Acquisition

It's 1995, and I'm sitting in the office of a person named Jim Fulton ... at the time he was the Marketing Manager of the Kids Division at Lands' End.

In the early 90s at Lands' End, we had what I coined "Battling Business Units". Each business unit (Kids, Home, Mens Casual, Mens Dress, Womens Casual, Womens Dress) battled for the love of the same customer. Each business unit mailed the same customer ... grossly overspending to trade dollars back-and-forth between Battling Business Units. This caused Lands' End to be less profitable than it could be.

So again, I'm sitting in Jim Fulton's office ... he has thousands of lines of custom SPSS code that create multi-year customer forecasts. To be fair, he borrowed the forecasting idea from a company called Fingerhut, a company who had comparable reporting in the mid 80s ... if I remember correctly, their forecasts were called "Nameflow Models".

He shows me one of his findings ... he shows me that if a "Battling Business Unit" wanted to optimize profitability when housefile spend was sub-optimized, the Battling Business Unit could excel at Customer Acquisition. In other words, if everybody was Battling for the same customer, a Business Unit could help the overall brand by finding new customers that fed the entire ecosystem.

And he had thousands of lines of code to create the simulations that proved his point.

Did anybody listen to this person? Absolutely not!!!

I listened.

Later that year I landed at Eddie Bauer. Once I got through the Byzantine structure of having to access data on a mainframe using COBOL, I created my own Forecasting algorithm. Once I had my own Forecasting algorithm, I (too) learned just how critically important Customer Acquisition was to a business.

I got to test my theories three years later. When I became Circulation Director at Eddie Bauer, I became responsible for the plan for the Home division. Home customers had low annual repurchase rates (25% - 32%, +/-). It didn't matter how many times we mailed these customers catalogs, they weren't going to buy anything. So I changed strategy. We created lean, thin catalogs with best merchandise, thereby increasing the productivity of the catalogs. Then, we shifted Circulation out of housefile mailings and instead focused on two key areas.

1. Customer Acquisition (specifically Pottery Barn customers).
2. The Three Months following a first purchase (more on this tomorrow).

Within a year, the Home division was growing and had the best year of profit in the history of the division.

Looks like Jim Fulton was right ... and while his ideas weren't embraced at Lands' End, his ideas were grafted on to my Marketing Management System, allowing the Home division at Eddie Bauer to have the best year in their history just four years later.

So far, we've covered three elements within the Great Eight.

• Audience (via my boss, the CMO at Nordstrom).
• Awareness (via Duluth Trading Company and a groaning audience at a conference).
• Acquisition (via the Customer Acquisition Simulations created by Jim Fulton).

I might talk about the Great Eight as if it were my idea ... but that's not true. I grafted ideas from smart people on to my own Marketing Management System.

Tomorrow we'll talk about Welcome Programs.

Awareness

I presented a paper at a conference. I referenced the fact that you can't get away from Duluth Trading Company advertising. 

And it's somewhat true ... the target TV-watching audience can't get away from it!!

As I shared examples, I could tell that the audience wasn't on my side. You know this feeling if you are a presenter ... you hear groans, you see people shaking their head back-and-forth to simulate a "No" motion. You see people whispering to other people ... "he's an idiot and my company paid for me to listen to this joke of a presenter". Ok, that didn't happen. I don't think it happened. Whatever.

I paused, then mentioned to the audience that I could tell that they "hated" Duluth Trading Company. The "no" motions changed to "yes" motions. I asked the audience why they hated a company that tripled in size in the past decade while leveraging catalog marketing, the very tool that the audience loved. One person volunteered an answer.

• "Their advertising is stupid. They assume that men are dumb fat morons."

What does that comment really mean?

• It means that the person who said the comment was not part of the Audience that Duluth Trading Company targets, and it means that the form of Awareness (TV ads) did not align with the preferred Awareness technique advocated by the Professional (Catalogs).

In modern marketing, Audience / Awareness / Acquisition is all part of what is called a "Marketing Funnel". The person at the conference preferred tactics (boring catalogs) that were further down the funnel, tactics closer to the sale process.

For me, Awareness became important late in my career. Even though examples were all around me for five decades, I was blind to the importance of Awareness until I saw Duluth Trading Company excel at Awareness. Then it clicked. Now I'd advocate spending money in ways I'd never have advocated through most of my career.

