Jasmine and the Direct Marketing Success Pyramid

Let's continue our discussion today, with Jasmine as our subject.

Merchandise:  Remember, Jasmine knows nothing of the economy of 1993 - 2007 that shaped Jennifer and benefited Judy.  Jasmine doesn't have money.  And yet, Jasmine is going to exhibit wild swings.  She'll pay $800 for an iPad, but she won't pay $0.80 for an app.  This will lead Jasmine-based marketers to solutions that "scale" ... you either find 1 customer that generates $400 of gross margin, or you find 1,000 customers that generate $0.40 of gross margin.  Jasmine's economy is going to be one of extremes ... low prices and low margins, or a few high priced winners.  Success in her economy is nearly opposite of success in Judy's economy, where you simply asked a co-op for 5,000,000 names a year at $0.06 each.

Creative:  This function will be reinvented in a Jasmine-focused businesses.  Social won't be a "channel", it will be a feature built into every part of the Creative process.  I think it is highly unlikely that Judy/Jennifer focused marketers will be able to lead this process, I believe this will come from Jasmine-aged employees.

Finance:  Finance Executives will be required to have "faith".  The business model is essentially opposite of the predictable "Judy-catalog-focused" business model that Finance folks are used to.  Jasmine-based Finance may require making many bets, hoping that 1-2 of 10 bets hit big.  More uncertainty, more pressure, more risk ... at least in the next 5-10 years as the app-based economy shakes out.

Service:  Jasmine is going to expect everything to be perfect.  She's used to a thousand apps that work seamlessly with her iPad or iPhone, and cost virtually nothing, so she's not going to tolerate $14.95 for eight-day shipping and handling.  And if she grumbles about something on Instagram or Twitter or Pinterest, she expects a response, now.  If Jennifer represented the end of the call center as we knew it, Jasmine represents the reinvention of the modern customer service center.

Passion:  So many of you tell me that you don't understand Jennifer, so you essentially ignore her.  When it comes to Jasmine, you tell me that you understand her, but you don't want to relate to her.  I think we'll see the passion of Jasmine's generation overwhelm existing businesses.  Jasmine will pick and choose her own winning brands, and the passion of her generation will provide her with her own solutions.  Look to employees who are like Jasmine, and harness their energy.  Too often, I visit companies that don't value the passion of younger employees.  This will need to change, to be successful marketing to Jasmine.

Excellence:  Jasmine needs a mentor.  Jasmine-focused businesses know more about Jasmine-centric tactics than anybody else.  They'll need mentors to help guide them through growth and Management issues.  With mentors, Excellence is certainly achievable.

Vision:  I think Vision is easier for Jasmine-focused businesses than for Judy/Jennifer businesses.  The Jasmine-focused business just needs to survive the short-term .. the Judy/Jennifer business needs to survive the long-term.  Vision will be easy, Evolution will be hard.

Evolution:  Jennifer-focused businesses are largely web-based, Jasmine-focused businesses will be app-based.  Something will come after this, something that Jadyn will embrace (Jadyn is currently 12-18 years old).  The Jasmine-focused business will need to evolve as apps evolve, and will also need to potentially embrace whatever it is that Jadyn embraces.

Chemistry:  You read so much about how Jasmine operates in a team-focused, de-centralized environment.  Chemistry is going to be different among Jasmine-focused employees than it is for those who have always dealt with Judy as a customer ... Judy-focused businesses often employ a centralized, command-and-control style of Management.  If Jasmine-focused businesses hire Jasmine-aged employees, Chemistry will be different.

Time for your thoughts ... how do you see the ten building blocks impacting Judy, Jennifer, and Jasmine?

Jennifer and the Direct Marketing Success Pyramid

Yesterday, we talked about Judy.  Today, we focus on Jennifer.

FYI - click here to download a pdf copy of the Direct Marketing Success Pyramid ... it is the most popular download of 2012, based on metrics about my blog.

