tag:blogger.com,1999:blog-322028932024-03-18T20:10:32.180-07:00Kevin Hillstrom: MineThatDataHelping CEOs Understand How Customers Interact With Advertising, Products, Brands, and ChannelsUnknownnoreply@blogger.comBlogger5172125tag:blogger.com,1999:blog-32202893.post-78384266365534145302024-03-18T20:10:00.000-07:002024-03-18T20:10:00.242-07:00Items That Appear In Multi-Item Orders<p style="text-align: justify;"><span style="font-family: arial;">In a typical Life Stage Analysis within a Merchandise Dynamics project, it is common to see exaggerated trends when comparing first-time buyers to loyal buyers.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I code every order in the database to see whether the order had multiple items (I call this MUL or "multiple lines") and/or had multiple categories (I call this MUC) in the order.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Let's look at MUC, or multiple categories, by life stage.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">1x Buyers = 18% of spend tied to orders with multiple categories in the order.</span></li><li><span style="font-family: arial;">2x Buyers = 26%.</span></li><li><span style="font-family: arial;">3x Buyers = 29%.</span></li><li><span style="font-family: arial;">4x Buyers = 32%.</span></li><li><span style="font-family: arial;">5x Buyers = 32%.</span></li><li><span style="font-family: arial;">6x - 7x Buyers = 32%.</span></li><li><span style="font-family: arial;">8x - 10x Buyers = 34%.</span></li><li><span style="font-family: arial;">11x - 15x Buyers = 38%.</span></li><li><span style="font-family: arial;">16x+ Buyers = 39%.</span></li></ul><span style="font-family: arial;"><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p>Interestingly, 1x buyers purchase 1.95 items in a first order ... 16x+ buyers purchase 2.53 items per order. So there is some difference. Also interesting? 1x buyers purchase $54.60 items in a first order, 16x+ buyers purchase $44.69 items in their loyalty-based orders.</span><p></p><p style="text-align: justify;"><span style="font-family: arial;">In other words, first-time buyers are focused on what they are looking for ... loyal buyers are grazing from a larger assortment.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Use those facts in your marketing efforts, peeps. </span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-8081877700701941692024-03-17T20:10:00.000-07:002024-03-17T20:31:22.070-07:00What Happens At Different Life Stages?<p style="text-align: justify;"><span style="font-family: arial;">One of the first analyses I run in a Merchandise Dynamics project is the Life Stage Analysis. Specifically, I want to know what customers do at different phases of their Life Stage with your brand.</span></p><p style="text-align: justify;"><span style="font-family: arial;">For instance, this is the percentage of AOV spent by customers on new merchandise (new in the past year) for a brand.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">1x Buyers = 26%.</span></li><li><span style="font-family: arial;">2x Buyers = 31%.</span></li><li><span style="font-family: arial;">3x Buyers = 33%.</span></li><li><span style="font-family: arial;">4x Buyers = 34%.</span></li><li><span style="font-family: arial;">5x Buyers = 35%.</span></li><li><span style="font-family: arial;">6x - 7x Buyers = 34%.</span></li><li><span style="font-family: arial;">8x - 10x Buyers = 36%.</span></li><li><span style="font-family: arial;">11x - 15x Buyers = 38%.</span></li><li><span style="font-family: arial;">16x+ Buyers = 40%.</span></li></ul><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Tell me what you observe?</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Either this brand features existing items to prospects and customers early in the life cycle, or my goodness, existing items are what customers early in the life cycle "need". Conversely, loyal buyers might be bored with the old-school assortment, allocating additional dollars to "newness".</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">This kind of finding represents a perfect place for email marketing personalization. Show newness to the best customers, show long-term winning items to prospects.</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-34694445094204912482024-03-14T20:10:00.000-07:002024-03-14T20:23:41.069-07:0030 Weeks Out Of 52<div style="text-align: justify;"><span style="font-family: arial;"><a href="https://www.marketwatch.com/story/amazon-announces-first-ever-spring-sale-in-north-america-from-march-20-to-25-c9ea2a04?mod=retail" target="_blank">Amazon will host a Spring Sale next week</a>.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">There comes a point in the evolution of many brands where you cannot grow via marketing channels, and you cannot grow via merchandise productivity. It's a dire moment. You've exhausted everything you know. For some of us, it happens at ten million in annual sales. For others, it happens at the intersection of AI and World Domination.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">During the dot.com era, I worked at Eddie Bauer, 1998. Business was awful. I attended a meeting where the marketing folks were bereft of ideas, the vault of merchandising brilliance was empty, and the creative folks (in response) overhauled imagery (i.e. younger), further harming sales.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">And yet, the parent company (Spiegel) wanted the business fixed.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">In a meeting with several Business Leaders, somebody broached the topic of adding a 31st sale week to the calendar (we were at 30 weeks of 52 with sales events). That would boost sales ... and nobody had to do any real work whatsoever ... just take 40% off everything and call it a day.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">The CEO at the time, somebody I adored, said "<i><span style="color: #783f04;">we have to maintain the integrity of the sale calendar ... eventually, every week is a sale week and that means no weeks are actual sale weeks</span></i>". In other words, he was prophesizing modern omnichannel Macy's.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Now we have Amazon ... one ... two ... three ....</span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-56153913375174750142024-03-13T20:10:00.000-07:002024-03-13T21:29:34.775-07:00Stores are Closing<p style="text-align: justify;"><span style="font-family: arial;">Even the successful folks (<a href="https://www.retaildive.com/news/dollar-tree-family-dollar-close-1000-stores/" target="_blank">click here</a>).</span></p><p style="text-align: justify;"><span style="font-family: arial;">There is a dearth of Leadership in Retail and in Old-School Cataloging these days, and when that happens, third-party voices fill the void ... and for good reason ... they're trying to preserve what they had/have.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I've had the good fortune to work with a handful of e-commerce brands in the past six months who are thriving. Their approach to marketing and merchandising is fundamentally different than what third parties are telling you to do. "Be Amazing" is not a strategy. "The Power of Paper" is not a strategy. "Omnichannel" is not a strategy. Those are things that are said when folks don't have a strategy.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I live in Arizona. If you take a drive North on Loop-303 from I-10 toward I-17, you can see the future of commerce.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">Endless distribution centers. Endless. Enormous. Cold. Sterile. They make sure your frictionless digital experience results in your dog chews arriving in two days.</span></li><li><span style="font-family: arial;">A UPS hub with so many trucks that it can be hard to get through a red light if you are turning left.</span></li><li><span style="font-family: arial;">Costco and Total Wine. Ponder that one for a moment.</span></li><li><span style="font-family: arial;">The sprawling TSMC semiconductor chip plant that would likely be seen from the surface of the Moon.