Are Relationships Changing?

My first two jobs were at intensely competitive companies.

At the Garst Seed Company, we were fourth in market share, losing money, fighting for our existence. We were fighting against the big boys at Pioneer.

We were downright competitive at Lands' End, too. Stuck in the middle of the country, with L.L. Bean to the east and Eddie Bauer to the west, we wanted to win in the early 1990s.

Two of my favorite experiences were part of cross-functional teams. Getting Eddie Bauer Direct to go from break-even to an at-the-time record $26,000,000 EBIT was fun, and it was especially neat to see merchants, brand marketers, finance, information technology, online marketing, contact center operations, creative and circulation all work together to make it happen. We openly talked about and shared ideas. And for a brief period of time, we were a well-functioning team.

The other really enjoyable experience was in 2003-2004, when Jim Bromley unified a similar team, a team that turned Nordstrom Direct from an epic failure to a money-printing machine.

Since then, the internet and blogosphere seem to have changed things.

Our allegiance to cross-functional teams within a company is being transformed by cross-company teams within an industry.

I see this happening every day. I follow an e-mail discussion group that talks about various topics within the e-mail industry. There are blogs for just about every possible discipline. Fans of any discipline can readily exchange ideas and thoughts with each other, across industries, within industries. You'll see folks from one competitor share ideas with folks from another competitor.

The changing face of relationships was illustrated to me earlier today. In the e-mail forum I follow, an individual asked if anybody leveraged partnerships with the web analytics folks to complement the metrics used to analyze e-mail campaigns.

This question was almost unfathomable to me. Fifteen years ago, you would simply walk down the hall and ask somebody to help you.

Today, you float your idea into the ether, to see if others in your field are already implementing your suggestion.

I'm not sure whether this is good or bad. In the old days, you'd develop your ideas internally. Some companies would win, some would lose. You learned things when you left your company, and went to work somewhere else.

Today, the ideas are homogenized. How many clever e-mail, web analytics, marketing, creative or merchandising ideas can there be if they can all be readily shared in nano-seconds on a blog or message board?

Ok, your turn. Do you notice that relationships are changing? Is this good or bad for an individual person's career? Is this good or bad for the profession we work in? Is this good or bad for the companies we work for?

Being Humbled

Early in my tenure at Nordstrom, I was asked to fix the way we forecast how well a potential new store would perform.

My team spent about four months developing a new process, and sure enough, the new process was a lot more accurate than the old process.

We were happy with our performance.

But somewhere along the way, I failed to communicate to our executive team that we developed a new process that was working better. I said the words to our management team. I shared the powerpoint slides. But due to my failure to communicate, or for reasons not shared with me, management did not feel like my team and I did a good job.

What do you do when you work at a big company, and you need a problem solved? You open up the wallet, and call in the big guns at a management consulting firm.

In came an army of consultants, well meaning individuals tasked by management to solve a problem that I apparently failed to solve.

If you are an analytical professional, especially in a leadership position, there are few ways to be humbled more than being at the mercy of the folks from a management consulting firm.

First, you have to sit through a couple of days of "fact finding". The consultants are given one of your prized conference rooms for eight weeks, ensuring that you are always a few feet away from serving their needs. They ask a lot of questions. "Have you ever thought about using your online buyer data as a proxy for new store performance?", or "Can I see the exact methodology you use today, including all relevant spreadsheets, and can I have that information delivered to me with the actual raw data in fifteen minutes, thanks?!"

This makes you feel defensive. Of course you've thought of everything the consultants are talking about, in fact, you already implemented those ideas, and improved the process!! The management consultants have a job to do, however. They take detailed notes on their laptops, and move on to the next set of question.

Over the next week, the consultants begin asking your executive partners for their ideas. You're not allowed to be in those meetings, but you know they are asking your co-workers about your strengths and weaknesses as well as asking them business questions they should be asked. This will lead to trouble in eight weeks, when the project is over.

For the next two weeks, you start a new job. Your job is to give the consultants whatever they want, whatever data they need, shaped however they need it. And they have a lot of needs!! You lose grip over your day job. Your team is strung out, they want to know why they are being stepped on.

Next thing you know, you have about a month of peace.

Then the project is about to wrap up. There is a presentation. Your management team, the management consulting team, and a select few members of your humble group of underpaid analysts are gathered to hear the findings.

The findings are not significantly different than the work your team did. You are surprised that a company could spend this much money to get a product that is barely any different than what your team previously created.

