Data Analyst Day: February 2, 2009!!!!!!

Economy got you down? Layoff pending? Tired of going to work and seeing -18% on the comp store sales report, or tired of seeing e-commerce sales at -3% every day?

Let's start the new fiscal year on a good note!

Today, I am formally announcing a new holiday. Monday, February 2 will be "Data Analyst Day", a world-wide day-long celebration of all that is good in the world of data analysis!

Maybe you are an Information Technology expert who just worked a weekend to create a dashboard for your Executive team.

Maybe you are a Business Intelligence staffer who recently used Business Objects to prove that certain store employees are worth 20% more than others.

Maybe you are a SAS/SPSS Programmer who calculated the lifetime value of multichannel customers.

Maybe you are a Web Analytics professional who demonstrated that branded search terms have a 15% larger average order value than other search terms.

Maybe you are a Catalog Circulation manager who saved your company $1.2 million dollars in expense by trimming unprofitable customer acquisition names.

Maybe you are an E-Mail Marketing director who developed six customized, personalized versions of a campaign that delivered a 20% improvement in $-per-e-mail.

Maybe you work in a fulfillment center, and you saved your company $300,000 in efficiencies, and you did so without touting yourself to Sr. Management.

Maybe you work at a Catalog Co-Op and you anonymously made your clients $3.5 million in profit by targeting the best names available.

Maybe you work in Online Marketing, and your portal advertising strategies caused a 4% increase in website traffic on the same ad-spend as last year.

Maybe you work at Catalog Choice, and your analytical efforts helped influence catalogers in a way that saved 222,000 trees last month.

Maybe you work at a Social Media startup, and you proved that certain users are "uber-influencers" who deserve special treatment.

Maybe you just deserve some recognition!

No matter the job or reason, you all work hard to analyze data to help your company succeed, or to help customers get more targeted communications. You deserve a day just for you!

If you have any great stories or bios of data analysts who made a difference, forward them to me in Microsoft Word or E-Mail or .PDF format and if I get a suitable quantity of good nominations, I'll publish a "top 50" or "top 100" list on February 2.

So SPREAD THE WORD --- February 2, 2009 is a world-wide event --- it is Data Analyst Day, celebrating all that is good in the world of Analytics!!!!

Poll Question: Who Is Most Responsible For Online Sales?

On the right-hand sidebar I posted a survey --- "Who Is Most Responsible For Online Sales?" Please take a second to take the poll.

For example, if you receive a Coldwater Creek catalog, then visit the Coldwater Creek website to buy merchandise, then "offline methods" are responsible --- they created interest that caused the customer to visit the website and buy something.

If you answered "Online Marketing", please use the comments section to describe the online methods you believe create online sales. In other words, what are the online marketing strategies that cause a customer to "want" something they previously didn't want --- methods that don't simply intercept a customer on a mission stimulated by an offline campaign? We might think about e-mail marketing (which is really direct marketing, not online marketing) and portal advertising as two options. What else?

The Death Of Seattle Print Newspapers?

The Seattle Post Intelligencer can be added to the list of newspapers on death row.

Catalogers, I'm begging you to consider what this means to the "multichannel industry".

The newspaper industry and catalog marketing industry aren't fundamentally different --- the newspaper industry collects money on the front end, while catalogers have to collect on the back end. Both industries are based on a paper-based habit that is dying among folks age 18-40.

Newspapers have 10x or 20x the readership online that they have in print ... they just failed to convert online readers into sustainable revenue.

Catalogers have maybe 5x to 20x as many visitors online, compared with monthly circulation ... we're doing better at converting online readers into sustainable revenue. Our key is to migrate the model away from paper, should paper become untenable in the future.

I have yet to observe one catalog industry expert, blogger, vendor, or consultant face up to this reality in a public forum. The longer it takes for us to consider our future, the more painful the transition will be --- maybe as painful as it is for the folks in the Seattle P.I. newsroom.

Your thoughts?

Sprint Cell Phone Coverage And Zip Code Forensics

There are many applications of Zip Code Forensics in marketing (free to you if you contribute anonymous annual zip code sales).

