Kevin Hillstrom: MineThatData

Exploring How Customers Interact With Advertising, Products, Brands, and Channels, using Multichannel Forensics.

October 18, 2009

Dear Catalog CEOs: Conflicting Messages

Dear Catalog CEOs:

Have you ever received conflicting messages from the marketing community?

Here's an example:

Who is right?

Who cares!!

Our job is to sell merchandise, to provide a compelling offering that results in a customer desiring to have merchandise delivered to her home.

We are one decade into the "Multichannel Era", a never-ending foray into an abyss of channels that have yet to genuinely increase long-term customer productivity or profitability (notice the use of the phrase 'long-term' ... you can prove that everything works on a campaign or conversion basis).

Oh, sure, this sounds like something you might hear from Don Libey, and it does for good reason, because in his comments are embedded fundamental truths.

Seriously, go do a "comp segment analysis", comparing customer behavior in 1999 and 2009. I've done this work for my clients. Customers are not more productive today than they were in 1999. You'll see something that looks like this (comparing 2x $180 - $220 annual buyers in this example, click to enlarge):



Notice that annual repurchase rates, in spite of a dramatic proliferation of marketing channels, have not budged in fifteen years (in this example --- your mileage will vary). And after you adjust spending levels for inflation, you don't see increased spend, either. In fact, after adjusting for inflation, you often see a decrease in spend. Oh oh.

Run this analysis for your business.

My Multichannel Forensics and Online Marketing Simulation projects continually reveal four strategies that lead to success.

  1. You have customers who crave or need the merchandise you sell.
  2. You do an exceptional and cost-effective job of acquiring new customers.
  3. You do a better-than-average job of using human beings to interact with customers.
  4. You exhibit outstanding operational management, not letting pennies leak out of the profit and loss statement.

Master these four things, and you have something! Channels and campaigns are almost meaningless in this context, rendering irrelevant discussions about whether print is dead or about e-mail being dead or about social media being a savior.

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