Business Principle #2

Business Principle #1

16 Business Principles: Hillstrom's Marketing Management

Over the next few weeks, I'm going to share the Sixteen Business Principles that make up what I'd call my "Marketing Management System".

Here's what I see happening. There's a decent amount of turnover happening at the Director / VP level. Lots of new Professionals getting their first chance to run something. I was there at one time (1998). It's a daunting opportunity. Nobody gets you ready for your opportunity, it's all up to you. And then you mess up, all over the place, learning on the fly. By the time you figure things out, there's a good chance you've made enough mistakes to lower the odds of long-term success.

As a consultant, the questions I'm getting in 2018 are different. They're not "How do I make Facebook work?" or "How do I leverage Machine Learning?". Instead, the questions are of the "How do I go about running my business given all of the static all around me?" nature.

That's a very different question ... a much smarter question.

In sports, it is common for teams / coaches to run a "System" ... an offensive or defensive way of doing things. About four weeks ago, I finished this wonderful book.

This is the story of how Hal Mumme borrowed aspects of an offense from Brigham Young in the 1980s, from Bill Walsh (San Francisco 49ers), and then created his own offense. His offense put up monster numbers. Nobody wanted to copy it. Nobody cared. Then he went to Kentucky and he beat Alabama in the late 1990s and folks started to take notice. By the time his protege (Mike Leach) took the offense to new levels at Texas Tech in the 2000s, elements of the offense were being copied by everybody. Today, a spread-passing attack is common, though Mumme's pure system is still truly leveraged by a half-dozen coaches. 

I also own an autographed copy of a book from Bill Walsh - where he outlines everything about the West Coast Offense that he created.

In sports, you have to have a solid system, a way that you do things that works for you and your team.

In modern Marketing? Vendors drive the "system" ... pure and simple. They want you to use their tools to pay for customers. Google and Facebook and Amazon are the primary beneficiaries of this system. Each created an ecosystem of experts who tell you how to use their platform for success. Of course, you have to use their platform for success, funny how that works!

What is needed is a Marketing Management System (MMS) whereby the new Director or VP or CEO has a set of Principles that drive how they approach everything they do.

Twenty years ago, Don Libey published his version of a Marketing Management System.

He traveled the country, using flip-charts and hand drawings to tell 1990s data-driven marketers how to maximize profit.

It's been my experience that modern marketers & analytics experts do not want to be told how to do anything. They don't want to be told what metrics to use or tables to create or channels to use ... they're the experts, thank you very much! What they do want to be told to do is this ... they want to be told how to be successful. They want to know how other people were able to change the culture within a company. They want to know how individuals were successful even though they were doing the same things that another individual did and didn't have success. In other words, folks want to know the secret sauce of success.

So I am in the process of documenting my own Marketing Management System (MMS). As part of this process, I have outlined 16 Business Principles. It's been my experience that the CEO / CMO / VP / Director who implements a comparable system has success.

And over the next few weeks, I will share each slide with you ... one slide for each of the 16 Business Principles that make up Hillstrom's Marketing Management system.

Click on the image each day, read the content, and tell me what you think. You're gonna disagree with some of it, you're gonna agree with some of it. Use what you agree with to form your own Marketing Management System.

If I were your new CEO or CMO, this is the system I'd install at your company.

Ready for fun?

Catalog Craig Paperman on the Amazon Toy Catalog

Yes, this is business fiction. If this isn't your thing, take a break and read this article about Build-A-Bear and their promotion that generated so much demand that they ran out of product and became the punching back of the trade journal fraternity for being so successful.

Kevin:  Craig, you look like you just found out that your adjustable rate mortgage is about to adjust to 10%. What's wrong?

Catalog Craig Paperman:  I'm just stunned.

Kevin:  Stunned?

Craig:  I can't believe that Amazon is going to put out a toy catalog. It's proof that the omnichannel thesis was right all along. 

Kevin:  Oh stop it.

Craig:  The catalog will be handed out at Whole Foods. It's pure omnichannel strategy played out on the World's Largest Stage.

Kevin:  You look like you are about to pass out.

Craig:  Can you imagine what happens when that thing drops? They'll need help. They'll need somebody like me to make sense of the catalog. Delivery stats. Do you think they'll be able to forecast what percentage of the book has been delivered by noon of Tuesday of the in-home week?

Kevin:  Do you think they'll care?

Craig:  Key codes. Who is guiding them on their key code strategy?

Kevin:  What is this, 1998?

Craig:  How will they track how successful the catalog is? Do you think they know that they need a credible matchback strategy? And how will they acquire new names? Do you think they'll take names from the co-ops? Will they contribute their names to the co-ops? Will we finally get access to Amazon names? Oh my God, I'm getting dizzy thinking about the possibilities.

Kevin:  I'm sure they'll have sophisticated mail/holdout tests to read the results.

Craig:  No, I mean matchbacks. They need matchbacks. Mail/Holdout test results are for geeks. You lose demand when you hold out names. Everybody knows that.

Kevin:  If they mail the entire housefile then the matchback strategy will say that all orders in the United States are due to the catalog.