</span></li></ul><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">You don't see a brand new "Galleria".</span></div><div><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Across my client base, I see some extremely wise 60+ year olds who are handing the keys to the future to a new generation of Leadership. Smart. They're letting the experts apply their knowledge.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">New generations of Leadership easily see that we are replacing 6,000 square foot stores at 300 locations across the country with a 300,000 square foot distribution center paired with a delivery network that includes giants like UPS and your neighbor Heather driving a 2006 Toyota Corolla (sorry, she's saddled with all of the fixed/variable costs associated with owning a car). That system, albeit unfair to some, is more efficient than forcing a customer to drive 20 miles to the Galleria to purchase a product without the ability to comparison shop.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">The future, to be honest, is so darn exciting! It's fundamentally different than everything we experienced prior to 2020, of course. That shouldn't scare us from changing. And it most certainly shouldn't dissuade us from handing the keys over to the next generation of business leaders. </span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Remember the scene in Moneyball (yes, I'm watching it again) where Billy Beane is talking to David Justice in the batting cage? Beane wants to extract every last ounce of playing ability Justice has, Justice wants to stay in the league. Beane tells Justice to be a Leader to the younger players on the roster. Justice agrees to do that.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">You see where I'm headed with that comment, right?</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">By the way ... <a href="https://www.youtube.com/watch?v=lxvdEOtW8n4" target="_blank">watch just the first minute of Iowa Lottery magic from 1986 here</a>, as Iowans were formally introduced to the magic of gambling. This is what we look like if we don't change.</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-31421162467987895972024-03-11T21:40:00.000-07:002024-03-11T21:53:42.372-07:00Yeah, This Is Happening<p style="text-align: justify;"><span style="font-family: arial;">This one is for our catalog readers.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Two vendors communicated to me today that print is "surging".</span></p><p style="text-align: justify;"><span style="font-family: arial;">Midland Paper communicated today that paper for catalog marketing is ... not ... surging. Click on the image, look at the graph on the upper left portion of the slide.</span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p><p style="text-align: justify;"><span style="font-family: arial;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: arial;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgOdiZOQY9wLonHmibVF35F37DztFL8rX8d2FnDtCo2qjYqJcLxBfc2NKJalQMy4C8tSqDE8yQCEAOx9s_oGJypSsgpQAtGBivs_aQIYxfk1lQE30k0LO1BZUdlXND5wsEUXuY4lY94nNfiE5W7OMOBAPw18D3AW-G6bl1HICnC82-RXjl_HksF9w" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="728" data-original-width="1289" height="226" src="https://blogger.googleusercontent.com/img/a/AVvXsEgOdiZOQY9wLonHmibVF35F37DztFL8rX8d2FnDtCo2qjYqJcLxBfc2NKJalQMy4C8tSqDE8yQCEAOx9s_oGJypSsgpQAtGBivs_aQIYxfk1lQE30k0LO1BZUdlXND5wsEUXuY4lY94nNfiE5W7OMOBAPw18D3AW-G6bl1HICnC82-RXjl_HksF9w=w400-h226" width="400" /></a></span></div><span style="font-family: arial;"><br /><br /></span><p></p><p style="text-align: justify;"><span style="font-family: arial;">Catalog circulation (that's you) is down more than 40% since 2018 ... and catalog circulation in 2018 was down by more than half since 2007. Which means that about 20% of what existed in 2007 (when I started consulting) still exists today.</span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p><p style="text-align: justify;"><span style="font-family: arial;">Here's a preview of coming attractions.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">If you haven't already shifted all customer acquisition efforts to digital and other tactics, it is immediately time to make a change. Go.</span></li><li><span style="font-family: arial;">As paper/printing/postage costs continue to increase, it will become very difficult to use paper to reactivate customers.</span></li><li><span style="font-family: arial;">Should costs continue to increase, you will only mail your very best customers in 3-5 years. It will be "over".</span></li></ul><div><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Have you watched the movie "Don't Look Up"? There's an asteroid hurtling toward Earth, there are scientists who try to warn Earth to do something ... anything. Nobody listens. The ruling political party encourages people to "Don't Look Up". As the crash of the asteroid is imminent, a feeble attempt to detonate the asteroid is hatched. It doesn't work. The ruling political class escape on a cryogenic space ship while the inhabitants of Earth are left to deal with their fate.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">I've been writing here since early 2006. I feel like the scientists in the movie.</span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-43848063949489904892024-03-10T20:10:00.000-07:002024-03-10T21:55:20.253-07:00NASCAR<p style="text-align: justify;"><span style="font-family: arial;">Yes, I will wander over to the topic for today in a moment. Here's the setup.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I was at the NASCAR XFINITY race in Phoenix on Saturday. This is racing's version of AAA baseball, a development series in the racing ladder system ... one step away from racing on Sundays in the Cup Series.</span></p><p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyMiGv14kn6l30xWGbGukkxZMQaWlh3ufdOGEw4fWIbE8KCmCRG4qGI8wJD6qJ4DbAe7mDp1EmtEGroEakWpN380n7_vqWZYFA8c5l1KCZUysVE9-Yp7rtV_c0hmytzhf4rigmblD-3mufrOL4ctH8eFczNOO4jI87Xj9wvrN86Awn16Z85Apu3g/s4032/IMG_3616.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3024" data-original-width="4032" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiyMiGv14kn6l30xWGbGukkxZMQaWlh3ufdOGEw4fWIbE8KCmCRG4qGI8wJD6qJ4DbAe7mDp1EmtEGroEakWpN380n7_vqWZYFA8c5l1KCZUysVE9-Yp7rtV_c0hmytzhf4rigmblD-3mufrOL4ctH8eFczNOO4jI87Xj9wvrN86Awn16Z85Apu3g/w400-h300/IMG_3616.JPG" width="400" /></a></div><br /><span style="font-family: arial;"><br /></span><p></p><p style="text-align: justify;"><span style="font-family: arial;">One of the women in the series is named Hailie Deegan. Her Dad is a famous in motocross racing, an impossibly difficult form of racing on motorcycles. Yes, there is a perception that she was born on third base and gets preferential treatment. People on Twitter will tell you so, unprompted.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Oh, she has talent. She won many late model races (racing at the "A" level in baseball terms) and took no crap from the guys she raced against. She moved up to NASCAR Trucks ("AA" level) and did not perform great. Regardless, she is signed by Toyota Racing Development, and as a result she's racing at the "AAA" level. </span></p><p style="text-align: justify;"><span style="font-family: arial;">Her first three races at this level were not great.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I watched her race on Saturday, in person. She was not fast, and you never know if it is the driver or the equipment (hint - it is usually the equipment). But she was not reckless - she protected her equipment, and she did not put other drivers in harm's way.</span></p><p style="text-align: justify;"><span style="font-family: arial;">At one point, she lightly touched the wall about a quarter lap ahead of the leader (meaning she was about to be lapped and when that happens you are not having a good day). NASCAR threw a caution flag, likely unnecessary since drivers scrape the wall often. The conspiracy theorists piled on "THEY'RE PROTECTING HER, IT'S UNFAIR!", knowing the caution would bunch everybody up and protect her from being lapped. A few laps later with the field tightly bunched up post-caution, a big accident happened, and she was collected in the accident. A red flag was called ... cars must stop on the track. Her pit team told her to drive the car to the pits, she did that, NASCAR disqualified her and towed her car off the track in retaliation.