Hillstrom's Personas + Hillstrom's Catalog Marketing PhD

Well, the most popular project request right now is a combination of both booklets.

In Hillstrom's Personas, we tackle the task of determining the target audience for catalogs and email marketing campaigns.

• Print (color) on Amazon, $14.95.
• Amazon Kindle, $4.95.
• Or read various content on the blog, for free.

Do you remember when I used to talk about "the organic percentage", the percentage of demand that is generated independent of catalog marketing?  Well, that research from 2009 - 2011 became the basis for Judy, Jennifer, and Jasmine, the three ladies we've been talking about for the past three months.

Many CEOs/EVPs are now asking to combine the concepts in Hillstrom's Personas and Hillstrom's Catalog Marketing PhD (Print for $7.95, Kindle for $2.99).

Good idea!


Remember, in our Catalog Marketing PhD framework, customers are evaluated as follows:

• Likelihood of Buying, Next 12 Months.
• Amount Spent, Next 12 Months.
• % of Total Demand Catalog Driven, Next 12 Months.

By multiplying each of the three metrics above, we arrive at the amount of demand, annually, that is driven by catalog marketing.  Then we run a profit and loss statement at each level of catalog marketing investment, grading customers as follows:

• A = Mail MORE Often!
• B = Mail 7 to maximum number of in-home dates, per year.
• C = Mail 3-7 times per year, on average.
• D = Mail 1-3 times per year.
• F = Mail 0-1 times per year.

Many of my larger clients ask me to predict the actual number of catalogs to mail to each individual customer ... and to predict the actual number of email campaigns to deliver to a customer, on an annual basis.  We get some very interesting results when we do this!

The result of these projects is about $1,000,000 of annual profit for a $100,000,000 catalog business ... maybe $500,000 of annual profit for a $50,000,000 catalog business.

Sound good?  Sure it does!

Contact me now for your own customized project (click here please).

Dear Catalog CEOs: Pinterest

Dear Catalog CEOs:


Have you heard about Pinterest?  It's the latest application that "changes everything".


Go take a look at what Nordstrom does on Pinterest (click here).  Remember, Nordstrom has somewhere north of 8,000,000 customers in their database who purchased in the past twelve months.  With 15,000 followers on Pinterest, this means that 1 out of every 533 twelve-month buyers is paying attention.


Not bad.  Not enough to move the sales needle, either.  Have you ever noticed that few of the experts put things into these terms ... 1 in 533 twelve-month buyers?


That, of course, is what Nordstrom thinks about Nordstrom.


Here's what Patti Corley thinks about Nordstrom (click here).


Katie Koster's "My Style" section includes items from Nordstrom, Boden, J. Crew, Zara, Gap, and others.  She has 26 followers, by the way.


In the short period of time that Pinterest has been alive, it ascended to the 220th most visited website in the United States.  Let that one sink in for a moment.  Considering that Judy isn't going to spend a lot of time putting her preferences from Coldwater Creek up on Pinterest (593 followers), that's an amazing achievement ... nearly zero users a year ago, nearly 6,000,000 monthly visitors today.


Now, a lot of people are going to tell you about Pinterest Best Practices, sharing the best ways to leverage the application to sell merchandise ... advice like "make your merchandise shareable" or "lead the customer, merchandise outfits" or "offer discounts and promotions to encourage cross-channel, Pinterest-based commerce".  As if you didn't already know to merchandise outfits, right?


Be honest, folks ... how many people could possibly know what a best practice is for selling on a medium that essentially had zero visitors eighteen months ago?


There's going to be another camp of folks who tell you how the customer is now in control, they'll use Pinterest as an example of how today's savvy shopper re-purposes your content for her own needs.  They'll discuss concepts like "co-creation", and they'll suggest that your lumbering and boring website (and business) is "dead" unless you immediately embrace co-creation.


Here's what is nuts about our current situation.


The pundits are actually right.


And those with the exact opposite point of view are right.


Both sides have to be right ... Pinterest from nothing to the 220th most visited website in no time flat ... Nordstrom for having only 1 in 533 12-month buyers participating ... both sides of the story are right.


At a 30,000 foot level, content is diffusing from controlled websites to Google (algorithms) to Facebook/Twitter (mostly text) to YouTube (video) to Pinterest/Instagram (images) and a thousand varied micro-channels.  At a 30,000 foot level, the change is mind-numbing.


