It’s All Crazy Until It Isn’t

If you were there, you know how great last week’s Datamann catalog seminar turned out – by most accounts it was awesome! If you weren’t there, I’m going to share a few key observations.

Rather Lose The War Than Admit The Mistake

In my presentation, I gave a list of issues, internal and external, that catalogs are suffering. I also gave a list of things which I feel the catalog industry wrongly pursued over the last 20 years, which allowed ecommerce companies to gain the upper hand. Among those pursuits was that as an industry, we became too dependent on the catalog co-op databases.   If you are a steady reader of this blog, you know that I feel the co-ops have been detrimental to our industry – but few of you acknowledged it. You preferred to continue blindly supporting a declining source of names for your customer acquisition purposes, than admit the mistake of that pursuit. Until now.

At the seminar, I had a simple, one question survey asking what two topics attendees wanted addressed for 2018. We had almost 50% participation to the survey (I think that is pretty good, don’t you?).  Guess which option received the least votes?  “Working with catalog co-ops” was in a tie with “PPC/SEO” for dead last, with only two votes each. Five years ago, “working with the co-ops” was number one.

At last, I feel that you understand that your future lies in taking a new path, breaking the mold and going against conventional wisdom. Some of you have been pursuing customer acquisition that did not rely on the co-ops for years, but the majority of the industry did not follow.

Of course, there is one fly in the pudding (old New England term). This is how the people at the seminar ranked the importance of co-ops. It may not match the reality of what they encounter when they return to work on Monday. That’s when they will meet the forces of gridlock within their companies that want to preserve the status quo, and not make any “dramatic” changes. It’s all crazy until it isn’t.

I Don’t Know The Ground Ahead:

Only Kevin Hillstrom could have done this. Kevin designed an incredibly complex, yet simple to understand, business simulation in which all of the attendees took part. Since Kevin will be writing about the exercise in his blog this week, I’m going to defer to his recounting of the experience and the outcomes. I thought it was awesome. The lesson learned: you already have all of the data and metrics you need to make decisions, but your actions are more important than the data.

I also thought the “group dynamics” were great. I’ve never seen a room full of seminar attendees get so involved in a project. It certainly was a bit more stimulating than doing some magic tricks with a piece of newspaper. The photo below is of my team debating our pricing and discounting strategy.

There was one aspect of Kevin’s simulation that was something that many participants probably did not fully appreciate. At the end of each “round” of the simulation, you could see what your competitors had done, and how it worked for them. In real life, you rarely have such transparency into the actions of your competitors.

As General Lee worried on the eve of the battle at Gettysburg, “I do not know the ground ahead”, most mailers today simply don’t have the time or resources to track the activities of their competitors. Some will argue that it is not important, that you have to run your business without the benefit of market research on your competitors. But Kevin’s exercise certainly reinforced that it is easier to take decisive action when you know the ground ahead, and what the competition is likely to do.

Note: Kevin and I exchanged emails on Saturday afternoon, and he is already working on improvements to the simulation based on feedback he received from attendees in Concord! I see a Kevin Hillstrom Business Simulation app in the future.

The Database for Merchandise

Frank Oliver was on. Loud, motivated, animated, funny and dead-on target with his advice. Frank got into the nitty-gritty of merchandise metrics, and the tools he uses to be a great merchant.  Fortunately, the main portion of his presentation echoed one of my key metrics (always good when two speakers agree on something) which was the need to track merchandise performance over time. Frank reinforced that you can’t rely on your ERP system, or mail order processing system for that tracking. Instead, he showed his offline “merchandise database”, of which I’m sure many in the audience were envious.

But it takes time to develop a database as Frank described. Frank shared with me after the seminar that it took him several years to get the data assembled to make that database worthwhile.

A Show of Hands

Every year, I ask for a show of hands on several topics. The results are always telling. I asked how many companies had grown by more than 5% in 2016. I’d say less than 20 of the 160 catalogers attending raised their hands.

About 10 or 12 years ago, I gave a speech at NEMOA, and asked how many people had made a purchase using PayPal, which at the time I used frequently and not just for eBay purchases.  As I recall, only 3 or 4 people raised their hand. I also asked how many people were Prime subscribers on Amazon, and about 5 people (out of several hundred) raised their hand.

