Oh, It's That Time Again!!

Yup, it's time for another run of The MineThatData Elite Program!

What do you get for $2,500 per run?

You get a twelve-month view of your Merchandise Productivity. Remember Merchandise Productivity? The most successful companies increase Merchandise Productivity.

You get a twelve-month view of new + reactivated customers. The most successful companies are able to continually increase new + reactivated customers at ever-decreasing rates of ad spend.

You get to see how you stack up against other program members. Having a rough spring? You'll learn if you are not alone. Having a great spring? You might learn that you are doing something special!

And you get my phone number ... anytime you have a question, you call me and I answer your question.

How the heck do you beat that?

Contact me now (kevinh@minethatdata.com) and get yourself included in this run of the program (click here for additional details from the original announcement).

Key Dates:

1. Payment Must Be Received By June 15, 2016.
2. Data Must Be Received By June 21, 2016.
3. Three Years Of Customer Data At An Order Level ... June 1, 2013 to May 31, 2016.
4. You Will Receive Your Personalized Write-Up By June 30, 2016.

Current Members - you will receive your email with instructions and your invoice this week.

Setting Goals

In November 2002 at Nordstrom, I got to enjoy a new relationship with a new boss ... the Chief Marketing Officer.

As we prepared for 2003, I asked a simple question.

• "What are my goals and objectives for 2003?"

The question was met with the following response ...

• "What?"

From that point forward, I wrote my own goals and objectives.

When you begin the rebuild of your department, make sure you have a Merchandise Productivity Goal, and a Customer Acquisition goal. All of your employees will be evaluated based on how well your company performs.

Let's say you are forecasting to hit 100,000 new customer if it is "business as-is" Let's say that you can increase new customers by 8% by swapping out some of your pointless housefile investments. Let's say your Brand Response Marketing Team can get you another 5%. Here's how you might write the goal.

Goal #1: Grow new customers from 100,000 in the next year to 113,000 in the next year, via changes in investment strategy and changes in marketing strategy.

• Exceeds Expectations = 120,000 new customers.
• Meets Expectations = 110,000 new customers.
• Missed Expectations = 109,999 or fewer new customers.

Goal #2:  Increase customer lifetime value from $22.00 profit per new customer to $25.00 profit per new customer by reducing wasteful marketing expenses.

• Exceeds Expectations = Lifetime Value of $27.00 or greater.
• Meets Expectations = Lifetime Value of $22.50 to $26.99.
• Missed Expectations = Lifetime Value < $22.50.

If every employee has a bonus structure, then bonuses are paid when the two goals are exceeded.

If you choose to not pay bonuses (#notsmart), then salary increases are provided when the two goals are exceeded.

I know, I know, it's time for the angry chorus to tell us all why this is stupid.

• We don't have control over new customers - if the creative team makes changes like they did in 2011 and those changes cost us 5%, then we miss our expectations and we don't get a raise and it isn't our fault, so can we please do things the way we used to do them?
• Our merchants are introducing too many new products, too many unproven products. Why should our bonus hinge on the effectiveness of new merchandise?
• I perform well but my co-workers don't. Why should I be evaluated on the same criteria they are evaluated against? Why do I have to carry this team?

Those are the kind of things that losing employees at losing companies tend to say. They gladly support the company when they get a salary increase they did nothing to earn. They love cashing in stock options when they had nothing to do with the nearly unethical things Wall Street partnered with your CFO on to bump up the stock price. But when held accountable?

#OhBoy.

Set high expectations from day one.

Reward employees when they exceed expectations.

Report on performance against expectations every single week.

It is time to rebuild your marketing department, from scratch.

Time To Address Your Vendors (#OhBoy)

Here we go. Let's see how many unsubs this generates.

When I spoke at VT/NH, an attendee mentioned that "Kevin is not a fan of vendors". 

Not true. 

I am not a fan of unaccountable vendors who voraciously consume your money without sufficient return on investment ... all for their own personal benefit. 

Vendors know fully well if they fall into this category or not.

We've all dealt with this issue.

I once took over a marketing department. The database vendor rep immediately flew to my office. The conversation went something like this (with obvious embellishments for comedic effect).

Rep: So nice to meet you! How is your family?

Kevin: We've never met, and you honestly want to know about my family?

Rep: You have a family, right?

Kevin: Of course.

Rep: So how is your family?

Kevin: Fine.

Rep: Good. Good! Kids?

Kevin: No.

Rep: Really?

Kevin: No kids.

Rep: Interesting.

Kevin: Why is that interesting?

Rep: I ... don't know.

Kevin: What did you want to discuss today?

