Pages / Contacts

There's a small audience out here that encourages you to mail fewer pages and fewer contacts.

There's a larger audience that encourages you to mail more contacts and pages because sales increase. It's good that sales increase.

Actual test results and actual math and actual profit calculations (especially profit calculations) that yield more profit is much, much better.

I've spent 30 years measuring this stuff. Developing equations. Performing actual math. Testing. Thirty-flippin'-years, folks. It's why I get frustrated. I've executed the tests and done the math and calculated profit and share the advice freely with you ... and you pick Thought Leaders who ask you to mail more pages and more contacts.

Why?

Back in August, I conducted a 10-part series on the topic and shared three decades of math/findings ... for free ... (click here). Please - go revisit the links and look at the math.

Then do what is right for your business.

• Test a 50% page count reduction with the same assortment/creative. Does the "rule of thumb" hold? (hint - it probably does).
• Test a 50% page count reduction stuffed with best products and best creative. Does the "rule of thumb" hold? (hint - it can't hold, it won't hold - you'll get amazing results on fewer pages).
• Measure page count reduction tests across best customers, marginal customers, lapsed customers, and prospects. Are your results different (hint, they are).
• Test 4 catalogs a year vs. 8 vs. 12 vs. 42. Execute the test among best customers, marginal customers, lapsed customers, and prospects. I keep getting calls from catalogers who are getting 80%+ of the demand on 20% of the contacts. Hint - that's a lot of profit! Double Hint - you won't hear any of these discussions from Thought Leaders or at Conferences, and for good reason - they don't want you to know about 'em ... but you keep telling me that's what you are seeing, so enjoy!
• Develop a strategy for Best Customers, Marginal Customers, Lapsed Customers, and Prospects. Contact me (kevinh@minethatdata.com) and I'll perform the math for you for your unique situation.

Follow the math outlined in this 10 part series.

If you don't execute actual math, actual tests, and calculate actual profit ... then you stuck dealing with lizard logic. Don't get trapped in the lizard logic of mailing more pages and more contacts, ok?

Butterflies on a Reptile

Long-time reader Robby sends us this one (click here for the article):

Now look at the image here.

The image is what we do in our industry. The reptile is the core business ... the butterflies are the fun new channels we bolt on to the core business. We think we are integrating the customer experience, creating omnichannel magic.

Instead, we created this image.

There's nothing wrong with generating as much profit as possible from the reptile, and then reinvest that profit in a new online brand.

Heck, people love to criticize J. Crew these days - but think about what they're doing ... as the core brand suffers the new brand (Madewell) performs better. It's good to have multiple brands ... it's like having a diversified portfolio of stocks, right?

Think about what Gap is doing these days ... they're closing Gap stores while opening Old Navy stores. Instead of bolting butterflies on the reptile, they're shutting down reptiles and growing their assortment of butterflies.

Don't fall for omnichannel lizard logic.

Consider hiring online experts - let them start an online brand using the fraction of your merchandise assortment that appeals to a younger audience. Let them use techniques and tactics (butterflies) that do not work when bolted on to the core business (the reptile). As success happens, let the new merchandise assortment evolve and shift as the customer base evolves.

Explain why this is a bad idea?

P.S.: Speaking of online marketing experts, read this story about Alto's Adventure.

P.P.S.:  Speaking of bolting butterflies on a reptile, look at what large retailers and Facebook are doing with catalogs (click here). There's no saving traditional folks who won't at least try something like this (though we've been here for 15 years or more with "digital" catalogs). Try Something!!

High Cost Customer Acquisition Example

I submitted my MineThatData Academy Business Simulation to the DMA (and Shop.org and Internet Retailer) ... they turned the opportunity down (all three did) ... and here's why ... take a look at the email I received from Ascendant Network:

Yes - you can spend $75,000 to achieve "High Level Brand Engagement" at the EMP Lounge. Or just $40,000 at the VIP Party.

A Track Speaking Session is just $60,000 - only 1 available!

Or you can spend $15,000 to host cocktails. Who hasn't dreamed of doing that?

Do you think Kobe Bryant and Tyra Banks paid $60,000 for their speaking opportunity?

It's easy to spend money.

It's hard to be creative. Really, really hard.

