Making The Case

I think I posted this spreadsheet on my blog seven or eight years ago ... the spreadsheet allows one to craft different scenarios.

Now, you're a smart person ... you've paid attention to what I've been talking about for the past six months, and you agree ... customer acquisition is the path to the future.

And yet, when you broach the subject with Sr. Management, they tell you to crawl back into your cave and figure out if Cyber Monday is more profitable with 40% off plus paid shipping or 30% off plus free shipping.

So run yourself a scenario.

Let's say this business increases new+reactivated buyers by 20%. What happens?

In five years, a $149,000,000 business becomes a $178,000,000 business.

Ask your leadership team which business they would prefer to manage?

The vendor/pundit community demanded that you be omnichannel or your business model was dead. Nordstrom / Macy's / Wal-Mart and others are proving the opposite ... focusing on channels is wrong. Catalogers know this, too. Catalogers spent the past decade integrating the entire experience, only to be left with a 65 year old customer base that likes pre-retirement merchandise ... the co-ops over-optimized this process and are now dying as well, leaving the catalog industry with significant struggles.

It's time to focus on the two things that matter.

1. Merchandise Productivity.
2. Customer Acquisition.

Tomorrow, I will begin a four week series focusing on rebuilding your marketing team to focus on customer acquisition and merchandise productivity. You will disagree with just about everything I say, because that's just the way things work. That's ok. Please go back to a simple question, when you disagree with me.

• What did a decade of doing what consultants, boutique agencies, co-ops, Google, Facebook, trade journals / trade journalists, and vendors told you to do get you? How did their strategies work, in terms of growing your business?

MailChimp Is Opening A Store

Tell me if your vendor is innovating like this (click here).

Has your printer started a catalog? Your paper rep? Your boutique catalog agency? Your co-op? Your preferred list rental agency? Do they live your industry, or just tell you what to do in order to keep the $s flowing their way?

Nordstrom Downsizing

Click here for the details.

The omnichannel movement advocated by vendors/pundits really, really ended up in a costly failure. My goodness. It just makes me sad to see how many retail leaders listened to such terrible advice, and are now paying for it with their jobs/careers.

Time to focus on what matters.

1. Merchandise Productivity.
2. Customer Acquisition.

But They Are My Friends

Who is the best friend of a credible marketer?

The answer should be "your merchandising team".

Who does a marketer tend to spend more time with? The merchandising team, or the vendor community?

It's a trend that has been twenty years or more in the making. As the internet overwhelmed what used to be called "direct marketing", aspects of internet marketing were outsourced. Paid search. Retargeting. Affiliates. Facebook. Social (notice I didn't lump Facebook in with social). Email.

What used to be a twelve person marketing team became a six person marketing team with two dozen vendors supporting the endeavor. What used to be a forty hour workweek filled with co-worker companionship became a sixty hour workweek with the hope of a vendor-paid dinner at a steakhouse.

Attend a half-dozen of these vendor-paid dinners (remember, you paid the vendor to pay for your dinner, so ultimately, it's you that is using company funds for steak dinners), you get to know your vendor reps. You get to know them better than you get to know somebody who works in the merchandising department, that's for sure. You craft a relationship with your rep. When you are fired or "retired" or you get fed up and quit, you land somewhere else. What do you do? You call on your friends ... your vendor reps, and you bring them in and give them business.

Turns out those vendor reps are pretty good at Customer Acquisition, aren't they?

You are successful when you have a good Customer Acquisition program. In order to find a new customer, you have to sell merchandise to that customer, right?

In other words, your focus should be on your merchandising partners.

Want to try something unique?

How about you identify a key employee in each of the following departments.

• Finance.
• Website Ops.
• Merchandising.
• Creative.
• Information Technology.
• Human Resources.
• Any Other Department Important To You Within Your Corporate Structure.

Take these employees out to dinner at your favorite steakhouse, seafood emporium, or pizza joint. Get to know your co-workers. Learn what motivates them. Learn what causes them fear.

Then, work with your new friends to grow new customer counts. Show them that when you succeed, they sell more. And when they sell more, they earn promotions and salary increases and better bonuses. Demonstrate that you are there to help them be successful.

