Oh Come On!

I receive my daily dose of propaganda from industry sources. Digging through twelve glowing articles about Macy's because they posted their first positive comp store sales metric in (checks notes) four years is tiring enough. 

The paper / printing / postage folks and their associated partners have made a habit in recent years of blaming you ... their customer ... for not being smart enough. It's YOUR fault that what used to be known as the catalog industry is crumbling.

Link from Midland Paper (click here).

The actual article from Printing Impressions (click here).

Oh come on. "Poor strategy costs more than postage ever will." You're blaming my clients for asking the wrong questions because the paper / printing / postage folks keep increasing costs? 

Unacceptable.

There is virtually nobody left in what used to be the "catalog industry" who speaks up. Don Libey would have spoken up. I need to speak up. The cost of paper / printing / postage is too onerous now, and it isn't your fault that it is onerous. You're still practicing the craft.

For most of what remains of the "catalog industry" (and as one of my readers tells me, there is no such thing as a catalog industry anymore), the cost of paper / printing / postage for a comparable catalog increased by between 50% and 100% in the past decade, with increases of 20% over the past three years very common. Who is responsible for that?

It sure as heck isn't my client base.

One of my favorite emails of all time came in several years ago. The source was Midland Paper. Somebody mistakenly sent something to Kevin Hillstrom instead of the Kevin intended to email. The email contained an attachment ... the document in the attachment outlined how catalog pages circulated had declined dramatically in fifteen years (at least 40% and up to 80% based on what I could decipher in the document). Midland Paper outlined how they'd constrain supply (i.e. close down mills) going forward, and with supply constrained they'd be able to charge my clients more for paper.

Is that outcome the fault of my clients leveraging "poor strategy"?

I recall another client calling me in 2022. Their printer (a major one in the Midwest) told them they were being fired after a multi-decade relationship. This brand had to find a broker to help them complete print runs ... naturally their printing costs went up.

Is that outcome the fault of my clients leveraging "poor strategy"?

On LinkedIn, an industry expert posted pictures of a wine-and-dine event in Washington, DC, trying to communicate for the 22,549th time to Congress the importance of a viable USPS. This poor guy keeps fighting for my catalog clients - even though he doesn't get paid to do that. He keeps losing. He keeps showing up.

Is that outcome the fault of my clients leveraging "poor strategy"?

I'm so frustrated by the behavior of a community that increased your costs by 50% to 100% and then possesses the temerity to suggest you are asking the wrong questions.

Increased costs transfer wealth from your brand to support agencies.

1. You are less profitable because you send your profit to support agencies. You lose out on equity or bonuses.
2. They generate an increase in net sales.

Do you understand that? Your hard-earned profit dollars are reduced while at the same time their net sales / top-line growth improves.

Here's what the value transfer looks like for a typical catalog brand with $60,000,000 of annual attributed catalog demand / net sales.

This would be a company that mails twelve times a year, about 1,000,000 per drop. Since 2023, paper / printing / postage costs increased by 25%. Instead of making $12,000,000 of contribution / variable profit before factoring in fixed costs (likely $6,000,000 or more), the company makes $9,000,000. Three million dollars evaporate off the bottom line, transferred from client profit to agency/vendor/supplier net sales.

Are my clients wrong to do anything but cut back on print expense and instead focus on accelerating their twenty-five year transition to digital marketing?

The author of the article doesn't go after ORVIS ... they cut it all! They got out. Did Orvis ask the wrong questions?

No, Orvis did just fine. The article author and Midland Paper (who published this sample of the article) goes after you ... the very brand still doing what they want you to do. You're paying their bills (Orvis no longer is), and they suggest you are asking the wrong questions.

You are not asking the wrong questions. 

Standing up for you will cost me business. Doesn't matter.

You simply cannot accept the ad cost increases via paper / printing / postage that are causing p&l challenges.

I'm not done. More tomorrow.

At 10,000 Feet?

We established that there are four categories that the Merchandising Team believes in ... and seven categories that are being purposely contracted.

Does a contracted category impact customer response?

Yes.

Let's look at how many customers bought from the four primary categories and all other categories (both) in the past four years.

• 3 Years Ago:  180,286.
• 2 Years Ago:  171,306.
• 1 Year Ago:  169,072.
• Today:  110,850.

Yeah, that's a problem.

How many customers purchased just from the four primary categories?

• 3 Years Ago:  168,952.
• 2 Years Ago:  156,288.
• 1 Year Ago:  174,994.
• Today:  184,286.

Counts are holding mostly steady.

How many customers purchased just from the other seven categories?

• 3 Years Ago:  217,656.
• 2 Years Ago:  243,028.
• 1 Year Ago:  218,436.
• Today:  130,866.

Yeah, counts are crumbling.

Which customer do you want? Here is the amount of spend each customer segment generated in the past year based on how the customer was segmented a year prior.