This is an example of low-cost customer acquisition (which also applies to best customers). Look at what Teespring sent me on Saturday:

See - there's a little bit of creativity there. Did you know that you can find pizza socks in the laundry 37% faster? I didn't know that.

So you can do the hard work and be creative ... or you can pay $15,000 to host cocktails.

Your choice.

Leverage

You have a solid marketing program in place to convert buyers within three months of a first purchase, right?

RIGHT?

Why is this so important?

This data is from a company that has a 50% annual repurchase rate - far greater than the repurchase rate most of you possess. Look at the probability of a second purchase by months since first purchase.

• Recency = 01, Rebuy = 17.3%.
• Recency = 02, Rebuy = 9.1%.
• Recency = 03, Rebuy = 5.7%.
• Recency = 04, Rebuy = 4.0%.
• Recency = 05, Rebuy = 3.5%.
• Recency = 06, Rebuy = 2.8%.
• Recency = 07, Rebuy = 2.3%.
• Recency = 08, Rebuy = 2.0%.
• Recency = 09, Rebuy = 1.9%.
• Recency = 10, Rebuy = 1.6%.
• Recency = 11, Rebuy = 1.5%.
• Recency = 12, Rebuy = 2.0%.
• Recency = 13, Rebuy = 1.3%.
• Recency = 14, Rebuy = 1.0%.
• Recency = 15, Rebuy = 0.9%.
• Recency = 16, Rebuy = 0.7%.

After three months, the customer is virtually lost.

Think about this ... you could take a 14 month customer and apply some "win-back" program and increase repurchase rates that month from 1.0% to 1.1% (that 10% gain is hard work, by the way). But you haven't accomplished anything.

What happens if you improve the repurchase rate in the first month after a first purchase by 10%? You go from 17.3% to 19.0%. THAT'S MEANINGFUL! Not only is it meaningful, but you gain 1.7 points of repurchase vs. the 0.1 point you gain on the 14 month buyer ... that's 17 times more impact!!

17 times more impact!!

We call this "leverage" ... a first time buyer with 0-3 month recency designation is at a "high" leverage point. The customer who last purchased 39 months ago is at a "low" leverage point.

• High Leverage = Many Customers, High Likelihood of Change.
• Low Leverage = Few Customers, Low Likelihood of Change.

So why do we spend so much effort trying to reactivate lapsed buyers when you could have a marketing program in place to get the first-time buyer to purchase again 0-3 months following a first purchase?

Show of hands, how many of you have a marketing program in place to convert the first-time buyer to a second purchase within 0-3 months of a first order? I'm not talking about your mass email marketing campaigns and your mass catalog mailings, those don't count. I'm talking about a specific program only for 0-3 month first-time buyers:

• A Welcome Package.
• A Call 10 Days After Package Arrives, Asking If Everything Is OK With The Order?
• If You Love Offering Discounts, How About A 2nd Purchase Discount?
• Offer To Join Your Loyalty Program?
• Offer To Join Your Subscription Program?
• Cross-Shop Personalized Email Campaigns Based On Items Purchased In A First Order?
• Free Expedited Shipping For Christmas For 1st-Time Buyers In Oct/Nov.
• Membership In A Customer Council To Improve Products/Service.
• Invites To First-Time Customer Events In-Store.
• First Opportunity To Purchase From New Merchandise Assortment.
• Credit Offers With Low APR.
• Request To Follow Your In-House Employee Influencers On Instagram.

Again, a show of hands ... how many of you have a marketing program in place to convert the first-time buyer to a second purchase within 0-3 months of a first order?

If you didn't raise your hand, what is stopping you from implementing a program? Discuss.

Gliebers Dresses: A Potential Buyer

Yes, this is a fictional story about a catalog company in New England. If this isn't your cup of tea, then feel free to browse the most popular article I wrote in August (click here) or take a look below at L.L. Bean getting tons of low-cost customer acquisition exposure courtesy of non-stop hurricane coverage.

Setting: The Gliebers Dresses Executive Conference Room. A potential buyer, Santa Ana Equities, surfaced in recent weeks. They sent a representative, Gerri Stapleton, to visit with the Gliebers Dresses Executive Team.

Glenn Glieber (Owner / CEO):  Well, on this beautiful fall day we consider a potential spring for our business. Gerri Stapleton is here to talk to us about our business. Let's grant her every possible courtesy as we begin our discussion.

