The Death Of An Item

Every item has a birth, and a death. Maybe that's the way everything is on Planet Earth.

Now, the life of an item is messy. Undeserving items receive disproportionate attention, and consequently, perform above their pay grade. Highly deserving items are ignored, literally dying from starvation. And as anybody knows, when a Management change happens, items die and items are born.

The key, of course, is to identify "peak life". For so many companies I work with, the curve looks something like what is depicted in the bar chart above. Often, items show significant promise, from the get-go. That promise is capitalized on ... the cataloger gives the item catalog space ... the online marketer features the item on landing pages and on the home page and in email campaigns.

The secret is to measure what happens after sales begin to decline. This relationship is different for each business. I have clients that are selling items from the 1990s - and the sales curve has yet to decline. I also have clients where the life cycle is measured in weeks/months instead of years.

I like to look at items that are in the top 5% for demand volume and/or item volume. These items typically make up 50% of your annual sales volume. Only a handful of items ... a ton of responsibility from these items! Anyway, measure where your items are on the life cycle curve above. If you notice that, year-over-year, your best selling items are increasingly aging, well, you know you have a real problem that you have to address.

Clouds / Thunderstorms

It's a Monday, and you're not doing anything productive today anyway, so take a few minutes and watch this video ... watch how all the clouds evolve / adapt / change over time.

Your business is like a cloud (no, it isn't "in the cloud" like vendors want it to be). Your business is a dynamic, changing ecosystem ... while at the same time, it is part of a much larger ecosystem ... the upper level low in the Pacific Northwest fuels the low level winds that interact with the jet stream and create severe weather across the Plains and Midwest.

Do you treat your business like a dynamic, changing ecosystem that is part of a much larger ecosystem? Well, yes and no.

In most cases, the answer is no. We treat our businesses like a snapshot. We execute an email campaign. Or we mail a catalog. We change the home page and landing pages and the retail floorset. All are snapshot executions of our business ... a picture at a point in time. Is the picture pretty? Yes? Then we succeeded. Never mind that the pretty picture becomes a tornado at a later point in time ... the picture is pretty.

Sometimes, the answer is "yes". When we change our bidding strategy on various keywords, we're treating our business like an ecosystem. When we offer 30% off plus free shipping in response to a competitor offering 25% off plus free shipping, we are treating our business like an ecosystem. Whether we positively or negatively impact our ecosystem, well, that's another story.

But the problem with business today is that we treat too many aspects of our business like a snapshot, and not like the videos shared with you in this blog post.

When we don't generate enough new, winning products, we stop fueling the thunderstorms in the video above.

When we don't generate enough new customers, we stop fueling the thunderstorms in the video above.

When we don't run the best selling items in the front of the catalog because we want to "make a statement", we stop fueling the thunderstorms in the video above.

When we put 25% off plus free shipping in an email campaign to generate more opens and clicks, we stop fueling the thunderstorms in the video above.

Do you understand the message?

Amazon / Nordstrom / You

I cannot tell you how many times I've heard many of you utter this sentence:

• "July is in the dead of summer. We cannot sell anything in July."

On Wednesday, Amazon increased sales by 266% (i.e. 3.66x) with a one-day promotion.

On Friday, Nordstrom begins their Anniversary Sale. They'll sell as much as they sell at Christmas.

It has become obvious that we aren't even trying to sell anything in July.

Instead of focusing on Omnichannel, why not focus on giving the customer a compelling reason to buy something?

In other words, what is lacking is not a seamless customer shopping experience across channels ... that doesn't work. What is lacking is marketing creativity. We need marketers who love merchandise so much that marketers cannot help but come up with creative ways to sell the merchandise.

We're the problem.

Or Mess With Creative - And Live With The Consequences - Good Consequences!!

Yesterday, I told you a story about my time at Eddie Bauer ... we made a major creative change, the change sunk sales by 10% or 15%, +/-, and that didn't go over well with the folks who have their thumb on the pulse of the business.

In that example, after a period of time, those who made the creative changes found themselves exploring new opportunities.

But what if folks had the patience to wait longer?

A few years ago, a person working at a major retailer told me a story about a change in creative. The website was literally re-built, from scratch ... new platform, new creative presentation, new imagery, new user-generated content. New everything.

In month one, conversion rates were -15%.

In month two, conversion rates were down -10%.

In month three, conversion rates were down -5%.

In month four, business reverted back to normal.

Imagine if you A/B tested this thing for a month ... came up with a statistically significant outcome (new = worse #measure #datadriven #gutinstinctisforlosers), and told the company to not make the change?

In 1998, I would have been a punitive moron ... I would have not appreciated changes that did not immediately produce positive results. In 2015, I hope I'd be more nuanced. I'd probably use my comp segment framework to demonstrate that, at this time, the change is not working ... and then, I'd give Management the two data points described in the past two blog posts as examples of what could happen.

Truth is, we don't know, at month one, whether the -15% will become 0 or will stay at -15%. Creative always requires a certain amount of faith, and a certain amount of prudence is needed before pulling the plug.

Don't Mess With Creative

Sometimes, you're not the victim of merchandise productivity declines. Instead, the real problem is changes in creative strategy.

Back in the day, at Lands' End, we knew that creative could cause a +/- 30% change the productivity of an item. We knew that because we tested the strategy.

Most companies don't test creative. I'll take you back to my time at Eddie Bauer. We built a brand marketing department, from scratch. The brand marketing folks absorbed the creative team. Together, it was determined that our catalogs needed to "get younger". No, not from a merchandising standpoint, but from a creative standpoint. Out went the grizzled 40 year old male in jeans fly fishing ... in came shirtless twenty-five year old men carrying a canoe overhead.