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Twitter was mercilessly cruel ... , as it frequently is toward women. Men (it's mostly men) said she lacks talent, and because she was born on third base and has the backing of Toyota she gets to race in a series she isn't qualified to race in, while many other more qualified drivers can't bring sponsorship money to the sport so they cannot drive. They think her presence on a race track is inherently unfair to more talented drivers.</span></p><p style="text-align: justify;"><span style="font-family: arial;">How does this story relate to you?</span></p><p style="text-align: justify;"><span style="font-family: arial;">A few years ago, I told the CEO of a company that his business was struggling because he wasn't investing in new customers (have any of you ever heard me say that before?). The CEO told me that the comment was unfair ... while online startups had bottomless pockets via Silicon Valley, he had to fund customer acquisition efforts with the profit from his business, and as his business became less profitable he had less profit to invest in new customers, which caused the business to become less profitable. You see where that business is headed, right?</span></p><p style="text-align: justify;"><span style="font-family: arial;">The CEO was grumbling because he wasn't in Hailie Deegan's shoes. He wasn't being given preferential treatment. He wasn't born on third base. To him, it wasn't fair that an online brand got VC backing that it didn't deserve and hadn't earned like his business earned.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Two things can be true at the same time.</span></p><p style="text-align: justify;"></p><ol><li><span style="font-family: arial;">Life isn't fair, and there is not one thing you can do to fight those who may have real or perceived opportunities because of fame or money.</span></li><li><span style="font-family: arial;">It is your flippin' job to overcome adversity. Find a way.</span></li></ol><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">If your competitor was born on third base (VC or Private Equity funding), they're lucky and you have to earn everything you're given. They're big and slow, you are small and nimble (sort of like that discussion from the movie Enemy of the State). They have to advertise in NASCAR, you get to take 1/40th the amount of the money and act immediately on the socials.</span></div><div><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Yes, it is unfair that these well-funded online brands get opportunities you don't get. That doesn't mean you attack them ... they may be earning their opportunities, you don't know. Focus on your business. How can you be scrapy and find new customers in non-traditional ways?</span></div><p></p><p style="text-align: justify;"><span style="font-family: arial;">How can you be scrappy and find new customers in non-traditional ways?</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-23063446086543520632024-03-07T19:10:00.000-08:002024-03-07T20:02:32.925-08:00Headphones<p style="text-align: justify;"><span style="font-family: arial;">Time for a merchandising story.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I've wasted thousands of dollars over the past four decades on headphones. I'm no different than any other headphone audiophile. You always think you can do better.</span></p><p style="text-align: justify;"><span style="font-family: arial;">In the past year, <a href="https://www.amazon.com/New-Apple-AirPods-Max-Blue/dp/B08PZJN7BD/" target="_blank">I saved my pennies for a pair of Airpods Max</a>. Mistake. They sound good. The feel really good on your head. But they aren't headphones as much as they are a computer on your head. Turn your head to the left while watching a movie on Apple TV and the sound shifts in your head. Cool? Absolutely. But it's a computer.</span></p><p style="text-align: justify;"><span style="font-family: arial;">With quality sound gnawing at my soul, I decided to dip my toe into better sound. I got a great deal on <a href="https://www.amazon.com/Sennheiser-HD-569-Closed-Headphone/dp/B01L1IIF1A/ref=sr_1_3?" target="_blank">a pair of Sennheiser HD569s</a>. $99 ... I got them for $73. They sound so much better than my expensive Airpods Max. Connected to my little <a href="https://www.amazon.com/Fosi-Audio-Headphone-Amplifier-Protection/dp/B0CK1F5BY8/ref=sr_1_2" target="_blank">hybrid tube amp, they sound even better</a>. Completely quiet background. Details in songs I had not heard before. A really, really good experience.</span></p><p style="text-align: justify;"><span style="font-family: arial;">But obviously I could do better.</span><span style="font-family: arial;">I</span><a href="https://www.reddit.com/r/HeadphoneAdvice/comments/16xm35u/what_headphones_under_500_would_you_recommend_to/" style="font-family: arial;" target="_blank"> decided to go down the Reddit rabbit hole</a><span style="font-family: arial;"> (and the YouTube rabbit hole). </span><span style="font-family: arial;">It's here that, quite literally, maybe fifty individuals steer the customer in whatever direction they want to steer the customer.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I spent two months reading headphone discussions on Reddit, watching videos on YouTube. Seriously. The experts want you to buy an open ear headphone (which means everybody in your house is going to hear what you are listening to). I can't do that, so it is closed ear headphones for me ... I don't want the audio quality loss with bluetooth headphones. I want corded closed ear headphones.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Months into my nightly Reddit-based education from users named "BoseStinks" and "Bonkers44292", there is one pair of headphones that keeps coming up ... not from the experts, but from actual users. <a href="https://www.amazon.com/Meze-Classics-Walnut-Headphones-Black/dp/B018VZBH5M/ref=sr_1_2?" target="_blank">They are the Meze 99 Classics ($309 ... currently available for $278)</a>. The people on Reddit DO NOT LIKE THESE HEADPHONES! But those who listen to music with the sole purpose of enjoying the music ... they like 'em.</span></p><p style="text-align: justify;"><span style="font-family: arial;">And it turns out that headphone companies partner with a company called Drop to produce comparable (or in this case identical) models at a discount. For $169 ($10 first time buyer discount), <a href="https://drop.com/buy/massdrop-x-meze-99-noir-closed-back-headphones" target="_blank">I pick up a pair of the Massdrop 99 Noirs</a>.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Oh.</span></p><p style="text-align: justify;"><span style="font-family: arial;">My.<br /></span></p><p style="text-align: justify;"><span style="font-family: arial;">God.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Connected to my hybrid tube amp or to a <a href="https://www.amazon.com/AudioQuest-DragonFly-Red-Headphone-Amplifier/dp/B01DFMV4NQ/ref=sr_1_2" target="_blank">Dragonfly Red dongle</a>, these headphones are absolutely what the Reddit folks who refused to give in to the mob said they were.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">Fun.</span></li><li><span style="font-family: arial;">Musical.</span></li><li><span style="font-family: arial;">Bassy.</span></li></ul><div style="text-align: justify;"><span style="font-family: arial;">Turns out the 50 headphone influencers on Reddit demand that headphones match a "flat" frequency response. In other words, what the headphone produces should be identical to what the individual mixing the original song intended. In coffee terms, they demand that your coffee be black and be perfect. Put some cream in there? They don't like that.