Chicos and Gliebers Dresses

Ok, here's the direct quote from a Gliebers Dresses article on July 4:

• Dr. Gene Feldman: On our YouTube channel, I envision Colbie Caillat singing an acoustic version of "Brighter Than The Sun".  Except, everybody in this video is wearing Gliebers Dresses.  Think of all of the new customers we'd acquire, the brand exposure?

Now, watch the TV commercial (also available on YouTube) from Chicos, published on YouTube on August 13.  See if you recognize the song (hint, it's 'Brighter Than The Sun' by Colbie Calliat).

I know, it takes some planning to pull things off quickly in the real world, but it is fun to dream about the connection, isn't it?

Dear Catalog CEOs: Recent Questions

Dear Catalog CEOs:

There have been many, many interesting questions over the past few weeks.  Let's address some of your questions.

Question:  You frequently talk about Judy, Jennifer, and Jasmine.  Sometimes you talk about Jadyn, a future customer who is currently 10-15 years old.  Do you think we can train Jadyn to love direct mail the way we love direct mail?  Well, maybe.  What do you think the probability of a younger customer falling in love with direct mail is?  Be honest!  We know that when Jasmine was 10-15 years old, we couldn't possibly have imagined that she would be using Facebook and Twitter and Pinterest ... for they didn't even exist when she was 10-15 years old.  So we can't possibly forecast what Jadyn will do, nobody can.  But we can probably surmise that her future is more closely aligned with modern technology.

Question:  I love direct mail, but your constant discussions about Judy, Jennifer, and Jasmine suggest that there is a limited window of opportunity for direct mail professionals. This has significant implications for my career.  It almost suggests that there is a limited window of opportunity for my career aspirations, as well.  What will happen to me?  Oh boy.  You know, I see the world the way I see it because I perform what are called "annual analytics".  I analyze how customers are evolving and changing over the past five years.  This allows me to see things that folks who analyze marketing campaigns never get to see.  I can clearly see a shift.  Jennifer is aligned with Amazon, discounts, promotions, that kind of thing.  Jasmine is clearly not direct mail responsive, though there are always exceptions.  What I have learned is that there is a lot of sand to play in, when it comes to the "how is the customer transitioning" realm.  I've learned that more people want you to explain how the transition is happening than people who want you to learn all of the skills that are currently being learned by modern, younger marketers.  Find a reason to be relevant.

Question:  Why do you talk so much about merchandise?  I recently told somebody that merchandise analysis is a lost art.  I sat in meetings at Lands' End in the early 1990s, where we put each spread in a catalog up on the wall, color codes ... Gold (30%+ profit rate), Green (20% - 29% profit rate), Blue (10% - 19% profit rate), and Red (< 10% profit rate).  Marketers, Merchants, Inventory Leaders, and Creative Staffers were all in on the discussion.  The transition to e-commerce eliminated this level of rigor.  Oh, sure, we can easily use a heat map to show what customers clicked on, but that doesn't tell us what drives our business.  Show me a heat map that links customer behavior to company profitability ... go ahead, I'll sit here and wait while you find a link on the internet to such a map.  Merchandise productivity is the secret sauce that fuels our businesses.  Analyzing merchandise productivity should be the top priority of marketers/analysts.

Question:  Why are you so devoted to new customer acquisition?  Everybody knows it costs eight times as much to acquire a new customer as it costs to retain an existing customer.  Why not focus on keeping loyal customers?  I've worked with more than eight-five companies since starting MineThatData in early 2007.  I can point to clients who increased sales by close to 50% within twelve month by focusing on profitable new customer acquisition programs.  I can point to clients who increased sales by close to 20% by focusing on merchandise productivity.  I cannot point to one client who increased sales by focusing on customer loyalty programs.  You can always improve customer loyalty within the context of a campaign.  Unfortunately, campaigns simply shift demand, they seldom create a lasting impact on annual retention rates, orders per buyer, items per order, or price per item purchased.

