Kevin Hillstrom: MineThatData

Every business possesses a unique relationship between first-time buyer AOV and future value. The relationship dictates exactly how the brand must approach marketing for first-time buyers.

An example: "Brand A" has an AOV of $70 and in the first five years after a first purchase the customer spends $230. You wouldn't be surprised if this company offers free shipping, executes television / radio / billboards, hires expensive influencers, seemingly wastes money. This business "can" waste money because the customer pays the brand back over time. In fact, it is almost good that the brand wastes money, because the long-term payback of finding new customers is so worth is that the math all works out.

Another example: "Brand B" has an AOV of $70 and in the first five years after a first purchase the customer spends $22. This company has no choice but to be exceptionally disciplined in their marketing approach. No waste. None. They can only afford tactics that are guaranteed to work and deliver profit during the acquisition transaction. Their "Share of AOV" is poor ... just 31%.

There are times when you read stuff from the LinkedIn experts, telling "brands" what they "must do" to be successful. Well, "Share of AOV" dictates what a "brand" must do ... if the company wants to be profitable.

There is a reason we always end up with department stores, or Walmart, or Target, or Amazon, or Marketplaces. The extended merchandise assortment (which comes at a cost, by the way, but frequently at a cost that is lower than wasteful marketing spend) drives "Share of AOV" much higher, allowing the company to generate a ton of downstream profit.

There is reason most newer enterprises hit a ceiling. Their merchandise assortment is too narrow, meaning "Share of AOV" is too low and eventually the brand reaches all of the prospects it can possibly reach.

Smart marketers optimize the relationship between acquisition AOV and downstream Share of AOV. From there, smart marketers do everything they can to increase merchandise productivity (i.e. personalizing the assortment to customers), increasing profitability, thereby increasing how much can be spent to acquire a customer.

        

I grew up in Wisconsin, so naturally I approached the peak of Maslow's Hierarchy of Needs on Wednesday night when the Milwaukee Brewers won their first World Series in the 57 year history of the team in Milwaukee.

Anyway, that's where the passion started. I recall going to a Brewers game in 1976. Bottom of the 9th, trailing, and Henry Aaron was called in to pinch hit. The crowd of maybe 10,000 fans watching a God-awful Brewers team rose to their feet. Aaron hit a fly ball. I instantly screamed out, believing we were about to see a Henry Aaron home run! The ball was caught 100 feet short of the wall, in mid-center field. Game over.

The 1982 team had a 7th inning lead in Game 7 of the World Series and could not pull it off. The State of Wisconsin remembered that team, seemingly forever, through decades of losing.

The Rickie Weeks / Prince Fielder / Ryan Braun / Corey Hart / Jonathan Lucroy teams started to win a bit.

In the past decade, the team starting winning regularly, but developed a nasty habit of horrifying playoff catastrophes. They lost to the Dodgers in 2018 in Game 7 of the NLCS at home. They lost to the Nationals in 2019 (they'd win the title). They lost to the Dodgers in 2020 (they'd win the title). They lost to the Braves in 2021 (they won the title). They lost to the Diamondbacks in 2023 (they won the pennant). They lost to the Mets in horrifying fashion on a 9th inning home run in 2024. They were swept by the Dodgers in the NLCS in 2025.

On Wednesday night, that changed.

The team played as a team, with everybody believing in each other.

Ecommerce isn't terribly different from sports. You work on a team in all likelihood. Some teams are dysfunctional. Some teams have amazing chemistry. Some teams are highly talented. High performers and low performers. Glaring mistakes and amazing creation. Every once-in-awhile your company does something incredible or your team does something incredible. We probably don't talk about this enough, but there are special times at work. You'll remember those times for a long time. You'll remember the people, you'll remember how the people made you feel.

If you find yourself working on a talented and high-performing ecommerce team, enjoy it. It doesn't happen very often.

        

Yesterday's business suffered from low merchandise productivity. Customers liked the merchandise less than the year prior. The marketing department continued to spend money finding new/reactivated buyers in an effort to keep the business steady. It's really important for marketing to do what can be done when customers simply don't like the merchandise being offered.

Ok, today we're going to look at two different dimensions within comp segment performance. Can you tell me how Management decided to respond to what was happening within this business?

        

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?