Last Thursday, I asked how many were now Amazon Prime subscribers. Almost the entire room raised their hand.

Which brings me to two key comments made about Amazon. During the question period at the end of the day, Kevin stated that he was tired of all the whining about Amazon. He reminded the audience that as marketers and merchants, you get paid to figure out how the deal with the competition, so do your job, and figure out how to beat Amazon.

The other comment came from a mailer who pulled me aside, and confidentially told me what his catalog was doing to take advantage of – not fight – Amazon Prime. I’m going to honor his request and not reveal what they are doing, but as he said “Don’t be afraid of Amazon. Embrace it and own the strategy. It is the future!”

I have always been Amazon agnostic. Some of our clients have done well there, others have not. My point on Amazon has always been that the customer activity on Amazon – which we as consumers now almost universally support as Prime members – was not flowing back to the co-ops, and was leading to the co-ops’ decline. I’m thinking that “working with Amazon” is going to be a theme for the 2018 seminar.

Seminar Tidbits:

I’m always taken aback when I’m giving a presentation and someone uses their cellphone to take a picture of one of my slides. And then I realize that I forgot to post the slides ahead of time. So, you will be getting an email from the VT/NH Marketing Group with a link to all three presentations.

One of those taking a picture of one of my slides told me he had taken a shot of this slide, and sent it back to his co-workers that had accompanied him to a recent conference where every speaker had promised that they would in fact, “transform the enterprise with their disruptive technology”.   Sometimes, vendors just don’t know how foolish they sound.

I want to once again thank my two co-presenters, Frank Oliver and Kevin Hillstrom for their hard work and efforts in making the seminar such a success.

Finally, as I write this Saturday afternoon, it is snowing hard at my house in Dublin, NH. We are expecting a foot of new snow by the end of the day. For the 4th year in a row, we beat a snowstorm by one day, and everyone got out of town safely. See you in 2018!

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Presidential Politics, No Snow, and An Unholy Trinity – Africa, Hillstrom, LaPierre

Your business only grows if you are adding new customers. Who can you trust to help you with that?

I want to invite all the readers of this blog to a special event. Datamann is proud to again be sponsoring a one-day seminar for the Vermont / New Hampshire Marketing Group on Customer Acquisition – The Baseline for Growth of Catalog and Ecommerce Companies on Thursday March 31, 2016 at the Marriott Courtyard / Grappone Conference Center in Concord, NH.

Why is this special?

They’re Back!

Last year, I was fortunate to get two of the brightest and most talented thinkers / writers / speakers in the industry to join me for this event – Amy Africa from Eight by Eight and Kevin Hillstrom from Mine That Data.  They are rock stars in the industry, known for looking into the future of where this industry is going, and the impact the future will have on your business. They put on a great seminar.

And guess what? They agreed to come back again! Amy referred to the combination of Africa, Hillstrom, and LaPierre as the “unholy trinity”. Well, we may be a motley trio, but we will give you an unbiased view of the future of new customer acquisition and growth that you won’t get elsewhere.

Presidential Politics and No Snow:

Unfortunately, last year, I chose to have the seminar during the coldest, snowiest week of a very cold and snowy New Hampshire winter. I had planned to hold the event during the same week in 2016, but New Hampshire’s first-in-the-nation Presidential Primary will get in the way. Since the date for the primary is not chosen until almost January 1, all the hotels in the state (there are not that many that can accommodate a crowd) will not make any conference rooms available until after March 1. And because all of the events in the state that usually take place in January and February have to move, we are having our seminar on Thursday March 31.  That puts us well past the blizzard season, and the temperature should be almost spring-like.

Last year we drew over 180 attendees, 80% of whom were mailers. This seminar has become the #1 one-day event in the nation for catalogers and ecommerce companies. You’ve got to be there!

The Strategies of Acquiring New Customers:

I asked both Amy and Kevin to focus on what the average catalog and ecommerce company must do to acquire new customers. This is not going to be a tactical session with five easy tips on working with the co-ops. This will be a day-long strategic discussion of the long range impact of merchandise, competitors, mobile, rising costs, and shrinking universes.