Question:  You don't share the same marketing attribution reasoning that other share.  Why is that?  Don't you think that attribution is really, REALLY important?  Well, sure, it is important.  But how many attribution practitioners utilize mail/holdout tests?  If you don't know the percentage of sales that happen with no marketing, then all of your attribution work is simply wrong.  When I review attribution work, almost all of it is simply wrong.

Question:  What is the next big idea?  I keep attending conferences and reading the trade journals, and nothing gains traction anymore, meaning nothing new causes a 30% jump in annual net sales.  What is the next big idea?  I think it is time for you to invent the next big idea!  Why do we keep waiting for others to take risks, so that we can copy their successes?  I recently met with a guy who grew his business from $0 to around $2,000,000 in annual sales in just a couple of years, by doing things I haven't seen before.  He copied things other people are doing, then just put his own twist on things and created something unique and different.  I'm not confident there are any big ideas left in catalog marketing, there's mostly discipline that most of us choose to ignore ... if we chose to have discipline around catalog marketing, we'd increase sales and profit immediately, and we could use that profit to invest in creating the next big idea.  I've yet to work with a catalog marketer that takes profit from catalog marketing, and reinvests it in search of the next "big idea".

Ok, your turn.  What questions do you have?

Books, Bookstores, Catalogs

The parallels between books, bookstores, and catalogs are significant.

So take fifty minutes this weekend, and watch this session that was recently broadcast on BookTV, titled "The Future of the Book and Bookstore".

• Click here to watch the video.

This is fifty minutes of absolutely riveting television, seriously!  Boring setting, riveting topic.

Look at the average age of the panelists who are defending the status quo (Judy).

Look at the average age of the folks in the audience (Judy).

Listen to the questions and comments of audience members.

Listen to some of the anger toward Amazon; eBooks and Kindle and newer technology.

Listen to the talk about how the author has to do publicity so that the agents/publishers can continue to make money off of the author (happened to me ... major publisher approached me to write a book, asked me to draft an outline for them, then told me that my 'platform' was too small too few followers to promote my content to so that they could make money ... so instead I make thousands a year selling my self-published books via Amazon ... and then you hear some on the panel criticize self-publishing via Amazon, so isn't that interesting?)

Listen to the positive comments about paper, about touching, about discovery.

Listen to folks decry that money can't be made as easily in a digital format.

Think about how all of these folks want to continue to profit off of the author, not really addressing what is best for the author, but instead, what is best for them.

Identify the many ways this panel describes how the status quo can compete against a digital revolution in books.

Now, take a few minutes, and consider your plight in retail or catalog marketing.  Do you use the same arguments that are used in this discussion?  How do your arguments stand up, after hearing a comparable argument in a comparable industry?  How is your industry similar or different to the book industry?

Must Read, Now, Especially The Comments!

You must read this article, right now.  Drop everything you're doing.

• http://econsultancy.com/us/blog/9067-lings-cars-the-art-of-persuading-visitors-to-buy
• And visit the site:   http://www.lingscars.com/

More important, please read the comments.

AGAIN --- READ THE COMMENTS!

You see, this business owner is doing things in a non-traditional manner.  Not following best practices.  Having success.

Many of the commenters struggle to accept this fact.  They want the business owner to change, to conform, to merge her methods with established best practices.

Think about your business.  How often do you try to sand off the rough edges of your business?  How often do you try to make things beautiful?  How often do you try to conform to the "right" way of doing things?  Does that strategy work?

Your thoughts about the article?

Fantasy Football Draft: Direct Marketing Style

Last week, I took part in a fantasy football draft.  For the next fourteen weeks, my attention is focused on maximizing the value of Larry Fitzgerald and Calvin Johnson.

If direct marketing held a fantasy draft, we'd have to evaluate each channel, predicting just how important it would be during the Fall/Winter season of 2012.

Let's handicap the race, right here, right now.


