Beautylish

Twitter user @mattgratt forwards us this Techcrunch video with Nils Johnson of Beautylish (click here for the video).  Via Quantcast, Beautylish had somewhere around 50,000 visitors last month.

For catalogers, there are themes that will resonate, and themes that are contrary to what is known in the catalog world.

• Importance of a brand (catalogers would agree).
• Importance of proprietary products over curated assortments (catalogers would agree).
• Offering great quality at a low price (many catalogers offer great quality at a fair price ... this is a fundamental difference that is not yet well understood).
• Low-cost customer acquisition of Jasmine-like customers via Social Media (completely opposite of how catalogers view the world ... catalogers = high-cost customer acquisition via co-ops).

I continue to observe stark contrasts between e-commerce startups, traditional catalog brands, and the first generation of e-commerce businesses when it comes to customer acquisition.

• Catalogers = High-Cost Co-Ops (finding 55+ rural customers ... Judy).
• 1st Generation E-Commerce = High-Cost Paid Search (finding Jennifer) coupled with %-off / discounts.
• Current E-Commerce Startups = Low-Cost Social Media to find Jasmine.

Each strategy requires a very different mindset.

For catalogers, we struggle with Jennifer/Jasmine when we try to integrate all channels around the catalog ... yielding an unprofitable Jennifer/Jasmine experience that results in a file disproportionately skewed toward Judy.

Pay attention to how startups approach the "Jasmine Problem".  I'm not saying they are going to succeed, but the chance of success is greater than it is for catalogers to try to train Jasmine to embrace classic direct marketing.

Lululemon

Please spend three minutes reading this article about Lululemon (click here for the article).


Study questions:

1. Name at least three best practices that Lululemon violates.
2. Describe the reasons why your business could not replicate the success of Lululemon.
3. For each reason in #2 above, label the reason as an excuse, a hypothesis, or fact.  If the reason is a fact, supply data that proves the reason to be a fact.
4. This business could not possibly be aligned more closely with Jennifer than any other business.  Do you think there are dynamics at play at Lululemon that only work with Jennifer, or could the concepts be applied to brands appealing to Judy or Jasmine?
5. Management places a disproportionate emphasis on merchandise, scarcity, and in-person listening.  How do these concepts apply to your business?

NYTimes Article: Knowing Cost, the Customer Sets the Price

Ok, give this article from the NYTimes a read, if you are a pricing maven (click here for the article), thanks to @caseycarey for mentioning it.


Again, pay attention to the individual featured in the article.

• P.T. Vineburgh, male, age 33.

This is a Jennifer/Jasmine aged person, closer to Jasmine ... and the game is played differently in this psychographic range.

When you hear people say that they miss coupons ... well, that's Judy.

The issue isn't pricing ... the issue is stimulating response within the Judy / Jennifer / Jasmine framework.  Judy likes sales and coupons.  Jennifer likes doing her own research for finding the best deal.  Jasmine demands the lowest price, period, she can't afford higher prices.

It's a lot harder to have a one-pricing-fits-all strategy when you have three different customer psychographics with three very different needs.

Your thoughts?

Catalog Browsing on a Tablet: Article from WSJ Reporter Katherine Boehret

Well known Wall St. Journal reporter Katherine Boehret discusses three catalog apps for tablet devices in this article (please click here for the article from AllThingsD).


Maybe more important than the review of catalog apps is the tone of the discourse in the first paragraph.

• "Unsolicited catalogs take up a frustratingly large amount of space in my snail mail, and I can't remember the last time I ordered from one".

Ms. Boehret is most likely Jasmine.


We talked at NEMOA (email me for slides) that there are three customer personas, each relate to catalogs in a different way.

• Judy (59 years old) "is" catalog marketing, her behavior is not likely to change, and our behavior in marketing to her doesn't have to change, either.
• Jennifer (43 years old) is in search of a deal, if a catalog helps facilitate that search, fine, otherwise, 45% of the demand attributed to catalogs is incorrectly attributed, causing us to dramatically over-circulate to Jennifer.  There's a ton of profit to be had, here, folks (contact me for your customized project).
• Jasmine (27 years old) is not likely to be a catalog shopper ... that being said, there is no reason she can't be a loyal fan of your brand ... just don't expect her to shop via physical catalogs.

Now, I keep getting feedback ... folks who find instances where a person in her 20s purchases via the telephone after receiving a catalog.  I don't for a minute doubt this happens.  But it is a 10 in 100 event, not a 90 in 100 event like it is with Judy.  


We need to start thinking about the future, thinking about the different ways we will have a future relationship with Judy, Jennifer, and Jasmine.

What Happens When We Stop Mailing Jennifer?

Yesterday, we decided to mail 70% fewer catalogs, per year, to Jasmine.  This money could easily be reinvested in a way that would be positive to the business, though if you don't want to reinvest it, fine, pocket a 13% increase in profit over five years.


But what about Jennifer, our 43 year old Google-loving online advocate?