You will get a realistic view of how we got to where we are, and what you’ll need to do to change your company so that it is positioned to competitively and profitably acquire new customers. We will end the day with an open forum, allowing attendees to share their concerns, beliefs and questions on catalog growth and customer acquisition.

Amy, Kevin and I have something in common – we never try to sell you something you don’t need, and we never try to sell you the latest shiny object. We believe in sticking to the basics – whether it is in website functionality, merchandise performance, or analyzing customer behavior. If you read either Amy’s blog  or Kevin’s blog, or this blog, you know that the three of us challenge the status quo.  As one of my readers once said, “I like it when you poke the bear with a sharp stick”. We are the ones looking out for your better interests, and by your continued readership and support, we know you trust us.

Registration details for the event will follow soon. Datamann clients and members of the VT/NH Marketing Group will be getting additional registration information in the next few weeks – but I wanted to let you know about this event early so you could mark your calendar.

The VT/NH Marketing Group has been providing conferences and seminars for catalog and e-commerce companies for 25+ years. Datamann is grateful for this opportunity to continue our sponsorship of this event.  For those of you unfamiliar with the state, Concord is New Hampshire’s state capital, and is only 20 minutes north of the Manchester, NH airport, which is served by all major airlines. We look forward to seeing you March 31th, 2016.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

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Staying True to Product

Several weeks ago, I wrote that many of the older catalogs headquartered in New England that were still in existence, have survived as long as they have because they have stayed true to their merchandise direction, while always keeping an eye on making sure they were staying “current” without trying to be “contemporary”. A reader asked “what is wrong with being contemporary?”

There is nothing inherently wrong with it, if that is what your customer wants/expects in your merchandise. But for many of you, going the “contemporary” route is akin to following a short-lived fad.  That’s when you lose your merchandise direction and the trust of your customer.

Some of you adapt products every day, without losing the trust of your customers. But some of you struggle with the concept because you constantly walk that line between having enough new products, while maintaining enough existing “winners” so that the book still resonates with your existing customer base. But carrying over “existing” product always carries the risk of making the customer say “there’s nothing new here”. You are so focused on bringing in new products, you fail to examine your existing assortment for products that can be modified/adapted, allowing you to squeeze out several more seasons of sales from those products.

Your customers love new product. For some of you, your customers and prospects also love tried and true “heritage” products, those items that stand the test of time, and become a staple in your catalog. Your skill as a merchant reaches its highest level when you can adapt those heritage products to changing times.

Let me give you a specific example.

LL-Bean-1948-Maine-Guide-Sh

This is a picture of my mother in 1948 wearing an LL Bean Maine Guide Shirt that my grandfather bought her directly from LL Bean. It was red and black, and 100% wool. (Sadly, my mother deleted this shirt from her wardrobe sometime in the mid-1970s).

The Maine Guide Shirt, much like the iconic Maine Hunting Boot, is one of those signature products of Bean’s. But it has changed over time. The presentation below from the Fall 1968 catalog, (which was printed in black and white) listed three color options for the shirt.

LL-Bean-1968-Maine-Shirt

Here is the same item today. It still has many of the same details as 70 years ago – a button flap over the pockets, long tails in back, and a no-itch collar. It still comes in the classic red and black, but the blue and black was added many years ago (my version from the 1980s is in blue).

LL-Bean-2014-Maine-Shirt

But Bean has made changes to the shirt. It is now 85% wool/15% nylon. There is an optional a liner of primaloft insulation. Several years ago, they briefly offered a machine-washable version, which I thought was great – the current one still requires dry cleaning. And in a nod to the American diet, it now also comes in Tall and XXL.

Also, LL Bean acknowledges this shirt is not for everyone. It is obviously on their website, but I have not seen it in their main catalog in years. It has been relegated to the Hunting catalog, where it still resonates with hunters and outdoors enthusiasts.

