Raising Cane's

Have you ever eaten there?

Unless you are trying to feed 1,243 people, they realistically have five (5) items on the menu. Five.

Now, did I enjoy eating this styrofoam-infused pile of mediocrity? Not really. But somebody enjoys eating it. According to Google, an average Raising Cane's franchise might pull in $4,000,000 to $6,000,000 a year.

Meanwhile, a Burger King franchise might pull in $1,500,000 a year.

Burger King has nine burgers you can order, not counting chicken / fish / salads & veggies / breakfasts / sides / dessert ... and other choices. A much broader assortment, one that doesn't sell anything compared to Raising Cane's.

Why am I sharing this information?

Some of you are going to have problems sourcing products this fall, and the stuff you do have could potentially cost more. Your Government caused this problem, not you. Regardless, it's your job to overcome challenges. The challenge should not stop you, the brilliant marketer, from selling the heck out of what you DO have available. If Raising Cane's can outsell Burger King three-to-one with only five flippin' items on the menu, there's hope for you. A LOT of hope!

It's time to laser-focus your customers on the stuff you sell that matters. Sure, you used to have 800 styles / 5,000 skus available to the customer ... you might only have 350 styles and 2,200 skus available come November. The customer doesn't know what struggles you are having, the customer wants to know your point of view on what you have available.

Take full advantage of what you have available. You are a Marketer. Start marketing to the customer.

Oh, Kohl's

Right out of a soap opera (click here).

A few years ago a Vice President told me that she could not longer hire "the best people" ... "they just won't work in a dying industry".

There are stupid people everywhere. Two situations seem to attract an altogether different animal ... the amoral clown.

• New Industries (think crypto, AI, pickleball).
• Dying Industries (think retail, politics).

Amoral clowns like to break rules, eliminate rules, and prioritize power.

Things go in cycles ... the past decade has been a celebration of the amoral clown cycle. Better times are coming.

Calculating Merchandise Residual Value

Let's work through a very simple example of Merchandise Residual Value.

Let's pretend you have five customers and three items that the customer can purchase.

13-24 months ago, here's how much each customer spent.

• Customer #1 = $100.
• Customer #2 = $200.
• Customer #3 = $100.
• Customer #4 = $300.
• Customer #5 = $500.

0-12 months ago, here's how much each customer spent.

• Customer #1 = $0.
• Customer #2 = $100.
• Customer #3 = $100.
• Customer #4 = $0.
• Customer #5 = $300.

There are three items that the brand offered (in this overly simplistic example). Here are the items purchased 13-24 months ago.

• Customer #1 = Item 1.
• Customer #2 = Item 1, Item 3.
• Customer #3 = Item 2.
• Customer #4 = Item 1, Item 2, Item 3.
• Customer #5 = Item 1, Item 2 (twice), Item 3 (twice).

Ok, we have everything we need to calculate Merchandise Residual Value.

The average 13-24 month value of customers buying each item was:

• Item 1 = $275:  (100+200+300+500)/4
• Item 2 = $350:  (100+300+500+500)/4
• Item 3 = $375:  (100+300+500+500)/4

The average future value (0-12 month) generated by customers buying each item was:

• Item 1 = $100:  (0+100+0+300)/4
• Item 2 = $175:  (100+0+300+300)/4
• Item 3 = $175:  (100+0+300+300)/4

We can now fit Merchandise Residual Value. We regress 0-12 month value against 13-24 month value.

The equation?

• -119.231 + 0.808*(13-24 Month Value).

We calculate the prediction and compare it to what we actually observed. The difference is the residual ... Merchandise Residual Value.

Item #1 caused customers to spend $2.97 less in the next year vs. normal.

Item #2 caused customers to spend $11.43 more in the next year vs. normal.

Item #3 caused customers to spend $8.77 less in the next year vs. normal.