Craig:  Yes. YES!! Omnichannel strategy truly does work. Finally, finally we have validation for a decade of shouting into the wind.

Kevin:  And to think this may never have happened had Private Equity folks not employed an omnichannel strategy coupled with a debt load that allowed Amazon to take just enough share to plow Toys 'R Us into the ground.

Craig:  It's beautiful.

Kevin:  Is it?

Craig:  Yes.

Kevin:  Can you think three steps ahead and see what happens to a traditional catalog brand in 2021 when Amazon gets all the paper and the cataloger is priced out, or are you locked into an omnichannel gaze?

Craig is not responsive.

Kevin:  Craig?

Craig:  Do you think Amazon will offer me stock options if I consult with them?

Kevin:  Your vendors are killing you off while they boost up Amazon, can't you see that?

Craig:  $300,000 a year plus five million dollars of stock options paid out in 25% annual installments. Ohhhhhhhh.

Kevin:  Your printers constrain demand so that they can squeeze more money out of you and then Amazon enters the market and that will only cause paper prices to increase. How does that help you?

Craig:  Do you think Amazon has a credible square inch analysis strategy? In house? Would anybody there be smart enough to know they need one?

Kevin:  The USPS really seems to see that their future aligns with Amazon, don't you think?

Craig:  I could bring RFM to Amazon. They don't need AI or Big Data or Machine Learning. They just need RFM.

Kevin:  Alright.

Craig:  Do you think Amazon knows all the postal discounts they get if the ramp-up the page counts? Somebody has to tell them. That somebody could be me. Me!!

Kevin:  Can you imagine how quickly the Seattle-based paper rep will lobby to move into their offices on Pill Hill? 

Craig:  Do you think Amazon knows that they need to stuff the first twenty pages of the catalog with winners? Will they leverage URL callouts on the bottom of each page, driving customers to their website? Will an Amazon Go store know I've received the catalog when I enter the store? Ohhhhhhhhh!!!!

Kevin:  You aren't listening to a word I'm saying, are you?

Craig:  Maybe they'll ink-jet a message on the back cover to take the catalog in to your closest Whole Foods store to get a discount on organic orzo. Think of the omnichannel possibilities. Dot-whacks. They could employ snipes and dot-whacks. Targeted inserts. 

Kevin:  That's what you are thinking about?

Craig:  They could push a digital version of the catalog to my Kindle Fire. My knees just buckled.

Kevin:  Didn't you always hate Amazon?

Craig:  Who is going to manage their catalog request program?

Kevin:  You said that Amazon was the "Evil Empire".

Craig:  They'll keynote a session at Cohere One's event next year, titled "Catalogs, The Final Piece Of The World Domination Puzzle, Sponsored By Quad Graphics and Epsilon and Belardi-Wong and Forty Other Industry Vendors Who Want A Small Piece Of The World Domination Puzzle".  

Kevin:  That sounds about right.

Craig:  And you couldn't blame the vendors because they need to survive and Amazon could be their meal ticket to success.

Kevin:  That's how capitalism works.

Craig:  And then NEMOA, they'll be at Spring NEMOA 2019 and we'll give a 24 year old at Amazon an up-and-coming catalog professional award and the record-attending crowd of 1,740 will give Amazon a standing ovation. The industry will bathe Amazon with love.

Kevin:  They'll give a standing ovation to the company who just two months ago the industry agreed was running them out of business?

Craig:  Yes, because Amazon will be part of the family.

Kevin:  What family?

Craig:  The Catalog Family.

Kevin:  That's what this is about?

Craig:  They're executing like we want them to execute. That's all that matters. That's why we've loved L.L. Bean and all of the other New England based catalogers all these years. 

Kevin:  #ohboy

Craig:  Catalog Craig Paperman ... Managing Editor ... Amazon Catalog Division.

And with that, Catalog Craig Paperman loses consciousness ... 

What Is Your Version Of The $1.50 Costco Hot Dog?

Read this.

Now discuss what your version of the $1.50 hot dog is at the company you work for. 

Merchandise can be a low-cost / no-cost customer acquisition or customer awareness tool.

The Secret To Success In Business Is Doing Something That Nobody Wants To Copy

Read This.

Watch This.

Time will tell if this yields sales/profit.

But it gets the job done in terms of low-cost / no-cost awareness.

And it's not something you are likely to copy, right?

Sales Tax

You've been told that having to collect sales tax will kill your business.

Think about it this way. You buy from Amazon ... you pre-pay for shipping, more than a hundred dollars a year ... then you pay sales tax in most states on many products, and you're not getting 40% off, are you? Has it stopped you from buying from Amazon? Has it stopped Amazon from becoming "Amazon"?

I've spent more than twenty years studying what happens when a retail brand opens a store in a new market and has to collect sales tax in that market (on online transactions). There's a modest, short-term hit to online business (mostly because customers shift behavior from online to the new store) followed by normal sales trajectory online.

When we sell something the customer wants to buy, sales tax is largely irrelevant. 

Don't let third parties freak you out. Their narrative/agenda is designed to improve their business. Your job is to improve your business. Find some merch that your customers love and try harder to sell it, ok?