When the management consultants finished their work, management told me they were thrilled with the outcome of the project, and communicated their excitement over seeing my team implement the solution created by the management consultants.

Yet the outcome was not significantly different than the work my team did. Obviously, something was wrong with my perception of the situation, or management wouldn't be happy with the work that the management consultants did.

Within days, the management consultants left. My team had to implement their solution.


One of the biggest challenges facing individuals with a skew toward numbers and analysis is communication. Communication problems magnify themselves as you ascend the corporate ladder. Analytical individuals use a style of language that is not easily understood by leadership. We often attack this problem by hoping that management will adapt to us. We talk slower, using the same language that failed to work properly in the first place.

Take time to learn the hidden language of your management team. Ask direct questions about your performance, and listen closely to the choice of words used by management. Realize that management decisions aren't always made on the basis of facts and figures. Realize that management does not see facts the same way you see them. Realize that management may be under pressure from their Board of Directors, causing them to make decisions that appear mysterious in nature.

Most important, invest a lot of time in the adaptation of your communication style. Your job may depend on your ability to adapt.

People Matter

Two things struck me this afternoon, two things from different realms.

• If you're addicted to motor racing like I am, then you were saddened today by the loss of former NASCAR leader Bill France Jr.
• An article from Bookstone about the merits of their relationship with Abacus.

What do these two completely unrelated topics have to do with each other?

The first article illustrates the importance of people, in this case, how one leader shaped thousands of lives and influenced millions of people.

The second article ignores the importance of people. Quotes attributed to a Brookstone executive suggest that a revolutionary product is responsible for unfettered business success.

Catalogers have always known that the creativity of people (and an steely-eyed focus on every detail of efficiently running the operations of a business) drive success.

All too often, multichannel marketing and online marketing focus on technology, on algorithms. We brand our technology, creating demand for a product or service.

But behind the scenes, people invent technology. People create algorithms.

What would happen if a vendor marketed the people responsible for a product? Instead of branding a product as being wonderful, what if the vendor publicly praised the people who created the product? Would we view a vendor differently if we knew that reputable multichannel expert "Bill Smith" is responsible for a product, and puts his reputation behind the product or service?

People matter. If we want multichannel marketing to succeed, we need to reward people for their efforts.

Answer me this: Name three individuals who are well known and respected for their expertise in multichannel marketing? Go ahead and write their names in the comments section of this post.

People matter. Let's start cultivating tomorrow's leaders.

Ten Ways We Will Save Multichannel Marketing

I once had a CEO tell me, "Don't tell me what is wrong, anybody can do that. Tell me how to fix what is wrong". With that in mind ...

Number 10 = Storytelling: One thing that was crystal-clear to me while attending my first NEMOA conference in March is that New England catalogers are better than anybody else at telling stories. This is a HUGE competitive advantage that catalogers possess over online pureplays, and for the most part, over retailers. When is the last time you felt romanced visiting Amazon.com? The further we progress down a technological path, the "colder" our world gets. Catalogers have always been best at being "warm", best at romancing a customer. Read the creative description of this product from Cuddledown of Maine. Use your eighty-four pages of catalog marketing to tell a story. Have what is on page nineteen relate to what is on page thirty-seven. Make the customer want to turn the page to see what is next. If the customer wants to go online and buy the product featured in a catalog, so be it. Online marketing is all about intercepting the customer at a time of need. As customers, we don't want to buy merchandise that way --- we buy the story as much as we buy the merchandise. Catalogers are great at "creating demand". We should exploit this gift we possess.

Number 9 = Band Together: Cataloging and Retailing have always relied upon healthy competition in order to grow. If you are Gap, you want to be in a mall where your competitors are, because a critical mass of popular apparel retailers fuels traffic. Catalogers have always partnered with each other, renting/exchanging each other's lists in order to facilitate growth. A sustainable version of this doesn't exist online --- we rely upon Google to parse traffic. If I were a charter member of the ACMA, I would build a shopping portal that features all member brands. I would construct the site to be search-engine friendly, so that customers searching for a dress shirt would arrive at this portal, and would be encouraged to shop Paul Frederick MenStyle. Use the collective interests of all members to raise the presence of the organization among search engines. Catalogers can band together, and leverage each other's strengths to grow their business.

Number 8 = Be Proud: If you are a cataloger ... BE A CATALOGER! You are not a "multichannel merchant". Conferences and publications invented that term for their own benefit. Retailers tell you over and over that they want to use the web to support stores. Their focus is ... guess what ... RETAIL! Be proud, you're a CATALOGER!