• Both Groups = $11.46.
• Primary Categories Only = $6.44.
• Secondary Categories Only = $4.60.

In other words, when you lose customers from Secondary Categories, you aren't losing highly productive customers. When you lose customers from Secondary Categories who also buy from the four Primary Categories, you lose $11.46 per customer, which is too much.

Worse, when a Primary+Secondary customer becomes a Primary-Only customer, value drops from $11.46 to $6.44. That's a stunning drop.

As the Merchandising Team at "Beans: The Internet's Only Variety Store" contracts the majority of categories, the Merchandising Team weakens the customer file - shifting customers from high-value segments to low-value segments. No Bueno! They are weakening the customer file, which lowers demand in all categories next year, which requires more of a marketing investment in new customers, which harms the p&l (in the short term).

So yes, before you start messing around with your merchandise assortment, think about what you are messing with! If you are lowering the value of customers for no good reason, well, that means you are harming the business.

The 15,000 Foot View

Yesterday we took a step back, looking at the business from a 30,000 foot view. We clearly observed that there was a new merchandise problem over the past two years.

I drilled down one level ... there are four categories that the Merchandising Team appear to have faith in.

Apparel Tops / Apparel Bottoms / Outside / Decorations were less than half the business three years ago ... today they're more than 60% of the business. Demand isn't necessarily stable, but it isn't bad. Existing items are stable, new items are down about $900,000 from two years ago.

Everything else?

Wow.

New items are down 45% from just two years ago. New item demand is down a whopping 70% from two years ago!!!!! In the past year, existing item demand is down a million dollars.

Tomorrow we'll apply this 15,000 foot level view of the business to customer response. It's obvious the Merchandising Team is doing something on purpose ... are customers impacted (hint - yes, they're impacted).

Click here for more information and file layouts.

The 30,000 Foot Level

It's common to run across a Marketing Team that is persecuted. "They don't know what they're doing!!" And yes, there are a ton of marketing teams that have absolutely no clue what they're doing ... that's life.

But there are marketing teams that are being persecuted ... they're blamed for problems that they have nothing to do with. Maybe the website has a 2.8% conversion rate and it was 3.3% last year ... "the marketing team is sending us terrible traffic". The Marketing Team blames Google & Facebook. Everybody is pointing at somebody.

Somebody should be pointing at the data. Here's the high level view of Beans ... at 30,000 feet, it is easy to see this isn't a marketing problem.

The business was at $27.4 million two years ago ... it is at $20.8 million today. Yes, there is a problem.

A simple cut of the data by new item sales vs. existing item sales shows us there is a merchandising problem.

• New Items:  Decreased by $6.5 million.
• Existing Items:  Decreased by $0.1 million.

Marketing problems result in equal declines.

Merchandising problems result in uneven and chaotic outcomes.

Here's a worse problem ... if you have a new merchandise problem today, you'll have an existing merchandise problem tomorrow. New items become existing items, and if you are down 40% in new items demand you'll be down a bunch in existing item demand in a year or two.

One simple table ... the one illustrated above ... it's not hard to run. If you are in marketing you need to know what the table illustrates. You need to know "what" specific problem you are solving, and it's frequently not the problem others in your company think you need to solve.

P.S.:  Click here for information about your own "Categories" analysis.

Another Way To Depict The Challenge

If a business discontinues too many existing items (or fails to introduce sufficient quantities of new items), we should be able to see the problem manifest via sales declines. Right?

Here is a scatter plot of number of items sold each year (>= $1,000) on the x-axis ... the y-axis shows us annual sales per item.

The three outliers on the bottom left of the chart? Those represent the past three months when this brand also decided to not spend money acquiring new customers, compounding their own challenges.

Otherwise, there's a clear relationship. Every additional item offered yields an ever-decreasing rate of demand/sales.

Is this good or bad? It almost looks bad.

Let's perform a multiplication.

• "Beans" generates $9,800 per item when it sells 2,700 items = $26.5 million.
• "Beans" generates $12,750 per item when it sells 1,900 items = $24.2 million.

In other words, fewer items = less demand/sales.

Pair it with a customer acquisition catastrophe in the past three months (largely caused by reductions in the marketing budget) and "Beans" has problems.

A group of Professionals appear to have harmed the business, all independently, on their own.

It will take a team of Professionals, working together, to rebuild "Beans".

Ready for your own customized "Categories" project? Contact me now (kevinh@minethatdata.com) ... click here for additional information.

A Problem, Presented Visually

The following bar chart clearly illustrates a problem.

I depicted the number of styles (i.e. t-shirt, not white t-shirt, not XL white t-shirt, just the style level) with annual sales >= $1,000.

There are two dates that are problematic in the image.

• End of December 2023.
• End of December 2024.