Merchandise:  Jennifer doesn't want to feel ripped off.  We know this, because she scours the internet in search of the best deal, just analyze her attribution trail!  In other words, she's not brand loyal, she's product loyal, trying to find a specific product.  Often, Amazon is her first stop.  Often, Google facilitates how she scours the internet.  Based on the data I analyze, Jennifer likes new products.  The merchandise farm system needs to be well-stocked in order to keep Jennifer interested.

Creative:  This is strictly an opinion, folks.  I think creative means less to Jennifer than to Judy or Jasmine.  Jennifer wasn't weaned on creative, she was weaned on Amazon, Google, Zappos.  It is my opinion that Jennifer needs information.  So give it to her!  Images, video, social, copy, mobile, all could be designed to provide Jennifer with the information she needs to make decisions.  Jennifer leaves your brand to get information, so combat that by giving her all the information she needs, so she won't search elsewhere.

Finance:  In Jennifer's world, Finance means "attribution".  Jennifer's generation of analysts are utterly stymied by a world where Jennifer touches eighteen different channels  before buying something.  Which of the 18 clicks drove the purchase?  We tie ourselves in knots arguing nonsense!  Remember, Jennifer isn't using channels for the sake of using channels, she's "searching" for the best product at the best price with free, expedited shipping ... that's all.  The more granular the analyst gets, the more likely the analyst is going to be wrong.  I believe that, in time, we'll learn to look at Jennifer's investment relationship as a function of time, not of channels/touchpoints.  We'll simply realize that the omnichannel relationship is a "digital" relationship, requiring an investment in "digital".  CSEs and Affiliates and Email and Search are all just byproducts of trying to find the best merchandise and the best price with free, expedited shipping.

Passion:  Jennifer values information.  Similarly, employees passionate about marketing to Jennifer are passionate about information.  The entire "Google Analytics Generation" has a passion for making decisions based on real-time information.  Passion is really a fusion of merchandise and information.  This is a very different relationship than the old merchandise reports that Judy-focused businesses evaluate.  Passion results in fast decisions, and rapid response to market conditions.

Excellence:  You ever wonder how Zappos went from $0 to a billion in a few short years?  They gave Jennifer exactly what she wanted ... they gave her information, free shipping, free returns, and delivered her product in 1-2 days.  That's what excellence looks like to Jennifer.  This will be in stark contrast to the Finance objective of being profitable ... a Finance executive used to managing Judy will balk at what is required to serve Jennifer.  Excellence will require the Finance folks and Marketing folks to work together to yield a profitable outcome, shedding expense elsewhere.

Knowledge:  Jennifer-focused businesses know more about how a customer converts on a web page than anybody else.  This knowledge could be a hindrance, however, as the evolution from a web-focused world to an app-focused world continues.  We don't know if Jennifer will follow Jasmine into an app-focused world ... she probably will do this, but the story is yet to be told.  Regardless, the Jennifer-focused business needs to know far more about customer behavior than the Judy-focused business needs to know.  Reports are important to understanding Judy ... Analytics are important to understanding Jennifer.

Vision:  Executives are going to face challenges.  Jasmine's generation, which is far larger than Jennifer's generation, will shape all innovation in the next ten years.  Executives will want to follow Jasmine's lead.  Oh boy.  That may not work with Jennifer, given that she'll be approaching 50 years old in the next seven years, and will become more set in her ways.  I think we're going to see a lot of Executives pivot out of Jennifer, into Jasmine's generation.  This is going to be very interesting, and will require keen vision to execute a successful transition between generations.

Evolution:  Vision leads to Evolution.  We hard-wired Jennifer into appreciation of a world led by Google/Amazon.  It is going to be hard to get her to change her habits, as Jennifer approaches 50 years old.  The very changes that benefit Jennifer will conflict with the preferences that Jasmine will exhibit.  Marketing to Jennifer will become more niche-oriented, given the significantly smaller size of her demographic cohort.  Anytime you hear "web-based", think Jennifer.  Anytime you hear "app-based", think Jasmine.  It will be hard to serve both audiences.  I don't think we know how this evolution will happen.

