Summer Schedule

Each year, we go through the same process, don't we?


We start the year with a topic, a theme, something that carries us through the Spring.  Some of you find the topic interesting, and hire me.  Others find the topic interesting, and implement the ideas. Still others find the topic of interest, and continue to subscribe.  Finally, there are those who don't like the topic, and unsubscribe, citing "too many updates"!


Then we get to Memorial Day.


From late May to early September, attention is diverted.  Some might think content is to blame, but I beg to differ.  No, I think our attention span dwindles, in part, because of the weather.


For the seventh consecutive year, you'll be part of a time-honored tradition, called "a decrease in content frequency". 


Starting next week, posts will be published for public consumption on Monday morning, Tuesday morning, and Thursday morning.  As always, when topics dictate, supplemental posts will be published.

Moses

No, not Him.

I mean Moses, the little miracle kitten (click here).

Did you see how the world found out about Moses?  Read through the historical posts.  This video "went viral", as they say.  Next thing you know, Moses is on The Today Show, and even earns honored status on I Can Has Cheezeburger.

But this isn't about something going viral.

The chain of events leading to this video going viral cannot be captured in a bottle.  You have a random blog, you have YouTube, you have popular websites appealing to Jasmine, you have websites appealing to Jennifer, you have the Today Show (Judy).

Marketing experts will tell you that you have to "do everything", that you have to be "multi-channel".  And yet, if you tried to astroturf this thing, you'd fail ... if you set up a blog and YouTube and your PR people tried to astroturf it on popular blogs or on television, you'd fail.  Be honest!

Everybody wants to know what the "Best Practices" are ... somebody just please give away some trade secrets for free, and we'll all be successful, right?

But these days, "Best Practices" make no sense.  Sure, the fundamentals still make sense ... you minimize returns and forecast inventory properly and you'll be wildly more profitable than your mediocre competition.  Marketing "Best Practices", however, have a low probability of success.

There are probably a thousand stories like Moses out there.  If marketed properly, you have a 1 in 500 chance of being noticed.  If not marketed properly, you have a 1 in 1,000 chance of being noticed.  This results in a share of not-so-good-practices succeeding ... and in almost all spectacularly-planned-via-best-practices strategies failing.

It's a good thing that little Moses is adorable, because that makes the story possible ... the content (or in our world, the merchandise) still matters.

New Customers, For Free

If you like to keep up on marketing/analytics, you probably read Andrew Chen, right?  And you've probably read this post, right? (click here).

If not, there's two sentences that you might pay attention to.

• The important thing about virality is it is free. So it's an important skill for startups.

It's an important skill for anybody!

I get calls and emails ... "what's the next big idea, Kevin?"  Now, I don't have the slightest idea what the next big idea is, but a business like One Kings' Lane that goes from $0 to a couple hundred million dollars in a few years is worth paying attention to, right?  Mostly grown by virality, it's certainly something we should pay attention to.

That's when I get the response ... "I need something that scales. You can't bank on virality, it's unpredictable. You can bank on Abacus giving you a million names that will generate $1.5 million in sales, +/- 5%.  That's what I'm talking about.  What's the next big idea like that?"

In other words, you want someone to assume all of the risk for you, and you will gladly pay them for the right to remove all risk, correct?

Big ideas are headed in the opposite direction, and have been for some time.  Judy's generation paid for offline access to information (Abacus).  Jennifer's generation paid for online access to information (Google).

Jasmine's generation just won't pay.  New customers can be found, for free.

Now this is hard, risky work, isn't it?  With Abacus, the odds of breakthrough success are nearly zero, but the odds of treading water are great.  With word-of-mouth, the odds of breakthrough success are, what, one in ten, or one in a hundred?  With word-of-mouth, there is no treading water ... you either succeed wildly, or you're finished ... you'll know, either way, really soon.

In the old days, you'd have a customer acquisition analyst, horse-trading names with competitors. And some geeky mathematician wrote SAS code on a mainframe computer, hoping to avoid a dreaded SB37 error ... analyzing test results when there were enough cycles available to process information.  Combined, the individuals earned your business new customers.

Read the blog post above, or the post on Growth Hackers, and you see a world that parallels what was done twenty years ago ... but is fundamentally different.  Gone is the teamwork required twenty years ago, replaced by technology, coding skills, rapid A/B testing, and the promise of free, new customers.

There is a gulf between the world that Judy thrives in, and the world that Jasmine thrives in.  We probably need a better balance between the two, don't we?

Swim Lanes

In merchandising, some companies introduce the concept of "swim lanes".  This is a valuable concept.  Merchandise is forced to stay within a swim lane, to eliminate the myriad problems associated with redundant skus.  Merchants are assigned a category, and are asked to not interfere with the work of another merchant. Each merchandise category is allowed to grow and thrive, without interference from the efforts of an employee responsible for another merchandise category.  In theory, this helps simplify the purchase process for customers as well.