One of the more interesting applications is in understanding channel preference.

This map illustrates Northeast Minnesota and Northwest Wisconsin. The orange zip codes represent "Catalog Crazies" and "Catalog Fans", zip codes that spend a lot of money because catalogs are sent to these customers.

Now take a look at the next image, one from the Sprint website, illustrating cell phone coverage on the Sprint network.




Green is good on the map ... it means that your phone will actually work!

Now compare the areas on the Sprint map that are white (no coverage) with the Zip Code Forensics map. Areas that are white on the Sprint map are often orange on the Zip Code Forensics map (orange represents old-school catalog responsiveness).

There is a correlation (not causation, mind you) --- no mobile marketing channel correlates with a robust old-school catalog marketing channel.

This is where we, as marketers, repeatedly fail.

We try to integrate everything, to make everything the same, as if the same customer is using mobile marketing and social media and e-mail marketing and television marketing and radio marketing and newspaper marketing and direct mail and catalog marketing to make the crucial decision to purchase a $19 shirt.

The maps suggest an opportunity. Why not work with the natural constraints that customers live with? In other words, in areas where mobile marketing isn't possible, why not fully capitalize on catalog marketing? And in Minneapolis / St. Paul (heavy e-commerce --- with ubiquitous 3G mobile broadband available), why not take full advantage of communicating with users who are updating Facebook pages on their 3G phones?

The data suggest we could do this.

And why not contribute your anonymous annual sales data at a zip code level, so that you can have access to the insights available in Zip Code Forensics?

Merchandise

When you look across acres of 60% off signs, buy-one-get-one-free, $3 shirt clearance racks, and other assorted discounts at the mall, you realize we've lost our connection with merchandise.

The folks at Apple haven't lost that connection. Your average Apple store has customers waiting outside the door.

A walk through the mall today indicates that the average store has one employee, and few customers.

At Nordstrom, our Chief Accessories Merchant was Margaret Myers. This merchant had PASSION. She fully believed in her merchandise. I could bring her 37 pages of customer data indicating that customers wanted "x". She would spend ten minutes, passionately arguing her case. I'd walk out of her office happily executing the exact opposite plan I wished to implement.

A merchant with passion is a terrible thing to waste.

When you walk through one of the large "brands" occupying space in a mall, do you see love and passion for merchandise? You can't replicate love and passion by paying Ashley Judd to use her image next to a pile of sale merchandise with the quote "I Love This Stuff!" on her image.

You want to have a merchant who communicates the story, who conveys passion, who wills you to want to buy the item.

Marketing and the credit devils (employees aren't credit devils, by the way, they're just doing their job) fill the void when passion isn't present.

We see desperation, not passion, when we see 60% and 70% off signs on every rounder. I understand this measure is necessary to clear inventory that is ready to spoil. But every second those signs sit on the rounders, a message is conveyed that is contrary to what the customer needs to hear.

A walk through the Bellis Fair Mall indicates that an era is coming to an end. Since about 1980, the Baby Boomer generation fueled retail commerce. Stores illustrated innovation and magic. Competitors filled the mall, then saturated the landscape. We bowed down to the credit devils, borrowing in order to over-saturate, to "capture marketshare" and "increase shareholder value". Ultimately, the Baby Boomers aged, they moved out of the prime shopping demographic. Half of Boomers now live outside of the coveted 25-54 demographic.

And Gen-X, of which I am a charter member, is the generation of e-commerce. We created a sterile, drill-down, algorithmic environment fueled by the lowest price, one where Google indirectly skims pennies from all of us. The mall owned the retail merchant. Google owns the online merchant. If Baby Boomers perfected traditional brand advertising, we perfected e-mail marketing, paid search, affiliate marketing, and shopping comparison sites. Not one of those tools convey passion for merchandise, though e-mail marketing has a chance if it doesn't land in your junk mail folder.

Maybe the Millenials will save us. Maybe they will focus on merchandise, on the importance of creating something that somebody "has to have", something that doesn't come with a mandatory e-mail signup, or a 15% off offer if you sign up for credit. Maybe we'll learn that it is truly important for a brand to have 23,048 followers on Twitter.