Build your own brand response marketing team.

Show Me An Easy And Cheap Way To Create Awareness

Ok, catalogers ... this is a CATALOGER mind you, a CATALOGER ... advertising during a soccer match between Arsenal and Crystal Palace.

This literally takes no work whatsoever. None. Give NBC your logo, pay them money, and you're done. It's easier than what you do with the co-ops.

I know, I know, here's where the angry catalog chorus kicks-in.

Catalog Craig Paperman:  But this won't work. We require immediate and positive ROI.

Kevin:  Customer Acquisition isn't about immediate and positive ROI.

Catalog Craig Paperman:  But the co-ops deliver ROI that isn't bad.

Kevin:  Then stick with the co-ops.

Catalog Craig Paperman:  But we've run out of names from the co-ops. Worse, co-op performance is in free-fall. The co-ops are dying.  We need a new set of tactics.

Kevin:  I just gave you a tactic.

Catalog Craig Paperman:  That won't work.

Kevin:  Duluth Trading Company is a cataloger that more than doubled sales in the past decade, and they are going public. Is that kind of growth acceptable to you?

Catalog Craig Paperman:  Their growth didn't happen because of a banner on a televised soccer match viewed by fewer than a quarter million people.

Kevin:  Why do you complain about every single tactic that isn't tied to a catalog?

Catalog Craig Paperman:  Just give me an easy idea that is guaranteed to work.

Kevin:  #OhBoy.

Catalog Craig Paperman:  Oh boy nothing. Give me an easy idea that requires no work and will generate immediate profit and new customers. That's all I'm asking for. I'm not unreasonable, you know.

Kevin:  How about this one? Refer a friend? It's easy to do this.

Catalog Craig Paperman: I said "something easy". We'll need our IT team to make a few subtle changes to the website and they won't ever do anything for us. 

Kevin: Why not spread the word organically via sponsorships, like MailChimp does?

Catalog Craig Paperman: That takes too long, and it's hard work. I asked for something easy and for something that works immediately. Are you even listening to me?

Kevin:  Why not work with Custora and personalize your website? Your sales could increase by between 15% and 50% overnight?

Catalog Craig Paperman:  I read in a trade journal that a valid omnichannel strategy requires the same items and the same prices in all channels to all customers. Personalization violates a valid omnichannel strategy. Now give me something that works immediately and costs nothing and is part of a valid omnichannel strategy.

Kevin:  How about creating an ad that you put on YouTube? Put the ad right on top of the video genius of your competition? You can literally steal their traffic.

Catalog Craig Paperman: I still have to create an ad. That's hard work. I don't want to do any work at all. Don't you get it? I'm 55. I want to retire in five years. I dug my ditches thirty years ago. I wrote COBOL code that enabled our brand to accept credit cards. That's hard work. I used to go home and watch Alf after a hard day at work, and I would ...

Kevin:  Fine, I get it. How about this one? Get a guest curator and just rearrange the stuff you already sell.

Catalog Craig Paperman: It's like talking to a brick wall with you. Don't you get it? I don't want to pay somebody money.

Kevin:  Then leverage your own staff. You have creative folks who would love to do this.

Catalog Craig Paperman: Then what? The person becomes "famous" and demands more money?

Kevin:  If the person sold merchandise, yes, pay him or her money. They've earned it.

Catalog Craig Paperman:  Other employees would get mad. And besides, if we create something, it has to go in the catalog, right?

Kevin:  No.

Catalog Craig Paperman:  Of course it does. Then we're dealing with six month lead times, so that won't work. It's like you don't think like a cataloger anymore.

Kevin:  That's because e-commerce has been around for more than twenty years. I'm a Luddite if I think e-commerce first, given our mobile/social/bots/virtual-reality world, much less think like a cataloger.

Catalog Craig Paperman:  This discussion was pointless.

Kevin:  Why?

Catalog Craig Paperman:  Because I need easy solutions that don't cost anything and deliver immediate return on investment. All your ideas cost money or require hard work. Listen next time, ok?