One of the things that I know is annoying to many of you is when a consultant uses an example from a catalog like LL Bean (and in this case, is an example with which I can personally identify) which has absolutely no relation to your business. And if that is how you feel right now, look deeper at your merchandise assortment. There are always products which you can revive, refresh and adapt to changing styles and tastes. You have a huge sunk cost in finding products in the first place – it is always in your best interest to examine ways to get a few more years out of a product. You may never end up with one that has a 70+ year lifespan, but keep trying.

One last point: when you make minor changes to an existing product, such as adding a new zipper, or pocket, or adding a new color/style, don’t fall into the trap of calling this a “new” product. Your merchants will want to, usually because their salary is based on the amount of new products they introduce. But it isn’t a new product – and calling it so misrepresents the performance of “truly new” products.  If you want help in reviewing your merchandise mix and assortment for productivity changes with Datamann’s merchandise analytics, contact me.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

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It’s Not Always the Fault of Merchandise

Sometimes Marketing gets away awfully easy by blaming Merchandise for issues unrelated to product performance in the book.

Last week I wrote about the fact that you all have products that lead to a one-time only customer. For a variety of reasons, if a first-time customer buys certain, specific products in your assortment, they are unlikely to ever make another purchase from you. I’ve seen this phenomenon with hard goods, soft goods, gifts and apparel.  Judging by the reaction and questions I received last week, this idea resonated with many of you.

However, the majority of readers that responded to last week’s posting were marketers, who basically said “I’ve been telling Merchandise this was a problem, and they won’t listen to me, and that’s why we have so many one-time buyers”. And yes, there is probably some truth to that.

Although, let’s be fair – the reason that customers only purchase once is not always related to the nature of the product purchased. There are a host of behaviors to look for among your customers to determine if they are unlikely to make a second purchase from you. Looking for these behaviors should be part of your catalog circulation planning, and your catalog survival strategy.

Let’s examine two scenarios. First, a customer comes to your website on a non-branded search term, it’s their first visit ever to your site, they land on the product page of the product for which they were searching, visit no other pages, and they purchase the product. Subsequent matchback processing reveals that you’ve never previously mailed them a catalog.

Second, you rent a name from your closest competitor, and mail them a catalog. The catalog recipient visits your website four times, looking at 20 pages, puts three items in their cart, and purchases two of them. The dollar value of this purchase is the same as the purchase in the first scenario.

Are the two customers equal? From an RFM standpoint, yes they are the same. From the standpoint of “propensity to purchase again”, they are dramatically different, and even an untrained marketer can see that difference. Before the internet, we would not have seen that difference. However, even though we see that difference today, most of you still treat these customers identically, mailing them each 12 catalogs a year for probably the next two years at least. And the first customer, who stumbled on your website because they had one specific product need, will most likely never respond again. What a waste for your company.

Determining the identity of those customers least likely to ever respond again, based on past purchase behavior, has nothing to do with merchandise, and everything to do with marketing analytics. The product that the customer in scenario #1 purchased might have been a good product for your company, and one which has led to other purchases from other customers. It’s the sum total of all the behaviors associated with the customer’s first purchase, or most recent purchase, that reveals their propensity to purchase again.

The chart below shows the traits present on a customer’s first order, for those customers who purchased only once compared to those who purchased twice within a 24-month window. For example, 75% of the customers that purchased twice, had been mailed a catalog prior to their first order, compared to only 20% of the customers that only bought once. At the bottom of the chart, 80% of the customer’s whose first purchase was on a promotion remained one-time buyers, while those customers who purchased without a promotion on the first order tended to make a second purchase.

Arrtibutes-of-1X-vs-2X-buye

What does this mean to the marketer? It means stop blaming the merchants for all the short comings in response, and look at the tools and data that you control. Start identifying those customers that are never going to order again, and mail them once or twice a year at most. What’s going to happen? You cut circulation, increase response rate, have negligible impact on sales, and wildly increase profits. You look like a hero, instead of always being the one pointing fingers at others.

Ah, but how do you get there? First you need a database, and if you don’t have a database, Datamann has four database options from which to choose that can answer this question for you – one for every budget.  Datamann can help you identify those customers that are never coming back, or those for whom the cost of reactivation is just not worth trying. If you want help in this process, give me a call or send me an email.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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