Now let's look at the failed concept known as "multi-channel marketing".  Everybody is an expert!!  The Chief Merchandising Office knows what email campaigns need to look like.  The Chief Operating Officer possesses distaste for affiliate marketers.  The Chief Financial Officer wants to trim catalog circulation by 30% (and would trim it by 97% if she could, because you just mail the customers who are going to purchase, right?).  The Chief Creative Officer thinks you need to "engage" the customer more via social media, and will work behind your back on developing a content-based strategy on Twitter, if necessary.  The Chief Inventory Officer wants to abandon paid search because it cannibalizes organic search results.  

The Chief Marketing Officer actively mines her network on LinkedIn, anticipating her next job.

Have you ever been in one of these meetings?  A half-dozen Executives all jumping out of their swim lanes to improve marketing performance?

I remember being at Lands' End in the early 1990s ... a profitable quarter was blown up, in part because somebody in Finance made some sort of mistake on currency exchange rates.  I remember the gnashing of teeth, because that mistake cost every employee a percentage of his/her annual bonus.  Nobody likes it when a bean counter is responsible for taking beans away from you!

I don't remember employees telling Finance how to manage money, however.  Money, even if mis-managed, was part of the Finance swim lane.

And you don't often see marketing leaders demanding a right to determine which robotics system to use in a warehouse, do you?

When it comes to marketing, swim lanes break down.  Everybody is an expert, right?!

A strong Marketing leader has facts to back up his/her claims.  A strong Marketing leader listens to Executives, then helps Executives move back into their swim lanes when appropriate.  A strong Marketing leader reminds every employee of the importance of Merchandise ... in other words, when business is down by 10%, the Marketer quantifies that Merchandise weakness is casing 9 points of the 10 point drop ... then the Marketer offers solutions to help the Merchant regain a few points.

A strong Marketing leader teaches Executives to respect each other.  A strong Marketing leader teaches Executives the limited potential of tools/techniques.  A strong Marketing leader teaches Executives the unlimited potential of creativity/working-together.

Finally, a strong Marketing leader reminds Executives about swim lanes ... reminding Executives about the importance of focusing on what one knows best.

Dear Catalog CEOs: Visiting A Non-Competitive Brand

Dear Catalog CEOs:


Here's one thing I don't understand.  Why won't we ever go spend a day with a non-competitive colleague?


We're on LinkedIn, so we have this network of 1,148 professionals.  And LinkedIn tells us that this network is really valuable, right?


So why don't we use it?


Get on the phone this week, and call a CEO at a non-competitive brand.  Arrange a visit.  Then get on an airplane and visit your colleague.


It's even better if the colleague leads a non-catalog brand.


Set up a six hour meeting.

• 10:00am - 11:00am:  Business results over the past five years ... a review of the profit and loss statement, customer file counts, orders per buyer, items per order, retention rates, that kind of thing.
• 11:00am - 12:00pm:  Marketing strategy ... a review of the way that each brand acquires customers, retains customers.  Discussion of the strategies, effectiveness, return on investment, vendors used, etc.
• 12:00am - 12:30pm:  Lunch.
• 12:30pm - 1:30pm:  Merchandising strategy ... how are products sourced, how is the mix of new and winning products arrived at, how is product productivity measured?
• 1:30pm - 2:30pm:  Employee strategy ... where do you find talent, how do you retain talent, how do you balance outsourcing talent to vendors vs. hiring the best people.
• 2:30pm - 3:30pm:  The Future ... a discussion of what "the next big thing" is, and how each business plans on growing over the next five years.  What are the strategies and tactics that lead to a viable business in 2017 and beyond?  What are the threats faced by each business?
• 3:30pm - 4:00pm:  Takeaways ... what was learned by each business that will be implemented.  How will the takeaway be measured?  How will each business communicate with each other?

The goal is to find complimentary ways for each business to help the other grow.

What would stop you from getting on a plane and having a session like this?

Planning Merchandise

How we plan merchandise dictates the audience that buys our merchandise.

Think of the classic catalog marketer.  You're planning a December catalog, right now.  You guess how many housefile customers you'll have.  You project how many new customers you'll need.  You ask Abacus for 1,500,000 names, you fork over $100,000 to have access to names that you know will perform at $1.05 per catalog.  Then you allocate space in the catalog for each item.  You know what many of the items will be, you source new items as well.  By December, you know how that catalog will perform, +/- 10%.  Your strategy for planning merchandise yields a predictable result.  It also yields a predictable customer file, rural 55+ customers sourced from Abacus.

Two years ago, I met with the founder of a business in Europe.  This person communicated a planning process that was completely opposite of what catalogers execute.

