Dear Catalog CEOs: Placing Bets

Dear Catalog CEOs:


Last week, you read about a CEO transition at Best Buy.  Regardless of why the CEO transition is happening, Best Buy has been struggling to find ways to combat mobile and Amazon.


Last week, you also read that Instagram was purchased by Facebook for just a billion dollars.


I was in a retail store last week.  A manager and an employee were standing next to me.  The manager was explaining that his company was being beaten silly by Amazon.  He told the employee that there was a new plan to combat Amazon.  The plan was to cross-sell services to the customer.  The manager explained how the program would work, how the employee would explain to the customer that the company offered services, valuable services, services that Amazon could never hope to match.  The employee would attempt to cross-sell services, even if the customer had not yet purchased an item!


The employee had that "how fast can I get a job at Jiffy Lube?" look.  You could just see the dread on his face ... the dread of having to try to sell a service that the customer didn't ask for and probably doesn't want to purchase.


We're all placing bets these days, aren't we?


Take my former employer, Nordstrom.

• 2011 = Purchase of HauteLook.
• 2012 = Investment in Bonobos ... a "Jennifer" skewed business (click here).

Now, honestly, I couldn't care less whether you agree or disagree with the investments, that's irrelevant.

What is relevant is that folks are placing bets.  People are betting as to what they think the future of commerce is.

Earlier, I told you about the discussion between a manager and employee at a retail brand ... the manager was explaining that his management team was betting that service would trump online price and convenience.  Again, it is irrelevant whether you agree or disagree with the thesis, it's simply a bet.

This brings me to you.

What are you betting on?

Are you betting that Judy will continue to spend money well beyond retirement?

Are you betting that you can seamlessly pivot your business to Jennifer?

Are you betting that you can find a business model that relates to Jasmine?


Are you betting on free shipping as a way to compete with Amazon?


Are you betting on proprietary merchandise as a key differentiator?


Are you betting on selling the same merchandise readily available online, but with better customer service?

Refinery29

Did you know that Refinery29 is the 2,163rd most visited website in the United States, with more than 2,000,000 unique US-based visitors and about 10,000,000 US-based unique page views per month?


Yes, this is a fully "Jasmine Centric Experience", folks ... see Quantcast for details.


I'm going to guess that if there are 1,500 Catalog Executives reading this today, fewer than 150 have even heard about Refinery29, right?


I found Refinery29 on Twitter, where a modest 317,000 folks are following (and more than 100,000 are fans on Facebook).


Go visit Refinery29, I'll wait while you take a peek.


Ok, welcome back.  Do you see how fundamentally different this experience is than what we sell to Judy?  Or Jennifer?  The experience for Jennifer looks something like this ... click here to visit Levi's ... a comparable experience for Judy might be found at Chicos (click here).


Why do I share this stuff?


Well, we need to grow.  And it is obvious that our multi-channel strategy to extend catalog marketing through Jennifer and Jasmine hasn't worked, or that audience would be shopping with us.  So, from time to time, I'll provide examples designed to educate all of us about how Judy, Jennifer, and Jasmine are different.




Purchase Hillstrom's Personas via Kindle, $4.95 click here!

Saks and Robotics: A 21% Sales Increase?

You probably read the article in the NRF SmartBrief about how robotics helped Saks achieve a huge sales increase via robotics.


Click here for the article.


There is one sentence in the article where a link between sales and robotics is made:

• It seemed to make a difference: Saks Direct reported a 21 percent increase in fourth quarter sales from the same period in 2010.

What fraction of the 21% increase in e-commerce sales would you attribute to a warehouse robotics system?

Well, you might look back to Q4 of the prior year to see what happened.  In this article, we learn that Saks e-commerce division posted a 36% increase in Q4 of 2010.

So this tells us that e-commerce was on a major updraft in 2010, and the rate of improvement slowed in 2011.  Regardless, there is momentum, momentum we cannot attribute to warehouse improvements.

On Twitter, @richardfergie suggests that customers who know they can order up to December 23 will spend more than customers who lack confidence that their order may not arrive in time for Christmas.  Ok, this is a good hypothesis!  How would we test it?

• We could have offered up a messaging test ... 80% of the audience is told that they can order up to 12/23, 20% of the audience is told that they can order up to 12/18 or whatever the old date was ... then measure the incremental lift between the two groups.  This would tell us what impact the robotics system was likely to have.
• Analyze the distribution of orders in 2010 and 2011, to see how many orders were pushed late (i.e. after 12/18), then give credit for those orders to the robotics system, assuming that these orders would not have happened otherwise.  In other words, if a customer was going to order on 12/12, then orders on 12/19 because of a promise of delivery by 12/23, the net financial impact is $0.  If a customer was not going to order, then orders on 12/19 because of a promise of delivery by 12/23, then the robotics system (and marketing messaging) get credit.  If the customer was going to spend $100, then elects to spend $200 because of a promise of delivery by 12/23, then the robotics system (and marketing messaging) get credit.

Now, via analytics and testing, we might prove that a robotics system more than pays for itself. I'll bet somebody in Finance / Operations would love to have an estimate (and it would be an estimate).  That would be a good thing!


We can also measure how much more accurate pick/pack/ship activities are when using a robotics system.  Knowing the improvement in accuracy, we can calculate a cost savings per order, multiplied by annual orders, yielding annual cost improvements.


We have the tools and techniques (you probably have more ideas for how to analyze this than I have, offer them up in the comments section) to measure the impact of a robotics system on the profit and loss statement.  Let's go measure it!

