Scarne on Cards

My parents bought this book for me in the mid-70s ... apparently they believed I had potential to be a gambler or loved card games, or both.

Turns out I enjoy statistics. And this book had a story in it that resonated with me in the 70s and the story sticks with me in my day job in 2025.

The author talked about playing a poker game in a casino. Each of six players starts with $100 (the specifics are likely different). At the end of each hand, the dealer would take $2 from the pot as the "house cut", the winner earned everything else. After fifty hands, $100 has been removed from the players. After one-hundred-and-fifty hands $300 has been removed from the players, leaving just $300. Assuming everybody had equal odds of winning, it meant that each player had $50 of their original $100. Everybody was losing money. If somebody was winning, it meant other players were broke.

His advice? Don't play games where the house gets a consistent and repeatable cut. You can't win. 

There are times when I look at the profit-and-loss statement of a brand and this story comes to mind. You know the company, they spend 25% of net sales on marketing expenses. Those are dollars going out of the pot, a cut to the house (Google, Facebook, etc). They get money, Shopify gets money, Listrak gets money, your favorite AI vendor is about to get a slice of your pie. In the catalog ecosystem, it's worse, because everybody in the e-commerce ecosystem gets a cut PLUS the paper people get a cut, your printer gets a cut, the USPS gets a cut, your boutique catalog agency gets a cut.

Is it any wonder that I tell you that you need ORGANIC orders, orders that don't happen because of marketing ... and when I tell you that the vendor ecosystem comes-a-fightin'???? They're the casino when the 1-800 number tells the gambler to stop gambling!

I'm not stupid (on this topic). You have no choice but to develop clever stuff that doesn't cost anything. That's your job! That's how your p&l works. That's how ownership keeps things going. That's how your Executive Team earn bonuses. That's how your Manager and Director make a credible living. That's how the analyst gets enough experience to eventually work in a Leadership role. 

Profit funds everything.

Think about it this way. You have a $50,000,000 brand that employs 125 people ... 75 of 'em are essentially earning $35,000 a year and the remaining 50 earn an average of $100,000. Multiply that out and it's around $7,600,000 in salary. If your brand is paying 25% of net sales in advertising costs, it means the vendors figured out how to get $12,500,000 while the actual employees ... the very ones who pay the vendors ... are only getting $7,600,000.

On what planet should your "trusted partners" earn 60%+ more than your employees earn? You're the one paying THEM!!!

Your job is to generate ORGANIC orders, orders that happen without the aid of marketing / advertising. Your co-workers depend on you to do that. So does ownership.

Experimentation

Last week I threw a handful of random posts at you ... several links, with the goal being to see what you click on. Is it marketing-related information? Is it analytics-related information? Is it random information?

What was the number one most-clicked link last week?

• Crappie Bites.

This is the reason all those data-driven gurus are WRONG. Wrong. Horribly wrong. If I followed all of you down the click-centric rabbit hole I'd be out of business within a month.

Don't do what the data tells you to do.

There's a certain amount of intuition you must have. Many of you possess it. If you are early in your career, you lack intuition, so data is really important. The intuition of your boss/leaders is important, it balances the experience you lack. Yeah, now you see the importance of strong leadership.

But at some point in your career (it's been my experience that intuition becomes important in the 30-35 year old range ... a decade +/- of experience) your intuition takes center stage. You know when you see something (crappie bites) that you shouldn't pay attention to. Or you realize you should do the opposite of what the data suggests.

Somewhere in your fifties a fusion of intuition, calm, and practicality takes over ... you are no longer at the forefront of technology and modern marketing/analytics, nor should you be. You have other gifts that are needed. Individual data points (crappie bites) take on a different meaning. Experimentation becomes more important than testing (this is an important distinction, FYI).

Experimentation is important. You can learn more from experimentation than you can from properly-calibrated tests, especially if you combine your intuition with experimentation results.

Merchandise Residual Value and Winning Items

Let's say you want to go crappie fishing. You'd need your rod/reel. Maybe a squirming grub. And some crappie bites. You wouldn't impale a worm on a hook and hope for the best.

The same concept applies to fishing for new customers.

You don't say "60% OFF LIMITED TIME ONLY" which really means "IT'S LIMITED BECAUSE NEXT WEEK WE'RE 70% OFF!"

I mean, that's lazy and stupid. It's a marketing best practice, but it is lazy and stupid.

Because you are smart, you "curate" your assortment for prospects that could become new customers.

• Best Selling Items.
• Items That Attract Customers More Likely To Purchase In The Future.

Why best selling items? Because those items have higher conversion rates, better ROAS, and better profit per new customer. Why waste marketing dollars on stuff that doesn't sell? Are you are Lemonhead? No!

Why high MRV items? Because you want new customers who are more likely to repurchase in the future than new customers who are one-and-done. Why waste marketing dollars on new customers who don't buy again? Are you a Lemonhead? No!