Chemistry:  I see better chemistry among Jennifer-focused businesses than I see among Judy-focused businesses. It seems like Judy-focused businesses "know everything" already (after marketing to the same customer for thirty years, they should know everything).  It seems like Jennifer-focused businesses are more open to opposing points of view.  We'll see if the pressure of the app-based internet consumes the chemistry earned by employees weaned on a web-based internet.

Tomorrow, we focus on Jasmine.

Judy and the Direct Marketing Success Pyramid

We talk often about Judy, Jennifer, and Jasmine, and for good reason.  See, it turns out that "omnichannel" is largely irrelevant ... it is an average of they myriad ways that Judy, Jennifer, and Jasmine behave.

In other words, your success strategy has a lot to do with who your customer is.

Take Judy, for instance.  Let's think about our framework, as it relates to Judy.

Merchandise:  Judy is about to turn sixty (60) years old.  Think about that, for a moment. In the next five years, what are the products that Judy will need?  How are these products different than the products that serve Jennifer?

Creative:  Ask yourself if Judy wants to watch a four minute video, then share her thoughts about the video on Twitter or Facebook with her sixty year old friends?  Ask yourself if Judy wants to use an iPhone to navigate through sixteen merchandise categories.  Ask yourself if Judy wants to remember great times from the 70s, 80s, and 90s?  Calibrate creative around the latter.  And oh, by the way, Judy likes "sameness".  How many catalogers have tried to change creative, only to have it fail miserably?  Judy doesn't want change.  Give her what she wants.

Finance:  Judy is the most predictable of our personas, and Finance folks love consistency.  Lifetime Value, however, is going to shift a bit in the next five years, as Judy approaches retirement ... her LTV will likely decline unless the merchandise assortment aligns with her retirement needs.

Service:  Judy is far more tolerant of paying for shipping than Jennifer / Jasmine are.  Judy is also more tolerant of your products arriving in 5-7 days, whereas Jennifer demands to have it in two days via free shipping.  Serving Judy means you have a bit more leeway than serving Jennifer / Jasmine.

Passion:  It is going to be increasingly more difficult to find young workers who have a passion for marketing to Judy.  Just ask any of a number of catalogers trying to hire up-and-coming Managers/Directors these days, they know.  And then we have Executives who are "hanging in there until retirement".  Oh boy!

Excellence:  If it is going to be increasingly more difficult to find young workers who want to cater to Judy (and this is an assumption of mine), it will be increasingly more difficult to find excellent workers.  This is a pain point among catalogers, I keep hearing about the "catalog brain drain" that has happened since 2005.  One Executive told me ... "I have to outsource nearly everything we do, because I can't hire anybody." At some point, this will come back and bite the Judy-centric marketer.

Knowledge:  There are two issues here.  First, we think we know everything about Judy, and for good reason ... we've been marketing to her for thirty years.  This is likely to change when Judy enters retirement, requiring a new merchandise / knowledge framework.  Second, we have to filter out everything we hear about Jasmine, because it isn't relevant when marketing to Judy.  Judy doesn't want engagement via Twitter, and she doesn't want to check in to the Dairy Queen in Louisville via Foresquare.

Vision:  Here's a place where CEOs need to "thread the needle".  We have a 5-10 year window to earn profit from Judy, and then we reach an inflection point where Judy ages and stops spending money.  At that point, the Judy-focused business model is not likely to pivot easily to serving Jennifer, who will have twenty years of Amazon-style service etched into her memory.  Be careful here, folks.

Evolution:  The Judy-focused marketer will need to think long and hard about evolution on two fronts ... first is merchandise ... second is audience.  It is going to take guts to market to Judy while trying to protect the future.  The very activities that Judy is likely to embrace (sameness, memories, retirement merchandise) are the activities that Jennifer will reject.