Loyalty Spoiler

You are probably running your own Loyalty Spoiler analysis, right?


A Loyalty Spoiler is an item that sells well, but hurts the downstream loyalty of a customer.


You'll see this analysis in email marketing.  You want to prop-up the performance of an email marketing campaign, so you feature a half-dozen items that will sell well.


You read the results, you generate sales, and then you move on.


In a Loyalty Spoiler analysis, we measure the downstream loyalty of customers who purchased specific items.  If, after controlling for the quality of the customer purchasing an item, we find that equal customers perform worse after buying a certain item, then the item is a Loyalty Spoiler.


We'll talk about this topic in upcoming posts.

The Rise and Fall of Multi-Channel: In One Stock Chart

Here is the price of Best Buy stock ... from the start of the multi-channel era (2001) through the day that Facebook became so big it could pay a billion dollars for a few warehouses of servers that store pictures on hard drives in the cloud.


Notice the clear peak of the multi-channel era (2006), when the stock price appreciated from about $20 to almost $60.


And now, six years of consistent declines, sending the stock price from almost $60 to about $20.

Hillstrom's Personas!!!!

Judy, Jennifer, and Jasmine have made a difference!


For three months, we've talked about how our wonderful ladies define the future of marketing.  We have Judy, a traditional shopper who still adores catalogs.  We have Jennifer, an online maven trained to adore free shipping.  And we have Jasmine, the future of marketing, a social/mobile/local shopper with limited funds.


Now, our thoughts are captured in a fifty-eight page booklet titled "Hillstrom's Personas"!!


There are three ways to learn about Hillstrom's Personas.

1. Purchase a color booklet on Amazon, $14.95 (to be available in the next few days).
2. Purchase the Kindle version, $4.95 (available right now).
3. Read older blog posts for free.

Of course, you'll want the souvenir, right?

This has been the most popular series ever written on this blog.  In some ways, it represents a unifying theory ... there's room for catalog marketing to matter (Judy), there's room for online marketing to matter (Jennifer), and there's room for social/mobile/local to matter (Jasmine).  We reinforce the concept of segmenting an audience.  We reinforce the concept of applying a relevant strategy to a target audience.  We reinforce the notion that product matters.

If you're walking in to an Executive meeting and you want ammunition for explaining why your direct mail program doesn't work, or why your Twitter presence only has 339 followers, bring a copy of "Hillstrom's Personas" to the meeting ... heck, have a copy ready for everybody in the room!

Dear Catalog CEOs: One-To-One CRM and Chicos

Dear Catalog CEOs:


Here's the deal ... on Saturday, I was researching apparel brands.  I typed Chicos.com into Quantcast ... I DID NOT PHYSICALLY VISIT CHICOS, nor have I visited Chicos.com in 2012, according to my web history.


You'd almost think that an advertiser cookied my computer, because in a few hours, I was receiving "view through opportunities" to purchase from Chicos.


I'm not sure how relevant the ads are, given that the website where the ads appeared contained an article about the death of journalism (see the ads and article in the image above).


And, oh, by the way, I am male ... not quite in the target market Chicos goes after.


If you hover over the ad, you realize that an agency called Turn may be accountable for the placement of this ad (click here to visit Turn.com).  Here is Turn's Twitter Page (click here), 


Now, guess what happens when you page down a little bit further?

Right below the ad I showed you at the top of the page is another ad ... ALSO FROM CHICOS!

However, this ad appears to be served-up by a different ad agency ... m6d (click here to learn more about them).


The article I was reading was three pages long.  Look at what happens on page two.

Look ... only five additional Chicos ads on the second page.  Fortunately, there were no additional ads from Chicos on the third page.


Seven "view throughs" from seven ads from Chicos, served by two agencies, to a male who was interrupted while reading an article about the death of journalism, a male who will never buy womens apparel from Chicos, a male who simply typed the Chicos URL into Quantcast.


This is the enlightened, data-driven age we live in.


I know, I know, the agencies will say that my website activities cause me to fall into segments of customers that are similar to women age 55-74, the target demographic who shop at Chicos (click here for Quantcast data about Chicos).


Never mind that somebody is scraping my surfing data from websites that have nothing to do with Chicos in order to serve up relevant and timely ads that aren't so relevant or timely.


We all know that the online marketing manager at Chicos has no idea that this is happening.  Imagine how mortified s/he will be on Monday morning when reading this?


We all know that both ad agencies would find it surprising, even funny, that they both served a comparable ad to me on the same page at the same time.  They may even use this as evidence that they are doing the right job, in aggregate, given that each approach yielded the same outcome.


And we all know that maybe it is time to pay more attention to what is happening with our scarce advertising dollars.


We have a measurement/marketing community that talks about accountability, about data-driven strategies, about one-to-one communications, about relevancy.  This community creates the outcome that we read about here, today, an outcome that few of us would say, "yup, that's about right!"


Dear Catalog CEOs --- let's pay attention to what our marketing teams, our vendors, and our analytics partners are doing.  From time to time, perfectly good intentions wind up yielding an experience similar to this one, and that doesn't help us sell merchandise, does it?




P.S.:  In no way am I unaccountable here, either.  I classify customers into Judy / Jennifer / Jasmine segments, making the same mistakes that are outlined in this article.  This is a call to action for all of us ... Executives, Marketers, Analytics Experts ... to all be more accountable.