Mobile Phone Number

It isn't hard to do, and it make "business intelligence" sense.

Next time a customer orders, online, via a call center, or in-store, ask the customer if s/he is willing to provide a mobile phone number.

From a modeling standpoint, the attribute tells you that the customer is probably "less interested" in old-school marketing (print, catalogs).  Instead of the customer being pelted with eighteen catalogs a year, you tone it down to five or six, saving a ton of money in the process.

Customers who volunteer a mobile phone number are more likely to generate demand "organically", i.e. without the aid of catalog marketing.  The customer is more likely to fall into "Jennifer" or "Jasmine" categorizations.

Dear Catalog CEOs: The Future

Dear Catalog CEOs:


This week, I am presenting at NEMOA ... a session about how Traditionals, Transitionals, and Transformationals (i.e. Judy, Jennifer, Jasmine) will impact the future of marketing.  Or, in simpler terms ... I am presenting the future of catalog marketing.


If you've been with me for the past six years, then you already understand my point of view:

• In 2001, we made a decision.  Instead of allowing the online channel to grow and thrive as an independent entity, we elected to integrate it with our core business, and by doing so, we homogenized the experience, causing the online channel to reflect the core catalog buyer we already possessed, eschewing a younger online shopper.
• Since 2001, we decided to embrace co-ops as our primary method for acquiring new customers.  The models employed by co-ops selected 55+ rural customers, as they should, given their job is to optimize response within catalogs, catalogs that are preferred by 55+ rural customers.
• This dynamic (catalog + website appeals to a 55+ rural customer ... co-ops deliver 55+ rural customers that will shop online after receiving a catalog) fueled a feedback loop that, eleven years later, results in a customer file that is fundamentally disconnected from the average consumer in America (a shopper in her early 40s).
• Now that we are disconnected from the average customer, anything new and trendy we try, stuff appealing to a customer age 18-49, simply doesn't work when marketed to a 55+ rural customer.  This fuels the feedback loop.
• Long-term, this feedback loop is unsustainable.
• Toss in USPS challenges, and short-term sustainability is questioned.
• The secret to sustainability, over the next decade, is for the catalog brand to follow an age band (50-59 year old customers) instead of following a cohort (59 year old customers that will become 69 year old customers).  This means that the catalog brand must become proficient at speaking to "Jennifer", the current 43ish year old e-commerce / Google maven.
• As the catalog brand switches from Judy to Jennifer, there will be a consistent reduction in catalog advertising dollars, because we will need to fund free shipping to encourage Jennifer to purchase.
• The catalog brand that tries to jump the bridge from Judy to Jasmine is likely to struggle.
• The catalog brand that sets up a separate, unique brand tailored to Jasmine might experience success.
• The catalog brand that rides Judy into the sunset may experience nice levels of profitability for a period of time, prior to an erosion of all business metrics.
• The transition from Judy to Jennifer won't be without struggle.  Jennifer demands free shipping, and likes discounts.  In order to fund these activities, catalogers will have to cut back on catalog housefile marketing activities to Jennifer.  This will be acceptable, because Jennifer spends 50% of her dollars outside of catalog marketing anyway.
• It may be possible that the catalog brand can mail more catalogs to Judy.

Some will argue that this story is congruent with the consulting business I have, that I am selling a message that benefits me directly.  I'd argue the exact opposite.  70 projects in five years clearly demonstrate that all of these trends are accelerating, so I must position myself in a place where I can be of the most help to you.

Now, allow me to be positive for a moment.  This transition (from Judy to Jennifer) is achievable.  But the transition will require a change in mindset.  It will require a shift in thought, from the catalog as the center of the solar system to a more "personalized" strategy (catalogs to Judy, a fantastic online experience for Jennifer, and something very different for Jasmine).

Any talk of the future (iPad apps, social media, mobile, hologram marketing) should consider the linkage between your audience, and the media your audience is likely to use.  Judy is not going to be part of the tablet commerce generation, in fact, she's not going to pull out her Blackberry and buy something from your snazzy mobile site.

Anyway, this is what we're going to be talking about this week at NEMOA.  I look forward to seeing you there!

Compare and Contrast

Think about marketing channels, think about our three customers, and things become much more clear, don't they?


Catalog Marketing:

• Judy = 30+ years of practice shopping via catalogs.  This is her domain.
• Jennifer = Inspiration, but she's going to combine inspiration with the internet in order to get exactly what she wants at a price she's willing to pay.
• Jasmine = Wait, I own a mailbox?

