What Does The Plan Look Like When Proper Organic Percentages Are Applied?

If I have to hear one more professional lament the fact that Orvis doesn't mail catalogs anymore but Amazon does ... then suggesting that "Amazon is smarter" ... my goodness.

None of that matters. The only thing that matters is your customers, your marketing efforts, and the incremental effectiveness of your marketing efforts. That's it.

Here's what proper application of the "Organic Percentage" looks like. Below is a typical circulation plan (simplified by deciles instead of segments for illustrative purposes) via matchback analytics. Looks good on the surface (only look at the top portion of the table for now).

Every segment is profitable - you could absorb a 10% increase in ad costs and still be profitable. It's all good! Catalogs work.

Except they don't work for most customers.

You're one of the smart ones ... you execute mail/holdout tests. For you, 75% of the demand will happen anyway, 25% is "caused" by catalog marketing. Which leaves you with the bottom half of the table.

Look at that. There are ten deciles/segments there. How many are profitable? One (1). One!! Just the most loyal customers. Every other segment represents a marketing abomination.

In case you are wondering, this is where the arguments begin.

There is the group of professionals who simply do not believe the results. They are true believers in the craft. You cannot convince this audience of anything, even though 80% of the catalog pages circulated 20 years ago no longer exist (because they were terribly ineffective). You have to let these people marinate in their delusion.

There is a group of professionals who have to test 50 times ... they believe that the test results "are not representative". These people are stalling. They know the change that these results will lead to, and they don't want to deal with change. So they delay the inevitable.

There are a small group of professionals who believe the results, but realize their organization is unwilling to change. This audience largely left catalog marketing in the past twenty years, and are now thriving in ecommerce.

There are a small group of professionals who work in paper / printing / agencies. They CANNOT believe these results, because as I was told by a paper rep ... "it will take food off my dinner table, and I cannot allow that to happen". They lie to benefit their craft. They are not fundamentally different than politicians who lie to protect their congressional seat.

There are a small group of professionals who work at agencies AND they believe in the results and they try to do what is best for their clients. If the agency you work with is willing to execute mail/holdout tests and evaluate results via the bottom half of the table (above), hold on to that agency like your life depends upon it.

Then there are the companies who change. Like Nordstrom did back in 2005 when I worked there (they kept mailing branding-centric catalogs throughout, but the classic list-based catalog business model was discountinued). Like Orvis. Like several of my clients. Why are they changing? Because they run a p&l that looks like this.

These companies make a choice. They take the 17% demand hit, but save $360,000 in ad cost and increase profit by $213,000 (in this example). With the ad cost savings, they typically reinvest in digital marketing channels ... or they just become a smaller brand that is more profitable. Either way, they outperform those who don't evaluate their businesses in this manner.

Did you see what happened in the bottom half of the table, when you evaluate your circulation plan via mail/holdout tests?

• Only the most loyal customers are profitable.

This is why you'll see brands with the GDP of Australia be able to mail catalogs ... they have hyper-loyal customers that can afford to be mailed even if little of the demand generated by the catalog is actually incremental.

This is why I argue that catalog marketing will still be a craft that can be applied to loyal customers or hyper-productive customers. The math will continue to work for a period of time.

But for everybody else?

• It's over.
• It's been over for a long time.
• There's no reason to badger Orvis because they made what is in reality an easy, fact-based, profitable decision.

Out of a Job

Over on LinkedIn, an analyst mentioned that his job was eliminated as a result of increased automation and organizational change.

As we approach Easter, I'm sure there were carpenters who lost their jobs back in the day as a result of increased automation and organizational change. Or for other reasons. It's not easy to find a job, do a job, keep a job, or create a job.

Back in the day, I gave attendees at a Shop.org session a choice. If they had to downsize one position out of the following three, with no knowledge of the skill level of the person in the job, which position would you coldly eliminate?

1. Digital Marketing Director.
2. Catalog Marketing Director.
3. Social Media Manager.

I recall maybe 10% of the audience voting for the Social Media Manager, maybe 20% voting for the Digital Marketing Director, and 70%ish voting the Catalog Marketing Director off the island. I recall a catalog professional stopping me after the presentation, stunned that his profession had so little value in the eyes of other professionals. "Don't they understand how valuable my work is?"

No, they don't understand.

Imagine being a coder, having a skill few others ever possessed, being paid more than many executives, writing the code that made AI happen ... only to lose your job to the software you wrote?

If you have opportunities for side hustles, separate projects etc., by all means, take advantage of those opportunities. When bad things happen, it's good to already have a head start on your next chapter.

ASIDE:  A marketing manager reached out, asking me to volunteer my time to go through a maze of nonsense to "apply" for a consulting arrangement. He said I was "chosen among a small group of professionals they believed in". Well, if you believe in me so much, you've certainly learned from the 5,700 posts I've written over twenty years what I stand for and you already know if I can do the job you might want to underpay me to do for you. Or you just want my approach to a problem for free (most likely outcome). Long-term, this isn't how you do a job, keep a job, or create a job. It's how you cheat your own job. Employers see through this stuff over time. It's the kind of problem that automation will ultimately solve.

Your Questions, Answered!!

Here we go, as promised! There are many questions. Skip the ones you don't want answers to.

Steven:  In all your meetings, whether working for or consulting with a brand, was there ever a moment when you saw the participants grasp what you were imparting on them? It would be great to hear an example of how you saw a team or group work, either from the ground up or top down to really change the culture and business trajectory.

It is rare for an entire group of people to grasp a concept at the same time or on a similar timeline. The core themes of my work (customer acquisition > customer retention ... incremental response vs. reported response ... importance of new merchandise and winning items) are not concepts that are accepted by average professionals. Imagine being the person who manages paid social and I tell the person that 70% of the conversions he observes in his reporting via Facebook would happen anyway if he didn't advertise?

There are individuals who grasp concepts. Those individuals generally run with the idea. I work with a CEO/Owner (for close to fifteen years) - this guy gets it and in general does a fabulous job implementing the concepts. When I analyze his data, I can see when he hires somebody who disagrees with him ... customer data changes and his business doesn't grow as fast. This would be an example of a top-down approach. The leader asks staff to execute a certain way, and sometimes the team working for him chooses otherwise.