Because each date represents twelve-months of purchase history, it likely means that many items were discontinued at the End of December 2022 and the End of December 2023. It could also mean that new items weren't introduced right after that whereas they were introduced at comparable times the year prior.

This is such an easy query to run.

So run it ... does it say anything about why your business is thriving or struggling?

Contact me for your own Categories analysis (click here). Blog subscribers and prior clients save $$$.

Sloane Montgomery

I'll receive an email from one of you ... my first thought is "here comes a new project!".

More often than not, it's an email about a fictional character in a months-long case study. A character named Sloane Montgomery. She's the Chief Merchandising Officer at the fictional company being analyzed. She doesn't hold back. She says what she wants to say, nobody in Human Resources is going to restrain her.

It seems like some of you work with this individual.

Spend any amount of time on LinkedIn and you'll read dozens of hopelessly simple stories about how "brands" can improve. Read the comments ... professionals saying that something Bed Bath & Beyond did is a "cautionary tale". Sure it is.

Have you ever tried to change something that a company does, only to have an individual get in your way, and the individual is somebody you cannot control? The person doesn't report to you. The person is lawless, arrogant, craves power, has power.

The person has power.

Often, the person is not the CEO. I once worked with a Manager-level individual who could stop any initiative cold dead. He'd just say "we're not working on that" and that was it, nobody worked on it. When the person retired, progress happened.

I once worked with the President of a Merchandise Division. This person was not smart. This person was powerful. This person posted substandard results for years, but was a golden child, adored by Leadership. This person used up staff. This person stole ideas.

Most of you work at "brands" that know what to do, that know what must be done. I've yet to work with a catalog brand that knows the brand should have moved into the future twenty years ago but failed to do so ... and is now trapped by the customer who shops the catalog, the merchandise preferred by a customer who bought from catalogs in 1989, and the vendors who are dependent on the brand to keep spending money on catalogs. The employees know they need to change. And yet? Change doesn't happen. Because somebody like Sloane Montgomery has power, and won't let change happen.

Your job, of course, is to make change happen.

What does Sloane Montgomery (or your version of Sloane Montgomery) need to look good?

What is Sloane Montgomery afraid of?

What motivates Sloane Montgomery?

What motivates you?

Is there an intersection between what motivates Sloane Montgomery and what motivates you?

Is the person simply corrupt / corrupted? If so, it might be time for you to work somewhere else.

Does the person have morals? If so, there is a solution. It will be your job to identify the solution.

You won't find the solution on LinkedIn. Your problem is a local problem (a unique individual with unique personality traits) ... the stuff people share on LinkedIn are global problems with pithy solutions.

There's a reason many of you email me about this fictional individual.

Do you work with somebody comparable to Sloane Montgomery? If so, email me your story (kevinh@minethatdata.com) ... how did you get break down the barrier between you and the individual?

Beans: Email Communications

A discussion about Home merchandise. The discussion started after I previously shared the following "Class Of" table.

______________________________________________________

From: sloane.montgomery@beans.com
Sent: Monday, May 25, 2026 3:19 PM
To: Paisley Ingram <paisley.ingram@beans.com>
Subject: RE: FW: Rebuilding Plan

I can't believe I'm saying this ... maybe.

But I can't be the only one accountable here. If the solution is my team cranking out a bunch of new styles/skus and then the marketing team executes their standard ten batch-and-blast campaigns each week with a subject line that says "88 new items!!" paired with a Facebook post showing a new towel then I'd just as soon do nothing. That's not marketing, that's coloring by the numbers.

Our marketing team cannot keep pretending it is 2011. They're going to have to work as hard as my team works. I need your support on this one.

______________________________________________________

From: paisley.ingram@beans.com
Sent: Monday, May 25, 2026 2:47 PM
To: Sloane Montgomery <sloane.montgomery@beans.com>
Subject: RE: FW: Rebuilding Plan

Does he have a point that many of our Categories need to be "rebuilt"? It looks to me like he identified a credible problem.

______________________________________________________

From: sloane.montgomery@beans.com
Sent: Monday, May 25, 2026 2:33 PM
To: Paisley Ingram <paisley.imgram@beans.com>
Subject: RE: FW: Rebuilding Plan

Goober the Linguist used the word "dearth".

Mutton Head is kind of missing the point. This is a problem that can be solved by the Marketing Team. Prospects who never purchased from us don't know what is new and what is existing. They don't! If we only had three products, it would be up to Marketing to either find a market for the three products or they could do the hard work to create a market for the three products. Ideally they'd do both. It's not like Apple has tens of thousands of products, some would suggest they have a "dearth" of products. And yet, they're just fine.

It is wrong to suggest that the size of my assortment is a problem. Size matters, to a point.