Facebook:

• Judy = On Facebook to see pictures of her grandchildren.
• Jennifer = Likes brands because she gets special discounts and promotions.
• Jasmine = Views Facebook as a utility, an extension of who she is, but would switch if something better came along.

Mobile Phones:

• Judy = Owns a tracfone, or a Blackberry device if professionally employed.
• Jennifer = Owns an iPhone or Android device, browser-centric.
• Jasmine = Owns an iPhone or Android device, app-centric.

Email Marketing:

• Judy = Prefers to not receive email marketing messages.
• Jennifer = Thrives on email marketing, loves discounts/promotions, an avid subscriber.
• Jasmine = Finds email marketing to be "old school".

Affiliate Marketing:

• Judy = Has no idea what they are.
• Jennifer = Loves getting coupons for free shipping.
• Jasmine = Indifferent.

Free Shipping:

• Judy = Used to paying for shipping, appreciates free shipping but doesn't expect it.
• Jennifer = Won't buy unless she's offered free shipping.
• Jasmine = Post-free-shipping, values a $399 handbag for $99 and demands free shipping.

Loyalty:

• Judy = Loves a subset of brands that she has history with.
• Jennifer = Loyal to Google, Amazon, Apple, Verizon.
• Jasmine = Gamification leads to loyalty.

Now, every character crosses over into other categories in many ways, so these are not iron-clad rules by any stretch of the imagination.  That being said, my goal is to get you to imagine different customers.  A cataloger should not expect core customers to embrace an iPad app.  A cataloger should not expect mobile devices to replace e-commerce, or to even expect e-commerce to replace the catalog among customers like Judy.  A cataloger should not expect to generate five million dollars of net sales on Twitter when Judy isn't ever going to get her own Twitter account.

Too often, we fail to account for what I call "audience disconnect".  Data I analyze strongly suggests that different audiences use channels differently.  We have a responsibility to link audiences to the channels we manage.

Five Year Anniversary

Today marks the five year anniversary of starting my own consulting business.


(quiet applause)


Thank you!


There's a few things worth considering, as we look back over the past five years.  I recall telling my "network" of business colleagues what I was doing.  I recall the tepid response ... most often documented with the following statement ... "you'll be a Vice President at a company within a year, that's what happens to everybody who says they're going to become a consultant, they don't make it, no offense."


The original business model was simple, and has not fundamentally changed.

1. Publish at least 4x a week on the blog (folks said this level of posting was too often).
2. Write textbooks that outline details about each methodology (folks said these books were way too expensive).
3. Give away nearly every idea for free, attract an audience, then have a small fraction of the audience pay for specific, customized projects.

This last point really chapped people's lips.  I recall speaking at a conference, back in the early days.  About fifteen minutes into my talk, after giving away a whole bunch of information, the consultants in the room (my competition) hijacked the presentation, loudly criticizing my business model ... "you can't just give away everything you know for free, that's plain stupid, it is bad for business, why would anybody ever hire you!" was one of the most interesting responses that drew laughter and derision from the attendees who agreed with the comment.

Since 2007, my business has grown by an annual compound rate of 19% ... in other words, it is double today what it was at the end of 2007.  Apparently you decided it was still worth it to hire me, for that, I am very grateful.

Times changed, so my approach had to change as well.  Twitter probably had fewer than 3,700 users in 2007, today, I have more than 3,700 followers on Twitter.  In 2007, I dreamed of having a book in a Barnes & Noble or Borders store.  Today, I only self-publish booklets on Amazon, 40-60 pages of content.  In 2007, Google + My Blog = 70% of my business.  In 2012, My Blog + Booklets = 70% of my business.  In 2007, I had maybe 250 blog subscribers.  In 2012, I have about 2,600 blog subscribers.

In 2007, I thought that my math "sold itself".  My math did not "sell itself".  Nobody wants to buy math, people want to buy "stories".

In 2009, I introduced "Gliebers Dresses" as a parable designed to communicate business issues that were not readily absorbed via "my math".  This turned out to be the most popular series I had written to-date, but it did not result in an increase in business ... people liked the characters more than the business concepts the characters talked about.  Engagement was high, sales were low ... the classic story of social media failure that so many have experienced.  You learn to never chase engagement if you want to pay the bills.

In 2012, I changed course.  I introduced Judy, Jennifer, and Jasmine.  Suddenly, math and fiction merged, and you "got it" ... you decided to buy Judy, Jennifer, and Jasmine.  Under the covers, the same math I've always used is fueling the description of our three ladies.  But now you are buying a story, you understand what I'm trying to accomplish, and you are more likely to purchase a "Judy, Jennifer, and Jasmine" project than a "Multichannel Forensics" project.  Strategically, you can easily infer what a business that caters to Judy will face, you understand why you must always have free shipping and discounts and promotions for Jennifer, and you are building for the future by trying to understand what Jasmine needs.