I worked with a Marketing Vice President who took the concepts and ran with them on his own, independent of the rest of the business. Merchandise productivity was bad, his marketing investments in new customers were good, the business grew as a consequence. When the individual left, the new marketing person identified "low hanging fruit" ... cutting marketing spend significantly. The business crumbled, and has not recovered.

I am currently working with a team that is getting results ... the individuals may or may not agree with me, but they are working together to make change happen. Their Leader sets the tone, the team respects the Leader, consequently, they listen to me. As you'd expect, implementation is bumpy ... it always is ... and it doesn't matter ... the team knows they want to see better performance and they are working together to make it happen. People have to be able to get along with each other for this to happen.

Anne:  Increasingly, I am seeing nonprofits I work with say they are not going to do postal mail because of cost. They want to use email and social only. They invite me to be on their board but they do not want to listen. I want to give them guidance but I do not want to lead them astray because conditions are changing rapidly and nonprofit budgets are thin and endangered. Any help would be appreciated.

Ok print lovers, here is your moment ... I'm about to land on your side! There are three issues with print ... costs are increasing, response is declining, and those who respond are generally 65+ years old. For non-profits, do you care if those who respond are generally more than 65 years old?

If costs increase, response has to increase in response to increased costs. This is the challenge - nonprofits I've worked with don't know if response increases or decreases ... they sometimes see marketing costs as a budget line, but they don't marry response to costs.

My catalog clients have something they call the "profit factor" ... it's the percentage of sales that flow through to profit. Let's pretend that factor is 40%. If a catalog costs $1.00 to put in the mail, then the client has to generate $1.00 / 0.40 = $2.50 of sales in order for the segment to break-even. If the cost to put the catalog in the mail increases to $1.10, the client has to generate $1.10 / 0.40 = $2.75 of sales in order for the segment to break-even. My clients would cut circulation on anybody expected to generate $2.50 to $2.74 to offset the increased cost of the mailing.

You should be in a similar circumstance ... your mailings must offset the cost of the mailer and generate enough donations to cover overhead and have enough left over to actually do good work. Which means you probably need to generate between $3.00 and $5.00 per recipient in donations to offset the cost of direct mail. And if direct mail costs increase by 10%, you need to generate $3.30 to $5.50 to offset increased costs.

As long as you generate enough donations to offset costs and have plenty left over to do good work, print is important regardless of cost increases.

Liz:  I understand your advice on building communities outside of Meta and Google. What is the expected range of outcomes from these programs? How long does it take to generate results via new customers, and what can I expect in terms of share of new customers from building communities?

Here's an answer my readers won't like ... it will likely take 3-4 years of hard work to make a difference. Also ... you have no choice but to do the hard work.

This isn't a place where you want a direct marketer leading the efforts. At all. The direct marketer doesn't have great ideas in this realm, and will quit long before the program has a chance of succeeding.

This isn't the place where you want an ROI-based digital marketer leading the efforts. At all. This individual will also quit long before the program has a chance of succeeding, citing low "ROAS". The individual would rather pay Facebook money today for orders tonight.

I know of a company that spent six years building the community. In years 4/5/6 efforts paid off. Roughly half of their sales come from new customers, they believe roughly a quarter of their new customers come from their community of registered users. They believe that each registered user is worth $10 net sales per year. The reality is that these are guesses, but they aren't bad guesses based on the data shared with me.

The community must be passionate about what the company sells (is anybody passionate about what Macy's or Kohl's sells, for instance?) and feel like there are benefits to being in your community ... purchasing your merchandise ... over what somebody else sells.

The first year will be a hot mess ... virtually no positive results ... a lot of numbers wonks asking you why you are wasting so much time/money on something so pointless?

The concept of a "registered user" is important - you have to track if your community is visiting your website and/or looking at your merchandise. If you can demonstrate that a registered user visits your website monthly, you're on to something.

Robby:  How is AI influencing prospecting and what is the best way to take advantage of it? Is any company excelling at it?

In digital marketing, AI has already stamped itself over everything you do. It determines the content/merchandise in email messages sent to non-buyers. Ask the Listraks and Klaviyos of the world for examples. Search is already aligned with AI ... when I search for HEADPHONES WITH A NEUTRAL SOUND SIGNATURE Google isn't looking for keywords, Google is inferring my meaning via AI.

AI-centric marketplaces will likely supplant modern search in the next 5-10 years, assuming the AI wonks don't boil all of our fresh water cooling their servers.

I have a direct mail client who uses AI models for reactivation, and has good results ... good meaning +20% over their baseline models. This is a bare-bones use of AI, of course ... they're just using AI like one would use a regression model.

Most of my clients tell me that classic direct mail prospecting is "dead", and when something is "dead", AI isn't going to be of much help. I recently saw a mail plan comparing 2026 to 2016 ... prospecting circulation was down 80% due to a combination of terrible response and increased costs. AI cannot overcome structural changes in an industry, which is why we don't see many AI solutions applied to direct mail paired with outstanding outcomes ... if that existed, the print folks on LinkedIn would be screaming from the mountaintops - their glee would be unavoidable.

Honestly ... if 40% of an email subscriber list has not purchased anything historically, I'd gather whatever attributes I could for this audience and use AI to align messaging and merchandise with non-buyers.

Bob:  What advice of yours changes when a new business or a business with sales < $1,000,000 a year has a handful of unique products/SKUs where product/market fit is still evolving, and where the database is < 10,000 customers?

The general theme of my advice doesn't change, the level of complexity required to implement ideas changes considerably. If the small business wants to grow, it needs to find clever ways to identify likely prospects - and the small business will have to do it "on the cheap". The organic social route is very important for these companies. It's very important until the business exceeds $10,000,000ish per year ... then the rules begin to change and there needs to be a more-generous marketing budget.

The small business needs to understand if the product they sell leads to repeat purchases. If the product is a one-and-done product, well, it's all about finding new customers for a long time. If the small business is selling body wash? Well, that's a different business model, and a small number of very happy customers can do a lot of free marketing on behalf of the brand.

