Customer Acquisition: The Story of 2016 - 2020

Customer Acquisition Is The Story Of 2016 - 2020

Kevin HillstromPresident, MineThatData

Lizard Logic

Lizard Logic: A term created by Dave Johnson (a current Executive at Orchard Brands) in the early 1990s, when he worked at Lands’ End. Simply put, “Lizard Logic” is marketing talk that sound seductive, rational, and well thought out … but is in fact illogical and bad for your business.

Examples of Lizard Logic

Engagement

If we say crazy things, more

people engage with our content! You will damage

your brand if you do that!

But that doesn’t mean you sell

more merchandise.

Merchandise pays your salary.

#OhBoy.

We tried to produce great

content, nobody read it. Say

something crazy, and people will pay attention!

I get a bonus when engagement

increases by 30%. Lies and crazy content pay my

salary!

Customer Loyalty

It costs nine times as much to acquire a

customer as it costs to retain a

customer.

Our annual repurchase rate among twelve-

month buyers is 37%. Without new

customers, we don’t have any

customers!

How much has our loyalty program

lost over the past five years? And did our annual

repurchase rate change at all?

#OhBoy.

If we calibrate our loyalty program properly, we can tickle the buying

bone. We just haven’t cracked

the code yet.

You have to spend money to make

money. Wait, that contradicts my

original statement.

Omnichannel

Everybody knows that customers

who purchase in multiple channels

are worth nine times as much as are single channel

buyers.

If that is true, then why is it that we

expanded by dozens of

channels in the past twenty years

and yet, our repurchase rate is

still 37%?

Woodside Research loves Macy’s. But the

more Macy’s embraces

Omnichannel, the more their

business fails. Explain that one.

#OhBoy.

Woodside Research says

that brands who do not embrace

channels are destined for the scrap heap of

commerce history.

Think how bad their business

would be if they hadn’t embraced

omnichannel!

Net Promoter Score

Our net promoter score has

increased for each of the past six quarters. Our

marketing strategy is working!

If that is true, then why is it that our

repurchase rate is still 37%?

If we generate more profit, we

win. Our Net Promoter Score is

not correlated with company profitability.

Without profit, you don’t get paid.

#OhBoy.

But it makes logical sense. If more customers

like you than dislike you, you

are winning. Don’t you want to win?

You are a silly bean counter.

Mobile

We invested millions in a

sound mobile strategy. Mobile

first or die, right? And our strategy is working. Our best customers

love mobile.



Our core customer is 63 years old. She

cannot even read the small text on a

mobile device, much less

transact with the device.

#OhBoy.

Millennials adore mobile. They don’t

care about our website or offline marketing. Don’t you want more

Millennial shoppers? I do!

I’ll make sure our app has large

fonts. Then our mobile strategy

will driven increased

engagement.

Print

Look, when we matched catalog

mailings to online orders, we learned that catalogs were

responsible for every order. Print

drives a ton of customer loyalty.



I thought she purchased

because she was given 60% off plus free shipping on catalog orders?

#OhBoy.

My 18 year old daughter bought a dog collar from a

catalog I gave her. Young shoppers

love catalogs.

Yup, print works when you offer

60% off plus free shipping!

The Organic Percentage

Our matchbacks, our keycode

analytics, and the three attribution

vendors we employ all proved

that marketing drives customer

orders.

If that is true, then why did 50% of our demand still exist when we

tested not mailing catalogs and emails during

2015?

The results were statistically significant! #OhBoy.

You cannot trust tests. The sample

sizes aren’t big enough, and you lose sales if you

withhold marketing from

customers.

Meh! I don’t believe the

results. You can manipulate tests to say anything.

Catalog Co-Ops

More competition will do nothing but

sharpen the models used by all of the co-ops. We will reap the

rewards!

How many new customers did we acquire per ad $ spent in 2015? How about in

2010? And how old is the

customer we acquire?

We’ve had twenty years to crack the

model!#OhBoy.

I wouldn’t worry about acquiring

30% fewer 63 year old customers

over the past five years. We just

haven’t cracked the proper model

yet.

I heard that increased

competition will improve the

models. Let’s just wait and see what

happens.

Buzzwords

I think our problem is that we

haven’t found a relevant content

strategy that engages loyal

buyers.Wut?