Or maybe we'll pull out of this by having a few bold merchandisers who are willing take a stand. Maybe we need to give more authority to the Margaret Myers' of the world.

Credit Devils at the Bellis Fair Mall

The sign inside the Macy's at the Bellis Fair Mall says "Customer Service". Below the sign are three messages.

• Open a Macy's Account.
• Make a Payment.
• Buy a Gift Card.

Surprisingly, none of the messages communicate the reason you go to a store ... to buy merchandise.

We didn't do any of the three options. Instead, we paid for the merchandise with a co-branded Nordstrom Visa, entitling us to future $20 merchandise certificates from Nordstrom, all because we purchased merchandise at Macy's.

At Kohls, we were asked if we wanted to open a Kohls credit account --- they would take 15% off of our order (which was, for the most part, discounted 60% from full price) if we opened up an account. We declined.

Both Macy's and Kohls had numerous images of pop-culture superstars with quotes like "I love this merchandise". There were numerous signs promoting credit. There were few employees.

Credit is seductive. The credit devils can move you away from a focus on merchandise. I mean seriously, how does Nordstrom benefit by giving me a $20 merchandise certificate for spending $2,000 at Macy's?

2009 is a good year to focus on merchandise innovation, to focus less on credit innovation. The credit devils won't be happy. Maybe customers will be happy.

Retail CEOs: Before You Close Stores, Give This A Try

If you are a retail CEO, you're probably feeling the pressure to close stores right about now.

Some of the trade journal articles and blog posts suggest that e-commerce may be able to pick up the slack for retail --- in other words, if Ann Taylor closes 100 stores, the Ann Taylor website will be able to pick up some of the orders that disappear when the store is no longer operational.

Tread carefully, folks!

Retail, e-commerce, and catalog ecosystems are fundamentally different, based on the Multichannel Forensics projects I've analyzed over the years. Over and over again, I see the following:

• Catalog customers in Exurban/Suburban areas willingly transition to E-Commerce.
• E-Commerce customers in Suburban/Urban areas willing transition to Retail.
• Catalog customers in Suburban areas willingly transition to Retail.
• Retail customers (especially urban folks) are unwilling to transition to E-Commerce, but are very willing to use websites to research merchandise.
  

The retail CEO can use Multichannel Forensics to understand how customers interact with stores. In fact, this is one of the most powerful uses of Multichannel Forensics --- identifying unprofitable stores that have customers willing to shop at other stores in your franchise.

Simply run a Migration Probability Table against each store, and identify the stores that are in equilibrium/transfer mode with neighboring stores. Here's an example --- this brand has three stores in the market, and has an e-commerce website.

		Store 001	Store 002	Store 003	Online
Rebuy Rate	Company	46.3%	41.9%	40.3%	33.7%
	Store 001	42.3%	13.9%	15.7%	10.4%
	Store 002	4.9%	25.3%	2.2%	6.5%
	Store 003	3.6%	14.3%	28.7%	11.3%
	Online	4.5%	4.0%	8.7%	14.7%
Rebuy Index	Store 001	91.4%	33.2%	39.0%	30.9%
	Store 002	10.6%	60.4%	5.5%	19.3%
	Store 003	7.8%	34.1%	71.2%	33.5%
	Online	9.7%	9.5%	21.6%	43.6%

What does the table tell us?

• Store 001 customers are unwilling to shop anywhere else. Close this store, and you'll lose the vast majority of the business generated at Store 001.

• Store 002 customers are very willing to shop at Store 001 and Store 003. Store 002 customers are not very willing to shop online. If you close this store, you'll likely recoup some of the sales in Store 001 and Store 003.

• Store 003 customers are willing to shop at Store 001, and to some extent, online. If you close this store, you may get some of the sales back online, but are more likely to get sales in Store 001.

• Online customers are likely to shop anywhere --- in any store or online. Strategically, you can use the online channel to acquire customers, because stores benefit from the customer acquisition strategy in future years.

Retail CEOs --- you may be going through retail closure pain in future months. Before you make the decision to close stores, run the Migration Probability Table to understand if you can re-capture lost sales in other stores, or online.