Barnes & Noble

Multichannel / Omnichannel experts tout the "bricks 'n clicks" advantage.

But then we read about Barnes & Noble (click here for a link to an article about losses in the Nook Division - losses offsetting in-store profit).

Let's think about this for a moment.

• Experts say Omnichannel / Multichannel > Single Channel.
• B&N will reduce stores by a third in upcoming years.
• B&N will pull back on digital tablets.
• B&N has every advantage over Amazon, according to omnichannel experts.
• Amazon is not pulling back, are they?

At some point, we have to concede that the whole multichannel / omnichannel thing is designed to generate page views, to sell vendor solutions, to sell research reports, and to generate Management Consulting engagements.

Do what is right for your business, not what is right for somebody to generate more page views.

Dear Catalog CEOs: A Business Bubbling Under The Core Business

Dear Catalog CEOs:

Here's an interesting quote ... I heard it recently from one of your peers.  I had not heard a true catalog executive offer this previously.  It marks a shift in thinking.

• "We were told we had to align all of our channels.  Yet last week, we're looking at merchandise reporting, and we can see the proof in the pudding.  We have online items that are fundamentally different than our core catalog items.  They sell reasonably well, and with minimal ad cost, they're very profitable.  But more important, this tells me that we're serving different customers.  We can no longer think about the catalog as the center of the ecosystem.  We have different customers.  Older customers and younger customers.  We need to meet all of their needs.  The catalog can't accomplish our goals anymore.  This will disrupt our entire organization, how we do things."

I'm going to stop right there.  Take a moment, and let the paragraph sink in.  I'll be back in a moment.

...

...

...

I'm back.

This was one of your peers, not me, saying this.

It may just be that you have a new business, bubbling under the surface of your core business.  If you look at the data the right way, you'll see this.  The future is staring you right in the face.

Now that you are back from a weekend of enjoying fireworks, spend a little time thinking about the quote, thinking about what it means for your organization.

July 4

I'll be back on July 8 with scintillating facts that have the potential to revolutionize your business.

Until then, take a break, and celebrate the outcome of the Revolutionary War ... explode a few devices (safely, of course).  Spend a day at the beach.  Grill brat patties over an open flame.  Enjoy a cold drink.

Or experience a summer sunset.  Your choice!

Two Items

You have two items:

• Item #1 was promoted in your catalog, generating $10,000 in demand and $1,000 profit.  Not bad!
• Item #2 was not featured in your catalog.  It generated $3,500 in demand and $1,700 profit.

Which item do you prefer?

Most of you prefer item #1, don't you?

"It sold more!".

"We captured market share!".

"Businesses grow or they die."

There are reasons for favoring item #1.  At a $25 price point, it means you sold 400 units, most likely to about 350 customers.  For item #2, you most likely sold 140 units to maybe 125 customers.  Item #1 gives you what I call "file power".  I'm a big advocate of file power.  I'll take an incremental customer over an incremental dollar of net sales any day of the week.  In this case, you get both - incremental customers and incremental sales.  Incremental customers are good, because they pay us back in the next 1-3 years.  Ask Amazon how they feel about incremental customers.

There are reasons for favoring item #2.  Two big reasons.  First, you didn't have to spend ad dollars to generate the sales.  Sales that are generated by brand loyalty are more valuable than sales generated by advertising.  You get to save the ad dollars, and possibly do something else with them that will generate sales.  Second, you generated more profit.  Now, I get it, nobody looks at profit anymore.  It's only the most important metric in your whole business, it's the metric that allows us to earn a salary.  Without profit (or cash), you're sunk.  This item generates more profit/cash than the first item.  Therefore, in many ways, it is more valuable.  The incremental profit increase allows us to invest in advertising, buildings, new businesses, new items, salary increases, bonuses, you name it.  Business leaders that prefer item #2 and reinvest profit/cash in new activities tend to find a path to the future faster than those who are cash strapped due to a 30% ad-to-sales ratio.

Each item possesses strengths.

Which strength do you favor?

The strength you favor says a lot about the type of business you desire to create.

