Kevin Hillstrom: MineThatData

Quiz Week: Question #2

Yesterday we explored a business where the marketing department elected to cut back on customer acquisition. We can easily detect this issue by looking at comp segment results (which were consistently positive). When comp segment results are positive and new/reactivated comps have a shift in performance at a specific point of time, we look to the marketing team ... because their change in marketing investment caused the business challenge observed.

Here is today's quiz question: What is wrong with this business?

Comp New/Reactivated Buyer Counts:

Sep: -3%.
Aug: -5%.
Jul: +2%.
Jun: - 1%.
May: +3%.
Apr: +4%.

Comp Segment (Those With Exactly Two Purchases In The Past Year) Results.

Sep: -8%.
Aug: -7%.
Jul: -9%.
Jun: -6%.
May: -9%.
Apr: -8%.

Quiz Week: Question #1

This week we're going to cover comp segment results that frequently arise in my work. Your job is to diagnose the reason why the business is succeeding or failing.

Question #1: Here are comp new/reactivated comps, and comp segment results ... for the past six months. What is the likely cause of this business not meeting expectations.

Comp New/Reactivated Buyer Counts:

Sep: -22%.
Aug: -18%.
Jul: -30%.
Jun: +13%.
May: +11%.
Apr: +8%.

Comp Segment (Those With Exactly Two Purchases In The Past Year) Results.

Sep: +6%.
Aug: +8%.
Jul: +5%.
Jun: +7%.
May: +3%.
Apr: +9%.

Based on what you see here, what is the reason this business did not meet expectations in recent months? What would cause a business to exhibit the comp new/reactivated buyer and comp segment results you see here? What would you do to fix the problem?

8%

Here's a gem.

I've been working in corporate America for more than thirty-eight years. The number of blank stares I've received when suggesting an A/B test when the person on the other side of the conversation is a ROAS believer ... well, it's a staggering number of blank stares!

A/B tests are humbling. They force you to address your personal marketing belief system. It's been my experience that not many professionals want to address their personal marketing belief system.

60%

In sports, the trend is moving toward building small stadiums. Colorado State comes to mind a few years ago. Northwestern this year, building a 35,000 seat stadium. Instead of probably not selling an inexpensive seat four thousand feet above the field, premium seats with premium experiences are sold at premium prices. Five thousand highly enthusiastic and/or wealthy individuals pay a ton more, the remaining 30,000 pay more.

Similar things are happening in ecommerce. The "middle" of the customer file is simply disappearing, being replaced by either one-time buyers that the brand needs to generate a handsome profit on the acquisition transaction ... or ... loyal buyers are subsidizing the core business.

I've told you this many times ... I define a loyal buyer as somebody who has a 60% or greater chance of buying again in the next year. As we continue to lose all of the "middle" customers to Amazon, the loyal buyer audience becomes increasingly important, because without them there is no profit.

In sports, this audience gets premium experiences, given what they're paying.

In ecommerce?

If I had to make a prediction for the future, I'd predict that "somebody smart" will figure out how to give premium experiences to loyal buyers. Not points. Not discounts. Not BOGOs. Not free shipping. No. Somebody smart is going to figure out what the premium experiences are that are unique to your best customers. Amazon figured it out - you pre-spend just south of $200 a year and somebody delivers the solar yard lights you purchased at 8:58pm tonight by 7:00am the next morning. Oh, the premium experience also includes NFL football games and NBA basketball games and NASCAR and first-run television series and Pickleball TV.

That's what we are competing against.

Have your analytically minded guru score your customer file ... have her tell you how many customers you have that have a 60% or better chance of buying again next year ... have her do this quarterly for the past three years. Have her show you what is happening to your loyal customer base. Is it growing? Is it shrinking? Is it contracting faster than the rest of your twelve-month buyer file?

If your analyst won't perform the work, contact me (kevinh@minethatdata.com) and I'll do it for you. Figure out how many premium customers you have, figure out what you can do for them.

Triggers / Targeting / Personalization

On my last trip to Europe, a vendor was telling a conference attendee how he had a client that was dynamically merchandising a catalog. The client had creative for several hundred products, the client sent the vendor customer purchase transactions, and the vendor assembled a personalized catalog for every customer based on prior purchase transactions. The conference attendee looked at the vendor, and said (I'm paraphrasing here):

"That takes all the fun out of creating a catalog."

The conference attendee walked away. The vendor sales person look at me and said"

"I don't understand why almost no catalog professionals realize that we're trying to help them. This happens to us all the time."

Professionals understand that the vendor was trying to help ... and would likely generate more profit.

Maybe you feel this way about your job. Have you ever had a new management team take over your department? A new Vice President? And she doesn't like how you are doing things, so she starts telling you that the way you're doing your job is "wrong" and she prescribes a new way to do things? You feel angry. You believe that she "doesn't get it!" You dig your heels in. You go through the five stages of grief. If you've ever been in this situation, you are reflecting the "that takes all the fun out of creating a catalog" statement above. You are that person!

I've been there.

There are three things that are incongruent with campaign-centric styles of marketing.

Trigger-based marketing.
Customer targeting.
Personalization.

It's one of the reasons some old-school marketers slide into email campaign execution seamlessly. It's a campaign. Everybody gets the same thing. Creation is fun!

It's one of the reasons some old-school marketers slide into social media. It's a campaign. All 199,000 followers get one message, with the added benefit that 25 of the recipients provide feedback. It feels good! Each message is a carefully created campaign.

Meanwhile, AI will usher in an era of machine-oriented triggers / targeting / personalization that will be outside of anybody's control. For many, that's going to take all the fun out of creating. For other professionals, it will be their turn to help run a business.

Kevin Hillstrom: MineThatData

Quiz Week: Question #2

Quiz Week: Question #1

8%

60%

Triggers / Targeting / Personalization

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