Small databases change the way experimentation happens. If you have 10,000 customers and 5,000 have an email address, you are likely to just split the file in half when experimenting with email marketing concepts. The small brand is likely to segment customers into a small number of segments so that any analysis/results are statistically relevant.

The small business that has one or two key items needs to closely monitor when those items are dying. The slightest miss against budget/expectations should set off alarm bells. There needs to be a plan for the small business ... an exit plan for a limited assortment (i.e. be bought by a larger brand or become an Amazon supplier) or a product development plan to become a "brand".

The small business looks a lot less at customer metrics and looks a lot more at conversion metrics. Where is traffic coming from? How does traffic convert? Do customers buy multiple items or a single item (this becomes an important segmentation variable)? Are customers clicking-through email campaigns? Analytics sophistication grows as net sales grow. It doesn't mean the small brand isn't analytically driven ... quite the opposite ... but the small brand worries much less about complex questions/solutions, focusing instead on what it controls and what it can understand with limited resources.

One area where the small business is no different from a large brand is in purchase activity within the first 3-4 months following a first purchase. Regardless of ecommerce brand, it is really important to convert a customer to a second purchase quickly before the customer fades away. Small businesses that focus on this metric have an inherent advantage over other small businesses.

Using a "simple is better" approach, the small brand is infinitely more nimble than Macy's ... an enormous advantage.

Ed:  We used to mail a 184 page catalog, but shifted to 124 pages when paper / printing / postage costs increased. Around that time our sales slumped. Did sales slump because we featured fewer pages in catalogs?

Believe it or not, I first analyzed this challenge in (checks notes) 1991. THIRTY-FIVE YEARS AGO! We had an equation at Lands' End that calculated the elasticity between pages offered and merchandise sold. Each additional page (i.e. going from 160 pages to 164 pages) generated incremental sales, but at an ever-decreasing rate.

At Eddie Bauer in (checks notes) 1999 ... TWENTY-SEVEN YEARS AGO we had an equation that optimized circ depth, page count, and quality of product offered. Small page counts were super-charged with best-selling products ... allowing 96 pages to perform nearly as well as 248 pages from a sales standpoint (meaning we could mail 96 pages forever because of the profit advantage those pages had).

But times change.

If you are like many modern catalogers ... you have an approximate 75% organic percentage ... page counts are nearly irrelevant. You heard that correctly. Your customer has moved on, and responds digitally. Spend your time on social, search, email, video, community ... it's over.

If you are like many B2B brands ... you have an approximate 35% organic percentage ... it's like it is the mid-90s. Your catalog IS THE REASON why the customer purchases. For these customers, you have to show the customer your merchandise assortment or the customer might not look for those items online.

Be willing to experiment ... if you mail 124 pages ten times per year, go ahead and mail 184 pages one time per year, and reduce circulation by a third in response. Try it. See what happens. Also be willing to test ... conduct a mail/holdout test and see if your organic percentage (the share of sales that still happen if a catalog is not mailed) is 35% or 75%.

Also - be willing to check your merchandise productivity. Most of the time pages offered is minimally relevant while merchandise productivity is maximally relevant. If customers like what you sell less year-over-year, it's easy to misattribute that issue to something less meaningful (like email marketing click-through rates and/or catalog pages and/or traffic from Instagram).

I Asked The Question Because ...

Here's the question I asked at the end of last week (click here).

I was recently sent a document where an agency mentioned that "you need to mail catalogs to reactivation candidates because catalogs are effective at boosting response".

The statement was correct.

One omission?

The catalog was not profitable. It was highly unprofitable, in fact.

• Demand = $1.30 per book.
• Ad Cost = $0.90 per book.
• Profit Factor = 40%.
• Profit = $1.30 * 0.40 - $0.90 = ($0.38).

The "brand" lost $0.38 among every reactivation candidate. Mail 100,000 reactivation candidates 12 times a year and you lose $456,000 of profit. Per year. Every year. That's what the agency wanted to accomplish.

Look, I get it. It is terrifying to spend your entire career working on a dying discipline. You could put digital folks on blast mode in 2002 because the catalog still mattered. You could put the search folks on blast mode in 2007 because the catalog was part of a "multi-channel" strategy. You could put the social folks on blast mode in 2012 because the catalog was part of an omnichannel future.

Then 2016-2019 happened, and you couldn't put anybody on blast mode because the catalog was dying. Slowly. One drip at a time. Mail/Holdout tests showed that 50% to 90% of demand attributed to catalogs via matchbacks was "organic", meaning it would happen without mailing a catalog. Nobody outside of smart practitioners within "brands" and a handful of industry experts believed the results. Why should people believe the results? The results were a threat to their existence.

From 2020-2021, people were in their homes ... buying from every direct-to-consumer brand under the sun. Your business was "fixed" ... no need to worry about the troubling trends of 2016-2019.

In 2022-2023, response crashed (the end of the COVID-bump). At the same time, paper either wasn't available or became too expensive. Printers fired my clients while at the same time becoming "full service digital agencies". A fun pivot. Co-op performance died, and when performance was acceptable, the co-ops delivered a 65-75 year old customer.

In the past two years mailing costs skyrocketed. Declining response paired with increased costs and high organic percentages yield a clear signal ... it's over.

We have no choice now ... we have to change.

Go ahead and mail the top 10% of your file, where a 70% organic percentage and declining response still result in a stead diet of mailings.

For 90% of your customer base and for prospecting purposes, it's over.

I "asked the question" on Friday because your trusted partners are in a difficult situation ... your business can thrive without catalogs ... their business model is predicated on keeping you mailing catalogs.

We need to move on, together. There's no sense in protecting a business model with declining response, increased costs, and high organic percentages.

What am I missing? Tell me (kevinh@minethatdata.com). Don't bring "72% of Gen-Z are digitally exhausted" as proof of what I'm missing. Bring profit. What am I missing in my argument?

The Playbook: A Missing Element

Here's our playbook.

You, of course, are a play caller. You make decisions. You have a playbook with all sorts of "plays".