______________________________________________________

From: Paisley Ingram <paisley.ingram@beans.com>
Sent: Monday, May 25, 2026 2:03 PM
To: Sloane.Montgomery@beans.com
Subject: FW: Rebuilding Plan

 

FYI. 

Best,

Paisley

______________________________________________________

 

From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, May 25, 2026 1:15 PM
To: paisley.ingram@beans.com
Subject: Rebuilding Plan

We've talked about the importance of "rebuilding" your assortment. There are many categories where existing items were scaled back. Take Home for instance. Two years ago only $650,000 of $1,889,000 of new merchandise from the year prior was carried forward. The dearth of existing items results in the customer having too little to choose from. As new items were scaled back from 542 to 525 to 388 to 368 per year, too little demand was generated from new items, causing subsequent year existing merchandise to suffer. To have a great existing class of merchandise, you have to have plenty of new items the year(s) prior.

This is a cycle that is very hard to pull out of unless your Merchandising Team spends 2-3 years "rebuilding" the assortment. If I were in your shoes, I'd require a "rebuilding plan" from your Merchandising Team and a "Merchandise Awareness Plan" from your Marketing Team. Both teams would work together for the next three years to build a foundation for success. Your Marketing Team should be able to clearly articulate how they will create awareness for new items.

I'm happy to share examples from non-competitive clients if you are interested.

Thanks,

Kevin

"Categories" Project and Customer Advocate Mentoring

Ok, I've listened to your requests over the past year ... those requests resulted in two new project opportunities for all of you. Contact me (kevinh@minethatdata.com) for details.

You've read my Case Study series (plenty more coming from the world of "Beans", FYI). Those analytics are part of a new product offering called "Categories" ... where you will learn how your customers interact with Merchandise Categories/Departments. The analysis is designed to explain why your business is thriving / struggling, pointing out actionable insights for marketing and merchandising purposes. As you can see, if you are a prior client or are a blog subscriber (hint - that's you) there is a substantial cost incentive to work on this project.

The most popular request in 2026 has been a form of specialized "Mentoring" ... either weekly video conferences or weekly video conferences fused with ad-hoc analytics designed to help your Management Team navigate customer behavior in 2026. Here are your two "Mentoring" options ... I call this offering a "Customer Advocate Mentorship" opportunity. Think of it as me being a "Chief Customer Officer" of sorts.

Click here for data layouts as well as other project offerings for the remainder of 2026.

My July / August / September calendar is likely to fill up quickly after this announcement, so please reach out soon to reserve time for your project.

Thanks,
Kevin

It's Time!

Once again, we've made it to the next run of the MineThatData Elite Program!

In our study of "Beans: The Internet's Only Variety Store!" we covered a handful of elements from a typical Elite Program Run (click here or click here or click here). The analytics are helpful, and you won't find them in on your Agency-Generated Shopify Dashboard.

Cost?  $1,800 for first-time participants, $1,000 per run thereafter, participation is fully voluntary. If you don't want to participate in the October run, don't participate!

Deets:

• Data due by 6/15 (let me know if you need to see the file format I use to run the analysis).
• Payment due by 6/15 (I'll invoice you ASAP).
• Analysis completed by 6/30.

Contact me now (kevinh@minethatdata.com) to participate in the June run of the Elite Program!

Case Study: A Marketing Plan

I ran a logistic regression equation to understand how likely multi-category buyers are to purchase again in the next year ... after controlling for purchase frequency and AOV ... analyzing twelve-month buyers. Here's the results of the Logistic Regression equation ... nerdy stuff you can ignore (though I do want to show my work).

The variable "multicat" has an Exp(B) of 1.361 ... this means that any customer that historically purchased from more than one category was 36% more likely to buy again in the future AFTER controlling for purchase frequency and AOV.

Separately, I was able to demonstrate that "multiple" is important ... whether the number is two categories or seven categories is much less important.

In a prior analysis, we demonstrated that customers are responsive for a few months following a first purchase, then are dormant, then come back at months 11/12/13 and again at 23/24/25 following a first purchase.

A marketing plan becomes obvious.

1. Separate email streams for first-time buyers within three months of a first purchase, attempting to generate a quick second order (preferably) within a second category.
2. Personalize the merchandise in email campaigns for first-time buyers to increase the probability of a second purchase (preferably) within a second category.
3. When a prospect visits via search, the goal is to convert the prospect to a first order and hopefully cross-shop the customer into a second item and/or second category.
4. When a customer reaches recency = 11/12/13/23/24/25, we ramp-up messaging and frequency.
5. Personalize the home page and/or landing pages to show customers what they "need" to see to maximize their future value.

Now, this requires "Beans: The Internet's Only Variety Store" to do things differently. They love to "batch and blast" their email campaigns, they send 12 catalogs per year to customers, they under-invest in social. In other words, they're like any other brand. And when you point out that somebody needs to do things differently and they are simultaneously like any other brand ... well ... the message isn't always well-received.