Number 7 = Creativity: We should be doing the exact opposite of "same look and feel across channels". We grow and evolve through experimentation. How else do we learn what works best? We don't improve by homogenizing our marketing, we improve by experimenting, by diversifying our marketing. So be creative, experiment, learn what customers want from us.

Number 6 = Let Them Do Their Job!: One channel is going to inevitably achieve greater sales than another. Multichannel organizations that have a retail arm frequently drive the majority of their sales via stores. In these cases, let the online/catalog folks do their jobs! Homogenization of business processes sub-optimizes the benefits of each channel. You don't have to adjust catalog in-home dates to match up with floorset changes in the store, unless that is what is best for your customer. You don't have to feature every store product online, you can have online-only merchandise, you can have merchandise only available in stores. Let the folks managing each channel do their jobs. Let these folks create demand. Don't stifle employees on the road to multichannel excellence.

Number 5 = Web Analytics: Have you ever sat down and spent an hour with your web analytics guru? Try it sometime. This person knows more about how customers are responding to your business at this moment in time than almost anybody in your company. Soak in everything this person says, don't let terminology issues taint the knowledge this person possesses. Once you've soaked in the knowledge this person has, apply the knowledge to your catalog and store marketing efforts. This person knows what is happening real-time. Don't put this person in a dark room, shine a light on what this person knows.

Number 4 = Web Analytics: Nobody wants to hear that 3.07% of visitors converted to a purchase. That makes us sound like we're failing. Merchants want to hear that loyal customers visited the website eight times last month, with a quarter of them purchasing at least once. That's a story that indicates we have a compelling website. Ironically, the metrics yield almost the exact same outcome!!! Our focus on converting a customer NOW fails to convey the rich experience customers actually have with the businesses we manage. Customers visit our site (and our competitors) multiple times before deciding what they want to do. Create metrics that actually mirror customer behavior, metrics that adequately explain our successes, not ones that beat us over the head with perceived failures.

Number 3 = Invest In Your Employees: Maybe this is old-fashioned thinking. We can save multichannel marketing if we simply invest in our employees. If you sell gardening supplies via catalogs, why not send your catalog and online marketing employees on a field trip to an online pureplay, to see how they think about their business? If you sell apparel, why not send your catalog and online marketing employees to a non-competitive retailer, to see how those folks merchandise a store? Invite a non-competitive cataloger to visit your campus, and create a workshop where they get to design a marketing campaign for you --- how do they approach your craft, what can you learn from them? Give your employees the tools to succeed. Even more important is the investment in line staff, the folks who are paid eleven dollars an hour to actually fuel our business. Give these employees incentives to do good. Pay a call-center employee ten dollars every time he solves a customer problem by using multiple channels. Pay a store employee ten dollars every time she solves a customer problem by using the website. Invest marketing dollars in your own employees, and see what happens.

Number 2 = Technology: There's a reason the term is called "Multichannel Marketing" or "Multichannel Merchandising". It's because marketing and merchandising create demand. Technology doesn't create demand, technology facilitates the interaction between customers and marketers/merchandisers. We need to let marketers determine the vision for our websites, we need to let the technology folks do what they do best.

Number 1 = Gut Instinct: Gut instinct plus timing equals innovation, innovation fuels future profits. Too much of online marketing is formula-based, Darwinian-style evolution, a reaction to "what is selling real-time". Catalogers have always been great at using gut instinct (the vision of the merchandiser or marketer) to fuel customer demand. Catalogers and Retailers create demand. Online Marketers adapt to response. Ultimately, creation and adaptation employed in harmony yields great outcomes. Too often, we focus on the cold science of measuring response. We need to save multichannel marketing by focusing more on the application of gut instinct to merchandising and marketing. We need to create. We need to lead. We need to innovate. We need to be "warm", not "cold".

Your turn, how would you save multichannel marketing? What are your ideas?

Ten Ways We Ruined Multichannel Marketing

Multichannel Marketing used to be called "Direct Marketing". Those were heady times. Now, we've ruined our once-promising method of selling to consumers and businesses. Let's look at ten ways we ruined what we now call "Multichannel Marketing".