Rep: Our relationship.

Kevin: We don't have a relationship.

Rep: Between our companies. We've been your loyal service provider for six years.

Kevin: My team wanted to implement a statistical model, and you told them that they couldn't easily implement a model without paying more money to create a new table. We've paid you millions upon millions of dollars over six years, and you wanted to nickle-and-dime my team for $1,900 to build a table. Is that correct?

Rep: Have you heard of Big Data? Because Big Data is really going to be a game changer. Our three year roadmap includes Big Data solutions that will enable you to do pretty much whatever you want. And your investment in supplemental tables funds Big Data research.

Kevin: Will I be able to build a model that suppresses email campaigns from customers who return more than seventy percent of their merchandise?

Rep: We don't have any clients doing anything like that. Doesn't sound like a best practice to me. We really like to focus client energy into best practices.

Kevin: But will I be able to do that in the future, or do I have to implement a skunkworks solution like I do today?

Rep: Are you using another vendor? Because we have an exclusive contract. Your predecessor wanted to make sure that our unique relationship did not spill over into the competitive environment.

Kevin: Are you saying that my predecessor was an idiot who signed a dumb contract?

Rep: He understood the value of an exclusive relationship.

Kevin: Speaking of our exclusive relationship, our contract ends next summer.

Rep: I have paperwork with me, if you want to re-up right now and get the best possible pricing.

Kevin: We will not be able to continue our relationship unless there are significant changes.

Rep: Oh, we can't lower our prices any lower than they are today. We're giving you the best deal in the industry. Trust me.

Kevin: I'm not talking about price.

Rep: Good!

Kevin: I'm talking about service.

Rep: Oh.

Kevin: You promised us real-time updates. It's in the contract. And yet, we waltz into the office on Monday morning, and the database is down thirty percent of the time.

Rep: That's not true.

Kevin: You are right, it's actually 32% of the time.

Rep: I'll have to verify this "fact" with my team. We have contingencies in our contract that give us some wiggle room.

Kevin: Why do all of the contractual contingencies benefit you?

Rep: I've got a really interesting deck I can send you. It features all of the benefits that Big Data is going to deliver to the industry. Let's focus on the future.

Kevin: Why is our database always down?

Rep: It's not always down. You said it is up about 68% of the time. That's better than two-thirds of the time.

Kevin: You know what I am talking about. Why is it always down? And why is your householding logic so bad?

Rep: It's not bad. It's proprietary!

Kevin: My wife and I are householded separately.

Rep: Are you having marital difficulties?

Kevin: What are you talking about?

Rep: Because our algorithms are really sensitive to social media overlays. We use fuzzy logic.

Kevin: Sure do.

Rep: Did you have a disagreement? Did you air your dirty laundry on Twitter? You should have seen what happened last week. A couple outside of Provo got into a real rhubarb about ...

Kevin: It's not my fault that your algorithm thinks that my wife and I, living in the same house for nearly thirty years, are in separate households. It means I'm paying you to implement a database filled with errors.

Rep: Our Big Data initiative will address this issue.

Kevin: In three years.

Rep: Correct. Though we have a contingency for a five-year implementation if the business environment changes.

Kevin: The business environment always changes!

Rep: Well then you have a clear idea when our Big Data initiative will roll out.

Kevin: So are you going to do anything to make sure we have real time updates to our database that we can trust? And are you going to address your householding logic?

Rep: Where do you want to go out to dinner tonight? I'm in the mood for seafood, how about you?

Kevin: You didn't answer my questions.

Rep: Is it Copper River Salmon season yet?

Kevin: This meeting is over.

Rep: I'll take you to Anthony's. Pick you up at six? I rented us a Lincoln MKZ.

Kevin: I pay you, and then you use my money to rent a Lincoln MKZ?

Rep: We thank you for your loyal patronage.

It is at this point, in your rebuilding process, that you have to put the vendor on notice. The highly embellished example (but directionally accurate example) resulted in the vendor being put on notice. Four months later, I visited the vendor in question, informing the vendor that if their performance did not improve, our contract would not be renewed.

It was around that time that the vendor rep stopped visiting with me, and instead visited with one of my staff members. I'd see the vendor rep walking through the building with my Manager. I'd ask both of them what they were doing? The vendor rep would say "we're working on strategic initiatives". The Manager would give you a smirk that suggested that the Manager was prepping for his next job at his next company. Or that he liked salmon. Or both.

Hmmmm.

The contract was not renewed. The staff member did not last long, either.

The steady diet of $34.95 seafood dinners ended.