Which brings us to next week's post ...

Case Study: All Paths Lead to Apparel Tops

Yesterday I talked about Entertainment customers shifting dollars over time to Apparel Tops.

By the time the customer orders for the third time, 34% is in Apparel Tops, just 9% in Entertainment.

Does this happen to all categories? In this case, yeah, it happens to all categories.

Here are first order categories and migration through a third order.

Apparel Bottoms:  47% / 21% (Bottoms vs Tops) in first order, 16% / 35% in third order.

Fashion:  34% / 21% (Fashion vs Tops) in first order, 9% / 33% in third order.

Home:  47% / 19% to 18% / 32%.

Jewelry:  40% / 17% to 6% / 35%.

Workplace:  27% / 21% to 3% / 36%.

Outside:  51% / 12% to 17% / 27%.

Having Fun:  37% / 20% to 15% / 32%.

Seasonal:  34% / 19% to 7% / 31%.

Decorations:  31% / 20% to 9% / 32%.

Two interesting things happening, of course. First, customers on a first order do buy from multiple categories, with Apparel Tops being right there at the top. Second, as the customer evolves, the customer spends more and more money with Apparel Tops, less and less money with the category of a first purchase.

As a marketer, tell me how you plan on using this information to make different decisions? If the answer is "I'm not changing anything", that means something.

Tomorrow, we'll explore an email exchange discussing "doing something different" given we have knowledge of customer behavior.

Case Study: Entry Points Into A Brand And Subsequent Migration

It's so much fun to study categories ... you learn how your business actually works in ways that Spotify reporting just can't replicate.

Let's look at Category = Entertainment. I selected all first-time buyers who purchased from Entertainment in the first order, measuring how their merchandise preferences evolve as the customer advances down the customer life cycle.

Tidbit #1:  If the customer purchased Entertainment in a first order, the customer only spend 33.6% of first order AOV on Entertainment. In other words, the Entertainment item was likely an add-on (Apparel Tops and Home comprised 31.3% of first order AOV).

Tidbit #2:  As the customer evolves, the customer leaves Entertainment, shifting into Apparel Tops. There's not much sense to keep hounding this customer to buy Entertainment when the customer has a natural gravity toward Apparel Tops.

Every brand has gravity. If we see more examples of new buyers ultimately gravitating to Apparel Tops, we know something valuable about how to market to customers in email marketing (for instance) moving forward.

Case Study: Off-Season Purchases

We've learned that "Beans: The Internet's Only Variety Store" is heavily skewed to the November/December timeframe.

I've learned across nearly twenty years of consulting project that it's not healthy for a business to skew so heavily to Christmas. You want to offer products that customers purchase all-year. If there's a reason that subscription-centric brands are coveted by investors, there's the opposite reason that Nov/Dec businesses aren't coveted.

When I see a skewed business, I run a regression model to test the dollar contribution of Oct/Nov/Dec orders vs. orders generated during the rest of the year. For twelve-month buyers, spanning four years of purchase history and one year of "prediction", here's the simple regression equation.

• 1.257 + 0.079*($ Spent in Oct/Nov/Dec) + 0.095*($ Spent Jan-Sep).

In other words, dollars spent in "off months" are 20.2% more valuable than are dollars spent in Oct/Nov/Dec.

This fact supports encouraging the Merchandising Team to invest more effort into January - September.

Case Study: Simple Forecasts

If we're going to analyze the intersection of category performance and customer performance (which - FYI - is really what our businesses all come down to), we should also be able to forecast how a category is likely to evolve next year based on current customer trends.

Here's a simple forecast I put together for Apparel Tops ... the largest category that Beans manages.

I know, small numbers ... click on it for details, ok?

Categories yield Teachable Moments. Look down the "PctDmd" column. This is the percentage of annual demand likely to be derived by four customer segments.

• 9.4% from last year's Apparel Tops AND Other Category buyers.
• 6.4% from last year's Apparel Tops only customers.
• 4.7% from last year's Other Category buyers.
• 79.5% from New/Reactivated buyers this year.

In essence, the Merchant responsible for Apparel Tops is generating 80% of his/her revenue from customers who haven't purchased in the past year.

If you know that fact, how would you work with a Marketing Professional to grow Apparel Tops? Yes, you know the answer. Hint - the answer applies to most of you.

We can see the performance difference for three twelve-month buyer segments.

• Category Yes, Other Yes = $5.98 in the next year.
• Category Yes, Other No = $4.58 in the next year.
• Category No, Other Yes = $1.44 in the next year.

If the customer didn't buy Apparel Tops last year but bought something else, the customer is worth 1/3 as much to 1/4 as much as a customer who did buy Apparel Tops last year.

Look at the demand forecast on the far right - if everything is similar to last year, the category will contract by 4.4%. No bueno.