I grafted the lessons of Duluth Trading Company onto my Marketing Management System. I don't care that the majority of my readers don't like what they do ... if anything, it should motivate my audience to do something unique and clever on their own ... creating their own Awareness programs, right?

Right??

Audience

My Marketing Management System relies on thorough knowledge of your core Audience.

I can remember the moment when Audience became important to me. I was sitting in the office of my boss ... she was the Chief Marketing Officer. My company (Nordstrom) was about to shut down the catalog division. I was trying to defend the rural customer in North Dakota who didn't have access to a Nordstrom store, a customer who adored the merchandise offered in the catalog. When the catalog went away, the merchandise offered in the catalog was also going to go away. Those customers, customers who loved the catalog, were not going to be served anymore.

I wanted my boss to have a solution for these customers.

My boss had a solution. She said:

• "We don't want those customers. We have plenty of market share that we can earn from our core customer audience."

Oh, I was angry. "We don't want those customers???" It wasn't the first time my boss told me she didn't want customers. How could she possibly not want customers?

The key word, of course, was "those" ... as in "those customers". Customers who were outside of our Audience.

My team prepared reports that showed we only captured "x" percent of the wallet of our core audience. The Management Team decided that it was better to try to earn more spend from our core Audience than it was to cast a wider Audience net.

Guess what?

My boss (as usual) was right. She knew her Audience. She defined the Audience for the rest of the company. And she was able to get those customers to spend more (something I had not previously observed).

The vast majority of my client base does not understand who their Audience is. Oh, they give answers ... "she's a convenience shopper". But they don't define the Audience, they don't define what the Audience spends, and they don't define how much of that spend they can earn.

If your audience is "Fashion Forward Women earning $100,000 a year or more in Suburban or Urban areas" and you know these women spend $7,500 a year in your wheelhouse and you are already capturing $500, then you know that you have just under 7% of the share of wallet of your core customer. You have room to grow. Now you implement programs within the remainder of the Great Eight to get 10% of the share of wallet of your core customer.

Mind you, you aren't trying to get the customer to spend more ... the customer CANNOT spend more. But the customer can reallocate. You want dollars that go elsewhere.

So that's the moment in my career that Audience became important. When in your career did the idea of "Audience" become important in your Marketing Management System?

Your Own System

Early in my consulting work, I visited a company. This company hosted a day-long strategy session. My job was to present customer findings, helping the merchandising and marketing and creative folks understand why customers were not achieving their potential.

After I shared my findings, the Marketing Professional gave a presentation about the future of marketing at that company. I prepared myself for an hour-long discussion of the innovations this person planned on implementing.

The presentation lasted maybe 10-15 minutes.

The Marketer essentially read from a white paper from a research brand, and even with that level of corporate malpractice the Professional sampled ten points of nonsense down to one point that he planned on implementing in the upcoming year.

It was the most tepid presentation I've witnessed in the twelve years I've been a consultant.

The Marketing Professional did not have his own system. He was reliant upon a third party for ideas. He had no confidence, no answers ... he had no clue. The research brand he paid, however, they knew how to monetize his lack of confidence.

The New Marketing Leader must have their own system ... a set of practices and concepts that seamlessly fit together and have been used previously to generate success. The New Marketing Leader communicates the system with enthusiasm, causing skeptical co-workers to buy into the system.

Tomorrow I'll address areas in the Great Eight, sharing with you the moments over more than three decades in my profession that shaped the system I advocate.

Now, if you are a sports fan, this article (click here) will prepare you for what is coming ... in particular, the article discusses "grafting" ideas on to a solid foundation. That's what I'm looking for from you, the new Marketing Leader.

Borrowing From Others

In football, pro teams liberally borrow from colleges, and colleges happily borrow from high schools. Read this article for details (click here).

I arrived at Eddie Bauer in the mid-1990s. The marketing team had a group that performed competitive analytics. An analyst straight out of college waltzed into Gap and documented everything Gap at Bellevue Square did, in plain sight. Promotions. Floorset changes. Pricing of key competitive items. I recall the times the Store Manager saw our analyst coming and banned him (and his camera) from the store.

I also remember the times when the young analyst lined up a conference room with the promotional strategies used by all of our competitors. He had the blueprint, the DNA of every company on the wall. We borrowed the stuff that fit with our way of doing things.

