Kevin Hillstrom: MineThatData

You Have Relationships, And You Have Situations That Do Not Follow Your Relationships

We've been evaluating micro-businesses ... your business is comprised of dozen(s) of micro-businesses. Each of those businesses possess different dynamics.

Sometimes there is an overriding relationship. For instance, this business is represented by a graph ... the x-axis is the rebuy rate of customers buying again from each individual micro-brand (category), the y-axis is annual net sales for the micro-business (category).

In general, one could fit a line through the dots ... if a micro-business (category) retains more customers, it generates more net sales. Sort of a #duh. Snoozer.

Except for two things.

Look at the category with an approximate 7.8% rebuy rate ... but generating about $11,000,000 a year. That shouldn't happen ... that micro-business should be somewhere around $6,000,000 a year. Why so high? High price points. The category has high prices, which artificially lower rebuy rates ... but the customers who do purchase spend a lot more, resulting in a good outcome.

Look at that data point with a rebuy rate > 14%. This micro-business has as loyal of customers as any category, and yet sales are awful. Why so low? Because the category does not attract customers outside of its own micro-category. Yeah. Customers like this category, but customers who do not buy from the micro-category DO NOT LIKE this category and won't buy from it, greatly limiting the potential of the category.

There's a lot of secrets in your business ... go look for them ... then develop marketing plans for each micro-business (category).

How A Micro-Business Generates Business

Allow me to simplify the message. Here is a brand that has seventeen categories. One of the categories is Gifts. Here is how the micro-business generates sales.

18% from last year's Gift Buyers.
15% from last year's buyers, no Gift purchase last year.
67% from new/reactivated buyers this year.

If it is your job to grow Gifts, it is your job to work with the marketing team to create awareness among people who haven't bought anything from the brand.

Every merchant responsible for a category / micro-business needs to partner with a marketer to properly grow the business.

Here's another example ... the micro-business is Pet Accessories.

4% from last year's Pet Accessory Buyers.
20% from last year's buyers, no Pet Accessory purchase last year.
76% from new/reactivated buyers this year.

In this example, it's even more critical to have a merchant partner with a marketer who knows how to fish for prospects who have never purchased from the brand.

Every category / micro-business has a sales generation profile that is different than the overall profile for your brand. Be sure to partner with your merchandising co-worker, helping that professional look good. If the merchant looks good, you look good!

SugarBee Apples

I really enjoy Sprint Car Racing ... toss Weather / Pickleball / Sprint Car Racing / Headphones / Food into any day and I'm generally in a good place.

When one of the two big 410 Sprint Car Series come to Central Arizona, yeah, I'm in. My favorite driver is named Rico Abreu - the most popular driver out there.

He was the champion of this series last year, and is the obvious crowd favorite ... young and old alike. There were many young ladies and boys around his car looking to meet him after the event, wearing his merch.

You don't run a race team without $$$. Lots of $$$. One of Rico's sponsors is SugarBee Apples from Washington State (click here). How do I know this? They're not prominently featured on his car, so they must be doing something else.

Well, they have the SugarBee mascot ... who had to be BOILING on Saturday night (race time temperature was 103 degrees when I arrived) ... featured here on FloRacing's broadcast of the event ... which means, of course, that not just the people at the event are hearing about SugarBee.

SugarBee did something else ... they had free apples. If you went to Rico's merch trailer (where his wife was making $30 every thirty seconds selling merch, plus you got to meet Rico's dog Gus), you were instructed to take a free SugarBee apple ... packaged in a teeny tiny adorable carrying case.

Once word got out that you could get a free apple, there were free apples everywhere. Where I sat, maybe five people were eating a free apple at the same time. The apples looked like those yummy Honeycrisp apples to my eyes ... turns out they are half Honeycrisp / half unknown variety.

All sorts of cross promotion as well.

Why bring this up?

One of the most common questions I receive is this question?

"How do I find new customers? Old school methods have dried up, and digital marketing is too expensive and opaque. Do you have examples of new customer acquisition techniques that other companies execute, examples that work?"

I hate the end of the sentence ... if you're only willing to do things that work, you're not going to be in business in a few years.

Do you think SugarBee have a guarantee that handing out a thousand apples in adorable carrying cases paired with a mascot sweating in 103 degree heat will "work"?

