July 28, 2021

Email Subscribers And Reactivation

Your best tactic regarding reactivation efforts is email marketing. It's virtually free and you control everything.

If you are simply executing your typical email blasts (same email to every customer five times per week), you are undoubtedly getting benefit, as shown below.


Yeah, look at those email subscribers! Especially look at those with 1 click-through in the past year or 2+ click-throughs in the past year. That's where you get a big bump in reactivation, and a huge increase in profitability.

The best reactivation marketers have programs tailored to the audience they hope to reactivate. This is a place where "engagement" actually means something. Take advantage of this opportunity!!




July 26, 2021

A Nice Reactivation Bump in CLV / LTV

Here's a common situation that supports reactivation efforts.

When you acquire a new customer, you might have the following metrics over three years.

  • Future Demand/Sales = $200.
  • Future Gross Margin Dollars = $120.
  • Future Pick/Pack/Ship Expense = $30.
  • Future Marketing Expense = $40.
  • Future Variable Profit (Long-Term Value) = $120 - $30 - $40 = $50.
Overall, you'd be pretty happy with that outcome.

When you reactivate a customer, you have a customer with multiple prior purchases, meaning that the customer is more valuable going forward. Your data looks like this:

  • Future Demand/Sales = $230.
  • Future Gross Margin Dollars = $138.
  • Future Pick/Pack/Ship Expense = $34.50.
  • Future Marketing Expense = $42.
  • Future Variable Profit (Long-Term Value) = $138 - $34.50 - $42 = $61.50.
Would you rather have a customer worth $50.00 in the future, or a customer worth $61.50 in the future?

This is why you work hard to reactivate customers with recency > 12 months.

July 25, 2021

It Can Be Hard To Move The Needle

Here's why you have to have some semblance of precision in your reactivation efforts.

This is what a normal year might look like for 13-48 month buyers:


It's not easy to reactivate customers ... they've lapsed for a reason, right?

Now, let's say you improve reactivation response by 15% annually. Here's what the story looks like.

You did a great job, and in this case you get 9,500 more customers as a consequence.

In this business, you go from the following scenario ...

  • 170,759 new buyers.
  • 63,404 reactivated buyers.
  • 234,163 new + reactivated buyers.
... to this scenario ...
  • 170,759 new buyers.
  • 72,915 reactivated buyers.
  • 243,674 new + reactivated buyers.
  • Total Increase = 4%.
A typical "direct marketer" looks at that story and says "no bueno" ... too much work for too little return.

Fortunately, many of you are going to have 50% or more 13-24 month buyers this fall because of the COVID-bump that you didn't capitalize on via a credible Welcome Program.

Which means you will have an opportunity to do something this October/November/December.

Time to do something!


July 21, 2021

10% to 20%

Why do you care about reactivating lapsed buyers?

Because they are worth more than new buyers.


In this example the new buyer spends $111 in the year acquired.

The reactivated buyer spends anywhere between $123 and $132 in the year reactivated. In other words, the reactivated buyer is likely to be worth 10% to 20% more.

This also means you can spend more to reactivate a customer than you can spend to acquire a new customers (because the customer will pay you back faster) ... and marketers love that kind of stuff.

Your cheapest, most direct, and most effective tool to reactivate a customer is email marketing.

Your best indicator of a lapsed buyer ready to reactivate is a website visit in the past 1-4 weeks.

Go get those lapsed buyers ... convert them ... at least get them to your website, ok?



July 19, 2021

Dealing With Tiny Percentages

The first thing you notice when you try to reactivate customers is that they (the lapsed buyer) have very little chance of buying again in the next month.

We've talked about the importance of the Welcome Program.

All of you know about the importance of Reactivating Customers.

When you try to Reactivate a Customer, you invariably face a big problem ... you're dealing with Tiny Percentages.

Here's a typical story regarding Reactivation. I calculated the average monthly response rate for buyers across a bunch of businesses.

Let's say you are trying to reactivate a 25-36 month buyer, who only purchased one time. Every month you have a 0.7% chance of getting the job done.

0.7%.

As a marketer you become Shania Twain ... "that don't impress me much". You could increase the rate by 50% and it would seem like nobody would notice and you wouldn't get credit and in a year you'd be fired.

You'd be wrong.

