Multichannel Forensics A to Z: Acquisition Mode

We begin a series on Multichannel Forensics (study, book) with the letter "A". Our first topic is "Acquisition Mode".

In Acquisition Mode, you retain fewer than 40% of last year's customers. In other words, if 1,000 customers purchased merchandise from your brand in 2007, fewer than 400 will purchase again during 2008.

Too often, we take a "Starbucks" view of the world, one where there is a 40% chance that Starbucks will retain our business today! In those situations, we think about loyalty programs and all the stuff that goes into cross-selling and up-selling the customer --- it's all about getting more from the customer today.

The majority of the brands I study retain fewer than forty percent of last year's customers, in fact, many retain less than thirty percent of last year's customers.

The media, trade journals, and vendor community seldom focus on this business model. A business can make a boatload of money catering to customers who purchase infrequently --- how often do you buy from your local furniture store, after all? Somehow, they stay in business (most of 'em!).

For products, brands or channels locked in Acquisition Mode, it doesn't make sense to try to increase loyalty, as the pundits would have you do. Instead, have a steely-eyed focus on acquiring/reactivating customers at the lowest cost possible.

Nordstrom (JWN) Stock Price

On January 8, 2001, I began my employment stint at Nordstrom as Vice President of Direct Marketing. The stock price was $8.33.

On March 9, 2007, I completed my employment tenure at Nordstrom. The stock price was $50.63.

On July 11, 2007, the stock price is $27.38.

How much of the stock price is due to my brilliant shepherding of the Database Marketing function at Nordstrom?

$0.

This is one of the challenges we face when evaluating talent.

Leaders are caught in updrafts and downturns. How the leader deals with updrafts and downturns manifest itself in the profit and loss statement. And during a time when Nordstrom stock declined by thirty percent (fiscal year ending 2/2008) Nordstrom actually posted a year of record profits.

MeritDirect Co-Op Slides: Non-Traditional Online Customer Acquisition

For those of you who were in attendance today and asked for digital copies of the presentation, here you go: Non-Traditional Online Customer Acquisition.

If you weren't in attendance, download this version instead.

Thanks to all of you who stopped by to say hello at some point over the past three days, I really enjoyed meeting so many enthusiastic direct marketers!

And for those of you who quizzed me on my position about best practices, I'm not against best practices, I'm against blind adoration of best practices without testing what is appropriate for your brand. I did enjoy the discussion!

$4.25 For A Bottle Of Water

The tag on the bottle of water in my hotel room encouraged me to "refresh" myself.

Cost to refresh myself = $4.25 per 20oz bottle of water.

In algebra class, we learned that we can determine the cost per gallon, using the following equation:

• $4.25 / 20 = "x" / 128 (equation corrected from earlier error!)
  

Solving for "x", we learn that the cost of this refreshing bottle of water is actually $27.20 per gallon.

These are the luxuries we'll forgo as we adapt to $5.00 gasoline.

Five Easy Steps To Jump-Start Your Struggling Business

Of course, there are never five easy steps to jump-start your struggling business, are there? If there were five easy steps, you'd already be executing them!

So why, then, do so many articles sound like this? Why do we write like this? Do we believe articles written using this format?


Five Easy Steps To Jump-Start Your Struggling Business

July 9, 2008: In today's highly competitive direct marketing environment, savvy marketers are increasing shareholder value by placing emphasis on understanding a dynamic global marketplace that rewards integrated multichannel strategies that empower consumers challenged by a recessionary environment predicated on sub-prime mortgage indulgence.

Visionary brands are already taking advantage of five easy steps, guaranteed to jump-start any struggling business. Complex financial markets require that we thoroughly understand these principals.

Step 1 = Know Your Target Audience: Leading brands have an in-depth understanding of who their target audience is. Wal-Mart, for instance, executes their brand promise against a hundred million shoppers who love getting the lowest price on everyday commodities.

Step 2 = Implement Advanced Multichannel Strategies: Brands that ignore the diverse needs of a fickle customer audience risk obsolescence in a complex and integrated multichannel environment.

Step 3 = Calculate Return On Investment Across All Strategies: Brands implementing return on investment (ROI) reporting using integrated business intelligence platforms often derive earnings before tax percentages exceeding mainstream brands.

Step 4 = Trim Unnecessary Programs: Shareholders fail to share in the benefits of a integrated strategic approach if management blindly ignore the findings of a strategic evaluation of the brand. By eliminating unnecessary programs, capital is reallocated to endeavors that are likely to generate a higher return on investment.

Step 5 = Repeat! No strategic process is complete without a thorough re-evaluation of every program for brand appropriateness. Iterative strategy yield superior pre-tax results.

By employing these five easy steps, brand leaders can increase shareholder value and weather any economic storm.

What are you doing to improve business performance?

Simple Tip: Customer Value By Day Of Week

Those of you who enjoy measuring long-term value might want to research customer behavior according to the day of week the customer purchases from your brand.

Retail customers purchasing on Saturday or Sunday have different future value than customers who purchase on a weekday afternoon or evening.

Online customers purchasing early in the week have different future value than customers who purchase evenings or weekends.

Catalog customers who buy during the in-home week have different future value than customers who buy two months after a catalog was mailed.

Those of you who analyze online visitation behavior will observe unique trends, based on the day/time the user visits your website.

Give it a try!

Google, Yahoo!, MSN, and Multichannel Forensics

Web Analytics practitioners do a very nice job of summarizing visit-specific customer behavior. They can tell you that 29% of the customers who visited a landing page were new, 71% existing visitors. Our world of marketing and measurement fundamentally changed when we were given access to the information provided by Web Analytics.

Now it is time to complement the veritable plethora of information provided by Web Analytics with Multichannel Forensics.

Most online marketers generate considerable sales from customers referred by Google, Yahoo!, and MSN searches.

Now let's consider future behavior. In other words, does the Google purchaser purchase again after conducting a search using Google? Does she purchase again because she becomes loyal to your website, visiting it frequently? Does she purchase again because of your catalog marketing activities? Does the MSN purchaser stay loyal to the MSN micro-channel, or does she switch to Google?

Multichannel Forensics provide answers to all of those questions.

Often, Multichannel Forensics suggest that Google is a unique micro-channel, separate from your e-commerce channel. My projects routinely indicate that Google customers have comparable future value, compared with Yahoo! or MSN customers. But subsequent behavior is fundamentally different! This means downstream marketing activities can be executed differently for the Google shopper than the MSN or Yahoo! shopper.

The Yahoo! and MSN shopper are occasionally less loyal to their portal than are Google shoppers. Loyalty to your brand may be similar, but you may find these customers elsewhere on the internet in the future, whereas the Google shopper may continue to be loyal to Google.

Results across brands are frequently unique, so it is important that you give Multichannel Forensics a try, considering each online marketing vehicle as a unique micro-channel.