But there they are, doing the hard work. In person.

Creating awareness.

Reaching prospects.

Encouraging customers to go to Trader Joes or Safeway to get their apples.

I'm not saying you should hand out free widgets at an event you think is beneath your sophisticated brand.

I'm saying you should do something. You ask for examples. I just gave you an example. What is a parallel for your business, one that is brand appropriate? What stops you from executing a similar strategy that is brand appropriate?

P.S.: SugarBee has other marketing programs.

Subtle Changes Over Time

Sometimes I'll step back and look at changes across several years. Many clients don't realize the subtle changes they've caused.

In the business we're studying, there are subtle changes worth pointing out.

Comp Rebuy Rates: -6% vs. three years ago. Not ideal.

Comp Segment Demand: +1% vs. three years ago.

Comp Items Purchased: -8% vs. three years ago. Yup, this company is selling more-expensive items over time. The COO is probably looking at downsizing operations folks, the CFO might be happy if gross margins are up. Always remember that items = customers. It's not a bad thing if management has metrics moving in odd directions with a top-line that is steady/growing. It's almost always a bad thing when fewer customers buy from a client.

Comp Item Price: +9%. Wow.

Comp Full Price Selling: -4%.

Comp Off-Price Selling: +11%. The two metrics tell a story, don't they? The likely story is that merchants are increasing prices when they offer new items, customers rebel against the merchants, so the marketing team offers discounts/promotions which customers accept. #ohboy

Comp New Items: +5%.

Comp Existing Items: -2%.

I create the metrics (above) to cut through all the BS a consultant hears from "some" members of the Management Team. The business I'm analyzing here had an ownership team who wanted to "transform" the brand. After digging into the numbers and speaking with members of the Management Team, it was clear there wasn't trust/harmony between the Ownership Team and the Management Team.

The core problem wasn't merchandise ... the core problem was trust.

As it so often is.

You run these metrics for your business ... right? Of course you do. You like to know what is happening, you like being smart.

Every business has customers shopping across micro-businesses / categories. Every business has interpersonal dynamics between ownership / management / employees that spill over into the customer relationship. The consultant / analyst cuts through all the nonsense, identifying core issues impacting the customer.

Nine More Months for the USPS - Which Means an Offer for You

That's the scare they threw at #papertarians this week.

Maybe they need Henry Adkins to come in and get things done (click here).

While your agencies and paper reps and printers furiously lobby for more of the same, your job becomes a lot more interesting.

What happens to your business if you cannot mail catalogs anymore?
What happens if postage increases by 50% and you ... essentially ... cannot mail catalogs anymore?

Surely you've modeled this outcome and know exactly what happens. You have mail/holdout tests that are reliable, you thoroughly understand your organic percentage, you know how you'd shift money into digital marketing channels. You know what happens to net sales. You know what happens to your customer file.

You know.

But if you don't know, it's time to hire me (kevinh@minethatdata.com). Here are your choices.

$9,000 and I'll tell you what happens, I'll model the outcome for you. You'll know. Within a few weeks. You'll know. I'll analyze any mail/holdout tests executed in the past year at no additional cost. Pretty good deal, given the millions you spend on paper, printing & postage.
$15,000 and I'll model the outcome for you AND score your file AND I'll provide you with the scoring equations so you can implement the equations in-house. I'll also score customers for email responsiveness so you can use that information as part of your transition. You'll know, and you'll be able to take action.
$35,000 gets you more ... I'll model the outcome for you AND score your file AND I'll update your scores at least once a month AND I'll score your email file monthly AND ... AND ... I'll be on-call for general marketing challenges you have, providing advice ... you get me on video conference for 90 minutes per month and I'm available via email whenever you need me ... all through 3/31/2027. Sort of a Virtual CMO to assist with your business transition. You don't get me for on-demand ad-hoc analytics like some clients do (that's more like a six-figure situation and on-demand email/chat response and 60 minutes of video conferencing per week ... but if you need that for your transition, contact me as well, I probably have bandwidth for one (1) additional client in this circumstance). But you'll do well with this arrangement.

Here's my email address (kevinh@minethatdata.com).

Contact me immediately, 'cause this stuff usually gets me busy quickly and I don't have bandwidth to help everybody. Act right now. Be prepared.