Chemistry:  It will be difficult to keep teams focused on Judy when the Executives of the future (currently 35-45 years old) will want to have sexier jobs.  It may make sense to have a "farm system" where the Judy-focused cataloger develops Executives who continually leave the company, hurting overall chemistry.

Tomorrow, we look at Jennifer.  Until then, what thoughts do you have?

The Direct Marketing Success Pyramid

I tend to focus on things I can prove, numerically.  

Today, we'll go down a different path.

There are few things that get under my skin like the "Eight Easy Steps To Success" posts that are designed to generate page views.  We read about how important it is to "know the marketplace" or "understand the customer".  Then we move on to the next article, with nothing to retain.

Why not print (or download) a PDF of the image here, titled "The Direct Marketing Success Pyramid"?  Click here for your own PDF copy.

Here, we have ten building blocks for achieving greatness as a direct marketer.  You need to get the foundation right (the bottom four building blocks) before you build discipline around the other six building blocks.  

It isn't easy.  If it were, everybody would be rolling in 15% EBITDA, right?

Let's look at the four foundational building blocks.

Merchandise:  There's probably nothing more important than merchandise.  Think about the iPad, or the iPhone.  People gladly pay 2x or 3x or 4x as much for one of these devices as they pay for competing product.  Think about the profit generated by being able to sell a product at a healthy gross margin?  We spend too little time thinking about merchandise.  Pretend you are Best Buy for a moment.  You are selling product that is available at a thousand other online or retail locations.  What is the compelling reason to buy an iPad at Best Buy vs. an Apple store?  Where possible, merchandise should be under your control, if it isn't, this building block disappears and it gets harder to sustain success.

Creative:  Creative encompasses all aspects of presenting merchandise to a customer.  If you are Best Buy, then Creative is really important, because Creative is one of only a handful of things that differentiate Best Buy from others.  I include images, video, social, copy (content), channels, and devices in Creative.  So much of what you read about (trade journals, vendors, consultants, bloggers, the Twitterati) focuses on this building block.

Finance:  Oh, I know, this one is boring, and is one you probably don't think about much ... or don't want to think about.  But this is so important, folks.  Finance is more than Accounts Payable.  Finance is about determining appropriate price points, setting reasonable customer acquisition budgets, marketing budgets, capital investment strategies.  Great Finance teams add two to three points of EBITDA per year through strong financial leadership.  This money gets reinvested in the business (or is funneled directly to your bonus check), minimizing finance costs, accelerating future growth and EBITDA.

Service:  You can define customer service in a million different ways.  Or you hear a company name like "Zappos", and you immediately think about good Service.  Most of us are capable of providing mediocre Service.  Ten percent of companies provide outstanding customer service, earning reputations in the process, reputations that increase customer loyalty, generate incremental profit, and fuel future success.  Mediocre Service is required.  Exceptional Service is a differentiator.

If we assume that your company is at or above average on Merchandise, Creative, Finance, and Service, then your company moves up the pyramid.  The following concepts are less quantifiable, but are just as important.  Without Merchandise, Creative, Finance, and Service, the following six building blocks are largely meaningless.

Passion:  My all-time favorite quote comes from an Executive, who told me ... "we simply don't have a new story to tell the customer for a few months."  You know, if we don't have passion for our business, why in the heck should we expect our customer to have passion for our business?  Look at your staff.  How many of these folks have passion for your business?  Can you count them on one hand, or do you have four dozen people with passion?  You can will a business to success with passion, if you have Merchandise / Creative / Finance / Service solved.

Excellence:  This is the opposite of "Best Practices".  The polar opposite, folks.  Best Practices are all about copying what somebody else did in an effort to achieve credibility.  Excellence is different.  Excellence requires discipline and structure, a desire to compete, to win, to innovate, to take measured risks.  Excellence requires non-stop practice, not "Best Practices".  Far too few of us want to invest the effort to be Excellent, we'd rather find short cuts.  Be honest, look around your team, how many would you label as somebody who "pursues Excellence?"  The latter point is critical.  Not everybody can be Excellent.  Everybody can "pursue Excellence".