On the ground floor, where you are, almost none of this stuff generates sales (unless your business was started a few years ago with all of this stuff in mind).


You almost have to invest in the future.


And you almost have no chance of generating significant sales increases from all of this stuff.


Your investments have to come at the expense of something.


As time goes by, you'll be forced to trim circulation among your Jennifer/Jasmine audience, in order to fund experimentation, experimentation that has a low probability of success.  At the same time, businesses that don't have your overhead and legacy channels will mysteriously succeed while you experience minimal success doing the exact same thing they do.


I know, it's frustrating.  


But it is reality.  And the longer we stay tethered to our "multi-channel" past, a past that demands that everything we do be linked to the production of a catalog, the harder it becomes to make anything new work, because we keep attracting customers that are opposed to anything new.




P.S.  There's no forecasting what will work, or how it will work, so be careful when taking the advice of the so-called pundits.  I worked for an individual named Mike Smith, way back in 2001-2002 at Nordstrom.  This person created an application called "Life Sketch" ... which, if we must be honest, is not fundamentally different than Pinterest is ... it was just created a decade earlier and the public wasn't ready for it.  We're going to continue to be surprised by the applications that "take off", and there won't be a rhyme or reason for it.

Loyalty Spoilers: Merchanics

Here's one approach to running a Loyalty Spoiler analysis.


Step 1:  Identify all items sold in 4th quarter of 2011.


Step 2:  Identify all customers who purchased merchandise in the 4th quarter of 2011.


Step 3:  At the end of the 4th quarter of 2011, calculate the future value of all customers who purchased in the 4th quarter.  Many folks will predict future value as the demand you expect this customer to generate in the 1st quarter of 2012.


Step 4:  Measure the repurchase rate (you can measure $/customer as well, it's just noisier) of all customers who purchased in the 4th quarter of 2011, measuring repurchase rate during the 1st quarter of 2012.


Step 5:  Create a spreadsheet, one row per customer/item combination, containing the following fields.

Step 6:  Aggregate the dataset to one row per item number.  Calculate the mean value of predicted customer future value.  Calculate the mean value of Q1 - 2012 repurchase rate.


Step 7:  Select all items that sold at least 50 units in Q4 - 2011.


Step 8:  Run a weighted least squares regression analysis.

• Independent Variable = Average Predicted Customer Value.
• Dependent Variable = Q1 - 2012 Average Repurchase Rate.
• Save the Predicted Value = Predicted Average Repurchase Rate.

Step 9:  Create an index (this step is important):

• Index = (Predicted Average Repurchase Rate) / (Average Repurchase Rate) - 1.

This index is a percentage.  It tells us how much an item spoils future customer loyalty.

For example, an item that has customers with an average predicted future value of $100 should yield an average repurchase rate of, say, 20%.

Now, let's say that an item instead yields customers with an average repurchase rate of 15%.  The index, then, is (15% / 20%) - 1 = -25%.  This item spoils future customer loyalty by 25%.

In the next post in this series, we'll address a practical outcome of the methodology.

Vibrant Conferences

You probably already know that The Forum for Cross-Channel Merchants (click here) was recently cancelled.

I'm going to go old-school on you, for a moment.

Lands' End ... 1993.  Our marketing management team (not me) attended the Catalog Conference.  This was a big deal, back in 1993.  Meetings.  Parties.  All the leading ideas ... stuff like alternative delivery (i.e. somebody other than the USPS delivering catalogs to your front door), neural networks designed to optimize name selection for catalogs, best practices for negotiating great rates on list exchanges.  More Parties.  Drinks.  Stories of industry leaders consuming several drinks.  Food.

Cataloging wasn't just at a local maxima, it was at an absolute peak of industry power!  And the place you went to partake in catalog marketing was the Catalog Conference.  Heck, it was at a point where you didn't even go to learn anything, you just went there because it was fun and all the other people you worked with in the industry were there, too.

The Catalog Conference was eclipsed by Shop.org, Shop.org was eclipsed by Internet Retailer, and Internet Retailer will be eclipsed by something that skews mobile.

Humans want to be entertained.  They will go to any conference where they are entertained and are with like-minded colleagues.

Examples?

OneKingsLane, for instance (a Jasmine-based business with a Judy-based subset demographic, click here to learn more), has buzz ... how many businesses in our industry went from $0 to a projected $200,000,000 in 2012 net sales in just three years?  We want to learn just how the heck they did that?!  One can hear those stories at vendor-based conferences (see hashtag here).  Heck, this example is from a vendor claiming to be "multi-channel", and they created buzz!  It can be done.