Your Chief Merchandising Officer and Chief Financial Officer need to know what is coming ... by category. If categories are forecast to contract, inventory buys need to be adjusted accordingly.

These category analysis are darn important.

Case Study: When The Crabby Merchant Is Right ... And Horribly Wrong At The Same Time

In the email dialogue shared yesterday, the Chief Merchandising Officer suggested that her customers had long repurchase cycles, therefore, it's not fair to measure future value across only twelve months.

For "Beans: The Internet's Only Variety Store", she is both correct and horribly wrong at the same time.

Her customers have long repurchase cycles. I use my Life Table Methodology to measure repurchase activity/cycles. Here is what the data looks like.

The green table shows incremental repurchase probabilities by month, as well as cumulative repurchase probabilities by month, for 1x buyers, 2x buyers, 3x buyers, and 4x buyers. The graph next to the green table maps out incremental repurchase probabilities for first time (1x) buyers. Look at that stupid-high spike at month = 12. What do you think that is?

• It is customers coming back and repurchasing at high rates exactly one year following a first purchase.

In other words, there are a metric ton of customers who buy in November/December, are responsive in Dec/Jan/Feb, then are inactive for most of the year ... then they magically reappear 11-12 months following a purchase to buy again. The customer then disappears for nearly a year before reappearing in months 23-24.

It's a hugely seasonal business ... the Chief Merchandising Officer is CORRECT in suggesting that her customers have a long purchase cycle and measuring things over time is more appropriate.

The Chief Merchandising Officer is also HORRIBLY WRONG at the same time. Her customers are simply not generating reasonable amounts of future demand no matter the timeframe looked at. Remember what I shared yesterday?

• New customers spend maybe $11 in year one, $7 in year two, and $4 in year three. In total, that's $22 of future demand ... it's nothing.

It is terribly difficult to run a business when customers have virtually no future value! The secret to a successful business is to manage acquisition costs while maximizing future profit yielding a wildly profitable relationship. If you cannot maximize future profit? No bueno.

The job of a great merchant is not to smoosh all sales into November/December. A great merchant creates reasons for customers to buy products all year long. The Nordstrom Anniversary Sale proves this is possible. Amazon Prime Days (where do you think they got that idea from) prove it is possible. The merchandising team at Beans should also know it is possible ... and chiding an analyst for not viewing customer response on an appropriate time horizon does not absolve the merchant for failing to create a thriving business in, say, June.

Does that make sense to you?

Case Study: An Email Correspondence

Maybe the most important finding in the past week is that "virtually nobody" is repurchasing when acquired by "Beans: The Internet's Only Variety Store!", regardless of merchandise category. Discovering the fact is one thing. Communicating the fact is quite another thing. And sometimes, the communication results in a reshaping of the message I convey.

This is why I send "tidbits" in my projects ... the back-and-forth interaction is useful and helps shape the outcome of the project.

From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, May 11, 2026 3:22 PM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: FW: RE: FW: Repurchase Activity

Does Sloane have a point? Sort of. But the point doesn't change the fact that your customers have minimal future value.

If I measure repurchase activity over three years instead of one year, repurchase rates improve from maybe 18% to 33%. In that manner, Sloane is right.

Let's look at annual spend for customers acquired four years ago. Year1 = $10.68 in sales. Year2 = $6.92 in sales. Year3 = $4.08 in sales.

The story doesn't change ... the customers you acquire have virtually no future value when converting sales to profit. You have to generate a lot of profit on a first order to stay in business.

______________________________________________________

From: Paisley Ingram <paisley.ingram@beans.com>
Sent: Monday, May 11, 2026 2:56 PM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: FW: RE: FW: Repurchase Activity

Does Sloane have a point regarding a longer repurchase cycle?

______________________________________________________

From: sloane.montgomery@beans.com
Sent: Monday, May 11, 2026 10:39 AM
To: Paisley Ingram <paisley.ingram@beans.com>
Subject: RE: FW: Repurchase Activity

His experience is limited - those companies are too big to matter. $20,000? Highway robbery. I'll get you better answers from AI for minimal cost. Let's focus on the future, not an antiquated business model where some dweeb is paid a premium for something software can easily generate for free.

Ask Goober if customers have a longer repurchase cycle? I think he's looking at the issue the wrong way. Marketers are marketers for a reason, they're simpletons who are too narrow-minded to have the world-view you and I have to have to run a business.

______________________________________________________

From: paisley.ingram@beans.com
Sent: Monday, May 11, 2026 10:33 AM
To: Sloane Montgomery <sloane.montgomery@beans.com>
Subject: RE: FW: Repurchase Activity

He was part of the Management Teams at both Eddie Bauer and Nordstrom back in the day. We're paying him $20,000 for his work.