Knowledge:  Real knowledge is earned, not copied.  Successful Direct Marketers don't rely upon surveys of 882 customers from research organizations.  Instead, Successful Direct Marketers know more about their customers than competing brands know about their customers.  Improved knowledge is frequently worth one to two points of EBITDA on an annual basis ... as any analytics expert knows.  The best Direct Marketers share knowledge across the enterprise, and are fully able to articulate complex business concepts to all employees.  Knowledge and Communication go hand-in-hand.

Vision:  A business leader recently told me that "my customers will continue to shop from catalogs for twenty years, and during that time, I will take market share from those who abandon catalog marketing."  That's vision, folks.  Now, you may 100% disagree with this person, but think about the advantages this business has over other businesses?  While other businesses debate the merits of being "omnichannel", this business focuses all employee efforts on one goal ... merchandising an outstanding catalog.  Vision yields focus, and focus feeds off of Passion, Excellence, and Knowledge.

Evolution:  Successful Direct Marketers evolve.  In the catalog marketing world, folks evolved from cash orders in envelopes to call centers taking orders with credit cards to e-commerce orders to mobile devices.  Successful Direct Marketers don't have to be first movers, but they have to be movers!  Vision helps expedite Evolution.

Chemistry:  I put this at the top of the pyramid, and for good reason.  You can master Vision, Evolution, Passion, Excellence, Knowledge, Merchandise, Creative, Finance, and Service, but without Chemistry, you won't experience Success.  Chemistry is the ability of people, of co-workers, to care about each other so much that the collective performance of each individual, as a team, is greater than the sum of individual performances.  You can't measure Chemistry, you only feel Chemistry.  Once you've felt Chemistry, you know that the alternative is just Work.  When you feel Chemistry, you don't ask for a pay raise, you don't question staying until 6:15pm to get something done, and you don't hesitate to visit the Hospital to see an ill co-worker.  When you have team Chemistry, you look forward to meetings, you rally around ideas, and you are open to different approaches to problem solving.  When you have team Chemistry, you put the needs of others (especially customers) above your own needs.  Chemistry is earned, it happens when we trust each other.  I can recall two instances, in almost twenty-five years, where I was part of a team that exhibited great team Chemistry, and was part of a third team that came close.  In sum, those instances consumed three years out of a possible twenty-five.  Yes, Chemistry is that hard to achieve.  Many of the good lessons taught by popular religions manifest themselves via Chemistry.

Yes, you can have team Chemistry, but without the other nine building blocks, you're unlikely to experience success ... you'll have a lot of fun, but not as much success.

I know, you're going to say "but he forgot Talent ... you've got to have Talent, or you're sunk."  Hogwash.  I've taken over highly talented teams that wanted to kill each other ... those teams created unimaginable headaches for the Human Resources team ... I know this, I've lived it.  And the most talented team I ever worked with was at Avenue A, back in 2000 ... an analytics/marketing department of maybe 30 people, all pulling in different directions, no Knowledge, no Vision, no willingness to Evolve, absolutely no Chemistry.  Talent is largely useless when you don't have Merchandise / Creative / Finance / Service solved, and when Management fails to foster Passion / Excellence / Knowledge / Vision / Evolution / Chemistry.  Conversely, I've been part of highly mediocre, largely untalented teams that produced record profit ... because they nailed most of the ten building blocks.

Ten building blocks.

As a business leader, you can isolate each building block.  The first four are building blocks that you focus on every single day.  The final six building blocks are much harder to achieve, but are every bit as important as Merchandise, Creative, Finance, and Service.

It is my opinion that these ten building blocks determine Success.  When I visit a company, it is easy to see which of the ten building blocks a company executes well, and which ones require a bit of focus.  I'm confident that you can look at your own company, and easily measure success via each building block.

Ok, time for your feedback.  Thoughts?