When I talk about entertainment, I'm not talking about getting Conan or Colbert to speak at a conference.  No, attendees seem to want, as one conference attendee recently told me, "the next big idea".  And they don't want to be put to sleep while being told what the next big idea is.

I know, it's not easy to run a conference.  I ran a series of failed conferences in 2001 and 2002. They were the most boring, information-filled conferences in history.  I know what it takes to put on a conference that is poorly attended.

The catalog industry can put on good shows ... just ask the folks at NEMOA.  But the format, the content, the buzz, and the entertainment factor must be different, must be relevant for modern times.  We need to create vibrant conferences, ones that speak to the concepts of being "cross-channel" without ever mentioning the phrase "cross-channel".  We need to market ourselves to our own industry.  Why can't we do that?

Maybe, in our quest to build a bridge from the past to the future, we've forgotten how to market ourselves to ourselves?

Hillstrom's Personas: Available in Print!!!

Courtesy of the folks at Amazon.com, you can now get Hillstrom's Personas in print or via Kindle!


Click here to purchase via print, Amazon.com, $14.95 for the color text.


Click here to purchase via Kindle, $4.95, and begin reading immediately.


You want a copy of the print version.  It's important to have something in your hand to take to a meeting.  It's important to have a response when the CEO says to you "I think we need a Twitter strategy" or "I think Direct Mail is the answer to our problems".

Sevenly.org

In Hillstrom's Personas, we talk a lot about Judy, Jennifer, and Jasmine, right?

• Purchase Kindle version, $4.95.

Well, each persona is aligned with various business models.

Give Sevenly.org a visit ... go ahead, I'll wait while you take a look at the website.

Justin Palmer mentioned on Twitter that 70% of new customers are sourced from Facebook.  Justin is the Marketing Director at Sevenly, so he is probably a reliable source for this metric.  He also tweeted the following sentence to me ... "Facebook can be used to drive sales, most brands just don't know how."

Now, pretend that you are Chicos.  Take a look at their online demographic profile (click here).  Does anybody honestly believe that Chicos could drive even one or two percent of total online sales via Facebook?  Why would a 61 year old woman go to Facebook first, then make a decision to purchase something online at Chicos?

Judy is not going to buy something because of Facebook.

Jennifer is going to hunt for the best products and the best prices and the best promotions.  If Facebook is part of that equation, she'll use it.  If Facebook is not part of that equation, Jennifer will still accomplish her mission, she won't be stopped.

Jasmine fully expects social and mobile to be built into her experience.  If you target Jasmine, it should not be a surprise that 70% of new customers come in via Facebook.


Marketing channels are not the issue, the issue is the target customer.  If you target Judy, don't expect Facebook to make a dent.  If you target Jasmine, don't expect old-school methods to work as well as they work when marketing to Judy.

Vice President of Digital Marketing, Lands' End

I'm confident that many of you already subscribe to Harry Joiner's E-Commerce Job of the Day (click here to subscribe), so it is likely that you already read the blurb about Lands' End, a company looking to hire a Vice President of Digital Marketing.


There is one sentence in particular that I want for you to focus on ... it is in red below.

• This is about so much more than just being able to push the buttons. Profitable growth is about having the right mindset -- and helping others embrace it. It will involve helping Lands' End become less catalog dependent. You must be an agent for positive change. Lands’ End has millions of customers in its database, and its goal is to get all of its customers digitally engaged across all digital platforms: tablets, smart phones, desktops, and more.

There is a fundamental, mind-boggling change happening ... finally.

Catalog Marketing isn't dead, as the pundits like to say.  Instead, it is evolving, finding a place in the future of marketing.  That place isn't in the mainstream.  Rather, it is a viable, healthy, profitable place, among customers who love interacting with this form of marketing.

When Lands' End, one of the Founding Fathers of Specialty Catalog Marketing, is publicly stating the new reality of Catalog Marketing, pay attention.

And when you are ready for your own Hillstrom's Catalog Marketing PhD project, when you are ready to generate a million incremental dollars of profit per $100,000,000 in annual net sales, by mailing fewer catalogs to customers who don't want to receive catalogs anymore, please contact me (click here).

Buy Hillstrom's Catalog Marketing PhD.

• Via Print, Amazon (click here).
• Via Kindle (click here).