Number 10 = E-Mail And RSS: There was an inflection point in the late 1990s, when e-mail could have been saved, and one in 2004 where RSS could have been saved. We stood by and watched. What would have been nice is the creation of a marketable, non-geeky, non-technical solution that the customer could have pulled into her inbox. Obviously, that solution is RSS. But who trusts a three-letter acronym that has no meaning to anybody? Allegedly, we're brilliant marketers. But we couldn't market a technology that allows the customer to pull whatever she wants into a secure, trusted inbox folder, without interference from twenty-four spam-based messages. E-mail and RSS could have replaced direct mail as the best way to drive volume, had they been managed differently. We're told that E-mail has the best ROI, yet since the advent of the tool, our businesses are not one bit more profitable. We failed.

Number 9 = Short Term Focus: Ignore the pointless arguments about whether lifetime value should sit at the "C-Level" table. Once you've sat at the "C-Level" table, you'll find it isn't very glamorous. We do almost everything to drive business today. We gear most of our marketing measurement around how an e-mail campaign did at driving click-thru rates over a twelve hour period of time, or how a search term drove conversion during a session. Our management teams are given incentives to increase sales and profit today --- incentives that far exceed their actual contributions.

Number 8 = Integration: We were told that we had to align marketing and merchandising across channels, because the customer demanded it. Did your customer demand it, or did you read this in a $279 research report? If the latter is true, who benefits, the customer, or the one producing the $279 research report? We made huge mistakes aligning our marketing and merchandising. First, in order to align these areas, we realized we didn't have the systems infrastructure to align areas properly. Second, putting the systems infrastructure in place to meet this vision requires money --- so instead of investing in the customer, we invest in a systems infrastructure, benefiting vendors. Third, to align marketing, we made compromises that homogenize marketing, lowering response within any one channel.

Number 7 = Shipping: We butchered shipping and handling. We charged our customers $16.95 for a service that they can employ UPS to do for $10.95. Customers aren't dumb, they know they are being gouged. Worse, we offered customers free shipping, charging them nothing for a service they can employ UPS to do for $10.95. We trained the customer that charges for shipping are evil. We trained the customer to expect to receive merchandise for free, though it may be unprofitable at the scale of business we manage. Why didn't we train the customer to expect to receive merchandise for $5, or $7? Why didn't we build an equitable partnership with our customers?

Number 6 = Career Development: Who is training tomorrow's multichannel leaders? By default, our merchandisers are taking control of the future of multichannel marketing. Merchandisers have to sell products across all channels. They learned how to do this without having the systems infrastructure to be effective. While everybody else defended their own turf, becoming experts at managing a niche, merchants became the rulers of the roost. It will be a decade before anybody else has the multichannel knowledge and experience to rival our merchandising co-workers. Why can't I buy a $279 research report on how to manage career development in a multichannel marketing environment?

Number 5 = Channel Dominance: If you worked for a company that has a catalog channel, an online channel, and a retail channel, you know what I am talking about. Dell is about to learn all about channel dominance. Dell will learn that customers who are given a choice between buying something online or in a retail setting will inevitably migrate to the retail setting. Over time, this mitigates all of the advantages of the direct-to-consumer channel. The dominant channel, and the sales rhythm of the dominant channel, require the other channels to "support" it. Anytime one channel "supports" another, it becomes compromised. Why do you think Macy's, Neiman Marcus and Nordstrom are in an arms race to build-out their online infrastructure? Each business wants to use the online channel to "support" their store channel. Anytime the online/catalog channel "supports" stores, sales in the "support" channel suffer, degrading the potential of multichannel marketing. Eventually, the catalog becomes a "brand advertising" tool. Eventually, the online channel becomes a "dictionary" or "encyclopedia" used by the customer to purchase store product. Eventually, "direct marketing" as an art/craft is compromised, unrecognizable.

Number 4 = Marketing's Digital Divide: What a waste. Catalogers honed their craft over more than a hundred years. Then online marketers invented a craft over a decade. Brands use both tools to grow sales. But the skillsets used in each craft are different, and we haven't cross-pollinated folks how to work with both crafts. Go to a NEMOA or Catalog conference, and you'll bask in the knowledge of a generation of catalog experts who are in their 40s, 50s and 60s. Go to any online-based conference out west, and you'll bask in the energy of a generation of online marketing experts who are in their 20s, 30s and 40s. Different channels, different tools, different generations, different mindsets, same objective. It could have been different, had the dot-com explosion of a decade ago not divided all of us so much.