Look, I understand what you are up against. Your merchandising team spends half the week chewing you out over perceived incompetence. Why would you want to spend one more minute with the Visigoths when you could enjoy halibut and three bottles of wine with your vendor rep? Be honest, which scenario is more enjoyable?

The more embedded your vendors are with your dining habits, the more critical it is to put the vendor on notice. Food is not a substitute for failing to adhere to contractual performance.

I know, you fully disagree with me. Over the past ten years, you repeatedly chose your vendor partners over your co-workers. Co-workers don't take you out for Copper River Salmon.

I attended NEMOA two years ago. I walked into a room for a session, and a vendor rep (NEMOA Sponsor, no less) had this to say.

Rep: Kevin, nice to see you. We're spending a lot of time with "Brand E" this week.

Brand E Employee: Hi Kevin!

Kevin: Hi Brand E.

Rep: We took Brand E Employee to a Boston Bruins game last night. Great seats! Great time! What exactly do you do to make your client base feel special, Kevin? Anything?

Kevin: I generate profit for my client base.

Yes, that conversation actually happened. As outlined.

You have vendors who work above-and-beyond to make sure your business is successful. It is patently unfair to treat them the same as you treat vendors who want to nullify poor performance by feeding you halibut or shoving a chardonnay-flavored hockey puck down your gullet.

Again, I get it. You aren't going to follow my advice. Your vendor partners are your friends.

Do you want to be excellent?

Do you want your team to perform at the highest level?

Do you want your company to perform at the highest level?

Do you want to rebuild your team, your department?

Your vendors are part of your team - they are essentially your co-workers. You fire co-workers all the time. Why won't you fire your vendor base, when they perform poorly? And for crying out loud, you pay your employees $70,000 a year ... you'll gladly pay a vendor a million dollars a year ... with numerous vendors into six-figure territory. Why do you hold your employees to a higher standard than you hold vendors to?

Flushing poorly performing vendors out of your ecosystem is a critical part of the rebuilding process. 

Rewarding highly performing vendors is a critical part of the rebuilding process. Do you reward highly performing vendors, or do you just pay them what the contract says you should pay them? And to think that some in the vendor community think I'm against them.

If you aren't willing to do this, then you aren't serious about rebuilding your marketing practices. 

Back To Your Team

You've put your program in place. Your Executive Team knows what you are focusing on and what you are going to deliver. Your Chief Merchandising Officer is fed up with you because you pointed out that Merchandise Productivity is down 7% this year and the CEO, well, she is all over the Chief Merchandising Officer to make changes.

And your very own Marketing Team is fed up because you are spending half of your time with your Brand Response Marketing Team.

This is when attrition happens.

It's not like your team is signed on for three years at two million dollars a year. They are free agents, and are not paid all that well, are they? And when a new Marketing Leader puts her foot down, puts the hammer down, well, some of your team will rebel.

You want to lose people in the early days.

I once took over a team where I lost eight of ten people in my early days ... some were fired, some quit, some flamed out in spectacular fashion. I required security backup to move one individual out of the company - folks were worried about my safety. Moving eight of ten people along cost me a year of productivity ... and that didn't go over well with Sr. Management.

Similarly, I took over a team of fourteen individuals ... I didn't change anything, none of them quit, and I didn't fire any of them. Huge mistake. All of the problems that existed prior to my arrival existed after my arrival ... but were now my fault.

Set clear expectations from day one.

Hold people accountable from day one ... if they are not meeting your expectations, they must be moved along. I don't say this to be a combative wombat. I say this because you must get the most out of your people, and you cannot get the most out of your people if they are working against you or are not qualified to implement a Customer Acquisition agenda.

Immediately hire yourself a programmer (don't work with IT on this, have your own programmer), and make sure that your programmer is analyzing simple issues for you, and is producing customer acquisition reporting, customer retention reporting, lifetime value reporting, marketing effectiveness reporting, and reporting to refute Executive idiocy ("we're failing because customers are expecting an omnichannel solution that you refuse to implement").

Immediately build a list of qualified candidates to replace any staff members that are not likely to survive your agenda. Work with HR, now.

And encourage those who are not supporting you to leave. In one instance, an employee walked into my office and said to me ... "make it like it was", to which I replied ... "you mean like it was when the company lost 10% pre-tax profit in back-to-back years and people worked 27 hour weeks and drank margaritas on Friday afternoon at 3:00pm?" And the person responded "yes". That person should not be there. That person is not inclined to support a Customer Acquisition agenda.

I know, I know. You don't like to think about people issues. People issues are unpleasant.

You will not enact change, you will not rebuild your marketing function, and you will not be successful with your Executive Team partners if you do not immediately fix the people problems in your department.