Those of you in old-school cataloging ask a common question.

• "If we didn't have a catalog, we wouldn't have anything to say. How do we close that gap?"

Yeah, there's a missing element for those folks ... an element that (some) ecommerce brands possess.

The missing element?

Events.

You just watched the Super Bowl a few days ago. That, ladies and gentlemen, is an "event". The entire football calendar is built around events.

Events can be sales, but they should be more than sales. Customers don't care about your MARCH SALE - HURRY, 50% OFF PLUS FREE SHIPPING when the customer knows that a month later there will be an APRIL SALE - HURRY, 50% OFF PLUS FREE SHIPPING. Those are events by definition only.

The old-school cataloger essentially had monthly events ... a catalog delivered to a mailbox. Take the catalog away and there is a void.

The void must be filled ... with events.

Here's Olive and Cocoa (click here). That's a business based on events ... they don't have to create events because the entire business model is based on events.

You remember Amazon? Prime Days? Yes, there is a price component to that ... but not all prices are cut, and it isn't a sale with a blanket 30% off everything.

Williams Sonoma has virtual events (click here) to complement in-store events. How hard is it to create virtual events?

The catalog is going to go away (for my catalog-centric readers) - your partners are going to increase costs to unmanageable levels ... it has already happened and will continue to happen. You will replace catalogs with events. You have no choice.

Scarne on Cards

My parents bought this book for me in the mid-70s ... apparently they believed I had potential to be a gambler or loved card games, or both.

Turns out I enjoy statistics. And this book had a story in it that resonated with me in the 70s and the story sticks with me in my day job in 2025.

The author talked about playing a poker game in a casino. Each of six players starts with $100 (the specifics are likely different). At the end of each hand, the dealer would take $2 from the pot as the "house cut", the winner earned everything else. After fifty hands, $100 has been removed from the players. After one-hundred-and-fifty hands $300 has been removed from the players, leaving just $300. Assuming everybody had equal odds of winning, it meant that each player had $50 of their original $100. Everybody was losing money. If somebody was winning, it meant other players were broke.

His advice? Don't play games where the house gets a consistent and repeatable cut. You can't win. 

There are times when I look at the profit-and-loss statement of a brand and this story comes to mind. You know the company, they spend 25% of net sales on marketing expenses. Those are dollars going out of the pot, a cut to the house (Google, Facebook, etc). They get money, Shopify gets money, Listrak gets money, your favorite AI vendor is about to get a slice of your pie. In the catalog ecosystem, it's worse, because everybody in the e-commerce ecosystem gets a cut PLUS the paper people get a cut, your printer gets a cut, the USPS gets a cut, your boutique catalog agency gets a cut.

Is it any wonder that I tell you that you need ORGANIC orders, orders that don't happen because of marketing ... and when I tell you that the vendor ecosystem comes-a-fightin'???? They're the casino when the 1-800 number tells the gambler to stop gambling!

I'm not stupid (on this topic). You have no choice but to develop clever stuff that doesn't cost anything. That's your job! That's how your p&l works. That's how ownership keeps things going. That's how your Executive Team earn bonuses. That's how your Manager and Director make a credible living. That's how the analyst gets enough experience to eventually work in a Leadership role. 

Profit funds everything.

Think about it this way. You have a $50,000,000 brand that employs 125 people ... 75 of 'em are essentially earning $35,000 a year and the remaining 50 earn an average of $100,000. Multiply that out and it's around $7,600,000 in salary. If your brand is paying 25% of net sales in advertising costs, it means the vendors figured out how to get $12,500,000 while the actual employees ... the very ones who pay the vendors ... are only getting $7,600,000.

On what planet should your "trusted partners" earn 60%+ more than your employees earn? You're the one paying THEM!!!

Your job is to generate ORGANIC orders, orders that happen without the aid of marketing / advertising. Your co-workers depend on you to do that. So does ownership.

Here's What Test Results Often Look Like

It's 2025. You don't "need" to mail a catalog anymore. It might be a smart idea, yes. In 1990, you had no choice ... no catalog ... no sales. Today, you have a veritable plethora of marketing options to get a customer to your website. If you cater to a 33 year old customer, your situation is very different than catering to a 73 year old customer.

Anybody willing to execute a mail/holdout test is on the good side of the ledger.

This is essentially an average of what I see when I analyze mail/holdout tests in 2025. Ready?

The "mailed" segment received the catalog. Six weeks later (your mileage will vary) we sum all demand from all channels within the mailed segment. We do the same thing for the holdout segment ... this group of equal quality customers did not receive the catalog.

We're going to stop our discussion today with the blue number in the black box. 70%. If we take average demand in the mailed group and subtract average demand in the holdout group, we see what the catalog actually delivered ($1.90 ... not the $6.40 you'd see on a matchback report). Take the $4.50 that customers actually spent if not receiving a catalog, divide it by the $6.40 that the mailed segment spent, and we get 70%.

This figure (70%) is called the "Organic Percentage". It's the amount of business that is generated independent of a catalog. It's the most important percentage in catalog marketing ... the Organic Percentage dictates your future as a marketer.

In 1995, the Organic Percentage might have hovered around 3%.

In 2005, the Organic Percentage might have been around 20%.

In 2015, the Organic Percentage might have been around 40%.

Today, the Organic Percentage is frequently between 50% and 85% ... but there is a big "IF" ... if your digital marketing efforts are underdeveloped OR your customer is 65+ years old, your Organic Percentage will be much lower.

Let's assume your business is typical of a modern catalog-centric brand. If 50% to 85% of your sales will happen anyway, what does that mean for your business?

• Homework Assignment:  Take your catalog matchback reporting, and pretend that 60% of the results will happen anyway. Subtract 60% of reported results at a segment level, then run a p&l for each segment. Tell me what you observe: (kevinh@minethatdata.com).

Discussing Lands' End with ChatGPT

Y'all realize, of course, that your utter dependence on Facebook/Google for new customers puts the future health of your business at serious risk, right?

Here's a discussion I had with ChatGPT.