Number 3 = Profit: The all-mighty quest to achieve 6.9% pre-tax profit instead of 6.2% pre-tax profit, to drive "shareholder value", causes us to make decisions that look good in the short-term. We send remails of catalogs, wrapping a new cover and back page around the same creative, hoping our customers won't notice. Private equity buys numerous companies, integrates backend and management operations to reduce expense, and then cross-pollinates the housefiles of each company to save on rental/exchange/co-op expenses (I lived through a version of this at Eddie Bauer). Circulation teams outsource the most vital part of their business, customer management, to a random statistician at a compiled list vendor. We ship merchandise overseas to be assembled, then ship it back here, all to lower cost of goods by a dollar a unit. Then we grumble when the worker in Indiana who used to have a job can no longer afford our product because her job was "outsourced" by our very-own company. We farm out call-center activities overseas. How does the customer benefit from all of these activities, long-term?

Number 2 = Google: Multichannel Marketing is doomed to fail in a Google-dominated world. The very thing Google gives us as customers, the very thing we love (relevant choice), is what will destroy the businesses we manage. Today, we love it that Google drives 20% of our website traffic. Once online growth stops, and Google makes changes for no good reason that reduce our traffic from 20% to 14%, what is our recourse? That's the kind of change that gets an Executive fired. That's the kind of change that turns a 6.2% pre-tax profit business into a break-even pre-tax profit business. That's the kind of change that causes you to lay-off your online marketing analyst. That's the kind of power that Google holds over you --- you just don't see it today, because your online volume is growing year-over-year at acceptable rates.

Number 1 = The Punditocracy: There's a reason that some conferences lock vendors out of sessions. Everywhere you turn, some pundit is telling you what you must do to succeed, is telling you why you are a failure, or is beating the living daylights out of the failure of some "brand". All too often, what they tell you to do requires you to purchase their services. All too often, this strategy creates financial and emotional benefit for the punditocracy, not for your business, not for your customer. The punditocracy hijack relevant trends, turning them into "solutions" for perceived failures within you brand. If all of these "solutions" are so fantastic "in today's multichannel world", how come businesses aren't rolling in profit? The punditocracy pushes us toward their vision of the future, not toward a vision of what our customer wants from us. Our failure to shut out the punditocracy, our desire to trust organizations not truly doing things in our best interest, to trust somebody with a perceived "solution" over our own gut instinct, is causing us to lose control over our businesses, to lose control over the expense structure of our business, and to provide a homogenized "solution" to our customers. Worst of all, we did this to ourselves. We're ultimately responsible. If we don't buy into what the punditocracy tells us, they don't stay in business.

Ok, you're turn. In what other ways did we ruin multichannel marketing? Or, maybe you want to defend multichannel marketing --- go ahead, express your point of view.

Site Changes

I added a couple of features to this blog.

Anytime a "Friend of MineThatData" writes a post on his/her blog, or is mentioned in the blogosphere, a link will be available for the reader to click on. This gives the reader an opportunity to click on the latest news about individuals writing about database marketing, customer analysis, web analytics and customer behavior.

Just below that feature are links to recent news about database marketing.

If you have a moment, please give each new feature a look. Both features are located on the right-hand side of the blog.

Thanks,
Kevin

Rewarding Greatness

If you are basketball fan, then last night you witnessed a 22 year old named LeBron James make the move from potential to a previously unseen blend of genius, talent, leadership and physical gifts.

Are there instances when you witnessed an employee as s/he experienced a "defining moment"?

How do you reward an employee who has a "defining moment"?

I had an employee who had a defining moment. This person went beyond anything I ever thought this individual was capable of. Once this employee crossed this threshold, there was no turning back. This person became a leader, out of nowhere, at a completely unexpected moment in time.

The latter portion of that sentence is what causes struggle in companies.

I immediately wanted to promote this person. And I immediately became demoralized.

I could not promote the individual, because there were "x" leadership positions available. We would need one person to leave the company, or be promoted, in order to open up another leadership position.

I could not give this person a salary increase, because the grading system utilized by our compensation department indicated this person was properly classified, and properly compensated. Furthermore, salary increases were tied to annual performance reviews, which weren't due for six months. Even worse, a future salary increase for this individual would require that another person not receive as big an increase, in order to balance the "salary increase" budget.

And I was a Vice President. I should have been able to do more than I did.

We do odd things in companies. We won't reward an employee at his/her moment of greatness. We will reward an employee when a brand has a need. We quickly seek leaders when sales are in a free fall, purging those we previously thought highly of in favor of a "new regime".

All too often, the employee, having achieved an unexpected level of professional growth, looks outside the company for a reward. There are plenty of brands who will take a chance on this individual.

What are examples of businesses that have properly rewarded greatness, and what examples have you observed where greatness hasn't been rewarded? Have the companies you have worked for recognized your greatest moments?