Jennifer is influenced by catalogs, she'll go online and buy something after completing her research on Google.


Here's the base case, again.

From testing, we surmise that Jennifer will still generate 45% of demand if she is no longer mailed catalogs.  Let's see what happens when we cut back catalog mailings by 50%:

That doesn't look like a good decision, does it?


In fact, in the business I'm analyzing here, I could not find a single case where reducing catalogs to Jennifer represented a good idea, on any level.


In our example:

• Continue to Mail Jennifer a Full Diet of Catalogs.
• Reduce Catalogs to Jasmine by 70% per Year.

Now, honestly, in most of my Catalog PhD projects, the results are more significant than this.  We're looking at significant cuts to both Jennifer and Jasmine.  But that's not what matters, folks.  What matters is that we run a five year simulation, estimating what might happen to the business if we make key business decisions like this.


Contact me if you'd like for me to create a five year simulation like this for your business!

What Happens When We Stop Mailing Jasmine?

You probably have five year forecasts for your business, down to an Earnings Before Taxes level, right?


And you are able to run scenarios that allow you to see what happens if you change your business strategy, right?


If not, give me a holler, and I'll set something up for you ... click here please!


Let's run through an example.  Here's where our current business is headed.

Clearly, this business is stuck, highly profitable no less, but stuck.


Assume you have test results, and you know that Jasmine generates 70% of her demand without the aid of catalog marketing.  What would happen if you stopped mailing Jasmine altogether?

Well, this is interesting, isn't it?  The simulation (contact me for your own, customized simulation tool) actually suggests that, in the short term, profit increases ... but over time, there is housefile weakness associated with not having as many customers like Jasmine, resulting in an overall sales decline and slightly less profit in the fourth and fifth year.  Overall, the best decision, from a profit standpoint, is to not mail Jasmine.


Of course, some will say that this strategy is extreme.  Let's try a compromise, then.  Let's mail this customer 30% of the annual diet of catalogs.  Here's the outcome of the simulation:

Oh my!


After the first year, you lose, on average, 10% of top-line demand.


You are, however, more profitable every single year, to the tune of 13% more profitable over a five year time frame.


Go take the ad cost you save, and reinvest it somewhere, reinvest it in a way that grows the business.  Heck, you're better off finding another Judy from a co-op at a loss than mailing Jasmine a relentless stream of media she's not interested in.


In this simulation, we learn that we should mail Jasmine 30% of the annual diet of catalogs she's currently getting.  This advertising plan results in optimal profit for the company.


You probably have somebody in your company already running five year sales forecasts, simulating different outcomes.  Plug this level of business intelligence into your forecasting strategy, and see what happens!

Dear Catalog CEOs: In The Workplace

Dear Catalog CEOs:


I talk about Judy, Jennifer, and Jasmine as being separate and distinct customers.


Similarly, you have Judy, Jennifer, and Jasmine in the workplace.  Or in the vendor community.


A few weeks ago, I observed this phenomenon in person.  Jasmine was trying to explain a new technology to Judy.  Judy dismissed the technology, saying "nobody" would use it.  Judy had a good reason for saying this.  You see, Judy has seen just about everything in a career that began in the 1970s.  She remembers the transition from checks to credit cards, she knows how that fundamentally changed the world.  She was also jaded by those who tried to "monetize eyeballs" in the late 1990s.  She lived through the "social media revolution" in the first decade of the 2000s, she knows that almost nobody monetized a process that promised to "change everything".  


Judy is skeptical.


Jasmine is hopeful.  She knows how her generation uses technology.  She hasn't experienced three decades of technology hyped to save the world but ultimately resulting in failure, sprinkled with intermittent success.  


Jasmine sees potential.  Judy sees potential failure.


Then you have Jennifer.  Her career started in the 1990s.  For better or worse, her career is linked to the dot.com movement.  Instead of earning promotions into leadership positions at companies, Jennifer was asked to solve small problems ... like search or email or affiliate marketing or retargeting ... Jennifer was asked to wait for Director/VP level jobs until Judy retired.  Often, Jennifer had to move into the vendor community if she desired career advancement ... a vendor community where she has to sell solutions to Judy, the very person jaded by unrealized solutions!


We have three generations, each with important skills that cannot be matched by other generations.

• Judy = Career Experience, Management Experience, Profit and Loss Accountability, Traditional Advertising Knowledge, Seasoned.
• Jennifer = Practical Online Experience, Entrepreneur, Individualism, Technology.
• Jasmine = Social / Mobile Knowledge, Energy, Enthusiasm, Hope, Collaboration, Technology.

Of course, each generation possesses qualities exhibited by other generations ... but I'm generalizing here to make a point.


The point is, "in the workplace", we have three generations of employees, each bringing interesting and valuable skills to the table.  As a CEO, you have a responsibility to harness the unique qualities of each generation.  Too often, this isn't happening, we default to the preferences of one generation, and sales suffer.


Maybe it is time to see how we can better leverage Judy, Jennifer, and Jasmine in the workplace?