Kevin:  Lands' End seems to rely heavily on discounts and promotions as part of its core business strategy for several reasons:

1. Perceived Value Strategy

Constant discounts create a sense of getting a deal, which encourages customers to buy more. If customers feel like they’re getting high-quality products at a reduced price, they’re more likely to make a purchase — even if the "original" price was inflated to allow for the discount.

2. Customer Conditioning

Over time, Lands' End has trained its customer base to expect discounts. If you know there’s always a sale around the corner, you might hesitate to buy at full price — but you'll jump at a 40% off email. This creates a shopping pattern where customers are almost waiting for the next sale to make a purchase.

3. Competitive Market Pressure

The apparel industry is highly competitive, especially in the mid-tier, classic, and outdoor clothing markets where Lands' End operates. Competitors like L.L.Bean, Eddie Bauer, and even department stores frequently run sales. Lands' End likely feels the need to match or exceed these offers to stay relevant.

4. Inventory Management

Frequent sales help clear out seasonal and excess inventory. Lands' End sells a lot of seasonal clothing (coats, swimsuits, etc.), so offering regular discounts helps prevent stock from piling up and reduces storage costs.

5. Catalog and Email Marketing Dependence

Lands' End has always leaned heavily on direct mail and email marketing. Regular discounts give them a reason to send those emails and catalogs ("Get 30% Off Now!") and drive immediate sales spikes.

6. Margin Cushioning

Lands' End likely sets its initial prices higher, knowing that a large percentage of sales will happen at a discount. That way, even after applying a 30%–50% off promo, they can still maintain a healthy profit margin.

🧥 Bottom Line: It’s a mix of customer psychology, competitive pressure, and strategic pricing. If Lands' End suddenly stopped offering promotions, many customers might stop buying altogether because they’ve been conditioned to expect a discount.

Kevin:  Does Lands' End sell outerwear that would fit me?

That depends — what’s your size and fit preference? Lands' End is known for offering a pretty wide range of sizes, including:

• Regular, Petite, Tall, and Plus for women
• Regular, Tall, and Big & Tall for men
• Some outerwear even comes in extended sizes up to 3X (for women) and 4X (for men)

They’re also known for more relaxed, classic fits rather than slim or trendy cuts. If you prefer a roomy, comfortable fit, you’ll probably have good luck. Plus, they tend to use quality materials (like down, PrimaLoft, and waterproof fabrics) at reasonable prices, especially when you catch one of their sales.

What kind of outerwear are you thinking — a winter coat, rain jacket, or something lighter? 👀

Kevin:  I need a rain jacket, mens, size = 3x.

Got it! Lands' End does carry men's rain jackets in 3X, and their outerwear tends to be pretty size-inclusive. Their Squall® jackets are a popular choice — waterproof, windproof, and lined for extra warmth. They also have some lighter rain shells if you’re looking for something less insulated.

Want me to check what’s available right now or help narrow down the options? 🌧️😊

Kevin: Yes, and please recommend cheaper options from competing brands (links and images were provided, FYI).

Certainly! Here are some men's rain jacket options in size 3X, including selections from Lands' End and more affordable alternatives from other brands:

Lands' End Men's Big Waterproof Rain Jacket
This jacket features a wind-and-waterproof 2.5-layer shell with a breathable, moisture-wicking interior membrane. It includes an adjustable hood, front and chest zipper pockets, and underarm zippers for ventilation. Available in size 3X.

Portwest US440 Classic Waterproof Rain Jacket
An affordable option, this jacket is waterproof with sealed seams and a pack-away hood. It's available in olive color, size 3X.

Frogg Toggs Men's Rain Suit
This rain suit includes both a jacket and pants, offering waterproof protection. Frogg Toggs is known for lightweight and breathable rainwear. Sizes up to 3X are available. 

Columbia Men's Rain Jackets
Columbia offers a range of waterproof and breathable rain jackets. Some styles are available in extended sizes, including 3X.

REI Co-op Men's Rain Jackets
REI carries various men's rain jackets from brands like Marmot and The North Face. Some options are available in size 3X.

When selecting a rain jacket, consider factors like waterproofing, breathability, and additional features such as adjustable hoods and ventilation options. Lands' End offers quality options, and brands like Portwest and Frogg Toggs provide more budget-friendly alternatives without compromising on essential features.

Now, I'm asking questions like a moron, not like a human being. But please pay attention to the judgments that ChatGPT makes about Lands' End and other companies (calling Portwest budget-friendly).

Imagine the content that ChatGPT had to "steal" to train itself to make judgments about who Lands' End is, who they compete with, and the give-and-take between catalogs / email / discounts?

From a commerce standpoint, Google and Facebook are "dead men walking" ... via their current business model. If you are having conversations with AI and AI is steering you where it wants via judgements made by equations that are easy to create but hard to understand, you won't sit in front of a laptop typing questions on Google then visiting landsend.com, will you?

That personal relationship you have with your customers ... either via the community you created, or via your own email/sms marketing program ... are about to become critically important. Ultimately, your email/sms program is going to be replaced by something interactive, but until then that personal relationship is going to be so darn important.

Also ... what do you do when AI makes judgments about your brand that you don't like?

Gonna be a wild ride.

P.S.: This is the point where some of the hounds come after me ... "Kevin, Meta isn't stealing content, they're using readily available information to train AI to be smarter." Well, I searched LibGen to see if Meta used my information, and yes, they used several of my booklets to train their AI. Which, of course, is stealing. And yes, there's nothing I can do about it so complaining is meaningless. I have to adapt and move on. ChatGPT tells me that it makes a distinction between creating new ideas and synthesizing existing ideas. Oh. Great. Also faulty logic.

Cut Off

Have you take a longer view of customer data? In other words, you look at marketing campaigns, sure ... but have you looked at (for instance) customer acquisition counts over the past 10-20 years?

It's common for e-commerce brands to have decent performance over time, with new customers sometimes being down, mostly up a lot, with a positive trajectory over time.

Old-school catalog brands have experienced something quite different. Their new/reactivated buyer count trajectory might look something like this.

There are two trends you should observe here.

