Accountability

A couple of interesting things I heard in the past month.

1. It's not my fault, our merchants stink.
2. It's not my fault, my industry is dying (looking at you, catalogers).
3. It's not my fault, the CFO asked me to stop spending so much money.

Merchants always stink ... and merchants are frequently brilliant. They have a HARD job. When they fail at their job, it is YOUR job to optimize their failure.

Industries always die. Horseshoeing was a burgeoning industry at one point. In every dying industry, there are winners. Why aren't you a winner in a dying industry?

CFOs always try to reign in spend. It's their job to protect cash. When the CFO takes your budget away, it's your job to optimize what you "can" do. Leverage all the marketing that doesn't cost you anything. There's this channel called YouTube just waiting for you to build an audience. Get busy!

You are accountable. Yeah, you! It may not purely be your fault that your merchants stink, but it most certainly is your fault that you didn't do anything about it.

Doing Something Different

On a recent Supper Club Tour of Wisconsin, one notices all sorts of interesting things.

Yes, I said "Supper Club Tour". Your state doesn't have Supper Clubs. Wisconsin does. People line up outside of dive restaurants at 3:45pm to make sure they get a seat at McGregor's Blink Bonnie.

When you smell the sizzling steak being served ... when you see the smoke wafting nearby, you understand.

Stuff like garlic toast ... sets one place apart from another.

Bakeries serve peanut squares/cake. Ohhhhh boy!

Ishnala, the top Supper Club in Wisconsin, serves five hundred Old Fashioned drinks ... PER DAY! They expect to sell nearly 100,000 OLD FASHIONED drinks this season, at $9.50 each that's nearly a MILLION dollars a year ... on ONE DRINK! You have stores that don't do a million dollars a year selling six hundred styles.

We were told that Ishnala serves six hundred people per day. Our wait was 2 hours 25 minutes on one visit, 2 hours 49 minutes on the second visit.

There were three common themes across our seven-day Supper Club Tour of Wisconsin.

1. Merchandise (i.e. food ... like sizzling steaks with smoke filling the restaurant at McGregor's Blink Bonnie). Good food matters. A lot.
2. Scarcity that forces people to line up well before the restaurant opens because seating is limited. Why accommodate everybody then sit empty most of the time when you could have limited seating that forces people to line up at the door before you open?
3. A "hook" ... something that sets one apart from everybody else.

I'm sure I sound Old Fashioned (see what I did there), but we've kind of lost the plot in the past fifteen years. You see all the YouTubers doing things differently, you go out in the real world and see all these businesses doing things differently ... then we sit here and think to ourselves about how many tepid channels we can sell tepid products in at 30% off??

P.S.:  I frequently think about scarcity these days and how the omnichannel era ruined our businesses by demanding that all products be priced the same in all channels and are constantly available. Wrong! Look at soccer - especially now in the United States. When an MLS team used to share a stadium with an NFL team and put 27,000 people in the stadium it looked like the stadium was 2/3rd empty (it looked that way because it was 2/3rd empty). When an MLS team erected a purpose-built stadium that seated 23,000 fans, you had a sellout and 4,000 people who could not get in. The former situation is an "omnichannel" solution that makes the brand look unloved. The latter situation is a sellout!

P.P.S.:  It only makes perfect sense that if you want to make your email marketing program a robust one that "works", you'd use it to advertise the products that you only bought a few hundred units of ... then you create FOMO via email marketing (and social, the concept would work even better there) that the customer must act now or the items will not be available.

• Try it with a clearance item ... you have 200 of 'em left ... tell the customer that they're at 50% off and they'll be gone in an hour unless the customer acts now. Try it and see what happens. Don't be a Lemonhead!

Uh Oh

It's fifteen months after The Lemonhead was hired.

The results? They aren't good.

• Net Sales are down 12%.
• Comp Segment performance is up 4%, strongly suggesting that existing customers like what the brand is selling.
• New/Reactivated buyer counts are down 25%.
• Loyal buyer counts are down 5% even though The Lemonhead implemented a brand new loyalty program nine months ago.
• The Executive Team didn't earn an annual bonus, and that's a problem because the VP of Operations wanted to buy a new BMW.
• The Marketing Team has been gutted ... a team of eight individuals has been replaced by eleven individuals (three new people to manage the loyalty program) ... three employees from the old regime and five hand-picked mini-Lemonheads hired by The Lemonhead.

Four months later, an announcement is made by the CEO ... "The Lemonhead" is going to leave the company to spend more time with his family. The CEO thanks The Lemonhead for his service and for modernizing marketing efforts. At the same time, the Chief Merchandising Officer is taking a new role with a new line of business that focuses on "the digital customer" (i.e. the Chief Merchandising Officer has been demoted). The CFO will move to a new role to support this new line of business (i.e. she has been demoted).

If you think this story is a parable about modern marketing situations, trust your instincts.

The Damage Is Done Before The Results Are In

The Lemonhead has a playbook, tried and true, tested under the most intense of circumstances. 