I'll explain why in my next post.




July 18, 2021

Reactivation

We talked last year ... at length ... about the fact that you were going to have a glut of customers courtesy of a global pandemic. We talked about how important it is to convert a first-time buyer RIGHT NOW before the customer becomes unresponsive.

If we conducted a survey asking how many of you made meaningful changes to marketing strategy for this enormous glut of first-time buyers, we'd learn that fewer than 10% of you did anything meaningful.

Opportunity wasted.

I know ... you'd respond:  "But Kevin, we didn't waste the opportunity. You don't get it. We could barely keep enough inventory on-hand to stay in business. Nobody was in the office. Our vendors were equally impaired. And we still grew our business by 50%. I'd rather count money than spend money on a tactic that is unproven. And let me tell you, we counted the money last year."

Fair enough.

Of course, now business is slumping ... with some of you selling less in May/June/July than you sold two years ago ... and that's with a ton of new customers on the file.

That means you are going to have to reactivate customers, doesn't it?

So we'll talk about Customer Reactivation over the next few posts.

July 15, 2021

Email Chain

Yes, this is fiction ... 


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, July 12, 2021 2:11 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: COVID

Kevin,

It's been so long. Are you still wearing a mask when you go indoors with hundreds of people? We're either crazy to wear a mask after being liberated by a vaccine or we must wear a mask because we won't take a vaccine that alters your DNA or we shouldn't wear a mask because it impinges upon our Liberty and consequently we spread a virus all over everybody else. I can't make sense of any of it. I just eat Doritos all day now.

Kevin, we're down 40% to last year. Have been for eight weeks. What is going on? In the past two weeks we're down vs. two years ago. Is our COVID-bump over? And if it is over, what the heck are we going to do?

I know you have been talking about a Customer Development project. We didn't do anything to develop the glut of COVID customers, I mean, why would we do anything when we got all of that extra profit? But now I'm looking at Fall/Holiday and I'm thinking we're going to crater and miss plan by 40% or 50% and not have access to paper to mail catalogs to clear out all of this extra inventory. If customers aren't buying shorts now, they're not likely to buy them at Christmas.

I'm really worried.

I'm also worried about my file counts. We're down 30% in our 0-3 month file, but we're plus 60% in our 13-15 month file. We're out of alignment.

How did we miss this trend?

Are you willing to perform a Customer Development analysis for us? I know you say on your website that the cost is $25,000, but we can't afford to pay $25,000 when our sales are -40% to last year. Give us your best price for your best work and let's actually ... finally ... get some work done, ok?

Please help us.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, July 20, 2020 4:59 PM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: COVID

Craig,

My clients are paying me to analyze what is now being called a "COVID-bump", to see if it is sustainable and to see how lasting it might be.

Before you randomly add a loyalty program that may or may not work, make sure you thoroughly understand how first-time buyers convert, understand when first-time buyers convert, and understand their long-term payback. Use your existing tools (hint - email) to quickly convert these customers. Personalize what you show them, based on a first purchase. Personalize the website when the customer visits your website, so that you get a 10% - 50% gain in conversion rates. Do the easy stuff before you implement a loyalty program. But please, do the work NOW before it is too late to do anything and you face sales declines when the COVID-bump inevitably ends.

Thanks,
Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, July 20, 2020 2:46 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: COVID

Kevin,

Our sales are CRAZY. Who would have ever imagined all of this death and disruption would cause my team and I to earn gigantic bonus payouts this year?

Our 0-3 month file is HUGE. Do you have a list of best practices for converting these customers to loyal status? We're thinking of a loyalty program with points. I'm not looking to pay for a project, I just want a list of all of the tactics that your paying clients employ, tactics that you know for certain will work.

Thanks,
Kevin


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, March 23, 2018 12:40 PM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: COVID

Craig,

I'm fine, thanks for asking.

Do not be surprised if you see a huge sales gain. You might not see it, but if retail stores remain closed e-commerce brands stand to benefit from a huge bump. I'm not convinced this will happen, but time will tell.

If you see a huge sales gain, work REALLY HARD to convert all of those new buyers to a second purchase quickly, thereby getting a sales bump on top of a sales bump. Compound Interest! Don't delay and then complain in a year that you need a list of tactics that other brands use to convert inactive customers.