1. The long-term structural decline in new customers.
2. The dramatic impact of COVID in 2020-2021.

If a business leader mis-read what happened in 2020-2021 (and many did), the last few years have been humbling.

Some of you have been with me for nearly twenty years. You remember when I pleaded with you in 2016 to build new customer acquisition programs. The data suggests few of you listened. I remember giving two presentations in 2016 ... one at a conference in Dayton, one at a conference in Savannah. 

At each conference, one individual in the audience had that smug look before asking a question. In Dayton, the woman told me that customer acquisition ideas wouldn't work, then asked me "what else do you have for us today?" I wonder if she is gainfully employed in catalog marketing anymore? In Savannah, it was a business owner. Front row. He thanked me for my ideas, then looked at the audience and told the attendees that he didn't need any customer acquisition ideas, that he had been through ups and downs for thirty years and his print-centric agenda would stand the test of time. 

Sure it would.

In 2019 at a conference, the paper rep informed me that he would not let me take food off of his table. He told me that he would make sure print-centric brands continued using paper and the omnichannel tools that leveraged paper.

It's as if many of these professionals purposely ignored the check engine light, like Penny on The Big Bang Theory.

Many of you reading this are Business Owners. You are in your 50s or 60s and are looking for an exit. It shouldn't surprise you one bit that there isn't a market for contracting paper-centric brands. There is a market for e-commerce brands that have well-crafted digital customer acquisition programs, mostly fueled by brilliant social media efforts. These businesses have in-house experts who know how to generate attention, attention that leads to prospects, prospects who become customers, customers who become loyalists.

One other fascinating tidbit from looking at catalog brands over the past twenty years.

• Merchandise Productivity is UP over time ... by between 20% and 40%.

This is an amazing finding, one that speaks to merchandise smarts and marketing shortfalls. Merchandise brilliance manifests itself via comp segment merchandise productivity. Catalog brands have done just as good a job as e-commerce brands at generating more from existing customers. Marketing brilliance manifests itself via new/reactivated customer counts. A relentless dependence upon paper and trusted partners did not result in marketing brilliance.

So now, we're in a situation where marketing chops needs to be rebuilt. It's no different than my 2008 Lexus RX400h. It is a great car. It's an old car. Increasingly I have to spend thousands each year just to keep it on the road. Eventually, I'll be left with no choice but to start over with a new car. The easy decision is to spend another $2,000 and keep it on the road another year. The hard decision is to start over.

Hard decisions are coming for old-school paper-based brands who are now cut off from the modern customer acquisition ecosystem.

Apparel (Not All of It) is Dying

Many of my clients sell apparel ... often Women's Apparel.

And many of you are telling me that Apparel is dying.

Some of you don't say it specifically ... you tell me things like "Our sporting goods business is solid but apparel just keeps losing ground". There is some synergy between apparel losing ground and catalog marketing now in a free fall ... both interact with each other in a negative feedback loop.

A decade ago I consulted with a business that ended selling casual apparel (which was a reasonable percentage of the business), favoring outdoor apparel instead. Lots of internal strife ... "this is the end of the brand".

• Narrator:  "It was not the end of the brand."

Sure, the brand got smaller, but then the brand stood for something, and moved forward. Their marketing tactics changed. Their creative treatment of products and personas completely changed. They were free to be "who they wanted to be" because they didn't have to constantly cater to a casual apparel customer that was ... well ... different.

As we ease into 2025, we're at an inflection point if you are an apparel brand. You are being squeezed into oblivion.

• Amazon / Target / Walmart:  They commoditized apparel. Why should I pay $79 for something from Under Armour or Nike when I can get something that is 85% as good from Amazon for $19 and if it fails I can get two more and still have $20 in my pocket?
• Fashion:  Meanwhile, some brands think they can get you to spend $149 on a dress. They can. A "comparable" item might cost $25 on Amazon ... it's not comparable, but it is comparable enough that most traffic heads to $25 while a small fraction spend $149. But it is the "right" traffic for that brand. They are competing on a very different level, and they have to pay for that, don't they? But they made a choice.

So, if you are Lands' End and you have a comparable dress for $89 at 40% off for $54, where do you fit? Why should the customer pay $54 when the customer can pay $25 and save money? Why should the customer pay $54 when the customer can pay $149 and get the ooohs and aaahs from the public? Financial benefits on one end. Social/Emotional benefits on the other end. What does $54 buy you?

One of my favorite books is The Demography of Corporations and Industries. One of the chapters deals with beer. There used to be hundreds/thousands of breweries ... which all were whittled down to a handful of "macro-breweries" by the 1990s. Bud or Miller. Enjoy! If you sold a middling beer at a middling price? Good luck, you were doomed. Only a handful of breweries existed by the mid-1990s.

What happened next? Micro-breweries. Walk down the beer aisle at Safeway in 2024 and you'll see a small area of macro-brews and an extensive array of micro-brews, all generally more expensive than the macro-brews that wiped out the beer industry thirty years ago. Who would have thought that "Summer Shandy" would command a higher price and that people would want beer that tasted like (checks notes) a lemon?

• You have luxury beers.
• You have quirky beers ... the "Summer Shandy's" of the world.
• You have commoditized beers.

When apparel reinvents itself over the next decade, it will likely take the "Summer Shandy" path ... it will be apparel ... plus something ... like beer plus lemon, for instance. Might be quirky, might be different. 

I can't tell you what that "plus something" is ... that's your job, that's what you get paid to do. You don't get paid to send money to Facebook in exchange for customers, a bot can do that.

Apparel isn't the only thing that is dying. Gifts are dying. Home products are dying. Electronics already died years ago (commoditized to Best Buy and Costco and Amazon). I speak often about headphones ... headphones are being re-invented after the market was decimated by Apple and Beats and Noise Cancelling offerings from Bose / Sony / Sennheiser. Go buy a Zero:2 iem for $25 and tell me why you'd buy a Beats headphone for $200 - $300 ever again?

It's your job to find the "plus something" that causes an item to be appealing when compared to "monopoly brands" like Apple, Target, Walmart, Amazon, Best Buy etc. I know, you don't want to hear that, some of you will email me and tell me I'm wrong. That's ok. But you can't fight progress, and if you don't figure it out, somebody else will, at your expense.