Email Marketing:  Email marketing is a lot like drafting a kicker, in that you get credit for a lot of extra points, but you are not going to get a four touchdown day.  The DMA loves publishing how email marketing has the best ROI in all of marketing.  That's true.  Email marketing essentially has no cost, so when you generate $0.09 per campaign, you get $0.03 of profit divided by $0.003 of cost, yielding a 100 to 1 ROI.  And yet, nobody talks about how you only get $0.09 demand per campaign, do they?  Draft email marketing in the later rounds.

Affiliate Marketing:  Sometimes known as "the place the customer goes to get a discount marketing channel", affiliates are a lot like drafting backup tight ends.  You need a backup tight end for the bye week when your starter isn't available.  Similarly, you need affiliate marketing for the small percentage of customers who care more about your promotions than your brand.

Natural / Organic Search:  This is one of those situations where you wait until after the first week of the season.  At that time, you look for a wide receiver that nobody drafted, one that scored two touchdowns in the season opener.  You claim this player on waivers, essentially costing you nothing.  That's the role of natural / organic search, largely ignored until the CFO wants free marketing.

Paid Search:  A lot like drafting a starting running back.  You have to have a running back on your team, but running backs used to be important and now are not valued nearly has high as are other positions.  Paid search was so important from 2004 - 2009.  Today, it may be important, but nobody cares anymore, it's like catalog marketing.

Omnichannel Marketing:  From what you read, this is like drafting Aaron Rodgers or Drew Brees.  You HAVE TO DO IT, OR YOUR BUSINESS MODEL WILL BE DEAD.  However, Aaron Rodgers and Drew Brees have proven that they work.  Omnichannel Marketing is just a theory.  Your peers will take Omnichannel Marketing early in the draft.  Hold on, and take Omnichannel Marketing in the later rounds.

Merchandise:  This should be your first-round draft choice.  Here's a funny thing about merchandise.  If you have crappy merchandise, everything else you do is utterly feckless.  Ever visit a company that is failing?  Everybody is yelling at the marketing team to do a better job ... you look at the marketing data, and you can just tell that nobody wants to buy the merchandise.  Merchandise is Aaron Rodgers or Drew Brees.  John Clayton of ESPN did research that showed that teams with a top-12 quarterback have an 80% chance of beating teams with a 13-32nd ranked quarterback.  The same thing goes for merchandise.  If your merchandise is craved by customers, you have a very high chance of beating the competition.  Sometimes, it's as if almost nothing else matters.

Catalogs:  Unless you're marketing to a 55+ rural crowd, view catalog marketing much the same way you'd view drafting Carson Palmer as a starting quarterback.

Social Media:  Unless you're marketing to a 30 or under crowd, view social media much the same way you'd view drafting Carson Palmer as a starting quarterback.

Mobile:  Mobile is like drafting Cam Newton, Josh Freeman, Robert Griffin III ... they are all mobile quarterbacks, and can elude the pocket (i.e. old school marketing), making plays on the run.  Of course, mobile quarterbacks sometimes get hit, and when they get hit, they get hurt, costing your team wins.  This is what mobile marketing is all about, folks.   Your fancy iPad app allows you to escape marketing clutter, but when nobody downloads the app, it's like you just sustained an injury, in that you lost out on opportunity cost to existing channels with proven ROI.  Not worth a 1st, 2nd, or 3rd round draft choice, but something you need to keep an eye on.

Retail:  Retail is a lot like drafting Larry Fitzgerald.  He's going to produce, but in an auction league, his cost is very high because he's going to produce.  In retail, the cost is very high ... debt, debt, debt.  If you invest here, you may not have as much money to invest in other opportunities.

Creative:  Creative is like choosing a defense.  The best defenses have all of the fundamentals covered, allowing them to take calculated risks that result in touchdowns.  The best companies know every aspect about selling, they know to present merchandise in stacks or on models, and they know what colors to feature.  This allows them to take risks within the confines of the fundamentals they have mastered.  Creative isn't something that you'd draft in the top-5, but you clearly want great creative somewhere down the road.

