Kevin Hillstrom: MineThatData

Newness

I watched some of the US-Spain Women's Soccer match Tuesday night.

So many players I didn't recognize. The ones I recognized largely won the Olympics a few years ago. The great class from 2015-2019, the players who struggled in the 2023 World Cup, they're gone. Times change, and if future players aren't identified and developed, future performance suffers.

Have you watched the Kansas City Chiefs play football this year? Patrick Mahomes is running the show, but look at his supporting cast ... it's a new generation of players, isn't it?

You know all about this dynamic, don't you?

If you don't find new customers, future performance suffers.

If you don't develop new items into winning items, future performance suffers.

In many ways, if you don't explore new marketing channels, future performance suffers. It's one of the blind spots of modern ecommerce professionals ... pursuit of marketplaces resulted in dead ends and missed opportunities elsewhere. Yes, some of you with commodity products are actually better-served selling on Amazon than on your own platform. Those of you who spent the past twenty years building viable "brands" have better opportunities to pursue.

Ecommerce is an endless exploration of "newness". If you are an analytically-focused professional, there's an entire career that can be built from the blueprint of newness + winners (winning items, winning customers).

A CEO Who's Customer Retention Heart Had Hardened

Back in the days when somebody paid to put you on an airplane (i.e. pre-video-conference days), I was asked by a CEO to visit his company to address a comment I made in a project writeup.

The comment?

"Until 'brand x' realizes they only retain 33% of last year's buyer file and invests significantly in customer acquisition efforts, 'brand x" will continue to contract."

At this time I had worked with the brand for more than seven years.

I was asked to present my findings to several operational teams within the company. At the end of the day, the Executive Team gathered with the CEO. It was my job to explain my findings to the CEO.

The CEO did not like my message. He took umbrage with my comment that his brand would contract. He began to yell. His face reddened. He eventually slammed his fist on the table hard enough to cause tendon damage, telling me that I didn't understand business, that his team would crack the code for customer loyalty.

At this time, his annual rebuy rates had already declined by about five percentage points (i.e. from 45% to 40%) over a seven-year period of time. I decided to chime in. My comment would end our business relationship. Here's what I said.

"You've already had seven years as CEO to crack the loyalty code. Instead, your rebuy rates have contracted over your tenure. What makes you think you the next seven years will be different?"

With that, I lost a lot of $$$, because this client was very good to me.

Would you want an analytics consultant to tell you the truth?

Or do you want an analytics consultant to make you feel good?

This CEO wanted the latter.

The problem, by the way, was not fixed. Even after a new Management Team took over.

You do not solve customer retention problems. I have a client who does an amazing job of getting as close as you can to solving customer retention problems. They've figured out the fusion of merchandising strategy and marketing targeting solutions. You CAN make a difference. You CAN'T solve the problem.

Your ability to retain your customer base is largely constrained by the merchandise you sell. If you sell stuff that doesn't sell well in summer, why would you retain customers in summer? And if you cannot retain customers in summer, why would your retention rate be high?

The business I'm talking about here had a season when the majority of their sales happened ... the customer simply didn't need their products or services year-round. By default, their business was calibrated to NOT retain customers each year.

Most of your businesses are calibrated to NOT retain customers. That's business - you succeed for other reasons!!! You know this to be true if your average number of annual purchases per twelve-month buyer is under 2.0. Somewhere between 2.5 and 3.0 purchases per year is the spot where retention sings and loyalty becomes apparent.

No amount of fist-slamming fixes a retention problem. Only year-round appealing merchandise does that.

Your November / December Forecast

Let's try something ... contact me (kevinh@minethatdata.com) and for a nominal fee I'll produce a forecast for three timeframes, based on how your customer file looks as of today. I mean, it is Forecast Season!

Timeframe #1 = November before the day before Thanksgiving.
Timeframe #2 = Cyber Window ... day before Thanksgiving to the Saturday after Cyber Monday.
Timeframe #3 = Sunday after Cyber Monday - December 31.

If you have a customer file problem, I'll be able to expose it for you quickly (project turnaround would be in just a few days), allowing you to change your marketing investments to help meet your business goals during November / December.

Contact me now (kevinh@minethatdata.com) and I'll turn this one around for you quickly at a cost that you can literally Venmo me the funds.

The Hated Holiday

There's just nothing in ecommerce more rudimentary, nothing that shows your service provider doesn't truly understand business ... than the promotion of Cyber Monday.

Or worse, "BFCM" as the service provider industry calls it.

Yesterday I talked about "double dipping" ... the proven method of acquiring / converting customers in September / October so they are recent and active in November / December, thereby "double dipping" ... generating two orders in a short period of time.

What makes more sense to you?

Acquire a customer or activate a customer in Sep/Oct and then get another quick purchase in Nov/Dec?
Generate an order at 50% off and then the customer doesn't spend money on full priced merchandise the rest of the year while waiting for "BFCM" again? It's good business for service providers. It's not good business for you. Why give away all that gross margin to participate in a service provider holiday?

Have you ever asked yourself why Amazon might benefit from Prime Days in the first week of October? It's almost like they're trying to get customers to double-dip!

Double-Dip Season

As you likely know, in most cases you WANT to acquire a new customer in September or October.

Why?

You get to double-dip.

When you acquire a customer on December 13, the customer is "done". The customer might purchase clearance products in January and might buy again in Spring (but probably won't buy again in Spring). From there, the customer largely goes dormant until the following November/December.

When you acquire a customer on October 13, the customer is "not done". When the customer is most likely to buy for a second time (the first ten weeks after a first purchase), you present the customer with November / December ... two months of amplified response. The customer quickly becomes a 2x buyer, and from there the customer is on the path to loyalty.

One of the easiest ways to build a loyal customer base is to acquire customers in Sep/Oct then send trigger-based email campaigns to customers through December to rapidly generate a second order. Many companies do this, it's highly effective, and it's highly profitable.