It is likely that Judy, Jennifer, and Jasmine will overtake my "Catalog PhD" projects as most requested in 2012.  Both projects yield a very similar result ... clients utilizing the Catalog PhD methodology since 2010 have increased profit by more than $24,000,000 on an annualized basis.  Clearly, the methodology works ... we identify customers who will shop regardless whether we mail catalogs or not, and we mail them fewer catalogs.  Simple!

These days, the pundits tell consultants that they have to base their practice on "so-lo-mo" ... social, mobile, and local ... pundits suggest you'll be out of business if you don't modernize what you're doing, you're sunk if you don't somehow tie Twitter engagement or Facebook likes to purchase transactions.

There might be another approach, folks.  Many CEOs, EVPs, VPs, and Directors tell me they are looking for a "bridge", one that connects the past and the future.  Judy, Jennifer, and Jasmine are a step in that direction.  When you know that 68% of your file is comprised of people like Judy, you realize that "so-lo-mo" is irrelevant to you.  When you know that 68% of your file is comprised of people like Jennifer, you realize you are going to have to find a way to fund free shipping.

When I started the thing, back in 2007, all you read about were channels ... hearing lines like "multichannel customer are the most valuable customers".  That never panned out, and in so many ways, our industry did us a disservice by forcing us to "do everything" to serve a mythical multichannel customer that didn't actually exist.  

In 2012, it's all "social / mobile / local".  Not surprisingly, a half-decade of social media immersion hasn't yielded sales increases outside of the Jasmine demographic.  Be honest, if you cater to Judy or Jennifer, what percentage of your sales today are attributed to social media or mobile (excluding the iPad, which isn't mobile but is a much better laptop)?

My approach had to change with the times.  I never guessed it would evolve in a manner congruent with "personas".  That being said, we relate to personas easier than we relate to channels.  We know why Jennifer is looking for the best deal.  We don't know how to merchandise to a customer using long-tail keywords coupled with affiliate sites that publish our promotion codes.

It is obvious to me that there are major inflection points that we will all have to deal with.

1. Judy will retire soon, and this will disrupt the catalog industry far more than the internet disrupted it.
2. Jennifer will never go back to paying full price, and this will continue to disrupt e-commerce by putting intense pressure on gross margins, pressure that will cause there to be fewer mid-sized companies, pressure that will result in a small number of giant online brands and a ton of very small niche players.  Mid-sized companies are being killed by discounts/promotions.
3. Jasmine won't relate to classic cataloging or traditional e-commerce, resulting in new business models that we are not likely to invent or easily understand.

My work, therefore, has to focus on helping you deal with the reality behind Judy, Jennifer, and Jasmine.  I will continue to find ways to greatly increase profitability, doing so by explaining customer behavior in an actionable manner.  I'll be blessed if you continue to follow me on this journey.

A Quiz

You remember the three customers that, if targeted appropriately, earn our business a boat load of profit?


There's Judy, the 59 year old, thirty year veteran of catalog shopping.

There's Jennifer, the 43 year old, iPad toting online maven, who searches for the best deals, using the internet as her own little personal scavenger hunt.

And there's Jasmine, the 29 year old mobile/social/local shopper who loves getting a $399 handbag for $99 on a flash sales site.

Now that you've been reintroduced to the cast, it is time for you to take a quiz.  How well do you know our customers?


Question #1:  What would happen if you mailed a catalog to Jennifer?

1. You may inspire a sale that would likely happen anyway online.
2. The catalog would be ignored.
3. The catalog would inspire a telephone order.

Question #2:  When you measure daily sales through your classic order entry system, which customer are you measuring?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #3:  Which customer is most likely to visit your website via Google?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #4:  Which customer is least likely to appear on the twelve-month buyer file of an average catalog brand?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #5:  Which customer is on Facebook only because it is the best way for her to see images of her grandchildren?

1. Judy.
2. Jennifer.
3. Jasmine

Question #6:  Which customer is most likely to purchase via a coupon code found on an affiliate website?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #7:  Which customer will enter prime earning years from 2025 - 2035?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #8:  Which customer is most likely to hear about a new brand via word of mouth?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #9:  Which customer is most likely to be rented from a co-op?

1. Judy.
2. Jennifer.
3. Jasmine.

Question #10:  Which customer is most likely to buy from an email campaign that features full price merchandise offered with free shipping?