Within hours of the change, sales dropped, by between 10% and 15%. And that's where they stayed. Sometimes we tumbled to -20%, other times -5%, but overall, it wasn't pretty.

Our catalog marketing team was responsible for prospect catalogs. We didn't change the creative of prospect catalogs ... the rules for those things were "best creative / best merchandise". Those catalogs stayed on plan.

You'd think we would have been rewarded for not sending the entire business down the toilet, but no. The creative folks were constantly badgering me ... "you are the problem, you acquire old customers and then old customers don't respond to our creative changes." I'd remind the creative team that 97% of our twelve-month buyer file came on prior to the creative changes ... so I was hardly the problem. Didn't matter.

I am always amazed by how few employees are actually motivated by sales, and by profit, especially given the fact that the small number of employees who are motivated by sales and profit seem to climb the corporate ladder much, much faster than everybody else. During that experience, back in the late 1990s, a large team of marketers / creatives cared about creative faith more than sales proof.

Maybe it's always been that way.

But as a marketer, you have the ability to put a stop to creative nonsense. Use the comp segment framework to measure the problem. Put a number to the problem. At Eddie Bauer, we could show that the creative changes were costing us $60,000,000 of demand and $15,000,000 profit. It's funny ... the Finance folks become alarmed when $15,000,000 of profit disappear in an effort to make creative imagery look appealing to younger customers.

Marketers have a disproportionate amount of impact on the business. When a marketer helps a company avoid a $15,000,000 cliff, people take notice.

Don't focus on omnichannel theory that helps generate page views and revenue for folks who do not work at your company.

Focus on helping your co-workers achieve their potential.

Amazon Prime Day

Customers complain ("the deals aren't that great" ... "this is a fake holiday").

Trade journalists complain, or they praise ... either way, it doesn't matter, they're not commerce experts, they're experts at generating page views, and they'll generate page views today.

None of that stuff matters ... it doesn't matter what 1,000 loud social media-centric customers think, and it doesn't matter what 100 trade journalists think.

What matters is that, in an alleged era of one-to-one personalized, relevant, engaging communications, the company that personalizes every single home page is running an old-school, Nordstrom Anniversary Sale style promotion. Amazon is creating a reason for a customer to buy something at a time of year nobody wants to buy anything. It doesn't matter if the promotion works or not.

What matters is this. What are we doing to create demand? It cannot be 20% off plus free shipping - everybody does that. We all need to do something to create demand. This is what Amazon chose to do. What are the rest of us choosing to do?

Waiting For A Girl Like You

You probably know all about the epic battle between "Waiting For A Girl Like You" by Foreigner, and "Physical" by Olivia Newton-John. For nine weeks, we'd sit by the radio (yes, you did this in the early 80s) ... listening to WIXX as Casey Kasem counted them down, from number forty to number one ... we waited, anxiously, as the songs were counted down ... you'd learn that "I Can't Go For That" by Hall & Oates was climbing the charts quickly.

Then, you'd get to number two.

• "Waiting For A Girl Like You" (with synthesizer courtesy of Thomas Dolby).

OMG! It's number two again. Five weeks in a row. Six weeks in a row. 

You'd wait for number one ... and sure enough, it was ...

• "Physical"!

Again! 

Seven weeks in a row.

Eight weeks in a row.

NINE WEEKS IN A ROW ... same thing ... same order.

Then Hall & Oates leap-frogged past Foreigner, Physical dropped like a rock, and a week later, it was all over, forgotten. Soon, we'd learn that people were the same, wherever you'd go ("Ebony & Ivory").

Why bring this up?

Foreigner was a pretty big deal back in the late 1970s. "Cold as Ice", "Hot Blooded", "Blue Morning, Blue Day", all rockin' tunes for their time. But as you know, it was a "best practice" for rock bands to perform a ballad. Or two. Or seven. You've gotta get the lighters lit at Alpine Valley, attendees swaying due to the soothing tones of a ballad and/or the sixteen cans of Kingsbury beer ingested prior to the start of the concert. By doing the ballad, you appealed to a larger audience. By appealing to a larger audience, you earned $$.

And they all did ballads, didn't they? Styx, Journey, Loverboy, Foreigner, you name it, they all followed the best practice of ballads ... followed it right into a black hole. Ballads changed the perception of a band. You don't think of Phil Collins singing "Illegal Alien" the same way after you've heard him sing "You'll Be In My Heart". After a half-dozen soft favorites, the audience tired of Phil Collins ... he was sappy ... rich ... but known for sappy, empty love songs.

Has this happened to the company you work for?

Did you stand for something once? And then, in a battle to top the charts, you changed? You became something else, you employed best practices, you became omnichannel and created a purchase funnel that looks something like this?

I always go back to my time at Eddie Bauer. The male-centric outdoor brand went the route of the ballad ... selling womens apparel ... until that is what sold the best. I was in countless meetings, with well-intentioned leaders trying to figure out how to "recapture our heritage". Well, you cannot recapture your heritage as a masculine outdoor brand when you sell womens dresses, now can you?

It happened in music, all the time ... sing a ballad, climb the charts, make $$$. But you evolve, and that evolution changes who you are, and pretty soon, without realizing it, you are in a different place.

In other words, from a Merchandise Forensics standpoint, you can chase what wins in the industry (ballads) ... and before you know it, those wins overshadow the winners that made you famous ... and now you're not what you were.

Take a look at what you sold 15 years ago.

Compare that with what you sell now.

Did you go the path of the ballad?

Or is your merchandise assortment still rockin' and rolling?