Thanks,
Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, March 23, 2020 3:48 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: COVID

Kevin,

I haven't heard from you in awhile. Are you safe?

This is crazy. How do I run a business with nobody in the office? I can't tell if anybody is actually doing any work. I keep coming in to work by myself. I think it is important to lead and show the world I'm not afraid of what has been unleashed upon us.

What are your clients saying about sales right now? I almost feel guilty about telling you this, but we're running 80% above plan. I don't know why. Why would people buy shorts during a pandemic? It's almost like they are sitting in shorts on video calls, though I have no idea who'd do something like that.

Tell me what you are hearing.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Friday, November 23, 2018 11:36 AM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Pricing Project

Craig,

The cost of my Pricing work is $25,000.

You might ask your analytics team perform some simple pricing work for you. How do repurchase rates, orders per buyer, items per order, and price per item purchased vary by product category as prices change? It won't cost you a penny and you'll learn whether you should discount more.

Please be careful as you consider your discounting tactics. This is not a bell that you can un-ring. The fact that you are following the herd and are already considering 50% off or 60% off or 70% off means that you will not be able to un-ring the bell.

Make sure you understand the impact of pricing on new merchandise. Undoubtedly you've performed your own merchandise forensics work with your in-house analytics team and fully understand how you should be pricing new items.

Finally, you probably performed a thorough multichannel forensics analysis of the impact of channels long ago, and you fully understand how your channels fit together. Once you know how they fit together, you will know why sales aren't increasing.

Thanks,

Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Friday, November 23, 2018 3:58 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: Pricing Project

Kevin,

I really don't understand how the omnichannel agenda is crumbling all around us. We are really facing some serious Holiday Headwinds (I call them "HH" in meetings here). The co-ops are dead. Mall-based retail is crumbling all around us. How is that possible with all of these channels that we have available? Shouldn't all of these channels add sales to the top line? 

All of that failure is causing everybody to offer customers 50% off, and with Cyber Monday just a few days away I don't know if I should offer 50% off or 60% off or 70% off. Do I capture market share? It seems prudent to capture market share right now, am I right?

You've been writing about pricing projects for some time now. I think that it would be wise to have you run your pricing algorithm against our discounting strategy. 

We've been down this road before. I'm not paying $25,000 for analytics work. I'm willing to pay a fair price. How does $7,500 sound? Best price for best effort, as I like to say.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, September 20, 2016 10:03 AM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Interesting Project Idea

Craig,

"Optimistic Caution" sounds a lot like being asked to do nothing. How much are you paying Woodside Research for their advice?


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, September 20, 2016 9:45 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: Interesting Project Idea

Kevin,

What are your clients telling you about what they are planning to do with their fall/holiday plans? How are your clients managing these headwinds?

Woodside Research suggests employing "optimistic caution". Smart advice from smart researchers.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, September 20, 2016 7:26 AM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Interesting Project Idea

Craig,

You might work with your existing analytics team to obtain an answer. I am working with paying clients right now, and I need to focus my efforts on the work they are paying for, despite the tempting offer of a cobb salad.

Thanks,

Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, September 20, 2016 3:01 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: Interesting Project Idea

Kevin,

If you are like me, you can't take your eyes off of cable news. I'm flipping back-and-forth between Fox and MSNBC as I write this, and I can't help but think that this election is harming business. Do I shrink my plan and cancel new merchandise orders because customers are consumed with the election? I don't know. I wish I knew the impact of new merchandise on the future of my brand.

Might there be a way to analyze 2000, 2004, 2008, and 2012 to quantify the impact of prior elections on customer behavior? I think this would be a lot of fun for you. If I sent you sales data by day for the past sixteen years could you spend an hour looking at our data and then provide us with a tangible path through the rest of 2016? I can send you the data this morning and you could turn the results around for me by end-of-day, so I could present the findings at our Executive Team meeting tomorrow.

How does that sound? As a way of saying thanks, I'd buy you lunch at the Shop.org conference if you are attending.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, February 24, 2014 8:11 AM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Possible Consulting Project

Craig,

I charge $4,000 a day plus all applicable travel expenses for onsite work. The cost of performing an actual Merchandise Forensics project is $25,000. I do not negotiate project prices.