Also, we're breaking too many eggs. Sales are down 20% since your arrival. We can't survive if we go below $16 million in annual sales.

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From: sloane.montgomery@beans.com
Sent: Monday, May 11, 2026 9:56 AM
To: Paisley Ingram <paisley.imgram@beans.com>
Subject: RE: FW: Repurchase Activity

First of all, who is this propeller-head you are working with? You can tell this Goober never worked for a real business, he's just out there wandering aimlessly in the Land of the Theoretical. How much are you paying for his "insights"?

Anybody with half a brain knows you don't measure lifetime value within twelve months. It's called Lifetime Value for a reason. You measure the Lifetime. That's what I'm working toward. And if we have to break a couple of eggs along the way, so be it.

______________________________________________________

From: Paisley Ingram <paisley.ingram@beans.com>
Sent: Monday, May 11, 2026 9:44 AM
To: Sloane.Montgomery@beans.com
Subject: FW: Repurchase Activity

 

FYI Sloane. 

Best,

Paisley

______________________________________________________

 

From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, May 11, 2026 9:12 AM
To: paisley.ingram@beans.com
Subject: Repurchase Activity

The analysis suggests that the future value of customers recently acquired is well below what I'd expect. Apparel Bottoms, Apparel Tops, and Outside are the three categories that do comparatively "well" ... even then, those categories deliver customers who spend just $11.00 on average in the next year (about $2.00 of profit after subtracting marketing costs). Fashion / Seasonal / Having Fun generate customers who spend about $8.00 or less on average in the next year (maybe $0.50 of profit after subtracting marketing costs).

This puts a lot of pressure on your p&l, because you have to generate a lot of profit when acquiring a new customer for your business to be profitable.

Thanks,

Kevin

Case Study: Which Categories Bring In Valuable Customers?

I ran an analysis, measuring how much future value (demand/sales over the next twelve months) a customer will generate after being acquired within each merchandise category. If a category does a great job of bringing in new customers and those customers don't spend money in the future, well, we've got a problem.

Here's a summary table of what I learned.

Apparel Tops is a high-volume category, and fortunately it is a top-three category in terms of future value (NY Value).

Notice that most categories generate customers that buy from nearly two categories in the next year if the customer repurchases.

However ...

However, there is a problem in this table.

When a customer is acquired, regardless of category, the customer spends very little in the next year. Seasonal is worst ($6.40) ... Outside is best ($11.33).

In other words, there is very little customer loyalty associated with this brand. Newly acquired customers have a low chance of buying in the first year with the brand (between 14% and 18%), and if they buy the don't spend much ($46.00 to $63.00).

This is one of those moments when the Consultant realizes s/he is about to anger people. Yes, you can run a profitable business with a customer base that simply doesn't spend much, but it means everything regarding the p&l is dependent upon generating profit off of a first purchase.

Tomorrow, I'll share what the conversation looked like regarding exceptionally low future value metrics.

Brief Case Study Break: What Your Media Might Look Like In The Future

I'm writing this back on Sunday night.

Here are the two shows I just watched on YouTube.

• AI Wasn't Built for You.
• English Football is Absolutely Ridiculous.

The former is the trendy stuff ... well produced, powerful people explaining powerful issues. It's easy to see how people are attracted to the content. Unfortunately, you'll never appear on this show. It's the evolution of a Ted Talk pushed 20 years into the future.

The latter is your future. That's Nieve. About 15 years ago, Rog and Davo brought the Premier League to me. Rog made it accessible to somebody who only saw a handful of televised Premier League fixtures each year. His storytelling was all audio back then, a completely different style of storytelling, but appropriate for his (my) generation.

Nieve is able to take the concepts of the Men in Blazers and apply them to the entire English Football Pyramid, via video ... I mean, in the clip above, she's at the final game of the National League season (5th tier), and she captured the pure madness and drama of the last ten minutes of that match. Poor Rochdale (hint - it would end up a fairy tale for them today at Wembley Stadium). 

She exudes raw, unadulterated humanity. There is no way AI is going to replace her, she's a force of nature, and if you have any empathy for the fans Exeter City FC, Nieve is going to help bring that empathy to you via humor and sadness in a way that modern "polished" / "scrubbed" activities cannot possibly achieve.

Nieve is your future. I realized you work for "Beans: The Internet's Only Variety Store". But every single one of you has a "Nieve" working for your brand ... a person uniquely qualified to bring storytelling to your customers. I am always amazed that almost none of you are willing to take that risk, and if you are willing to take the risk you shut it down long before anything positive could happen.

Instead of worrying about AI, why not apply stuff AI cannot possibly mimic (like a parrot) to your marketing efforts?

Case Study: Dispelling Legends

At "Beans: The Internet's Only Variety Store" there is a legend ... that a broad assortment "holds the brand together".

It's been my opinion that Leadership is violating this "legend", assuming the legend is true.