</span></div><div><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">These headphones are not a black cup of coffee. They add a little bit of bass, something that those who listen to R&B or Dance Music or Rap or some Pop Songs like. I've listened to hours of songs since getting them and I just couldn't be happier. I've heard things I've never heard in songs before. And for $169? My goodness. They are musical. They are fun! And they have a little bit more bass than they should have ... bass that can be equalized away if you don't like it. I'm sure a $1,000 pair of headphones will sound better ... but these things are fabulous and only cost me $169! <a href="https://www.youtube.com/watch?v=2Y6Nne8RvaA" target="_blank">Listen to this song with 'em</a>. You'll find the song "fun" and "musical"! There are bizarre horns at the 0:54 mark in the right ear that I haven't heard in the eight years I've been listening to this song.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Why share this story?</span></div><div><ol><li style="text-align: justify;"><span style="font-family: arial;">Who controls your industry? It's a surprisingly small number of people. Why don't you have a relationship with these individuals? Better yet, why isn't one of your employees one of these individuals? Seriously.</span></li><li style="text-align: justify;"><span style="font-family: arial;">Readers keep telling me that digital advertising doesn't work as well as it used to. If you were Meze, how would you fight 50 influencers on Reddit who don't like your product? Spending more on Google doesn't solve the problem, does it? More retargeting doesn't solve the problem. Paid social doesn't solve the problem. Meze, instead, sent a pair of headphones to a vocal critic and said "say whatever you like about them" ... and the person said positive things about them. That's a better use of money that spending money on channel-centric marketing tactics.</span></li><li style="text-align: justify;"><span style="font-family: arial;">My long-term catalog readers keep telling me that the print industry is going to bankrupt them. Yes, they are going to bankrupt you. "Their influencers" have you convinced that you need them.</span></li><ol><li style="text-align: justify;"><span style="font-family: arial;">Hint ... you don't need them.</span></li></ol></ol><div><span style="font-family: arial;"><br /></span></div></div><div style="text-align: justify;"><span style="font-family: arial;">In 2024-2025, your customer acquisition efforts are increasingly focused on hand-to-hand marketing combat. You'll have to get into the trenches and convince individual customers that you matter ... like I have to do with you on a daily basis. You won't be able to pay Facebook a million dollars and let them do the work for you.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">You're going to have to do the work.</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-64929578252246214962024-03-06T19:10:00.000-08:002024-03-06T19:10:00.135-08:00They're All Less Effective<p style="text-align: justify;"><span style="font-family: arial;">It's difficult to convey to professionals that, in many ways, old-school digital marketing is in decline ... and really-old-school print is in decline at a faster rate.</span></p><p style="text-align: justify;"><span style="font-family: arial;">You see articles like this (<a href="https://www.office.fedex.com/default/hub/how-restaurants-can-survive-the-decline-in-digital-ad-effectiveness" target="_blank">click here</a>) and you realize that third parties are promoting a medium declining faster than the medium they proclaim is in decline.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I have clients that have fabulous customer acquisition programs. For them, it's seldom about the "channel" ... it's generally about telling a story around the products they sell. </span></p><p style="text-align: justify;"><span style="font-family: arial;">It's funny how much better digital (and even old-school print) perform when you have a compelling story surrounding products/merchandise that customers care about, want badly, or need.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-25830345238380748392024-03-04T19:10:00.000-08:002024-03-04T19:10:00.129-08:00Winners? Units or Sales?<p style="text-align: justify;"><span style="font-family: arial;">Pretend you have a $100 item that sells one unit. You also have a $5 item that sells 10 units.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The $100 item generated $100, but just one customer.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The $5 item generated $50, but may have generated up to ten (10) customers.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Which item is a "Winning" item?</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-64725376383353917742024-03-03T19:10:00.000-08:002024-03-03T19:10:00.142-08:00Odd Things Happen When You Don't Understand How Customers Interact With The Merchandise You Sell<p style="text-align: justify;"><span style="font-family: arial;">Very early in my consulting career I visited a company that simply did not understand how their merchandise performed.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The CEO told me there was a marketing issue.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The VP of Marketing told me that the analytics guru could not solve the marketing challenges the brand faced.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The Analytics Guru had no idea what was happening. This is a far more common scenario than analytics gurus would have you believe.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Just a simple review of their marketing reporting showed that there was a significant merchandising problem. All customer segments were performing 10% worse than the year prior. New/Reactivated customers were performing 10% worse than the year prior. Customers simply didn't like what the brand was selling.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The CEO, the Marketing VP, the Analytics Guru ... when told that there was a merchandising problem ... all dug in harder and fought for marketing solutions. When I didn't offer marketing solutions, they dug in against me. Now I was the problem!!</span></p><p style="text-align: justify;"><span style="font-family: arial;">Can a business struggle because of marketing issues? Yes.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Is it far more likely that a business is struggling because customers don't want to buy the merchandise you are selling? Yes.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-78813492252585848022024-02-28T20:15:00.000-08:002024-02-28T20:15:00.140-08:00Lone Wolf?<p style="text-align: justify;"><span style="font-family: arial;">I just went to the Safeway website to look for Tempura batter.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Odds are that most people don't go buy Tempura batter ... and that's it. Maybe they're making a black bean burger, and they need seven or eight ingredients.</span></p><p style="text-align: justify;"><span style="font-family: arial;">If an item sells by itself ... and the item has negative Merchandise Residual Value ... well, that's no bueno.</span></p><p style="text-align: justify;"><span style="font-family: arial;">For every item you sell, measure if the item is a Lone Wolf ... does it sell by itself without any pairing of any other items, or does the item sell with other items?</span></p><p style="text-align: justify;"><span style="font-family: arial;">Even an item that has negative Merchandise Residual Value is valuable if it sells with other items that have positive Merchandise Residual Value.</span></p><p style="text-align: justify;"><span style="font-family: arial;">More on this topic tomorrow.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-78294080243641365782024-02-27T19:10:00.000-08:002024-02-27T19:10:00.136-08:00How Can A Product Or Category "Cause" A Customer To Become More Valuable?<p style="text-align: justify;"><span style="font-family: arial;">I'll go back to my time at Nordstrom ... two decades in the rear view mirror these days.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Our Accessories merchant was a force of nature. When hand bag price points were around $200 she pushed them up to $400, and did not care one tiny bit what people thought (people thought she was nuts).