Kevin Hillstrom: MineThatData

Want To See If Your Customers Are Paying Attention To You?

Buried deep on the Headphones.com website is this (click here for proof). The comments were obviously staged as well, and are delightful.

I share this with you after enduring a day of absolute Cyber Monday pummeling. One "brand" sent me six email messages promoting Cyber Monday, offering 60% off. Three went straight into my junk folder, three persevered and made it to my inbox.

When you don't have a creative bone in your org structure, you send six email messages on Cyber Monday promoting 60% off. It's all you have - you are begging the customer to buy something on a day that generates customers who have low long-term value. You'll spend the rest of the year offering more discounts because rebuy rates are too low. You'll spend eternity doing this, you can't get out of the cycle. You populate your customer file with the worst possible customers, the ones who only purchase "because it is a game".

You do not want those customers.

And yet?

So darn many of you keep attracting those customers.

Give creativity a try. It won't work at first - it can't work when the customer has been trained to accept enormous discounts. It is the path out, however.

It's Here

Yup, Cyber Monday. Are you taking care of your customers today or are you taking care of those who earn money via thought leadership?

Performance Bonuses

As a 26 year old at Lands' End, I enjoyed the period between Thanksgiving and Christmas. All of the hectic work needed to get Holiday catalogs out the door happened in August / September. By Thanksgiving, there was nothing left to do but count the money. And get February / March catalogs out the door. The train must run on schedule.

So there I am, sitting at my desk right before Christmas, when my boss stops by and hands me a check.

"What is this?"

"Half of your annual bonus."

"I get a bonus?"

"Yes. If the company meets profit goals, you share in the profit."

"Say what now?"

"We met our profit goals. Our owner pays half before Christmas because he knows it is important for families to have the money at Christmas. He pays the other half when our fiscal year results are announced in March."

Well I've never been so excited to get half of 10% of $28,000 in my life, less taxes and withholding!

From that moment, I became obsessed with profit. It was a way for everybody to get paid more money!

The incentive only goes up from there ... all of a sudden it's a 20% bonus as a Manager, a 40% bonus as a Director ... it was quite a bit more than that when I was a VP at Nordstrom. Do the math on that one.

An Eddie Bauer bonus became the down payment on a first home. That was meaningful.

My staff at Nordstrom became agitated when our division was folded into the Retail division. The Online division at the time had a bonus structure, the Retail division did not (for analysts / project managers). I was able to get half of the annual bonus added to their annual salaries, guaranteeing them something. Didn't matter. They were livid they weren't being rewarded for a year of hard work.

Bonuses accomplish three things.

They allow employees to share in the success of a company.
They teach employees to focus on what matters to Management / Ownership. In most cases, that was either sales growth and/or profit.
The employee isn't performing soulless work while hoping for a 2% cost of living increase when the Owner sails off in a yacht. There's a reason, a purpose, for doing a good job if salary increases are unlikely and promotions are unlikely.

I realize this message won't get anybody to do anything different. But that's not the purpose. The goal here is to appreciate those of you who are blessed, who might get a check in the next month or early next year ... helping you appreciate your lot in life. Bonuses are good things.

The Cyber Window

In my projects, I create a variable that measures if a customer purchases during what I call the "Cyber Window".

The Wednesday before Thanksgiving to the Saturday after Cyber Monday is the Cyber Window.

My Elite Program clients recently learned how valuable all these customers are that are acquired at 60% off plus free shipping (plus 80% off clearance items).

One of the biggest problems you face is the "repurchase opportunity" for Cyber Window buyers. When you acquire a customer in September or October, the customer is very likely to buy again in November / December. You get to double-dip your chip, you generate a second order quickly. That dynamic drives an increase in future value. The Cyber Monday window? It's doomed to fail. You fulfill the need of the customer to get a gift for Christmas (in many cases), so the customer is dormant through Christmas, and then the customer is dormant in January / February because you are liquidating stuff and the customer isn't there for liquidated merchandise, the customer had a need met via a gift purchase at 60% off. The "brand" (that's you) misses out on the "response opportunity", driving down future value.

So stop doing that!

I get it, you want to acquire customers, and it is easy to do so during the Cyber Window. So you can do that. But don't be a Lemonhead and acquire the customer at 60% off so you don't make any profit and then fail to generate profit downstream ... you're not here to fill the void with empty calories.

Tell me why I'm wrong (kevinh@minethatdata.com).

Business Therapy!

Need Business Therapy? Want to talk about anything related to your business?

If you'd like an hour of Business Therapy, contact me now (kevinh@minethatdata.com) to get started. Here is a link to all other project opportunities.