Dear Catalog CEOs: Terrible Attribution or Matchback Reporting

Dear Catalog CEOs:

For the past ten years, you've been told to match back online orders to the catalog that "caused" them.  We conveniently ignored the "cause" portion of the statement - we just took every single online order and gave the catalog credit.  This is fun, of course, because it guarantees that we keep mailing catalogs, no matter whether the catalog had any impact or not.  In fact, if you mail every single customer in your database a catalog, then you will attribute every single online order back to the catalog.  You see this, often.  Of course it's nonsense.  But it keeps the vendor community employed, and it keeps those who love producing catalogs employed, so the behavior will not change.  I've railed against the behavior for the better part of a decade, few listened.  I cannot change those who do not want to change.

I can, however, point out nonsense in the reporting generated by the vendor community.

Too often, we see attribution mistakes so nasty that they should be pointed out, immediately.  And they aren't.

For instance, say your business possesses an average order value of $150.  You look at a distribution of average order values, and notice that only 10% of your orders are under $35.

Then your vendor produces a matchback analysis for you, by channel.  And you see something like this:

• Catalog = 1,000 orders, average order value = $211.
• E-Mail = 200 orders, average order value = $160.
• Search = 200 orders, average order value = $160.
• All Other Online Orders = 500 orders, average order value = $20.
• Totals = 1,900 orders, average order value = $150.

What is wrong with this picture?

Well, the attribution routine completely butchers actual attribution, doesn't it?  We know this to be true, because only 10% of company orders are < $35, and yet, the attribution program says that 500/1,900 = 26% of company orders are attributed online, with an average of $20.

The data clearly indicates that this attribution vendor has no concept of reality.  None.  It simply doesn't matter that the vendor uses a "proprietary and sophisticated algorithm" ... the algorithm is simply and horribly wrong, and will cause you to make terrible business decisions.

I see this outcome, often.  Your reporting is just plain terrible.  Either you don't care, or you don't even look at the reports.

Do you even look at the reports?

Do you ever challenge your marketing team to actually think about the reports generated by their favorite matchback vendor?

It's one thing to outsource marketing attribution to industry experts, giving them the authority to know your business better than your own internal staff.

It's quite another thing to completely accept terrible, terrible reporting as truth.

And that's what too many of you you're doing.

RSS Subscribers: Please Move Your Subscription Immediately

As RSS readers already know, Google Reader is about to be shut down.

You know that you can't afford to miss any of the riveting content you enjoy on a daily basis.  You simply cannot afford to miss it!

So move your RSS subscription today, while you still have a couple of days left.

1. Visit the blog home page (http://blog.minethatata.com) and follow via email.
2. Use services like Feedly or Flipboard - you'll log into Google Reader, and then you'll be able to continue to enjoy your feeds (with, in my opinion, a more zippy interface).

Take 90 seconds and move your feeds RIGHT NOW!  You simply don't want to miss out on any of the riveting content you enjoy daily.

Out Of The Ordinary

In the real world, when we see something out of the ordinary, we take a picture of it.

What do we do when we see something out of the ordinary in business?

Curiosity is a gift.  Too often, we let software limit our curiosity.

I once asked an analyst if he calculated profit.  He told me that the systems weren't integrated well enough for him to incorporate profitability into his calculations.  He didn't possess the curiosity required to investigate if any data could be linked.

Another analyst produced a report that didn't tie out with the report the EVP possessed.  The analyst didn't have the curiosity to find out why the data didn't match, only offering that the data came from "different systems".

Or as I'm seeing a lot lately ... merchandise performance absolutely stinks, and somebody notices something odd in the data.  But ... and this is a big but ... "that's the responsibility of the merchandising team, it's simply not my job to analyze the performance of merchandise, that's the job of the merchandising team."

Wrong.

Wrong.

Terribly wrong.

When you see something out of the ordinary, document it (i.e. take a picture).  Then go figure out what the heck is going on.  Odds are nobody else is seeing what you are seeing, and even if somebody else is analyzing the issue, they aren't analyzing it the way you analyze it!