Your "prospecting assortment" is different than your overall merchandising assortment.

1. Only offer winning or high-contending items, improving your cost per new customer.
2. Only offer items that increase the probability of a new customer buying again by 20% (high MRV items), improving your downstream rebuy rates.

It's so easy.

So why aren't you doing this?

Training / Academies

Here in Phoenix, the USL team (Phoenix Rising) has an Academy. This is common in soccer / football, of course. The next generation of players are developed, giving the parent team an opportunity to lock-in talent trained in the methodologies and strategies of the parent team.

The NBA has a G-League and College Basketball.

The NFL has College Football.

MLB has the Minor Leagues (Rookie, A, AA, AAA).

E-Commerce is already being filled with Academies ... they are otherwise called "AI". We're in the top-of-the-first-inning in AI. We are training AI to do things to make our lives both easier and more strategic in nature.

As you already know, AI needs to be "trained". It isn't magic. It requires human smarts.

Are you a good "trainer"? Do you know what information AI needs to be trained properly. Does the agency that uses AI know what information needs to be used to train AI properly?

The answer is invariably going to be "no". Dumb people, dumb agencies, and smart algorithms will produce dumb outcomes.

You can train AI to create the best-performing omnichannel campaigns on Facebook, and AI will do what you train it to do. But if you have no business sense whatsoever and want to push moronic ommnichannel slop at a customer who could care less, you will optimize a very low performing campaign into low-performing territory.

Somebody has to be the smart person in the room. Why can't that person be you?

Backgammon

This video of a Backgammon championship garnered more than 175,000 views to-date. It's on YouTube, there are analysts discussing the match, they have a computer that assesses who is "making errors" in real-time, the computer shares the probability of winning in real-time, and the analysts even play a game during a break with one of the individuals in live chat.

Also - Pickleball TV is now a channel on YouTube TV ... nearly ten million subscribers can watch professional pickleball matches 24/7/365. Was that ever a possibility a decade ago? As of tonight, you can't watch ESPN or ABC on YouTube TV but you can watch the World Championships of Pickleball live.

What does this have to do with e-commerce?

There is a lot of innovation these days. Here's an AI tool that promises to replace most of the functions of marketing for small businesses, allowing the marketer to be "strategic". Which is code, of course, for "we're going to take your job and you will be the one who will pay us to give up your job". A lot of innovation, no doubt ... similar to the Backgammon channel above, where the computer is doing a lot of work and yet the analysts still convert everything into plain language. The analysts also promote the book they wrote during the match ... monetizing the event in their favor. Heck, they promote their book being on Backgammon Galaxy (click here). Who knew there was a store called Backgammon Galaxy? More important - that store is on Shopify. While you were trying to adhere to a nonsense-based Omnichannel Thesis that your boutique agency demanded you adhere to (#printisback), Shopify took over the world. 

Imagine five years from now ... your store is on Shopify, Shopify AI is doing your marketing and is fully integrated with the Shopify Ecosystem so when your prospect purchases a t-shirt from Backgammon Galaxy Shopify AI sends the customer a text message encouraging the customer to buy from your store ... all automated, all out of your control. 

It's coming. You know it is coming. You and I are unprepared for this future. We will adapt.

P.S.:  One of the analysts on the Backgammon broadcast said "Learn the Rules, then Break the Rules". That's a smart line. How does that line apply to your business?

P.P.S.:  Backgammon Strategy meets AI Principles. A book on Backgammon Galaxy. Would you be able to write a book called "E-Commerce Strategy meets AI Principles"???

The "Cyber Window"

Since the pattern has repeated for more than twenty years, I thought I'd coin a term for you. Those who participated in the October run of the Elite Program already know the answer to what is coming.

The "Cyber Window":  The period between the day before Thanksgiving (November 26 this year) and the Saturday after Cyber Monday (December 6 this year). A timeframe featuring a veritable buffet of profitless discounts / promotions designed to please anybody that does not have p&l responsibility.

Identify the quality of new customers acquired during the "Cyber Window". It's a fun / revealing analysis.

You Always Want Ideas - Here's One

Chinese headphone companies offer lots of discounts / promotions on November 11.

One of the big umbrella brands, Linsoul, is offering three tiers of discounts that you pre-purchase. Here is one of the tiers.

By spending $1.11, you get $25 off $60 plus access to the event. That's the Bronze Pass. Here are the Silver and Gold level incentives.

Now, from a data collection standpoint, imagine what you could do with knowledge of the fact that some of your customers will "pre-pay" for access to discounts? How does this fact differ from the sloppy customer who simply gets 30% off from the even-sloppier marketer?

If you're about to criticize me for sharing a tactic with you (and yes, I get mail when I do this stuff), think about taking a look in the mirror and asking yourself why your 60% off plus free shipping is more useful than what is outlined above?