Do you even believe in the

words you just uttered?

#OhBoy.

If we personalize campaigns and optimize results and get the right message in front

of the right customer at the

right time, we will engage the buyer.

It’s a quote from a $795 report I

purchased from Woodside

Research, so the quote must be

meaningful.

What Did Lizard Logic Buy Us?

We believed the stories told by vendors, trade journalists (paid by vendors), conference organizers (who are paid by vendors), research brands (paid by vendors), and industry pundits.

We distracted ourselves. Instead of diving head-first into new merchandise and new customers, we dove head-first into new buzzwords. Our results (predictably) have been tepid. That’s our fault.

It Is Time To Challenge Our Assumptions.

No More Lizard Logic. No More.

The Three Mega-Trends

Trend #1 = Merchandise Productivity

Trend #2 = How Will We Acquire A New Customer In 2020?

Trend #3 = How Will We Avoid Paying Tolls?

Merchandise Productivity is Killing Us!

I have performed a Merchandise Forensics analysis on approximately 50 catalog brands in the past three years.

In 80% of the cases, there is a decline in merchandise productivity that can easily be explained and reversed.

In most cases, the decline in merchandise productivity is explained by the inability of a cataloger to generate productive new items to replace dying existing items.

Merchandise Productivity & E-Commerce

My e-commerce clients relentlessly seek to improve merchandise productivity.

Personalization – making sure that customers see the merchandise they are most likely to purchase.

Optimization – constantly changing the home page, landing pages, email campaigns, apps – via non-stop testing.

Print-based brands do not approach commerce this way, and as a consequence, merchandise productivity suffers.

Merchandise Productivity Erodes Circ Depth

Merchandise Productivity: 2x Buyers

Older Items Grow Stale – New Items Are Needed

Estimate The Number of New Items Needed

Watch How Quickly A Business Is Consumed By The Customer Acquisition

Channel It Prefers

Catalog Customer Acq. via Co-Ops: Year 1

Customer Acquisition via Co-Ops: Year 2

Within Two Years – The File Is Already Consumed

The average catalog brand (with a 37% annual repurchase rate and 85% of new customers from co-ops) evolves quickly.

If no historical names came from the co-ops … it only takes 2 years … 2 YEARS … for 60% of the customer file to be sourced from co-ops.

For Most Catalogers …

… business is what it is because the majority of the twelve-month buyer file has been sourced from co-ops.

Repurchase Rates … Purchase Frequency … Price Points Purchased From … Merchandise Item Success … Profitability … all are +/- 70% determined not by you, the Executive at your company … but by Jr. Level employees at four companies who build statistical equations that you are not allowed to see and/or understand and/or influence.

Your Customer Acquisition Sources Define What Your Brand Will Become

It should not be a surprise to anybody that four major co-ops use algorithmic techniques to send sixty year old customers to catalogers.

It should not be a surprise to anybody that Google / Facebook dominate online/mobile customer acquisition, sending Gen-X / Millennial traffic to the brands that leverage these platforms.

Consequently, your merchandise assortment shifts in response to the customers you acquire, & vice versa!

Worse, Customers Are Acquired In December. Those Customers Have Low Lifetime Value

And The Trend Holds As The Customer Migrates Through The Life Cycle

To Recap:

Non-Employees Determine Who Our New Customers Are

Our New Customers Are Disproportionately Sourced At Christmas

Christmas Customers Have Low Lifetime Value (And Christmas Orders Are Generated Via Discounts/Promotions, Lowering Profit)

We Wonder Why Customer Loyalty Is Lousy?

Our Customer Files Are Consumed By Outside Forces

Re-Focus

1 – Plant Seeds In Jan-Aug

2 – Harvest Your Bumper Crop Through October

3 – Generate Profit Next Year

Tolls Are Killing Print-Centric Marketers

Different Tolls

20% Off = A Major Toll.

Free Shipping = A Major Toll (maybe 10% of sales).

Paper Costs (pushing to bigger page counts that benefit a printer … pushing to deeper circ levels that benefit a paper rep).

Postage.

Co-Op Rental Fees (repeatedly paying $0.06 for the same name 12x a year).

Different Tolls

Paid Search / Google = Pay a toll for access to a name that you already paid a series of tolls to obtain access to via co-ops and printers and merge/purge houses and paper reps and the USPS.