</span></p><p style="text-align: justify;"><span style="font-family: arial;">She was not nuts.</span></p><p style="text-align: justify;"><span style="font-family: arial;">She understood back then that customer wanted a handbag for $400 .... and four months later they wanted ANOTHER handbag for $400. Those additional handbags were purchases that wouldn't have otherwise happened, incremental to the customer and to the business. Perform a Merchandise Residual Value analysis on her handbags and you'd see that her handbags "caused" customers to become more valuable.</span></p><p style="text-align: justify;"><span style="font-family: arial;">That doesn't mean you should keep selling the same handbag in perpetuity.</span></p><p style="text-align: justify;"><span style="font-family: arial;">It means somebody with merchandising smarts works with somebody with marketing smarts to exaggerate the importance of handbags.</span></p><p style="text-align: justify;"><span style="font-family: arial;">That's a solid use of Merchandise Residual Value.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-86060519156704516822024-02-26T19:10:00.000-08:002024-02-26T19:58:37.824-08:00Merchandise Residual Value in Practice<p style="text-align: justify;"><span style="font-family: arial;">Here are the top ten selling items for the past year for a brand ... in this example (for the sake of simplicity, all items existed the year prior as well), I illustrate total sales for each item, then list MRV (merchandise residual value) for each item (i.e. the amount of future value that is added to each customer who buys that item because the customer buys that item), and then a sum of last year's sales and total MRV for the next year. Yes, you want to sell items that sell well and add value to customers in the future.</span></p><p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEii5tTVbN_1b5lDhmwIWlSUSS5_hBfcYj_XenGcoQ_dvlhsbRFbpmzwdFwM386-DXIowx2iYTh5TCinMGTOssTanw4Lu7bWeb5tc0MBorOfRSTc-_uO_0aUj3JyOsW6m39Xexk4Nrcz092Bn7TpIFtpLb51_5bmkb0y2_3i9MwbGHex3hfRXGQZuA/s1280/mtd_20240226.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEii5tTVbN_1b5lDhmwIWlSUSS5_hBfcYj_XenGcoQ_dvlhsbRFbpmzwdFwM386-DXIowx2iYTh5TCinMGTOssTanw4Lu7bWeb5tc0MBorOfRSTc-_uO_0aUj3JyOsW6m39Xexk4Nrcz092Bn7TpIFtpLb51_5bmkb0y2_3i9MwbGHex3hfRXGQZuA/w400-h225/mtd_20240226.jpg" width="400" /></a></div><br /><span style="font-family: arial;">This is the look you should have on your face when you look at Item #6.</span><p></p><p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhahzfD9p89YfTsCbaSCDHgHgsTc5jmPjnMZInCfbcUweLtKk6N4YCnmahWFDgKxcigGmzTZw8l5PmNOAqz7kXuiBy2Cc7Sf_zPaBg4r5EM249LW6HshqyljoZbeGTW-SHZzx9e9IU7QJHPLD_qYPEscqXWpuyHVKj9XPykn4DWpNwKimBFvOIHbA/s458/mtd_20231219.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="426" data-original-width="458" height="298" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhahzfD9p89YfTsCbaSCDHgHgsTc5jmPjnMZInCfbcUweLtKk6N4YCnmahWFDgKxcigGmzTZw8l5PmNOAqz7kXuiBy2Cc7Sf_zPaBg4r5EM249LW6HshqyljoZbeGTW-SHZzx9e9IU7QJHPLD_qYPEscqXWpuyHVKj9XPykn4DWpNwKimBFvOIHbA/s320/mtd_20231219.png" width="320" /></a></div><br /><span style="font-family: arial;"><br /></span><p></p><p style="text-align: justify;"><span style="font-family: arial;">Item #6 is a problem child. It is a low-priced item ($9.99) that sells the second-most units of any of the top ten sellers. But for every $9.99 unit sold, MRV is a negative $4.75, meaning the customers who purchase the $9.99 item spend $4.75 LESS in the next year as a consequence.</span></p><p style="text-align: justify;"><span style="font-family: arial;">In other words, the item is a loyalty killer.</span></p><p style="text-align: justify;"><span style="font-family: arial;">If you take last year's sales and what you lose in the next year by selling that item into account and take the sum of the two metrics down to profit, you will learn that this best selling item is actually UNPROFITABLE to your brand.</span></p><p style="text-align: justify;"><span style="font-family: arial;">I'm guessing you want to know these facts for your business, right?</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-8732764812059927612024-02-25T19:10:00.000-08:002024-02-25T19:10:00.142-08:00Oh, It Adds Up<p style="text-align: justify;"><span style="font-family: arial;">Let's look at an example.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">You have a winning item.</span></li><ul><li><span style="font-family: arial;">It sold 50,000 units last year at an average of $30.00 each, for $1,500,000 in sales.</span></li></ul><li><span style="font-family: arial;">However, this item has negative Merchandise Residual Value ... negative $10.00 in the next year.</span></li><ul><li><span style="font-family: arial;">This means the item will cost your brand $10.00*50,000 = $500,000 next year.</span></li></ul></ul><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Is the item truly a winning item? That's a good question! It generated $1,500,000 in sales, but it will cost your brand $500,000 next year. In other words, it's actually a $1,000,000 item.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Every single one of you manages a brand where this happens. Every single one of you.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">You can't stop customers from buying that item.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">But as a marketer, you are under no obligation to FEATURE that item, now are you?</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">If you aren't already performing this style of work, contact me now (kevinh@minethatdata.com) and we'll get started, ok?</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-62151006408310805662024-02-22T19:10:00.001-08:002024-02-22T19:10:00.139-08:00Lots of Choices!<p><span style="font-family: arial;">I updated my product offering (click on the image below or click here to <a href="https://blog.minethatdata.com/p/hire-kevin.html" target="_blank">visit my Hire Me page</a>).</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtrSy75UZOgmDF2cuZG7UDpH9mtzkKlxteg96fG3-SZ7FDP295RWXPmvBoPgtydkkLwsHjjLFzVcXOunHvE923T6WYAJsOWz66MxG87JQFcfwV2qhBlb69BEbXvSHdCQZAja_9Uj1dQmVA4pX2YPSUavxaKD3acxLVTOlcItQOG-vahuPQQTKofg/s1280/Kevin_Hillstrom_MineThatData_ProductOffering2024.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjtrSy75UZOgmDF2cuZG7UDpH9mtzkKlxteg96fG3-SZ7FDP295RWXPmvBoPgtydkkLwsHjjLFzVcXOunHvE923T6WYAJsOWz66MxG87JQFcfwV2qhBlb69BEbXvSHdCQZAja_9Uj1dQmVA4pX2YPSUavxaKD3acxLVTOlcItQOG-vahuPQQTKofg/w400-h225/Kevin_Hillstrom_MineThatData_ProductOffering2024.jpg" width="400" /></a></div><br /><span style="font-family: arial;"><br /></span><p></p><p style="text-align: justify;"><span style="font-family: arial;">There are several updates here.</span></p><p></p><ul style="text-align: left;"><li style="text-align: justify;"><span style="font-family: arial;">I re-introduced my <b><span style="color: #674ea7;">CATALOG MODELING</span></b> project, given how popular it was over the winter when I wasn't even offering it. Many (MANY) catalog brands are going through a dramatic transformation, forced upon them by rising paper/printing/postage costs. In these projects, I calculate the exact number of catalogs to mail a customer annually. You'll save a significant amount of ad cost, you'll increase profit in the process.</span></li><li style="text-align: justify;"><span style="font-family: arial;"><b><span style="color: #674ea7;">MERCHANDISE DYNAMICS:</span></b> This is going to be a project that I roll out over the next few weeks. There is a significant shift among e-commerce brands to fully understand the interaction between customers and what the brand sells. You've seen some of my work over the past 1-2 weeks. Lots more to follow.</span></li><li style="text-align: justify;"><span style="font-family: arial;"><b><span style="color: #674ea7;">HILLSTROM'S CHECK-UP:</span></b> You asked for this. You want a quick-and-tidy evaluation of your business that can be executed within 1-3 days. That's what this project is. I'll combine a few aspects of Merchandise Dynamics with a full Elite Program Run, helping you understand within a few days some high-level issues that are holding your brand back.