Gerri Stapleton:  Let's get right to it. Tell me about your strategy for 2018.

Meredith Thompson (Chief Merchandising Officer): That's an easy one. We're going to leverage catalog mailings to deliver a trend-right assortment to a price-sensitive shopper trying to navigate today's competitive environment.

Gerri Stapleton: That's not a strategy. That's a paragraph from a Woodside Research report.

Roger Morgan (Chief Operating Officer): She's right!!

Gerri Stapleton: Be specific. What are the five strategies you are employing for 2018 to grow the top-line?

Meredith Thompson: We've done a lot of testing on our in-home dates in January. We think we should go with January 6. It's far enough away from New Year's Day but it allows us enough spacing to get the February catalog in on February 2, giving the customer time to buy before Valentine's Day.

Gerri Stapleton: That's not a strategy, that's a tactic, and an elementary one at that.

Lois Gladstone (Chief Financial Officer): Somebody woke up on the wrong side of the bed this morning.

Gerri Stapleton: Excuse me?

Lois Gladstone: Look, we're not Instagram. We're not trying to own the world. We mail catalogs.

Gerri Stapleton: Then you probably have a comprehensive strategy for mailing catalogs.

Lois Gladstone: We do! It's called the mail plan.

Gerri Stapleton: What?

Lois Gladstone: Pepper maintains the mail plan. It's the bible that fuels our business. Well, it's more like a spreadsheet, to be honest.

Gerri Stapleton: Who is Pepper?

Pepper Morgan-Pressley (Chief Marketing Officer): I am.

Gerri Stapleton: And you maintain the mail plan, is that correct?

Pepper Morgan-Pressley: I enter numbers into it. It's a living, breathing document that everybody owns, to be honest.

Gerri Stapleton: What does that mean?

Pepper Morgan-Pressley: A living breathing document?

Gerri Stapleton: No, a document that everybody owns. What does that mean?

Pepper Morgan-Pressley: I'll give you an example. Last Friday Meredith went into the document and unilaterally determined that the January catalog should be mailed on January 6 instead of January 2. This spurred a series of cross-functional meetings. Creative said we could meet the January 2 in-home date, but the merchants were compelled to mail the catalog later. We compromised and now the January catalog is in-home on January 6. I took the demand plan down by a quarter million dollars as a consequence.

Gerri Stapleton: So you made a decision that will result in less demand, less sales, and less profit? And everybody is ok with that?

Pepper Morgan-Pressley: Our printer wants us to co-mail the catalog with other brands on that date, so our vendor ecosystem gave us a handful of discounts to make it happen - the net impact won't be that bad on the p&l.

Roger Morgan: Also remember, Pepper, that AfterNine told us to not do smaller page counts in catalogs because then sales decrease - so we added twenty-four pages to the January catalog and sales are forecast to increase. You have to look at this stuff in total.

Gerri Stapleton: Who is AfterNine?

Roger Morgan: They are a catalog agency. They have all sorts of great ideas that increase sales, like mailing more catalogs and adding pages to catalogs. When we do exactly what they tell us to do, the entire industry generates more revenue.

Gerri Stapleton: But do you generate more profit?

Roger Morgan: Listen, catalog vendors pay AfterNine tens of thousands of dollars to speak at the AfterNine conference in December. The vendor community offers Thought Leadership that integrates with the AfterNine product assortment. Then AfterNine tells us what to do. Then we do it. Then all of the vendors get paid. That's how the catalog industry works. How else would the entire industry stay in business? We have a paper rep, maybe you know him, Sal Tarton. Sal says if this system didn't exist, he'd have to find a new job.

Pepper Morgan-Pressley: Gerri, in a perfect world vendors would offer services that earn business organically, generating profit for us in the process.

Gerri Stapleton: Roger, are you telling me that you are stupid enough to let outside vendors determine the tactics you use, tactics that allow outside vendors to generate profit?

Roger Morgan: It's the right thing for the catalog industry. 

Gerri Stapleton: Is it the right thing for Gliebers Dresses?

Roger Morgan: Once your paper rep takes you to a fine steakhouse, you'll realize it's the right thing to do. And the AfterNine folks have a breakfast bar that is to die for. They have a Millennial Outreach program where they serve avocado toast. It's something to behold.