Retargeting = Pay a toll for access to a name that you already paid a series of tolls to … hoping to stalk the customer online.

Pinterest = Pay a toll to get a customer to purchase using creative you gave to Pinterest to free – creative that Pinterest will now use to charge you a toll that helps Pinterest.

Different Tolls

Free Shipping = A toll caused by not having merchandise that is sufficiently differentiated from the competition.

Television / Radio / Print / Magazines = Rampant tolls.

The smartest companies identify low-cost customer acquisition programs that bypass the toll collecting process.

Measure Your Marketing Toll Rate

Sum discounts, promotions, free shipping, catalog paper expense, catalog postage expense, catalog printing expense, list rental and co-op fees, merge/purge fees, online marketing expense, housefile vendor modeling expense, TV/Radio/Magazine/Print expenses. Call this sum “tolls paid”.

Calculation: Toll Rate = Tolls Paid / Demand Generated.

If your Toll Rate > 30%, you have problems.

If your Toll Rate > 50%, you are in trouble!!

Where Are Print-Based Brands Headed?

The Modern Print-Based Ecosystem

MinimalTolls (Low Ad $)

Teamwork (Chemistry)

MerchandiseProductivity

YourStrategy

Customer Acquisition

Golden Gate Bridge

Catalog Cul-de-sac

Ranch-Style Remodel

Abandoned Warehouse

My Thesis: Four Paths

Golden Gate Bridge

Catalog Cul-de-sac

Ranch-Style Remodel

Abandoned Warehouse

Golden Gate Bridge

Direct Marketers with a < 50 year old customer base have the option to “Cross The Bridge” and become fully-fledged e-commerce brands.

These businesses will fully adopt low-cost customer acquisition programs designed to fuel online/mobile traffic.

Expect these businesses to leverage print as a support vehicle for the overall online/mobile brand experience.

Example: Duluth Trading Company.

Catalog Cul-de-sac

Direct Mailers with a 50-70 year old customer base love print, and love working with co-ops and lists.

Many businesses in this segment do not want to change.

The only way to make this strategy work is to have a neighborhood of great homes in a cul-de-sac, making it a great destination.

Great Homes = Great Merchandise.

Ranch-Style Remodel

Another set of direct mailers with 50-70 year old customers will pursue hyper-targeted print-based strategies.

Larger print pieces will become smaller print pieces with the best merchandise at the best prices.

Smaller print pieces will become even smaller print pieces with a personalized merchandise offering for segments of customers, or individual customers.

Abandoned Warehouse

This is where print-based brands will go to die.

My guess … there will be +/- 12 “Holding Companies”. Think “Potpourri Group” without a soul.

The Holding Company will attempt to get to the “Magic 8,000,000” level … they will buy brands that help them get to the 8,000,000 catalog households that love shopping via direct mail. This allows the Holding Company to bypass the co-ops and encourage cross-shopping to grow each individual brand.

Which Business Do You Want To Be?

Golden Gate Bridge = Crossing over to e-commerce with a low-cost customer acquisition program.

Catalog Cul-de-sac = Traditional print-based business with improved merchandise productivity.

Ranch-Style Remodel = Optimization & Personalization to drive marketing efficiency, which increases circ depth & new names.

Abandoned Warehouse = Sell to a Holding Company in the future, generate profit & names, then disband.





YourStrategy


Golden Gate Bridge

Catalog Cul-de-sac

Ranch-Style Remodel

Abandoned Warehouse

Teamwork / Chemistry

Missing from most catalog-centric brands.

In-fighting between merchants & creative, marketing and merchandising, online and offline. IT thinks they can and should be performing all analytics. Operations think they can be marketers. Marketers hate the CFO and would rather spend time with vendors than with in-house co-workers (happens all the time).

Lack of teamwork / chemistry leads to hopelessly futile channel-centric tactics.

The Problem With Channels

Channels speak to “best customers”. When catalogers utilize “multi-channel” strategies and retailers leverage “omnichannel”, both theories focus on the existing, core (best) customer who uses multiple channels. What about everybody else? Good question!

Over the course of five years – we lose most of our “multi-channel” and “omnichannel” customers … it’s simple retention math. Then, we’re forced to find new customers. How do we do that when we only understand disconnected tactics?