</span></li></ul><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Next week? More on Merchandise Dynamics.</span></div><p></p><p><span style="font-family: arial;"><br /></span></p><p><span style="font-family: arial;"><br /></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-29026426910557495692024-02-21T19:10:00.000-08:002024-02-21T19:10:00.139-08:00MRV (Merchandise Residual Value): A Jewelry Example<p style="text-align: justify;"><span style="font-family: arial;">Yesterday I showed you how Home merchandise negatively impacted how the customer behaved in the future.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Here's Jewelry for the same brand. Tell me what you observe:</span></p><p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLgIAJj3i0ivOGF4tAPFFyumJTLuwVLbTmQsbZ2Nqmvkk3gYls77WpYy-ROpjPx94RFi1j3SJV7HZ0pQGVn1J5D6vlzFWSrClL7ftBErO7_1wXRauGh8ssMTaqwxtAPDlM3ftla-JnBRtwBSz5v3tCGC9fOYV8DtLxH2B33yF6nEQ5PdMFkK9F-Q/s1280/mtd_20240210c.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLgIAJj3i0ivOGF4tAPFFyumJTLuwVLbTmQsbZ2Nqmvkk3gYls77WpYy-ROpjPx94RFi1j3SJV7HZ0pQGVn1J5D6vlzFWSrClL7ftBErO7_1wXRauGh8ssMTaqwxtAPDlM3ftla-JnBRtwBSz5v3tCGC9fOYV8DtLxH2B33yF6nEQ5PdMFkK9F-Q/w400-h225/mtd_20240210c.jpg" width="400" /></a></div><br /><span style="font-family: arial;">Jewelry is generally purchased by customers in the middle of the life stage of the customer. Notice that 35 winners negatively impact customer spend in the future, while 64 winners positively impact customer spend in the future.</span><p></p><p style="text-align: justify;"><span style="font-family: arial;">For this brand, Jewelry is a positive (on average) on future customer spend.</span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-48209387790149304882024-02-20T19:10:00.000-08:002024-02-20T19:10:00.151-08:00MRV: An Example With Home Merchandise<p style="text-align: justify;"><span style="font-family: arial;">Home is one of those categories that Executives love, customers allegedly love, and analysts don't love.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Why?</span></p><p style="text-align: justify;"><span style="font-family: arial;">Because buying Home product stalls customer evolution.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Here's a grid for Home products within this brand.</span></p><p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjt0gNQw-AIpw831TTT-LUcOqyE895ftyDTQcXCYQ5HDA-7aHZKv7cbbA_dXv-eakkAWO8lH71aIt4Tzejl0jGe1SAZGIuPiKdmma8OpEnBURT_xQh3j5PTmDc1Rizk0ENPm0LB_n6Nl_kYj5gCBd-49m_pfBzq-6ffm9lxvAoTLWSCE08Eb1few/s1280/mtd_20240210b.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjt0gNQw-AIpw831TTT-LUcOqyE895ftyDTQcXCYQ5HDA-7aHZKv7cbbA_dXv-eakkAWO8lH71aIt4Tzejl0jGe1SAZGIuPiKdmma8OpEnBURT_xQh3j5PTmDc1Rizk0ENPm0LB_n6Nl_kYj5gCBd-49m_pfBzq-6ffm9lxvAoTLWSCE08Eb1few/w400-h225/mtd_20240210b.jpg" width="400" /></a></div><br /><span style="font-family: arial;">This table is just plain scrumptious.</span><p></p><p style="text-align: justify;"><span style="font-family: arial;">Who buys Home Merchandise? In this case, it's generally customers in the middle of their life stage with the brand, but mostly among loyal customers.</span></p><p style="text-align: justify;"><span style="font-family: arial;">So, our best customers are generally buying Home merchandise.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Do winning Home items help/hurt future customer spend?</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">Winning Home Items HURT future customer spend.</span></li></ul><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">I see this happen a lot - have been watching this for more than three decades. Once that customer buys sheets or furniture, the customer doesn't need to buy again for awhile - even though you offer other products that the customer could purchase regularly.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">As a marketer, you have to be very careful WHO you offer Home products to. You might think you are helping the customer cross-shop your entire brand. If you cause your customer to spend $50 less next year because of it, you've accomplished little and likely hurt the customer relationship.</span></div><p></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-1718329390068194452024-02-19T19:10:00.000-08:002024-02-19T19:10:00.153-08:00MRV (Merchandise Residual Value): Placing All Those Dots In A Grid<div style="text-align: justify;"><span style="font-family: arial;">You saw the graph yesterday.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj53SwKfg208V5wTU_Y9wTFBDkelwQMZRQ0zmzyBaHQNUxAJ_09ojLbJxPX6SNjMuqfq3e8AEe5-_tme5FRhsM3uiQDdAVOlkir8psYqP8se0ga2WeSwu-CBA98fQAjZJQCrzRcQAl9dxNjgNyPnO0OYWCs1FmBBPPpIYrMnTAnpNuZK95PoEYJMw/s1280/mtd_20240210.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj53SwKfg208V5wTU_Y9wTFBDkelwQMZRQ0zmzyBaHQNUxAJ_09ojLbJxPX6SNjMuqfq3e8AEe5-_tme5FRhsM3uiQDdAVOlkir8psYqP8se0ga2WeSwu-CBA98fQAjZJQCrzRcQAl9dxNjgNyPnO0OYWCs1FmBBPPpIYrMnTAnpNuZK95PoEYJMw/w400-h225/mtd_20240210.jpg" width="400" /></a></div><br /> </span></div><div style="text-align: justify;"><span style="font-family: arial;">The average business professional will glaze over when seeing the data presented in that manner.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Simply the presentation to a 3x3 grid, and you have something.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguzZx22Mjq1H_0FEvjshj82HFnUQVczBlSoiW6ulDurh6KNOuGL8-VgIGEgsDdJ2tTvj-bB6UfeeVlI62zjGR3MpPeihjU17WxdO7MA-prk7f7mSK30HoKRN5Z81ZTxWqFSy3QTGK6WwLjFxyOzGbZHZiIjPy_UvlN4JR8Xq6BvqOg7l5K9KTrBw/s1280/mtd_20240210a.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguzZx22Mjq1H_0FEvjshj82HFnUQVczBlSoiW6ulDurh6KNOuGL8-VgIGEgsDdJ2tTvj-bB6UfeeVlI62zjGR3MpPeihjU17WxdO7MA-prk7f7mSK30HoKRN5Z81ZTxWqFSy3QTGK6WwLjFxyOzGbZHZiIjPy_UvlN4JR8Xq6BvqOg7l5K9KTrBw/w400-h225/mtd_20240210a.jpg" width="400" /></a></div><br /><span style="font-family: arial;">In total, yes, the counts should be reasonably equal.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">Look at a merchandise category, and the story changes. Let's evaluate one such story tomorrow, ok?</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-60893966691532489032024-02-18T19:10:00.000-08:002024-02-18T19:10:00.137-08:00MRV (Merchandise Residual Value): The Residual Plot<p style="text-align: justify;"><span style="font-family: arial;">Remember, MRV (Merchandise Residual Value) is the amount of customer spend in the next year caused by each winning item, after controlling for where the customer is in the life stage of the customer when buying the item.</span></p><p style="text-align: justify;"><span style="font-family: arial;">If an item adds value to the customer, you want to feature the item.</span></p><p style="text-align: justify;"><span style="font-family: arial;">If an item causes a customer to purchase less often in the future, you want to de-emphasize the item, right?</span></p><p style="text-align: justify;"><span style="font-family: arial;">Are you calculating this metric?</span></p><p style="text-align: justify;"><span style="font-family: arial;">Here's a residual plot for a brand with more than 70,000 items sold per year and more than 2,000 winners per year.</span></p><p style="text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7DnkKM8nrbGCz-eq1j_mXMAMIoFexBvQGzc04Lfvzy6Riv1s25-YXlhWvrLlKyLWIcZ0dAuYWRukgL69gsR555946vVEO9feVOyKcftingv7hhWf367vy1FX2gxmhtvG0Asy65IPald03YYMU5ZSdUeZVX9_SgRzb7-1ZnM3pdnnJFVh8o3BAvA/s1280/mtd_20240210.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7DnkKM8nrbGCz-eq1j_mXMAMIoFexBvQGzc04Lfvzy6Riv1s25-YXlhWvrLlKyLWIcZ0dAuYWRukgL69gsR555946vVEO9feVOyKcftingv7hhWf367vy1FX2gxmhtvG0Asy65IPald03YYMU5ZSdUeZVX9_SgRzb7-1ZnM3pdnnJFVh8o3BAvA/w400-h225/mtd_20240210.jpg" width="400" /></a></div><br /><span style="font-family: arial;"><br /></span><p></p><p style="text-align: justify;"><span style="font-family: arial;">Items purchased by a customer early in the life stage (i.e. a 2nd or 3rd purchase) don't have a lot of MRV variability ... customer spend in the future is changed by +/- $20, which isn't nothing, but it isn't what we see later.