Ryan Hall (y'all)

Last week parts of the Country experienced three days of exceedingly severe weather (yes, this topic will eventually angle back to you).

If you spent your formative years in the 1980s and you liked weather, you were mesmerized by the concept of somebody broadcasting weather on cable television ... all day ... every day.

And eventually coverage evolved so that Jim Cantore could be filmed standing outside a hotel while a hurricane hit. Times change.

Several years ago Fox began broadcasting their own weather network. Viewers on other systems could watch the Weather Network ... so there's competition, sure.

And then, hiding in plain sight on YouTube, you have Ryan Hall. When there is a severe weather outbreak, more than a hundred thousand viewers will watch his twelve-hour live streams, paired with four or five or six storm chasers and actual meteorologists describing the physics of storms. It's a stimulating broadcast.

While this is happening, his viewers raise money for storm victims ... last week it was around a hundred thousand dollars a night ... certainly not enough to rebuild towns leveled by tornados but it is more than $0. He has a community, and the community rallies around bad situations.

As you watch on YouTube, you can comment on the broadcast, and if your comments are reasonable, your comments will be mentioned on-air.

As of a few years ago, The Weather Channel might average 140,000 viewers, +/- ... undoubtedly that number goes up doing storms. So the fact that this guy had more than 100,000 viewers each night last week is saying something. Undoubtedly ... the demographic is very different as well.

Oh, he's got critics (click here). He's not a meteorologist, so the online folks with weather training tend to view his efforts negatively. Every one of us has experienced this form of criticism ... "You don't have a Masters Degree in Statistics ... you are not an Omnichannel Marketing expert ... you are not a good enough pickleball player to help others ... you don't have fashion merchandise training ... you are not a digital marketer so you don't know anything, you're old-fashioned".

Welcome to the modern world.

It's been estimated that Ryan Hall makes +/- $250,000 per year via his community ... YouTube puts ads in his programming and gives him a cut. I have no idea if the $250,000 per year figure is true or not, but he's got nearly 2,000,000 followers now so if that figure is remotely close to true he's earning maybe $0.12 per community member per year ... again, those are wild guesses designed to make you think.

Back to you and your business.

E-commerce evolved, and as I said eight years ago, e-commerce brands were going to become media brands. The e-commerce brand monetizes the world differently from media brands.

• Media Brands create content, content attracts viewers, viewers attract advertisers, advertisers pay Media Brands a toll for access to viewers. Media Brands ultimately depend on Advertisers, but without a community (viewers) there are no Advertisers.
• E-commerce Brands sell products, products attract a community, the community pays the E-commerce Brand by purchasing products. E-commerce Brands depend on Customers, and Customers are part of a Community.

Based on some of the work I've done this year, you need +/- 30 members of a well-developed community to generate one annual customer. Yes, this research is going to constantly change. So think about it this way ... if you created a community and had 100,000 registered users who actually cared about your community, you could theoretically generate 100,000/30 = 3,333 customers each year ... if a customer spent $200.00 a year, you'd have $666,600 in net sales.  That would be $6.67 per community member.

If you do a great job, you might get 1 customer per 10 community members, maybe 1 customer per 7 community members. Heck, I have a community of over 10,000 followers between Blog/LinkedIn/Twitter, and anywhere between 15-40 clients per year. That's 1 customer per maybe 363 community members ... but my AOV is huge, so I can get away with a "low level of engagement". 

I was never a big "community" marketing advocate ... I spoke at a conference more than a decade ago, and it was my job to poke holes in the community marketing model. That was 2011ish. By 2016, I could see the light. In 2024, you kind of have no choice. Worse, if you don't build out your own community, your customers will do it for you off-platform ... they'll talk about you on the socials, out of your control.

When I think about traditional catalog brands, I realize the catalog industry didn't focus on building communities. The "community" by default became the shared pool of 65+ year old customers who liked buying via catalogs, and a small number of data-centric brands collected the data from catalogers (who sent their own customer data to these brands at no cost - imagine the insanity of that sentence), mixed it up and re-sold it back to catalogers, which meant catalogers were constantly paying the data industry a toll for access to their own community. That's a bad business model for catalogers. That's a great business model for data brands.

One you have this realization (that traditional catalog brands were paying a toll to third parties for access to the community they built), you cannot unsee the unfairness of the situation. Yes, there were catalog executives who made horrible decisions in the 2000-2005 timeframe that led to the community being a toll-based community, but it doesn't have to stay that way. The future is yet to be written.

Now that you see it this way, you see that all of catalog marketing is a ridiculous toll-collecting process ... it's the opposite of community building.

• Pay a toll to co-ops.
• Pay a toll to your paper brand.
• Pay a toll to your printer.
• Pay a toll to the USPS.
• Pay a toll to your favorite consultancy who is now owned by your favorite paper brand.

And if you want to be viewed as a digital marketer to complement your old-school efforts, it's just as bad.

• Pay a toll to Shopify.
• Pay a toll to your Search Vendor.
• Pay a toll to your Email Vendor.
• Pay a toll to your Retargeting Vendor.
• Pay a toll to Google.
• Pay a toll to Facebook.
• Pay a toll to an Influencer.

Do you see it?

You can't unsee it once you see it.

Google/Facebook are simply "communities at scale", and all of us are paying them tolls for access to our own customers ... customers that we lazily didn't adhere to our brands because our community building efforts failed miserably (or were never initiated in the first place).

You're going to have to build out your own community, going forward. Why are we constantly paying tolls?

The toll collectors will be angry. They'll tell you that you are stupid (how can you avoid Facebook, all of your customers are there?).

Part of becoming a Media Brand is crafting a community that others pay you for access to. For e-commerce, you don't need to give anybody access to your community ... the community will pay you for access to what you sell.

Every week, somebody contacts me asking to pay me for access to you. You are my community, and they don't want to do the hard work of building their own community ... they want to pay me a toll instead. Lazy marketers, every one of them.

You're going to have to do the hard work of building your own community. That way, when the toll collectors charge you 15% more for the same access next year, you can ignore them.