I frequently talk about the Great Eight.

A key element of a credible Optimization Program includes borrowing from others. If Stitch Fix uses regression and neural networks to determine what a customer is likely to purchase next, and you compete against Stitch Fix, then you have every opportunity to liberally borrow their ideas and import 'em into your Marketing Management System. It doesn't guarantee that the ideas will work, but it most certainly guarantees that you'll come up with a Marketing Management System that is unique and fully your own. As a new Marketing Leader, the last thing you want to do is fail because you clung to the failures of your predecessor.

Borrow from others. Combine what they do with what you do best. Allow your own Marketing Management System to evolve and thrive. Teach your ideas to everybody who will listen.

It's Your Fault, Part 2

A few days ago I told you a story from my time at Eddie Bauer. As the new Circulation Director, it didn't take long for the problems of the prior Leadership group to be pinned on me. That's the way the world works.

By mid-September the Green Bay Packers might get off to an 0-2 start. Even though the new coach will largely coach players from the failed regime, the 0-2 record will be his fault. If you are going to be blamed for an 0-2 start, at least be blamed for doing things your way, right?

The same logic works for you, the New Marketing Leader. Why should you be blamed for things that your company did a year ago, things that were so lousy that it caused you to earn your new job as a Leader?

And yet, we see this happen all the time. In catalog marketing, the New Leader comes in and keeps mailing the darn catalogs ... same in-home dates, same circulation levels, same vendors, same geeky math. In e-commerce, it's the same boring five emails per week, not personalized, blasted to the same customers expecting 40% off plus free shipping because you've sent the customer more than a thousand of these over the past four years.

Do that and you'll start off with an 0-2 record ... and then the problems are your fault.

Do you want the problems of the old regime to be your fault?

Absolutely not.

You are a New Marketing Leader. Chart a new course. Your course. Don't continue doing the same darn stuff that got your predecessor fired. Have a Marketing Management System in place on Day One, a system fully unique to you. If you are going to fail, fail your way. If you are going to succeed, get the credit you deserve.

A New Start

My football team is the Green Bay Packers. They have to be my team ... I grew up 35 miles from Lambeau Field.

My team completed back-to-back 7-9 and 6-9-1 seasons. The former head coach was fired in December ... Super Bowl winning head coaches are seldom fired, but then again, the last time the team was this bad e-commerce didn't exist (1990-1991).

The new head coach isn't even 40 years old. He comes from a coaching tree that produced the past two NFC Champions. He's never been a head coach, he only called plays for one season, and yet he's been given the keys to Aaron Rodger's car.

When a new coach is hired, the new coach brings in a new style ... in this case, a new offense. Articles are written, research is done, and we end up having a "feel" for what the new coach is likely to do. You look at how the Redskins played in 2012, how Atlanta played in 2016, how the Rams played in 2017, and how the Titans played in 2018. Elements of those offenses are likely to become the new Packers offense.

The new coach hired his staff. In April, the team will draft new players, and come July the pieces all fit together. In early September, we'll begin to see what the new team looks like.

This Spring is filled with New Marketing Leaders. You folks are giving your brands a new start. Your co-workers are looking at you, trying to figure out what "system" you bring to the table. Are you going to do things they way they've always been done? What "newness" are you bringing to the table? What is your secret to increase sales and improve profitability? Are you going to employ the old, stale "omnichannel" strategy that doomed so many retailers? Will your focus be digital, and if so, how will you employ mobile and social and Google and Facebook (yes, social and paid ads on Facebook are fundamentally different)?

You better darn well have a marketing system in place, right?

Right??

I advocate a system that focuses on what I call the "Great Eight":

• Audience.
• Awareness.
• Acquisition.
• Welcome Program.
• Anniversary Program.
• Optimization Program.
• New Merchandise.
• Winning Merchandise.

There should be a plan for each of the eight areas of study. And you should know what your plan is as close to day one as is humanly possible.

There's no guarantee that you'll succeed ... or fail. You might be brilliant and fail, you might be a dimwit and luck into wild success. But if you have a plan, from day one, a system that is all your own, you'll have better odds than other new marketing leaders.

Have a plan. And for goodness sake, implement your own system ... something only you do, something that is fully unique to the skills only you possess.