Kevin Hillstrom: MineThatData

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

June 11, 2007

Growth Strategy

Your forecasting analyst suggests your telephone sales will decrease by ten percent next year, while your online sales will increase by ten percent next year, yielding flat corporate growth.

Your CFO is unhappy with this projection, and demands that the business grow by ten percent next year.

There are many ways you could grow the business. Here's a sampling of opportunities:
  • Catalog Strategies
    • Add catalogs to the mail plan (currently at 30 in-home dates each year).
    • Add pages to each catalog.
    • Remail catalogs to the same customers.
    • Increase circulation in each catalog --- either customer acquisition or reactivation.
    • Other ideas?
  • E-Mail Strategies
    • Increase e-mail contact frequency from one per week to two or more per week.
    • Increase the number of targeted e-mails from five versions per contact to ten or more.
    • Other ideas?
  • Online Marketing Strategies
    • Improve natural search opportunities.
    • Spend more on paid search, or be smarter about paid search.
    • Increase affiliate partners.
    • Spend money on portal advertising.
    • Start a corporate blog.
    • Other ideas?
Prioritize the top three ways you would try to grow sales, and describe why you would use the techniques you chose to employ? Which strategies do you think drive the most incremental sales, at the lowest cost?

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March 28, 2007

Virtual CEO: Grow E-Commerce Sales By An Additional 25%

Following up on a point from yesterday, I want to re-phrase a question that resulted in a lot of chatter today.

Assume you are an E-Commerce executive at a multichannel retailer. Your channel (online) is forecast to grow by 25% in 2007.

Let's assume that your Board of Directors is not happy with projected E-Commerce growth rates, and demands you grow the online channel by 50% in 2007. Your Board will not give you any money to spend on catalog marketing, television, radio, magazines, etc. Your Board will not allow you to source new merchandise. You are required to use marketing within only the online channel to grow your online business an additional twenty-five percentage points.

In the heyday of catalog marketing, you would increase pages circulated by roughly fifty percent, in order to grow your sales by twenty-five percent. You would prospect to inactive and new customers, add contacts/mail-dates to your best customers, and possibly add pages to your best catalogs. Given the money, you could achieve this unreasonable request --- albeit unprofitably. This was the magic of the old direct-to-consumer business model. You and your customers were a team that jointly determined sales and profit levels.

In retail, we know this request is not achievable within existing square footage allocations. A business leader would ask for capital to add new stores, renovate old stores, or acquire other businesses.

Now let's focus solely on the online channel. Could you grow E-Commerce sales an additional twenty-five percentage points? Is it possible? What marketing tactics would you use? Could you get there via paid search? Portal advertising? Affiliates? E-Mail marketing? Natural search? Blogging? How much would it cost you to get the increase, if you think this type of increase is possible? Would there be any long-term benefit to this short-term growth strategy?


Multichannel CEOs and CMOs: Today is as good a time as any to begin testing online growth strategies that don't include paper. If you have to go well beyond organic growth rates, how would you do it? Learn today, so that you can answer this question tomorrow.

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March 27, 2007

Credit For Channel Growth

You worked your tail off to acquire a customer via catalog advertising, in the telephone channel, back in 2002.

Today, your job as it existed back in 2002 no longer exists. You do the work of two or three catalog folks from 2002. Your former catalog positions are now leadership-level positions in the online marketing department.

Remember the customer you acquired, via catalog, in 2002? This customer now purchases merchandise exclusively via the online channel. She may or may not purchase online because of the catalogs she receives. But she certainly clicks on paid search via Google.

Last week, an individual told me "I deserve credit for acquiring this customer. The website folks get all the credit for customers I worked so hard to acquire."


One of the challenges of multichannel marketing involves rewarding individuals for exemplary performance.

If there's one thing I observed last week, in speaking with folks, it is that employees really want to do what is right for the customer. If the customer wants to purchase merchandise via any channel, at any time, and have merchandise/pricing transparency in any channel, employees want to provide this for the customer.

And yet, within companies, there is tension. Finance folks want to see sales reporting based on the channel that records the sale. As long as this happens, employees that work in growing channels will be rewarded. Conversely, employees that work in shrinking channels are not as likely to be rewarded.

It will be really interesting to see what happens when the online channel stops growing at twenty-five percent per year. When this channel grows at five percent a year, and Google fails to drive significant increases, a generation of online marketers raised in an era of constant growth will be challenged like never before, will feel pressure like never before. Many of these folks will have never experienced a true, non-bubble-based downturn. What will they fall back on for experience, when the sales increases stop happening?


Multichannel CEOs and CMOs: This is a very good time to start thinking about how you would dramatically grow the online channel, if asked to. Online executives benefited from the transfer of catalog and retail customers to the online channel. Here's a great drill --- run a simulation. Have your folks tell you what it would take to grow online sales by an additional twenty-five percent TOMORROW. How much would you have to spend? How profitable would it be? Could you do it via online marketing, or would you need paper/catalogs to help you? And if you needed paper/catalogs, who would you give credit for the online sales to?

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