</span></p><p style="text-align: justify;"><span style="font-family: arial;">When an item is purchased by customers buying for the 8th time, on average, future customer spend is impacted by +/- $50. In other words, if a customer is expected to spend $300 in the future and the customer buys an item that harms MRV, the customer trajectory is changed by the item and the customer now spends $250 in the future instead of $300.</span></p><p style="text-align: justify;"><span style="font-family: arial;">The items we sell help dictate how the customer will behave in the future. Why are we repeatedly featuring items that cause customers to spend less in the future?</span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p><p style="text-align: justify;"><span style="font-family: arial;"><br /></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-48146910070434790442024-02-15T19:10:00.000-08:002024-02-15T19:10:00.139-08:00MRV Yields "Some" Bad Items and "Some" Good Items<p><span style="font-family: arial;">This is the way MRV (Merchandise Residual Value) looked for the Winning Items at one brand:</span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQNXhzeIY-Q8cO-BO7aLRis_HJvoMkPn2T8AZb3BhDmf-Me_sOCL8RUpuTP3y9ENuQ71beXRByxK4xBAR8xCl-gvO3uVfBbOr1khWVqW16TXXT6fwykf8UnBHRm6e4KMNYEN8W7rlNg-XyXrJ03rNnei4iLVDgDAXSKxaeTl3zDMUXJzNwiezTBg/s1280/mtd_20240208b.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQNXhzeIY-Q8cO-BO7aLRis_HJvoMkPn2T8AZb3BhDmf-Me_sOCL8RUpuTP3y9ENuQ71beXRByxK4xBAR8xCl-gvO3uVfBbOr1khWVqW16TXXT6fwykf8UnBHRm6e4KMNYEN8W7rlNg-XyXrJ03rNnei4iLVDgDAXSKxaeTl3zDMUXJzNwiezTBg/w400-h225/mtd_20240208b.jpg" width="400" /></a></div><br /><span style="font-family: arial;"><br /></span><p></p><p style="text-align: justify;"><span style="font-family: arial;">Most items act "normally" ... but there are 20+ items that perform terribly (i.e. they deliver customers that, after controlling for the quality of the customer, deliver customers with reduced future value). Conversely, there are 20+ items that perform really well ... the customers who purchase those items are worth more in the future BECAUSE they purchased those items.</span></p><p style="text-align: justify;"><span style="font-family: arial;">It's really, really important to know which items deliver customers that BECAUSE they bought the item are now worth MORE than they would have been previously.</span></p><p style="text-align: justify;"><span style="font-family: arial;">This knowledge changes how the marketer does every aspect of his/her job.</span></p><p style="text-align: justify;"><span style="font-family: arial;">It's that important.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Are you performing this analysis?</span></p><p style="text-align: justify;"><span style="font-family: arial;">If not, contact me immediately (kevinh@minethatdata.com) and we'll get busy.</span></p><p><span style="font-family: arial;"><br /></span></p><p><span style="font-family: arial;"><br /></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-40873843298494116122024-02-14T19:10:00.000-08:002024-02-14T19:10:00.144-08:00MRV: Merchandise Residual Value<p style="text-align: justify;"><span style="font-family: arial;">"MRV" is what I call "Merchandise Residual Value". It's the amount of incremental value the item generates on an annual basis, per customer purchasing the item, above-and-beyond expectations.</span></p><p style="text-align: justify;"><span style="font-family: arial;">We control for the LIFESTAGE of the customer buying the item. Here's a sample dataset of six items. For each item, I calculated the LIFESTAGE of the customers buying the item, and I calculated the FUTURE spend customers who purchased the item in 2022 spent in 2023.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">Winner #1: Lifestage = 3.00. Future = $200.00.</span></li><li><span style="font-family: arial;">Winner #2: Lifestage = 3.50. Future = $235.00.</span></li><li><span style="font-family: arial;">Winner #3: Lifestage = 4.00. Future = $180.00.</span></li><li><span style="font-family: arial;">Winner #4: Lifestage = 4.50. Future = $305.00.</span></li><li><span style="font-family: arial;">Winner #5: Lifestage = 5.00. Future = $285.00.</span></li><li><span style="font-family: arial;">Winner #6. Lifestage = 7.00. Future = $400.00.</span></li></ul><div><span style="font-family: arial;">Let's graph the relationship.</span></div><div><span style="font-family: arial;"><br /></span></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5KnQpsIP62sw73No7VLxdl4d9TowctEVBbzUznsnY_Alg6oQX9PZKv5tpo_FJQQm6tjHZr81x3R1CylCRooE4AO8KbKUiqWwu0_7ghLaz_7INPdWoOafcJDoQi_ibkxETS6xpfBd4nN8c7nbv4RHjbLugBbvnCDS9sZNKCRVBjBMy4mouz5UWyA/s1280/mtd_20240208a.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5KnQpsIP62sw73No7VLxdl4d9TowctEVBbzUznsnY_Alg6oQX9PZKv5tpo_FJQQm6tjHZr81x3R1CylCRooE4AO8KbKUiqWwu0_7ghLaz_7INPdWoOafcJDoQi_ibkxETS6xpfBd4nN8c7nbv4RHjbLugBbvnCDS9sZNKCRVBjBMy4mouz5UWyA/w400-h225/mtd_20240208a.jpg" width="400" /></a></div><br /><span style="font-family: arial;">There's a clear relationship - if items are purchased by customers later in the LIFECYCLE, those items produce better Merchandise Value.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">That's not what we are looking for.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">We went Merchandise Residual Value (MRV) ... the difference between the points on the graph and the orange line.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">The equation is a straight linear Ordinary Least Squares Regression equation.</span></div><div><ul><li><span style="font-family: arial;">$34.63 + $51.75*(LIFESTAGE).</span></li></ul><div><span style="font-family: arial;"><br /></span></div></div><div><span style="font-family: arial;">For each item, we know the FUTURE spend of customers buying the item, we know the predicted amount of future spend, so the residual is FUTURE - PREDICTION.</span></div><p></p><ul style="text-align: justify;"><li><span style="font-family: arial;">Winner #1: Lifestage = 3.00. Future = $200.00. Pred = $189.99. MRV = $10.12.</span></li><li><span style="font-family: arial;">Winner #2: Lifestage = 3.50. Future = $235.00. Pred = $215.76. MRV = $19.25.</span></li><li><span style="font-family: arial;">Winner #3: Lifestage = 4.00. Future = $180.00. Pred = $241.63. MRV = ($61.63).</span></li><li><span style="font-family: arial;">Winner #4: Lifestage = 4.50. Future = $305.00. Pred = $267.51. MRV = $37.50.</span></li><li><span style="font-family: arial;">Winner #5: Lifestage = 5.00. Future = $285.00. Pred = $293.38. MRV = ($8.38).</span></li><li><span style="font-family: arial;">Winner #6. Lifestage = 7.00. Future = $400.00. Pred = $396.88. MRV = $3.12.</span></li></ul><div></div><p style="text-align: justify;"></p><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Which item has a poor MRV? Winner #3 does. At an average LIFESTAGE of 4.00 orders, the item should produce customers worth $241.63 ... instead it produced customers worth $180.00. MRV is negative ... -$61.63.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">This is so ... darn ... neat!!</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">So ... darn ... neat!!</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">If you are going to feature merchandise in social or email or print, you might de-emphasize Winner #3 because it produces customers who spend less in the future, with an MRV of ($61.63).</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Think about all the ways you'll use MRV in your business?</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Now get busy using MRV!!</span></div><div><span style="font-family: arial;"><br /></span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-89543051753389007802024-02-13T19:10:00.000-08:002024-02-13T19:10:00.142-08:00Once You've Defined A Winner ...<p style="text-align: justify;"><span style="font-family: arial;">... it becomes your job to determine if the winning item helps or hurts your brand.</span></p><p style="text-align: justify;"><span style="font-family: arial;">How can a winning item possibly hurt your brand?</span></p><p style="text-align: justify;"><span style="font-family: arial;">Easy.