You are a media brand. How well-developed is your community?

Send me an email (kevinh@minethatdata.com) with your thoughts.

A Philosophical Debate

Thirty years ago, during the roaring 90s at Lands' End, there was a philosophical debate about investing in catalog mailings to housefile customers.

One camp said you should mail to a 10% variable profit level, because after accounting for fixed costs, you were approximating a break-even approach to mailing. This meant that a housefile mailing might be sent to 4,500,000 housefile customers.

Another camp viewed the world differently. They said you mailed to a -10% variable profit level, because after you converted customers to a purchase, those customers had higher long-term value, and consequently you would make money on the transaction on an annual basis.

Neither side had an actual Marketing Budget Experiment to prove or disprove the other side. It was an argument that could never be won, and as we've learned from politics, those are the arguments that our modern world is optimized for.

Today we have Marketing Budget Experiments.

Here, we invest more in catalog housefile marketing and we lose money in the process. The top table shows what happens if we do it for just one year. The bottom table shows what happens if we do it every year for five years.

In the top table, we see that the investment makes sense. We lose money in year one, then we make money each year thereafter, causing us to make money overall.

In the bottom table, we see that if we employ this strategy as a "best practice" (doing it every year), we lose money for four consecutive years before finally turning a profit. Overall, the brand loses nearly $1.5 million over five years.

The endless argument continues ...

You get to decide which choice makes the most sense.

But you should make that decision with full knowledge of what your p&l looks like (on a Variable Profit Level) with/without the tactic, right?

Click here for project pricing.

The Customer Has No Value

Back in the days when clients paid money to have you on campus, there were times when a CEO or Marketing Executive just wanted to "touch base". I learned early in my consulting work that "touch base" sessions needed to be expensive. You don't charge $900/day to have somebody yell at you for eight hours. The key was to charge just enough to encourage a handful of "touch base" sessions but to dissuade the large number of sessions where somebody wanted to yell and was "frugal". Yelling/Frugal is a bad combination. If you want to yell and are frugal, I'll let you do that via Zoom for free.

"Frugal" is a bad word when it comes to customer acquisition.

One such CEO ... a catalog CEO ... wanted to discuss "customer acquisition theory". Theory is also a bad word, as it implies that the CEO can never be wrong because s/he is simply discussing theory. In this case, the CEO was frustrated that paid search customers had no value.

Here's what the math looked like:

• New Catalog Customer = 35% Rebuy Rate, $170 Spend per Repurchaser, 40% Profit Factor, $12.00 Annual Marketing Expense, $11.80 Variable Profit in Year One.
• New Paid Search Customer = 25% Rebuy Rate, $160 Spend per Repurchaser, 40% Profit Factor, $10.00 Annual Marketing Expense, $6.00 Variable Profit in Year One.

He presents this data-driven argument, tells me that the Paid Search customer has "no value", and wants to abandon paid search.

He is wrong, of course.

Just because a customer is less valuable doesn't mean that a customer is not valuable. The customer is simply different.

The CEO became frustrated. "Why would I acquire a customer worth half as much as my catalog customers?" I answered "Because the customer generates enough variable profit to offset fixed costs." This was apparently the wrong answer to offer during a "touch base" ... the CEO became more upset. "This customer won't even buy from my catalogs." I told the CEO that "You don't care if the customer purchases from your catalogs, you only care that the customer purchases." Visibly angry now, the CEO says "What am I supposed to do, acquire two lousy customers to make up for one catalog customer?" I replied "yes".

Here we are, in 2023. A fusion of low co-op response and a paper industry charged with destroying the expense structure of a catalog that resonates among customers age 60+ mean that it is terribly hard to acquire new customers via print.

The choice is to now acquire two customers at $6.00 each instead of one customer at $11.80. The customer that has no value is now "the" customer. On Maslow's Hierarchy of Needs, we're moving toward Acceptance.

ROAS-Based Digital Marketing

ROAS. Return on ad spend. The inverse of the old-school 1980s catalog metric called ad-to-sales ratio (yes, they are the exact same thing).

It's a metric that dominates digital marketing. If you don't have access to profit information (or gross margins at bare minimum), it's the metric of choice. It correlates directly with profit, so it is a metric that has value.

Your challenge (and you already know this) is that you don't truly know if a ROAS of $14.00 or $2.75 is appropriate. You know $14.00 is likely profitable ... highly profitable. You know $2.75 is probably marginally unprofitable ... but is that bad?

Tomorrow, we'll explore math that reveals how much we've been deluded to think that we must have a high ROAS or we are failures as marketing professionals. All of this is leading us toward the value of Marketing Budget Experiments.

Judy / Jennifer / Jasmine

Eleven years ago I spoke at NEMOA about the importance of Judy / Jennifer / Jasmine as key shoppers within a traditional catalog brand (hint ... Judy was a Baby Boomer, Jennifer was Gen-X, and Jasmine was a Millenial).

The audience, evenly split between catalogers and vendors, absolutely groaned when I discussed Jennifer. They HATED her. Hated her. I recall one attendee telling me afterwards "I don't like anything about her. Shopping via email or social. Always online with a phone in her hand. She's not my customer."

She is now.

A reader sent me this PR-inspired link from CNN about Lands' End catering to Gen-X (i.e. Jennifer) ... click here.

If you built your business from the 80s through the early 00s via Baby Boomers, your next logical pivot is to a generation you simply do not like. Analyze your assortment, and identify the products that Gen-X buys vs. the products that Baby Boomers buy. I've done this, and there is a difference.

Build your assortment around these items ... you'll see stylistic differences. You might not like the differences, but the differences represent your future.

In the next seven years Baby Boomers will completely leave the workforce. Their need for your products will not exist. If a Baby Boomer is your core customer, you will have no choice but to pivot.

P.S.: I get it - you're about to email me telling me why you hate this. You've been filling my email box for a decade-and-a-half telling me you hate this. Your dislike for changing demographics (and we're not even talking about addressing Millennials or Gen-Z) cannot be stopped. Demographics are going to change. Are you willing to change?