Establish Yourself on the Corporate Pecking Order

On purpose, I wrote in an earlier post about staring down a couple of Executives.

There's a good reason I said this ... and it isn't to be a cantankerous wombat ... and it isn't to draw out a bunch of unsubs from catalog industry leaders, as has happened during this series (let that one sink in for a moment).

Marketing Leaders and Analytics leaders own a marginal slot on the corporate pecking order ... above janitor (#custodialservices), but somewhere below the person who fixes the air conditioning ducts. We know this is true ... at least I know this is true ... when I worked at Nordstrom, one of the air conditioning ducts funneled super-chilled air on my customer acquisition manager. I requested a repair ... my request was always prioritized at #22,943 ... so one day, I climbed up on a chair, and used duct tape and cardboard to re-direct the chilled air. The interim CEO of the online business, who I reported to, saw what I was doing and called me in his office. Here's how our conversation went:

Interim CEO: You are a Vice President at one of the largest companies in the history of commerce. You do not fix air conditioning issues ... we hire people to do that stuff for you. Do you know why we hire people to do that stuff for you? It's because you are a Vice President at one of the largest companies in the history of commerce. You have other things to focus on.

Kevin: I have made numerous requests to have the issue fixed. I am at #22,943 on the facilities repair pecking order. I can show you where they prioritized my request, if you like.

Interim CEO: Any credible Vice President should be able to put the hammer down and get this problem solved. Put the hammer down.

Kevin: Alright.

The problem never got solved, hammer or no hammer.

Maybe I didn't know how to put the hammer down.

Or maybe marketing folks don't have a hammer to put down.

I suspect I'm not alone. I've sat in countless meetings where the Chief Marketing Officer shares his/her findings or outlines his/her plan, only to have the Chief Financial Officer or the Chief Operations Officer tell the rest of the room what the "real" marketing plan will be. Happens in at least 50% of the meetings I attend. It is disrespectful, and it must change. Does the Chief Marketing Officer determine the robotics strategy used in the warehouse? No! Then why the heck does the CFO or COO or Chief Merchandising Officer constantly steamroll the marketing leader?

As you rebuild your catalog marketing function, it is critical that you move up the Corporate Pecking Order.

How do you do that?

Measure Merchandise Productivity.

If you want to flip the script, hire yourself a great programmer (not a #datascientist, for merchandise productivity will bore the living daylights out of a #datascientist, and there isn't one 33 year old #datascientist who has interest in working with a catalog brand anyway), and make sure you measure every single aspect of merchandise productivity.

Why?

First of all, it is far more common for your failures to be linked to a failure to improve merchandise productivity than a failure in marketing strategy. Marketers are frequently blamed for merchandising problems ... losing jobs every two years because "the wrong customers" were contacted ... or because "it was your job to grow the business" even though customers hated the merchandise.

By publishing Merchandise Productivity every single week (yes, every single week), you flip the script. You put success squarely in the sweaty palms of your Merchandising Leader. You outline failure to your entire Executive Team, so that your team focuses on what is truly important.

If you don't flip the script and establish yourself as more than a plebe on the corporate pecking order, then the first time business doesn't meet expectations it will be your fault.

Yes, your fault.

And once it is your fault, that stink doesn't leave you. Every Executive immediately knows you are the problem, even though you did nothing wrong.

At every meeting, at every opportunity, teach your co-workers what Merchandise Productivity is. Make it very clear that success/failure is rooted in Merchandise Productivity. Make it very clear that your Customer Acquisition efforts simply amplify success/failure in Merchandise Productivity.

Do this at every single meeting, regardless whether it is an Executive Team meeting or a meeting of your facility services team. You are not doing this to be nasty. You are doing this to teach every single employee why your business succeeds or fails.

It is time to stand up for yourself. Be a leader!

5 Year Plan

It is rare to meet a marketing leader who has a multi-year growth plan. Plenty of tactics? Absolutely. But no plan that shows cause-and-effect, demonstrating that they will grow the business to "x plus 30%" in five years.

Name one vendor in the industry who creates a five year sales plan for your business, showing you the impact customer acquisition has on growth vs. targeting of marginal names? You can increase response on a marginal name from 0.8% to 0.88% and the industry cheers their digital initiatives ... but you end up with 2,000 more customers. 

You need 200,000 more customers.

Then there's the poor marketing exec. Geez.