• 8:00am:  Read blogs, Facebook, Twitter, and understand what is "hot" this morning (yes, this morning).
• 9:00am:  Have a staff meeting with merchants and social media experts.  Discuss the products that folks are talking about.
• 10:00am - 6:00pm:  New products are designed.
• Next Two Weeks:  Products are created, in China.
• Two Weeks Later:  Proprietary products are available for sale on the website.

Not surprisingly, this process yields a very different customer, with very different merchandise preferences.

Both approaches "work".  One attracts a 55+ rural audience, one attracts a younger, fashion-oriented audience.

We need to understand that we play a huge role in determining who buys merchandise.  When we have a nine month merchandise planning process that is built around the assembly of a catalog, well, we end up with a customer who prefers the outcome of this strategy.  When we have a two week planning process, well, we end up with a customer who prefers the hottest and most relevant merchandise.

Multiple Digital Channels: Oh Boy

A few weeks back, the folks on Twitter took umbrage with my stance on the concept of "multi-channel".

• "77% of customers research online before buying in a store ... this is the very definition of multi-channel."
• "63% of e-commerce buyers touch at least four channels before buying merchandise."

So what?

• "But this is proof that customers prefer a multi-channel experience.  You cannot deny it."

Of course I can deny it!

Customers don't prefer a multi-channel experience.

Customers are forced into a multi-channel experience.

You know why customers are forced into a multi-channel experience?  

Because customers don't trust us.

Customers don't trust that we offer the lowest price, every single day.

Customers don't trust that we offer the lowest shipping/handling cost, every single day.

Remember Jennifer?  She's the persona you are least enamored with.

You don't like Jennifer because Jennifer doesn't trust you!

Jennifer knows that you have multiple versions of email campaigns.  She knows that her neighbor was offered 20% off scarves while Jennifer was offered 10% off of socks.  So Jennifer clicks through your email campaign (see, multiple channels work), because Jennifer still needs a scarf, regardless of your promotional strategy.

Jennifer documents the price of a scarf on your website, placing a scarf in her shopping cart, but she doesn't trust you.

Jennifer heads to Google, to see if comparable scarves at your competition are comparably priced (see, multiple channels work, don't they ... Jennifer just used email + search, multi-channel Heaven).

Let's assume that Google proves to Jennifer that your scarves are comparably priced.

What is Jennifer going to do next?

Well, she sure isn't going to pay for shipping and handling.  Your website says you offer $8 shipping every day, but Jennifer remembers that two months ago you were running free shipping campaigns (hurry, act now, free shipping ends in just 36 hours).  

Jennifer has a hunch that you're offering somebody free shipping, just not her.

Jennifer doesn't trust you.

Jennifer heads back out to Google.  She searches for a free shipping code.  Google redirects Jennifer to an affiliate website (see, multiple channels work).  There, Jennifer finds a free shipping code.  Oh, Jennifer also finds a 20% off scarf promo code.  Jennifer has to pick one of the two promotions.  

Jennifer doesn't want to pick only one of two promo codes.  Jennifer doesn't trust you.

Jennifer picks free shipping, as free shipping saves her more money than 20% off of the scarf she wants to purchase.

If Jennifer had time, she'd dial your call center and demand 20% off plus free shipping ... and you'd add another channel to the purchase process and suggest that multi-channel works, right?

By the way, Jennifer did all of this on her iPad at work, using wi-fi from the Starbucks downstairs ... Jennifer doesn't want her company to know that she is using the company computer to shop for a scarf.  But we observe this behavior as "mobile multi-channel" ... we think Jennifer is the valuable mobile buyer that we've been hearing about!!!  

Jennifer, however, is not using mobile because of mobile, she's using it to shop while at work.  Mobile isn't a channel to Jennifer, it's a way to get around the rules.

Jennifer buys the scarf, using a free shipping promo code.  

Jennifer feels burned that she couldn't apply a percentage off code.

If Jennifer had time (she needs the scarf for date night with her husband on Saturday), she'd leave the scarf in her shopping cart for a week, knowing that you'd send her a trigger-based email message with an offer to save an additional 10%.  And when she purchased, you'd credit her with another touch point in the process.  See, multi-channel works, doesn't it?!

Do you get it?

Jennifer touched a veritable plethora of channels, not because she's a multi-channel customer, but because she doesn't trust us.

Jennifer doesn't trust that we will always offer her the best price.  This lack of trust manifests itself in the use of multiple channels.

There is an inverse relationship between trust and use of multiple channels.  

Yes, great customers buy online and in stores.  But many customers don't trust us, and use multiple digital channels to evaluate just how much they can trust us.

Think of a brand that you trust.  Once trust is built, you don't do a lot of comparison shopping, do you?  You simply trust.  You cut down all friction, simply purchasing in the channel that is most convenient to you.

That's what my evaluation of the data suggests.  What does your evaluation of the data suggest?