Gerri Stapleton: I've worked at companies where the entire Executive Team would be fired on the spot if they fell for this system of payola.

Meredith Thompson: Maybe you fire people on the West Coast or on a reality TV show, but here in New England a handshake and partnerships still means something.

Gerri Stapleton: What does that even mean?

Lois Gladstone: It means you are kind of mean to us.

Gerri Stapleton: You don't have a strategy and you let vendors run you in circles in exchange for avocado toast. Somebody needs to rattle your cage.

Roger Morgan: Gerri, people like you and I like to keep up on best practices, so you should appreciate this ...

Gerri Stapleton (interrupting Roger): I detest best practices.

Roger Morgan: Say what?

Gerri Stapleton: Best practices are for copy-cat companies who lack imagination and do not have the guts to take a risk.

Roger Morgan: Um, maybe you'll feel different after reading this document in my left hand from Woodside Research. At just $1,495, it's got everything you need to be successful. It's called "Best Practices for Modern Multi-Channel Retailers."

Gerri Stapleton: Let me ask you a question, Roger. What is the three-year sales trajectory at Woodside Research?

Roger Morgan: Uh, well, they're flat. Sales have not grown in three years at Woodside Research.

Gerri Stapleton: Let me get this straight. Woodside Research has access to all the research they sell to you, for free, and they cannot grow their own business using the very research they're telling you that you must adhere to in order to grow your business. It means what Woodside Research sells you has no value, or they'd be able to grow their business exponentially using their own advice.

Roger Morgan: Lois is right, you are mean.

Gerri Stapleton: If my firm is going to buy your business, my firm needs to feel one-hundred percent confident that we are purchasing a valuable asset that will grow in the future. So far, you've convinced me that you are good at entering dates into a spreadsheet and you love avocado toast.

Roger Morgan: I said Millennials love avocado toast.

Meredith Thompson: Maybe Gerri needs a history lesson on the catalog industry. Then she'll understand how we got here. You see, back in the early 1900s companies like Sears ...

Gerri Stapleton (interrupting): In 2017, companies have comprehensive digital marketing plans. Can you share your digital marketing strategy with me? How about your mobile strategy?

Lois Gladstone: Pepper, take it away!

Pepper Morgan Pressley:  If you go into our mail plan spreadsheet ...

Gerri Stapleton (interrupting): Are you telling me your digital strategy is in your mail plan spreadsheet?

Roger Morgan: That's called multi-channel integration. Read the report, lady.

Gerri Stapleton: Why is the digital strategy in the same spreadsheet as your mail plan?

Roger Morgan: Because if you had read the report, you'd know that Woodside Research told us that all marketing tactics need to be integrated. 

Gerri Stapleton: Are all of your marketing activities integrated?

Roger Morgan: All of our digital strategies support the catalog.

Gerri Stapleton: I was asking Pepper.

Roger Morgan: Please.

Gerri Stapleton: Pepper, are you the Chief Marketing Officer?

Pepper Morgan-Pressley: Yes.

Gerri Stapleton: Then why aren't you answering my question?

Roger Morgan: Pepper isn't answering the question because, as I am trying to explain to you, we are an integrated organization.

Gerri Stapleton: Roger, I don't need you mansplaining anything to me. I'm sure Pepper can speak for herself.

Glenn Glieber: What is mansplaining?

Roger Morgan: Let me take a moment to explain it ...

Lois Gladstone (interrupting): Roger, please.

Roger Morgan: Meredith is right, you don't understand the history of the catalog industry, and as a result you couldn't possibly understand how we got here and why we make the decisions we make. You don't understand the value a catalog business model generates.

Gerri Stapleton: I may not understand how you got here, but I'm pretty confident I can describe where y'all are going in the future.

Glenn Glieber: I'd like to hear Gerri's point of view on that topic.

Gerri Stapleton: Let me give you an example. ESPN. They leverage a traditional business model via cable. But customers are cutting the cord, especially younger customers. This means ESPN gets less and less revenue. However, ESPN's costs are fixed. They pay a hundred million dollars a game for Monday Night Football! So the math doesn't work, and you look into the future and you see a financial cliff on the horizon. Given the information I just shared with you, what should ESPN do?

Meredith Thompson: They're toast unless they embrace a digital future with younger customers!