If you had to protect an item, you'd protect Item #2 because it adds $11.43 of future spend (next twelve months) to each customer who bought it the year prior. Which of the three items would you feature in your next email marketing campaign?

This is how you calculate Merchandise Residual Value ... and it's a very important metric to know in a world where your cost of goods might (or might now) increase significantly in upcoming months. Make sure you know the specific items that cause customers to spend more next year, ok? And if you don't know this metric, contact me right now (kevinh@minethatdata.com) and let's get busy calculating it.

Merchandise Residual Value

Every item in your merchandise/product assortment has two key attributes.

1. It is purchased by newer customers, average customers, or loyal customers.
2. It either adds to the future value of customers, is neutral, or detracts from the future value of customers.

If you have to take a bath on an item because the cost of goods on the item skyrocket over the next few months (or it doesn't, who knows), take a bath on items that appeal to newer/loyal customers and/or items that add to the future value of customers.

Perform the analytics and know exactly who each item appeals to ... know if that item adds or detracts from future value.

A/B/C/D/F Channel Grade Opportunity

Let's try something low-cost to help you plan better for Q3/Q4.

• For $9,000 I will grade every customer in your database (A/B/C/D/F where "A" is best and "F" is non-responsive) for every large marketing channel you employ.
• You will receive a list of all 60-month buyers, all customers graded.
• I will update the list for you with data through August 1, and again with data through October 1 ... or alternatively, I'll update the list for you on September 1 ... whatever works best for you.
• This allows you to save $$$ by not mailing customers with D/F designations, especially among those with A/B/C email grades.

Those of you who leverage my catalog modeling efforts ($15,000 or $30,000) get a better and more actionable outcome paired with analysis of the importance of your print efforts ... hence, the higher cost. Your email grades are already built into how many catalogs to mail a customer on an annual basis. When I tell you to mail a customer "3" times, that is a highly actionable and prescriptive outcome, based on whether the customer is an email respondent or not, based on whether the customer buys from other digital channels or not.

This analysis ($9,000) is designed to get you an actionable and inexpensive outcome without compromising the integrity of the bigger projects I've performed over the past fifteen years. I want you to have an opportunity to "do something" to save you money during what could well be a spirited eight months to follow. I want to do something to help you. And it helps me, too!

You can click here for the file layout.

Does this seem reasonable?

Send me an email right now (kevinh@minethatdata.com) and we'll get started, ok?!

Making Good Decisions

Those of you deciding to save money in upcoming months ... especially those of you in the print world ... will need to make good decisions. Really good decisions. Like not killing customer acquisition efforts. Like finding ways to keep customers buying whatever is available without spending a lot of money telling customers to buy stuff.

A good decision? Not mailing email buyers. Not mailing digital buyers. Not mailing 25+ month buyers. I've been telling many of you this for nearly twenty years. A fair number of you listened, hiring me to cut back on wasteful variable marketing dollars.

Now the rest of you are going to be forced down this path. Or not. Who knows?

But if you are forced down this path, score every darn customer in your database for propensity to purchase from different marketing channels.

Example:

• Print Customers ... top 5% = "A", 6% - 15% = "B", 16% - 35% = "C", 36% - 60% = "D", 61% to bottom of file = "F".
  
• Apply Same Modeling Logic to "Omnichannel" Customers (respond to print online), Website Customers, Email Customers, "Digital Marketing" Customers, and Social Customers.

You likely mail a TON of "D" and "F" customers. Don't do that!

Here's a great example of an individual customer from a large dataset:

• "F" for Print.
• "D" for Omnichannel (Print via the Website).
• "C" for Website.
• "B" for Email.
• "B" for Digital Marketing.

Catalog brands likely mail this customer 2-8 times per year. Stop it! The customer is in the top 15% for email marketing. You're already speaking to this customer 7-21 times per week.

If you want to conserve marketing dollars without putting the top-line at risk, here's the place where you can make a good decision ... so do it!

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An FYI.