Customer Service:  So important.  Draft it early, at any cost.

Free Shipping:  Almost expected now.  No sense forcing some customers to pay for it to fund the ones smart enough to find an affiliate marketing code.  Find the AOV hurdle that makes sense and just do it --- a 3rd or 4th round draft choice, it's that important these days.

20% Off Promotions:  This is the Terrell Owens of marketing ploys.  In his prime, he was very talented, worth a 1st round draft choice.  But then he'd pull out a Sharpie after scoring a touchdown and, well, that's not part of the team spirit, is it?  Eventually, his talent wasn't worth the problems he caused.  Same goes for promotions ... they bring in the sales, but eventually, promotions wear out their welcome and you can't sell anything at full price anymore.  You'll be tempted to do this, to make it a primary part of your marketing strategy.  Honestly, it should be a low round draft choice, at best.

Comparison Shopping Engines:  Certain ideas are popular at some point in time, then fade in other eras.  That's the CSE, folks.  Remember how important tight ends were in football?  About every 10-15 years, tight ends are in vogue, often in periods when the running game matters.  Today, spread offenses demand having five good wide receivers, minimizing the impact of the tight end.  Today, your social/mobile strategy gets all of the attention, minimizing the importance of CSEs.

Co-Ops:  When drafting a fantasy football team, you always pick backup running backs and wide receivers that will become starters when other players get hurt.  That's what a co-op is to a cataloger ... ignored when business is good, needed when new customers are required to fuel future growth.

Use the comments section to offer your thoughts!

Stop Marketing To High Returns Customers!

Back in the day (i.e. 1992), I was a Statistical Analyst at Lands' End.  I was told to find a way to minimize the impact of returns on the business.

The analysis showed that customers who purchased at least three times, and returned at least 60% of their merchandise, were unprofitable.

We rolled this program out in 1993.  Basically, we stopped mailing customers who returned most of what they purchased.

It took a few weeks, but the complaints started to roll in.  "I'm a great customer, I deserve a catalog!"  Our customer service reps looked at purchase transactions, and agreed.  "Kevin, this is a great customer, what the heck are you doing?"

Eventually, the complaints were so loud, and in such significant quantity, that we had to relent a bit ... we sent catalogs to customers quarterly instead of monthly.  The complaints continued from all corners of the world ... except from the office of the Chief Financial Officer ... those folks thoroughly enjoyed a $1,000,000 increase in annual profit coupled with a 1-2 point drop in the return rate.

Today, there is no reason whatsoever to market to customers who return too much merchandise.  You have a website that is open 24/7/365, so the customer isn't being cut off from your brand.

Take a look at this example ... this is typical.

When you stop marketing to this customer, yes, the customer spends less, significantly less.  But look at the impact on the profit and loss statement!

You can't see this, of course, unless you're willing to do three things.

1. Measure returns on a customer level.
2. Work with your CFO to quantify the actual cost of each item that is returned.
3. Test not mailing customers who return a lot of merchandise.

So stop marketing to high returns customers!  There's no reason you have to incur losses.

Dear Catalog CEOs: Twelve Weeks

Dear Catalog CEOs:

You may already know this, but it bears repeating ...

• The twelve weeks after a first purchase are really, really important.

Our instinct, of course, is to get a bunch of catalogs in the hands of a customer who just placed a first order.

Our instinct, of course, should be to make sure that everything about this first order went well.  We should make sure that the customer feels like s/he was taken care of, and feels satisfied.

For many folks, 40% to 50% of all customers who will purchase again do so within the first twelve weeks of a first purchase.  For those who were happy with an order, this timeframe is ripe for "add-ons".  For those who didn't order the right size, this timeframe is when returns and exchanges happen.

Please consider having somebody in your marketing department be responsible for satisfying customers in the twelve weeks following a first order.  You might be surprised with the results you get!  B2B marketers, typically, are much better at this than are B2C marketers.  Maybe it is time all marketers focus on this critical stage in the customer life cycle.