All too often, the marketing leader is a pinball ... sent into the game by the CEO, battered by the flippers known as the Chief Merchandising Officer and Information Technology Guru (who all-too-often thinks he is running marketing for the company - #datadriven) ... running up ramps and hitting bumpers and basically being knocked silly on a repeated basis. You only get three lives in pinball ... each life is like a year. And then, the marketing leader is done. Most of the time, the score isn't very high ... so it is as if the poor marketing leader didn't even exist. The company just sticks another quarter into the machine, and hopes for the best.

Don't believe me? Sit in an Executive Meeting sometime, and watch the dynamic between the marketing leader and everybody else. Not a lot of respect in the room, folks.

It does not have to be this way.

It's time for leadership.

You are going to share a five year plan with your Executive Team, your Marketing Team, and the Brand Response Marketing Team you will lead.

At this time, the five year plan is mostly theoretical. You'll show a 10% increase in new customers in year one, a 20% increase in new customers in year two, and a 30% increase in new customers in years three, four, and five.

You'll show your base plan (same tepid performance as previous).

Then you'll show the plan with customer acquisition increases.

You'll say that this is what you are going to deliver. You, your marketing team, and your Brand Response Marketing Team.

You'll show how every Executive earns greater bonuses when your plan is followed.

Best of all ... they don't have to do a thing ... other than contribute one leader to your Brand Response Marketing Team ... and not block your initiatives. This is where you purposely stare at the Information Technology leader and your Website Operations leader ... stare for effect. You need 'em more than they need you ... but they've run all over every marketing leader, blocking their efforts. You need to establish a spot on the pecking order. If you don't like what I've outlined here, use your own professional skills to find another way.

Or don't set the tone, whatever.

But our industry is on year ten of being hijacked by best practices, omnichannel strategy, vendor agendas, encouragement to use as much paper as possible, and 65 year old optimized names from co-op models created by 28 year old data scientists. How did that work out for you?

Communicate that you are going to grow new names this year and early next year using existing tactics.

Communicate that you will be testing new ideas for the next two years.

Communicate that you will reinvent a large fraction of customer acquisition strategy in years three through five, courtesy of your brand response marketing team.

Then do not stop communicating, ever. Constantly communicate your five year plan, and how you are progressing against your five year plan.

Stop being the ball in the Executive Pinball game.

Sandbagging

In many forms of auto racing, the fastest cars have to start in the middle of the field, or in the rear. This is done to make sure that there is plenty of passing. Fans love passing. Racing fans hate watching cars run in circles without passing.

Say 24 cars are starting a race, but the fastest 12 are inverted. This means that the fastest car starts 12th. Well, the fastest drivers didn't like this at all ... so they learned to do something tricky ... they learned to do what is called "sandbagging". They don't drive as fast as they could, so that they qualify about 10th fastest ... which means after inverting the fastest 12 cars, the driver starts 3rd. The driver quickly passes the two cars in front of him/her, and cruises to a win.

The smartest marketers sandbag their plans.

The CEO of the online business at Nordstrom used to ask me how much I sandbagged my plans by? I'd say 3%, and then he knew that I created a cushion for success. He and I would tell the inventory VP how much I sandbagged the plan by, so that we purchased an appropriate amount of inventory. Regardless, the expense structure of the business was based on a plan that was conservative by 3%. So when the business truly performed to expectations, it would look like we were 3% above plan, and the financials would look very, very good. Nobody complained when the bonus checks were big.

Again, only the smartest marketers (like you) sandbag their plans.

When you are rebuilding your marketing team around customer acquisition efforts, you sandbag your plan, no doubt about it.

Not the total counts, no, you don't sandbag those, because you cannot hide from actual counts ... they are what they are.

Here's what you do.

Let's say you have to acquire 100,000 new customers, in order to keep your business on plan.

You have your marketing team swap circ out of housefile buyers into co-op names, in the short term. Your goal is to increase customer acquisition circulation by 10%, which means you will increase customer acquisition counts by about 5%. Nobody is going to miss a handful of books that are swapped out of housefile names into customer acquisition names. Your favorite co-op will love this strategy.

You only tell your Brand Response Marketing Team, your own Marketing Team, and your CEO that you are doing this. If your company requires considerable transparency, and that is frequently normal, then tell every single employee, have at it. No need to hide behind your strategy.

Then, three months into your plan, you communicate to the company that new customer counts are 5% over plan. You communicate that you are "winning". You communicate this fact to every single employee at your company.

Employees support "winning" strategies.

This tactic buys your Brand Response Marketing Team and your Marketing Team time to find real strategies that work. By the time they find strategies that work, you have employees on your side. You will be acquiring customers above-and-beyond baseline, above-and-beyond your typical catalog marketing strategies.

In other words, you will be generating the success necessary to move your initiatives forward.

Questions?