loads the brand up with debt, pumps the numbers, and then sells to a "less smart" buyer, who is left holding the bag.

The secret to success in business is to not be the person left holding the bag.

Sometimes Consultants See Things ...

There are times when several of you within a vertical hire me in a similar timeframe (thanks to ChatGPT for framing the situation).

These instances were far more plentiful twenty-five years ago. In the catalog world, your list broker knew what your competitors were doing, and they couldn't tell you what your competitors were doing. If they ever let anything slip, they were done.

Talk to these folks AFTER you leave a vertical (i.e. apparel or home), and yeah, you realize how blind every single company is. You also realize the absolute genius that every single company possesses.

There are "genius situations" happening in 2025. Work your network over, and figure out what is happening. Business challenges frequently lead to genius solutions. Some of you are cooking with gas right now!

Beachwaver

Website (click here).

TikTok (click here).

Beachwaver TV (click here).

Under ten second video of guy in the distribution center packing products (liked 73,000 times). When is the last time you bothered to say anything about Ralph and Charlene in your distribution center? If you think it is hard to get employees to work (#peoplewontwork), how much easier might it be if those employees are featured in your marketing efforts?

Ambassador Community (click here).

This sure smells like Direct Response Marketing. Yet it is different, isn't it? This looks a lot like Customer Media Marketing.

Also - it bypasses traditional search/social ... the model ultimately uses the organic nature of each channel to benefit the brand. Yes, they're paying the gatekeepers ... but it isn't the core of the business model, is it?

An Imbalanced Ecosystem

Back to our working hypothesis.

If you think about Customer Media Marketing as a YouTube / TikTok / AI centric video/search platform fused with Community, you immediately see that "traffic" has to flow into those avenues and ultimately flow out of Direct Response Marketing.

This flow out of "traditional search + traditional social" creates an imbalanced ecosystem.

Think about it this way ... pretend you have 100 customers in the old ecosystem. 10 of the 100 customers leak out into YouTube / TikTok / AI, leaving 90 customers in the old ecosystem. The marketer notices that response is 10% worse because the marketer spends money but 10% of the traffic is "gone", driving down ROAS, driving down profitability.

The marketer has two responses here.

The marketer likely notices that certain responsive keywords are "more expensive" ... and they are more expensive because every other marketer decides to go after the responsive keywords, de-emphasizing low performing keywords. The competition is good for the old ecosystem, in that the old ecosystem has pricing authority, but is bad for the marketer, who now pays more and gets less.

As long as the marketer fails to realize that Customer Media Marketing is "a thing" ... a fusion of Video / Community / AI ... problems exist in the p&l. If the marketer is "advertising dependent" (and many of you are), performance is bad, the top-line contracts, and most importantly, it becomes terribly hard to find new customers because customers have leaked out of the old ecosystem into the Customer Media Marketing ecosystem.

The imbalances in the old ecosystem will correct over time, but the correction process can be painful.

Many of you (look at your new customer counts) are dealing with this correction process.

P.S.:  If you want to see an example of a company dealing with this correction process, read this email message ... show me where the merchandise is? Or the community? Or video? Or any way to create awareness?

• In their defense, they are directing you to Insta and some of their Reels have a reasonable number of views. They're leveraging a decade-old style of social. Better than not leveraging it, sure.

P.P.S.:  Back in 2007 one of the commenters on my blog mentioned that big/old companies were too stupid to leverage social media properly and they'd be DEAD in a few years (emphasis on dead was hers). No brand dies quickly unless there is a ridiculous level of financial mismanagement. Instead, brands die very slowly, they participate in an imbalanced ecosystem that drains their blood one drop at a time ... for a long time.

The Four Pests Campaign

For whatever the reason, I wasn't aware of this "Great Moment in Political Leadership" (click here).

• If you kill the sparrows, considering them a "pest", you might not realize that locust populations will grow, creating an even bigger problem.

In the late 1990s and early 2000s, I carried this book with me to most meetings (#nerd).

The book was a dense mathematical exploration of the interconnectedness of different biological situations. If you had an area with 10 wolves and 200 rabbits and somebody killed 100 rabbits, seven wolves would starve to death, leaving you with three wolves, causing the population of 100 rabbits to grow to 500 rabbits (because there weren't enough wolves to eat the rabbits).

That same level of interconnectedness is happening in modern marketing ... specifically, Customer Media Marketing.

As customers leak out of Direct Response Marketing, there isn't enough "food" for Direct Response Marketing. This causes marketers to spend more on the customers that remain, not even knowing that fewer customers remain, driving down the performance of their marketing efforts. All of a sudden people are lamenting the cost of clicks and grumbling about "Facebook being dead".

Eventually, the lack of "performance" causes marketers to look for other ways to reach customers (pushing them to Customer Media Marketing), transforming Direct Response Marketing. I mean, in 2000 we thought that Digital Marketing was fundamentally different than Direct Response marketing ... in 2025 we know they are essentially similar. Customer Media Marketing seems different today. Who knows how we'll view it in 2050?

Regardless, marketing concepts closely relate to biology and ecology. We're heading down an interesting path with both AI and Customer Media Marketing changing the "ecosystem" we belong to.