</span></p><p style="text-align: justify;"><span style="font-family: arial;">If the winning item attracts buyers who choose to <i><u><span style="color: #cc0000;">reduce</span></u></i> their spend in the future, then the winning item hurts your brand.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Here's what I want you to do.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Take every winning item from 2022, and perform two calculations for me.</span></p><p style="text-align: justify;"></p><ol><li><span style="font-family: arial;">Calculate where in the customer life stage the customer was when the customer purchased the item. Was this the 14th purchase for that customer? If so, create a variable called "LIFESTAGE" and populate the column with a 14 in this instance.</span></li><li><span style="font-family: arial;">For every item sold in 2022, calculate how much the customer who bought that item in 2022 spent in 2023. Call this variable "FUTURE".</span></li></ol><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Now, for each winning item, calculate the average "LIFESTAGE" the customer resides in when placing the order. If an item was sold three times and the three customers were on the 1st, 3rd, and 8th order in their LIFESTAGE, the average LIFESTAGE for the item is (1+3+8)/3 = 4.00.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Next, for each winning item, calculate the average "FUTURE" amount the customer who buys the item spends. If the item was sold three times and the three customers spent $0, $0, and $300 in the next year, the average FUTURE for the item is (0+0+300)/100 = $100.00.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Things are about to get interesting!</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Tomorrow, we'll get to the interesting part.</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-79333716701702510892024-02-13T10:05:00.000-08:002024-02-13T10:05:20.682-08:00And To Think You Are Required To Implement Some Idealistic Omnichannel Strategy To Compete Against This<p style="text-align: justify;"><span style="font-family: arial;"><a href="https://www.theatlantic.com/technology/archive/2024/02/temu-super-bowl-shop-like-a-billionaire/677436" target="_blank">They've been around about a year-and-a-half ... they advertised during the Super Bowl, and they're going to run circles around the tactics your agency demands you implement ... they're Temu (click here)</a>.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-3784104388353342692024-02-12T19:10:00.000-08:002024-02-12T20:32:19.732-08:00Defining Winners<p style="text-align: justify;"><span style="font-family: arial;">My thinking evolved a lot over the past decade. These days, to me, "Winners" or "Winning Items" are items that represent the top half of annual sales (or in many of my projects, I calculate winning items on a daily basis). In other cases, I just grade the top 20% (sales) of items as "A", next 20% as "B", next 20% as "C", next 20% as "D", and the remaining 20% (which is often 60% of items) as "F".</span></p><p style="text-align: justify;"><span style="font-family: arial;">In one project, there were about 2,600 winners out of 72,000 items sold in the past year. In other words, 2,600 out of 72,000 items accounted for half of annual sales.</span></p><p style="text-align: justify;"><span style="font-family: arial;">And so it goes with most of the brands we manage. Apple has the iPhone, then generates less sales from Macs and Watches and Airpods etc. The iPhone is the Winner.</span></p><p style="text-align: justify;"><span style="font-family: arial;">Winners (and sales of most items, for that matter) follow a law of diminishing returns. You can't just keep expanding your assortment and expect sales to grow linearly.</span></p><p style="text-align: justify;"><span style="font-family: arial;">All of us eventually max out our assortment. We do not come up with creative solutions, and our ability to grow via product ends. This is where marketers are called into the equation. Marketers help in two different ways.</span></p><p style="text-align: justify;"></p><ul><li><span style="font-family: arial;">New Markets/Channels.</span></li><li><span style="font-family: arial;">Improved Perception of the Brand.</span></li></ul><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Modern marketers could help in a third way.</span></div><div><ul><li><span style="font-family: arial;">Developing new/existing items into winning items.</span></li></ul><div><span style="font-family: arial;"><br /></span></div></div><div><span style="font-family: arial;">Modern marketers work hard to develop customers.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Modern marketers have time to develop winners as well.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">Winning items generate the profit that pays our salaries, bonuses, health insurance, 401k, you name it, they're responsible for it. When we have more winning items, we have more of the things we need to be successful.</span></div><p></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-32202893.post-89319118290724505292024-02-11T19:10:00.000-08:002024-02-11T19:10:00.246-08:00Diminishing Returns In Action<div style="text-align: justify;"><span style="font-family: arial;">Maybe you don't believe all of the diminishing returns curves you see me present, in one form or another. So let's take a one-day detour into the world of Major League Baseball.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">The image below evaluates data for MLB team spend and number of wins the team earned during the 2023 season.</span></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjM6QYjI024lWQUv8eUTiCFEPskwXLQspUCh0PFBnCi90TU9RZBlwIzcQiQU_1pEw85LI7Fpx14eJZrbXpCfhbT3tMj2w6GT8Sq1IGga7aYIBV_-vUTho4wdI19n_w1H3GNDjtTuH0SYrX6Q4fCIdEuxCDgQQbz7phxKeScKxs37pvZ-WpP9-_nwg/s1280/mtd_20240208.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="1280" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjM6QYjI024lWQUv8eUTiCFEPskwXLQspUCh0PFBnCi90TU9RZBlwIzcQiQU_1pEw85LI7Fpx14eJZrbXpCfhbT3tMj2w6GT8Sq1IGga7aYIBV_-vUTho4wdI19n_w1H3GNDjtTuH0SYrX6Q4fCIdEuxCDgQQbz7phxKeScKxs37pvZ-WpP9-_nwg/w400-h225/mtd_20240208.jpg" width="400" /></a></div><br /><span style="font-family: arial;"><br /></span></div><div style="text-align: justify;"><span style="font-family: arial;">The orange line represents a fitted power function (a*x^b). On the bottom right of the image, you can see how much money you have to spend to buy wins.</span></div><div style="text-align: justify;"><ul><li><span style="font-family: arial;">Going from $100 million in payroll to $150 million yields about 4.4 wins per season ... the difference between a team going 80-82 vs. 76-86, approximately.</span></li><li><span style="font-family: arial;">Going from $150 million to $200 million yields 3.3 wins per season.</span></li><li><span style="font-family: arial;">Going from $200 million to $250 million yields 2.6 wins per season.</span></li><li><span style="font-family: arial;">Going from $250 million to $300 million yields 2.2 wins per season.</span></li></ul><div><span style="font-family: arial;">So a $100 million payroll team can expect to go 75-87. A $300 million payroll team can expect to go 88-74.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">If you were an executive running a baseball team, you'd probably ask yourself if you truly had to spend $200 million to purchase 12 additional wins ... or was there "something else" in the data that could be used to manufacture 12 additional wins???</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">But notice diminishing returns happening in baseball. Each additional fifty million dollars buys you fewer wins.</span></div><div><span style="font-family: arial;"><br /></span></div><div><span style="font-family: arial;">The same things happens in your business ... quite literally everywhere. Each additional customer is generally worth less. Each additional product you offer is generally worth less. Each additional marketing dollar is generally worth less.</span></div></div><div style="text-align: justify;"><span style="font-family: arial;"><br /></span></div>Unknownnoreply@blogger.com0