Lois Gladstone: But that creates problems, because they have fixed costs that don't change, and they won't get as much revenue going digital with a younger audience. They need to get out of some of their contracts. And they've already fired talent to trim costs.

Roger Morgan: But if they do that, their programming won't be as compelling.

Lois Gladstone: They can produce more opinion-based programming. That doesn't cost them anything but they can keep viewers while they figure out how to get to the future.

Meredith Thompson: Opinion-based program is a vapid waste of time. It changes their brand. They optimize for the short-term but hurt the long-term.

Pepper Morgan-Pressley: Have you seen how hard they are promoting their mobile phone apps on college football games? They're trying to encourage their customers to shift to digital.

Lois Gladstone: They're going to have to increase carriage fees and ask for more advertising revenue.

Roger Morgan: But cable companies will balk at the carriage fees, and if they pass 'em along to customers then more customers will cut the cord, further accelerating their demise.

Gerri Stapleton: Good! Y'all understand the issues that a company in a different industry deals with.

Meredith Thompson: It's not rocket science.

Gerri Stapleton: Are there any parallels to your business?

Meredith Thompson: Yeah! Pepper tried to get our customers to use an app once and it didn't work. She even advertised the app on page 27 of the October catalog. If you can't get a customer to use an app after reading about it in the catalog, then mobile strategy is pointless.

Lois Gladstone: We conducted surveys. Our 64 year old customer told us she couldn't read the app on a small mobile device. That's why catalog marketing is so critical. We can use large fonts to engage the customer. Catalogs are a fantastic form of engagement. Did we tell you about the reading glasses promotion we ran in the November catalog last year? That was a home run!

Gerri Stapleton: Anybody else?

Pepper Morgan Pressley: You are saying that we are like ESPN, but it's easier for us to see problems in other industries than it is to see our own problems?

Roger Morgan: If I can speak for you for a moment, I'd suggest Pepper isn't saying that. Pepper is suggesting that ESPN employ the type of multi-channel and omni-channel solutions we've been employing. I think Pepper has been reading Woodside Research reports! Good girl, Pepper!

Gerri Stapleton: Oh my goodness.

Meredith Thompson: Roger always treats Pepper that way. He's a nice guy once you get past the obvious flaws in his personality.

Gerri Stapleton: Glenn, I've got everything I need. Thank you for your time.

Lois Gladstone: But you haven't even gotten to the financials yet!

Gerri Stapleton: I'm confident I can predict what the financials look like.

Roger Morgan: We made eight hundred and twenty-four dollars last year!

Glenn Glieber: Gerri might be mean spirited, but imagine what our future would look like under her leadership?

"Win-Back" Programs - Sound Good, But Do They Make A Difference?

You read articles from vendors writing in trade journals. They encourage you to "Win-Back" the customer. Just make a great offer (as if the customer hasn't seen your great offers five days a week for the past sixteen years via email marketing) and tickle his/her buying bone, and you'll "Win-Back" the customer.

Uh huh.

Look at what happens one month after 10,000 16 month 1x buyers are analyzed.

You "won-back" 70 customers out of 10,000. And that's with business as-is. Let's say you were able to improve by 10% through some sort of magical marketing program ... you'd boost the total from 70 out of 10,000 to 77 out of 10,000 ... for an incremental seven (7) customers.

But the vendor got paid - the vendor gets paid not on the 7 customers but on the 10,000 customers.

What happens to the 1x / 16 month segment one year later?

Not depicted are the 9,313 customers who did not repurchase ... only 6.9% of the customers were "won-back" after a year ... bump that by 10% and you are up to 7.6% of the customers. However, the quantity is close to zero, isn't it?

Why work so hard to convert a lapsed buyer (win-back a lapsed buyer) when you could invest that money in a new customer, a new customer who has a 17% chance of buying in the month following a first purchase?

I'm not saying your "win-back" program isn't profitable ... it may well be very profitable. That's a good thing. But you aren't moving the needle on the business ... the customer counts are simply too small to matter.

Go find a new customer, and then apply your marketing prowess to the first three months that customer is on the file.

Netflix Is A Joke

Here's a low-cost customer acquisition program in practice ... click here to read the article in Variety Magazine.

Try something!

P.S.: Describe what stops you from trying something?