It's the exact wrong playbook for 90% of brands, likely including the brand you work for.

The Lemonhead believes in Customer Loyalty. Of course he does ... he worked for a multi-billion dollar brand that sold addictive products on a daily basis ... so of course his formula of applying a loyalty playbook on your brand who sells sundresses that the customer only needs 1x or 2x per year will "turbocharge" your brand.

The Lemonhead immediately ends wasteful "customer acquisition" tactics, saving the brand a fortune. "WHY ARE WE DOING THIS?" The Lemonhead screams. Of course, this angers the long-term employees who know that without new customers the brand will never had loyal customers. The Lemonhead labels these employees "Luddites" ... "THEY DON'T GET IT!"

The Lemonhead celebrates three months in charge with a p&l that looks spectacular. Sales are roughly flat, maybe down a percent or two ("THE MERCHANTS DON'T GET IT!"), but profit is surging.

Everybody in Leadership is pleased with the results.

Several key employees on the marketing team elect to leave the company ("I'm not working for this stupid lemonhead"), taking a ton of institutional knowledge with them.

The damage is done before the results are in.

Next, we review results a year later.

The Lemonhead

This is a marketer (male, female, it doesn't matter) ... you've met this person countless times.

Your company is performing acceptably ... maybe you do $75,000,000 in annual sales, you've been growing at a 3% rate ... not great, but better than others. Then, somebody makes a mistake. It's often the CEO, though many on the Executive Team fall prey to the same logic ... they interview a Lemonhead.

By now you should be wondering what a Lemonhead is.

It's the unique person who is both a force of nature and is a moron. The kind of person who worked at Starbucks in 2005 when they were printing money ... the person had nothing whatsoever to do with their growth plan of putting three stores on a downtown block, but took full credit for it in subsequent job interviews. The kind of person who says that customer loyalty is "paramount" to success (yeah, people love hearing vapid nonsense like that). The Executive Team or CEO or Owner or Board are easily seduced by The Lemonhead.

That's when The Lemonhead begins a "transformation" project. More on that tomorrow.

Goat Yoga

Apparently it is a thing.

Before it was a thing, explain the best practice that existed that suggested that Goat Yoga would be a "thing"?

If you answered "there was no best practice", you are likely correct.

By the way, I asked ChatGPT to draw a picture of a person enjoying Goat Yoga. It came up with this. Apparently the fun part of Goat Yoga is AI envisioning that the goats stand on top of each other.

Always remember that when a marketing professional tells you that something is a "best practice", it likely wasn't close to a best practice when it was created and quite likely was something that practitioners sneered at.

File Power

I go through phases where I spend a lot of time talking about File Power. Then I go through phases where I read marketers babbling about nonsense ("your customers simply aren't engaged in today's complex media ecosystem") and I'm inspired to reintroduce the topic.

Let's put this in the simplest terms possible.

Say you have 100 customers. In the next year, 30% will buy again, spending $200 each.

Meanwhile, you acquire 70 new/reactivated customers each year, each spending $100.

Here's how you generate business:

• 100 Customers * 0.30 Rebuy Rate * $200 per Repurchaser = $6,000.
• 70 New/Reactivated Customers Spending $100 Each = $7,000.
• Total Sales = $6,000 + $7,000 = $13,000.
• Next Year's 12-Month Buyer File = 100 * 0.30 + 70 = 100.

This business is at an equilibrium point. As long as Merchandise Productivity and/or Marketing Productivity and/or Creative Productivity don't change, the business will generally book $13,000 per year and 100 customers per year.

This is the point in the story where the company hires a new CFO, and the CFO thinks the brand is spending too much money on marketing ... "our ROAS is too low"! The CFO demands that the brand spend less. Most of the marketing spend aligns with new/reactivated customers, but some of it causes existing customers to repurchase. The marketing team carries out the wishes of the CFO. Here we go:

• 100 Customers * 0.28 Rebuy Rate * $200 per Repurchaser = $5,600.
• 50 New/Reactivated Customers Spending $100 Each = $5,000.
• Total Sales = $5,600 + $5,000 = $10,600.
• Next Year's 12-Month Buyer File = 100 * 0.28 + 50 = 78.

We've arrived at the penultimate moment in the discussion. The year prior, we could expect 100 customers to generate $6,000. This year, we can expect 78 customers to generate $4,680. The brand lost $1,320 of "File Power". If the brand elects to reverse the decision made by the CFO, sales do not return to prior levels.

• 78 Customers * 0.30 Rebuy Rate * $200 per Repurchaser = $4,680.
• 70 New/Reactivated Customers Spending $100 Each = $7,000.
• Total Sales = $4,680 + $7,000 = $11,680.
• Next Year's 12-Month Buyer File = 78 * 0.30 + 70 = 93.

Even when the brand reverses direction, sales do not get back to prior levels, and customer counts are short of where they used to be.

This is File Power.

The decisions you make today have a lasting impact. They don't just impact 2025, they impact 2026 and 2027.