Thanks,

Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, February 24, 2014 5:01 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: Possible Consulting Project

Kevin,

Have you had a chance to reconsider the consulting project we discussed last year? Spiffy Shorts is plowing through some serious headwinds right now, with outside lists not working and our sales not meeting expectations.

I am willing to pay $10,000 for project work, and am willing to provide a $2,000 travel and hotel stipend for the two weeks you'll need to be on campus to teach our staff how to perform the work.

I'm meeting with our Executive Team at 10:00am this morning, so I need an immediate response.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, August 26, 2013 7:51 AM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Possible Consulting Project

Craig,

I charge $4,000 a day plus all applicable travel expenses for onsite work. The cost of performing an actual Merchandise Forensics project is $25,000. I do not negotiate project prices.

Thanks,

Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, August 26, 2013 4:42 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: Possible Consulting Project

Kevin,

Just getting back to this. Could you write a new proposal that includes the additional work required to adjust for the fact that outside lists via co-ops are not performing well? We need to adjust properly for the headwinds we face on the list front. It's almost like the catalog industry is dying, for crying out loud. Having said that, I am a strong believer in catalog marketing.

I'm willing to pay up to $9,500 for this project. I would also like for you to train my analytics team how to run all of your reports, so that they can produce the reporting on demand for me. I assume that you will have to spend two weeks on-site to teach my team how to run the reports on their own.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, May 13, 2013 5:26 PM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Possible Consulting Project

Craig,

Thanks for the message. I don't use existing company reporting to perform my work. You already have talented staff that use existing company reporting, so what good could possibly come from my interpretation of a report that has already been interpreted multiple ways by in-house staff? I use my own proprietary code to analyze the intersection of customers and merchandise.

Project cost is $25,000, half due up-front, half due within fifteen days of project completion.

Thanks,

Kevin 


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, May 13, 2013 3:16 AM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: Possible Consulting Project

Kevin,

It's been a long time. I hope you are doing well. You've been talking about Merchandise Forensics on your blog for some time. Our merchandise assortment is stunning, as always, but sometimes an impartial outside point of view can be helpful. Could you use our existing reports to look at our merchandise assortment, keeping the cost of a possible consulting project inexpensive? I don't want to spend money that could be spent on mailing catalogs that yield new customers :)

I expect your best price and best effort. Can you put together a proposal this afternoon for me?

Best,

Craig


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, October 20, 2009 12:17 PM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: RE: Consulting Project

Kevin,

We'll take up the project at our next Executive Team meeting and see if we can come to a consensus on next steps.

Best,

Craig


From: Kevin Hillstrom <kevinh@minethatdata.com>
Sent: Monday, October 21, 2009 8:04 AM
To: 
Craig Paperman <craigp@spiffyshorts.com>
Subject: RE: Consulting Project

Craig,

Thanks for the message. I do not discount prices on consulting work unless I can gain efficiencies in data prep across brands. The price of the project is $25,000.

Regarding channels, do not raise your hopes that you will sell more if you have more channels to sell in. Each channel has a purpose. Email might be used for speaking to best customers. Search might be used to find new customers. It's unlikely they'll all work together to generate sales gains. If they did work well together, your business would have grown over the past decade, right?

Thanks,
Kevin


From: Craig Paperman <craigp@spiffyshorts.com>
Sent: Monday, October 20, 2009 8:55 PM
To: Kevin Hillstrom <kevinh@minethatdata.com>
Subject: Consulting Project

Kevin,

Crazy times, eh? Who would have ever thought that the stock market would crash like it has? We're dealing with unprecedented headwinds at Spiffy Shorts, like everybody else. Who wants to buy shorts when they are abandoning their homes, leaving the bank holding the note?

Anyway, we think there has to be a way to leverage multiple channels to grow in spite of the challenges we face. Our rep at Woodside Research told us that multichannel customers are worth seventeen times a much as single channel customers. Could your research tools help us solve this riddle?

Remember, we're dealing with significant headwinds at Spiffy Shorts, so we can't pay full price for Consulting Projects that may not yield actionable results. We expect your best price and best effort.

Best,

Craig

Email Subscribers And Reactivation

Your best tactic regarding reactivation efforts is email marketing. It's virtually free and you control everything. If you are simply ex...