So ... I performed a classic Factor Analysis to demonstrate categories that customers like to purchase from. If dots on the image below are close together, customers like to purchase from the categories "near each other" on the image. If categories are far apart, it means different customers prefer the categories.

Here's the image from the Factor Analysis.

There appear to be three reasons why customers buy from this brand.

1. Apparel Tops:  We know this is a high-volume category, and it is all by itself meaning that many customers ONLY purchase Apparel Tops.
2. Home / Outside:  There are clearly customers who view this brand as a Home / Outside brand. There's some bad news here ... some customers clearly come for Home / Outside, but a few weeks ago I showed you that Home decreased from $6.0 million to $2.9 million over four years. No bueno.
3. Everything Else:  There are customers who view this brand as an eclectic mix of categories (the right/middle side of the image).

Of interest ... Apparel Bottoms does not align with Apparel Tops ... it aligns with "everything else".

I have to analyze new customers by these three groupings ... if the future value of a customer who aligns with "Everything Else" is higher than other categories, we have a lot of freedom as marketers to be clever. If "Apparel Tops" drives new customers, we have to concede that those customers might not appreciate the "entire assortment". Messaging to Leadership doesn't always go well on that topic.

P.S.:  If you like what you are seeing here and are interested in a Category/Customer centric analysis, send me an email (kevinh@minethatdata.com).

Case Study: Customer Response to a Dying Category

We talked about Apparel Tops yesterday. We've previously mentioned that Fashion is a dying category, largely because the merchandising team appears to be killing the category. How does customer response change when a category is being killed off?

Similar to Apparel Tops, most demand comes from new/reactivated category buyers (80%). Again, the marketer has to know this, because the marketing plan has to include a lot of $$$ and attention in awareness (organic social) and search (product listing ads). If the marketer doesn't acknowledge this fact and act upon it, well, the marketer is equally culpable with the merchant at killing off the category.

This likely applies to your business as well. Most of your categories offer products that largely appeal to new/reactivated buyers and/or prospects. A marketing department that does not understand this dynamic is a marketing department that sub-optimizes the potential of the category/business.

Ok, what have the merchandising team done with their assortment-contraction initiative?

Rebuy Rates over time.

• 12-Month Fashion Buyers = 2.0% to 3.0% to 2.8% to 1.5%.
• All Other 12-Month Buyers = 1.6% to 2.5% to 2.2% to 1.2%.

What happened in the past year is telling ... 40% or greater decreases in rebuy rates (albeit very low rebuy rates). With less merchandise available, existing buyers become less likely to repurchase.

The astute reader should say "Hey, Goober, you just told us that almost all demand comes from new/reactivated buyers, please tell me how many new/reactivated buyers the category had over time".

I can do that.

• 36,236 to 54,438 to 52,418 to 27,308.

We see the same (ugly) trend with new/reactivated buyers ... counts are down nearly 50%.

This comes up repeatedly in my work ... if you trim the assortment, you harm demand/sales. If you grow the assortment, you increase demand/sales but introduce other challenges (inventory / liquidations / margin erosion).

I'm going to hold off on communicating this fact to Paisley Ingram (the owner) until have a few more data points. I need to find a simple way to tell a complicated story.

Case Study: Customer Response To Merchandising Changes

Let's approach this discussion in bite-sized pieces.

This table reviews repurchase activity for Apparel Tops ... the best-selling category that Beans: The Internet's Only Variety Store sells.

Yes, there's a lot going on here.

An introductory tidbit ... in the past year, 79% of demand in Apparel Tops comes from customers who haven't bought in at least a year or are first-time buyers. Only 16% of demand came from last year's Apparel Tops customers and just 5% of demand came from other twelve-month buyers.

If you are the marketer trying to grow Apparel Tops (your best-selling category), what might your approach be?

• Awareness (organic social) and Search (product listing ads).

You could try to squeeze more out of existing buyers, but what is the point? If your efforts were positive and increased sales among existing Apparel Tops buyers by 10%, total demand would grow by 16%*10% = 1.6% ... meaningless.

When a merchant tells you that the marketer is not getting her product in front of the "right customers", the merchants is both wrong and right at the same time.

• Wrong, in that the merchant usually has minimal experience with marketing techniques.
• Right, in that most categories benefit from exposure to prospects who haven't bought the product previously.

Pay attention to rebuy rates over time.

• 16% to 15% to 14% to 11% for existing buyers.
• 7% to 6% to 6% to 4% among all other twelve-month buyers.

This is a mystery that requires professional levels of communication.

• The category is stable because new/reactivated customers are buying the product.
• The category is stable because new/existing items are being managed reasonably.
• The housefile ... twelve-month buyers ... are increasingly less likely to buy this product, but their share of total demand is not sufficient for management to notice there is a problem.