Kevin:  I'm sorry.

Catalog Craig Paperman:  Idiot.

Yes, this is exaggerated, and is done for effect. Everybody "writes" stuff these days ... the "change or die" mantras offered by pundits and thought leaders and trade journalists are nice and all, but there's too much of it, and nobody is listening anymore.

So I try this method.

Only you can let me know if it is effective or not. There's an easy way to demonstrate if it is effective ... try different ideas ... try forty ideas, knowing that three will work and thirty-seven will not work.

I Don't Have Time To Impact 2016

When I suggest that a Brand Response Marketing team be created to find new customers and protect the future of your company, I get a lot of push-back. A lot of push-back.

• We can't afford to pay talent outside of our salary bands.
• We cannot give a group of managers responsibility that is owned by a handful of Vice Presidents ... the VPs will get mad.
• We cannot give out a 30% bonus to a team that generates a 30% increase in new customers. That's not fair to everybody else, and besides, bonuses are expensive. Is there a way we can reward employees without paying them? Maybe a breakfast at Waffle House? Our CFO could get behind that, and who doesn't love Waffle House?
• We can't trust employees age 30-39. They need to work in the industry for a couple of decades, learn the ropes like we did, wait their turn, and then when we leave the industry, they can take control of the car and drive it.
• If we build a Brand Response Marketing Team, we cannot conceivably impact 2016, it's already too late.

The first four examples are bad enough ... they represent a poor corporate culture.

The last example might make some sense. I have e-commerce clients that immediately implement my recommendations ... seriously ... if I tell them something on April 5, they implement it on April 6. But in the world of catalog marketing, the overriding industry culture will not accept rapid action ... the catalog planning process requires a 6-9 month lead time ... which worked fine in 1986 but it doesn't matter because that's how the industry works, so what do you do about that, Mr. Smartypants Kevin?

1. Name Brand Response Marketing Team no later than June 1, 2016. Spend the next seven weeks identifying the talent that will be part of this team. Your e-commerce counterparts knock this out in two days, but this is the catalog industry, so a seven week search is achievable.
2. Build your customer acquisition plan for 2017 ... you already know your likely budgeted number of new customers for 2017, so your plan is probably already 80% done. Have a plan complete by June 1.
3. Your Brand Response Marketing Team must have their 2017 marketing plan in place no later than August 15, 2016.
4. If any programming changes need to happen anywhere in the building, they are completed between August 16 and October 31. If your information technology team fails to support the Brand Response Marketing Team, then make a public announcement that this team failed the business and will not earn salary increases or bonuses in 2017 unless the situation changes by the end of the year. Then watch what happens!
5. On November 1, 2016, you lock-in the number of new customers the Brand Response Marketing Team will generate, above-and-beyond the current plan. If your plan is for 100,000 new customers, and the Brand Response Marketing Team (BRMT) is going to increase newbies by 20%, then the new target is 120,000, and the BRMT is responsible for 20,000 of the 120,000. This fact is announced to the entire company.
6. All new programs begin on January 1, 2017.

If you don't have time to impact 2016 (and your e-commerce brand competitors disagree with you), then follow (1) (2) (3) (4) (5) (6) above and be ready to roll on 1/1/2017.

Each New Customer Tends To Be Less Valuable

If you are a social media expert, you know very well that you have a lot of clients who grow from $0 to $10,000,000 in annual sales by savvy use of social. This is a common story.

And then, new customer growth slows. The easy (free) names run out.

This is where direct response comes into play. High ROI programs like paid search. You spend money, you get new customers at an acceptable cost. This pushes you from $10,000,000 to $30,000,000. And then, new customer growth slows. The easy paid names run out.

This is where brand response marketing has to come into play. Has to. You have no choice but to plant seeds in spring, harvest new customers at/before Christmas, and earn profit next year. This has to be done, of course, because the names that get you from $30,000,000 to $100,000,000 are going to be even more expensive.

Each incremental name gets more expensive ... and worse ... generates less future demand. Brand response marketing is required to combat the ever-worsening mathematics of incremental new customers.