1. Judy.
2. Jennifer.
3. Jasmine.

Answers:  1=1, 2=1, 3=2, 4=3, 5=1, 6=2, 7=3, 8=3, 9=1, 10=2

Dear Catalog CEOs: What Would You Take?

Dear Catalog CEOs:


Recently, I polled folks on Twitter, asking them a simple question.

• "If your analyst came to you with a $500,000 profit opportunity, or came to you with an opportunity to increase conversion rate by 12%, which would you prefer?"

You're the CEO ... what would you prefer?  One opportunity has no context around sales growth, one opportunity says nothing about how much it would cost to increase conversion rate.

On Twitter, not one person said "profit".


Everybody is a VC these days, trying to "scale", trying to dominate a world that is likely to be dominated, in the short-term, by Google, by Amazon, by Apple, and by Facebook.


I recently met an owner of a $3,000,000 online business.  He told me he made $300,000 profit last year.  Another individual said to him, "Wouldn't you rather be a ten million or twenty million dollar business, wouldn't it make sense to forego profit and try to scale?" ... as if earning $300,000 a year isn't desirable.


When it is somebody else's money, you want for that person to "scale".


What about when it is your money?


In the past decade, personal savings dropped to 0% (personal savings, of course, are the household version of profit).  Maybe we've forgotten how to even calculate profit?


Right now, many of us are losing the profit and loss game.  We're spending 25% of net sales on putting catalogs in the mail before we ever get paid back with a dollar of net sales.  This was a good strategy in 1990, because it was the only game in town.

Newer business models are mastering the "two-step" process ... generating an inexpensive list of prospects that can be mined for purchases.  We pay up-front in the co-op model, newer models pay bills at the time of a click or transaction.


It seems like there's an opportunity to watch what folks are doing right now.  Maybe we can improve conversion rate by 12% and increase profit by $500,000!

What Are We Selling? Memories?

At the Arizona Opry, they sell memories.  


The two hour musical extravaganza takes you from the 1950s to the 1970s.  Judy loves this show (as does June, her 75 year old friend who is wintering in Mesa).  During a typical performance, 480 people spend $32 each for a chicken & stuffing & mashers dinner and entertainment.  They spend even more on CDs and jewelry and gadgets that remind the attendees what life was like before home foreclosures and rising gas prices and escalating health care costs ruined life as we knew it ... reminding us instead of when we only worried about rising gas prices and the threat of a nuclear attack from the USSR and a war in Vietnam and what might happen in the season finale of M*A*S*H.


Trust me, while the singing is credible and the musicians are good, you're not paying for talent as much as you are paying for memories at the Arizona Opry.


What exactly are we selling our customers?


Sometimes, I think we have everything backwards.  We're told we have to be "so-mo-lo", or social/mobile/local, because "the modern customer demands it".  Well, maybe Jasmine demands that, right?  We're told we have to offer 20% off plus free shipping, because "the modern customer is in charge".  Well, maybe Jennifer is in charge.


Be honest ... does 59 year old Judy (or her 75 year old friend June) care about "so-mo-lo"?  To Judy and June, "social" is sharing a lemonade during the encore presentation of "The Lion Sleeps Tonight" at the Arizona Opry with 478 like-minded individuals.  


Would Jasmine ever be caught dead at the Arizona Opry?


Catalogers are going to pivot in one of at least five different directions.

1. Ride Judy into retirement ... selling her need-based products that complement her lifestyle.
2. Ride Judy into retirement ... selling her memories.  Think about all of the casinos out there featuring Herman's Hermits, right?
3. Migrating into Jennifer's demographic ... selling her "moxie" ... via discounts and promotions that help Jennifer feel like she got the best deal possible ... these discounts and promotions will be funded by significant reductions in catalog ad cost expense to Jennifer (like going from 18 to 4 catalogs a year).
4. Migrating into Jasmine's demographic ... where "mobile" matters, a lot ... this will cause the cataloger to lose identity, but may be great for the long-term survival of the brand.  This is a whole different business model, one where the profit from the catalog is used to re-invest in new business models.
5. Brand erosion as Judy heads into retirement, caused by not selling her what she needs, or by not selling her memories.

I know, you're going to disagree with me.  You'll tell me about the 26 year old who just picked up the phone and ordered from a catalog ... you'll tell me that memories are "for old people" ... you'll tell me that your 65 year old Aunt loves her iPad ... you'll tell me that 67% of your sales happen online, so you're just fine.


Most of those instances are simply outliers.


In the real world, we might consider evaluating what business we have, and consider what we are truly selling:

• Judy = Memories.
• Jennifer = Moxie.
• Jasmine = Mobile.

Who is your customer?  What are you really selling that customer?