Avoid Lizard Logic. Focus On What Matters

Merchandise Productivity.

Stop Paying Tolls.

Teamwork / Chemistry.

Low Cost Customer Acquisition & New Customers.

Brand Response Marketing.

Low-Cost Customer Acquisition Programs Via Our Own Platforms Are Very Important

Ready For A Discussion?

5 Companies Earned 50% Of Black Friday Online Sales In 2015. Makes It Hard To Compete!

http://techcrunch.com/2015/12/01/amazon-dominated-36-of-online-black-friday-sales-says-slice/

Lands’ End Struggles With Tactics – But Understands The Overarching Story

http://seekingalpha.com/article/3731336-lands-ends-le-ceo-federica-marchionni-on-q3-2015-results-earnings-call-transcript?all=true&find=lands%2Bend

“In our catalog business, we see a significant opportunity to improve productivity. We would use our catalog circulation and shift investment away from lapsed and less profitable customers to marketing initiatives designed to capture new customers. While this resulted in a reduction in sales, we achieved meaningful cost savings that are being reinvested in marketing initiatives designed to drive new customer acquisition and increase brand awareness over time”.

New Channels Pluck Customers From Old Ones

In Old Channels – The Audience Becomes … Old

Time To Get Busy Fixing The Problem, And If We Cannot Fix The Problem, It’s Time To Take

Market Share From The Competition.

Read A Book – How Brands Grow

This book goes against “conventional wisdom” … strongly suggesting that the secret to business success lies in recruiting the infrequent shopper, while ignoring customer loyalty initiatives.

The book argues for “brand advertising” that is not immediately ROI-centric.

I know, I know, you don’t like either topic!!

Loyalty Didn’t Save A Video Store In Portland

If you love retail, customer loyalty initiatives, or both, go read this article about the closure of a video store.

http://www.vox.com/2015/11/20/9757186/netflix-video-rental-store

Convenience (omnichannel) kills retail, but thrives in the digital realm.

Loyal customer efforts cannot offset declines in customer acquisition activities.

Customer acquisition is the secret to success (or the signal that something is structurally wrong).



Most Of My Clients = Infrequent Shopper Base

Turns out that, for most of us, loyalty is vastly overrated.

Over time, some demand comes from a small slice of customers … everybody else = infrequent / low volume customers.

For My Average Client …

The annual repurchase rate (% of those who purchased last year buying again this year) is …

37%.

For My Average Client …

If 100 customers purchased last year, we have to find this quantity of new + reactivated buyers just to keep the customer file flat:

63.

If My Average Client Has To Replace 63 Out Of Every 100 Customers Every Year, Where Should The Vast Majority Of Your Energy,

Effort, And Marketing Spend Occur?

Customer Acquisition!

For Most Businesses, New Customers Matter

How Do I Know If I Have A New Customer Acquisition Problem? (See The Red Numbers)

Catalogers Went Way, Way, Way Too Far

Typical Cataloger New Customer Acquisition Mix:

35% = Co-Op #1.24% = Co-Op #2.16% = Co-Op #3.10% = Co-Op #4.15% = Online Marketing.

Would you manage your 401k by investing in Apple, Google, Facebook, and Twitter, or would you diversify your portfolio?

Other Companies (Amazon) Think Differently

Your Tactics Dictate Who Your Customer Is

It Is Tough To Trust 3rd Party Channels

http://digiday.com/publishers/facebooks-traffic-top-publishers-fell-32-percent-since-January/

A Digital Monopoly

Take Control – Leverage Your Platform

Trust Your Platform

Customer Acquisition Tactics

Marketing Executive: “We believe that nearly every one of our purchasers in 2014 saw at least one retargeting ad.”

What did prospects who know nothing about the brand see?

How does a prospect learn about what you sell and how you sell it if the prospect has no idea who you are?

Customer Acquisition Tactics

High Cost Customer Acquisition = New York Yankees, Boston Red Sox, McDonalds, Geico, Progressive.

Low Cost Customer Acquisition = Kansas City Royals, Tampa Bay Rays, Oakland As, MailChimp, Betabrand.

Most of us no longer know how to approach low-cost customer acquisition. We only know easy (and expensive) channel-centric tactics that require minimal co-operation with employees from non-marketing departments.

How We Display Products And How We Tell Stories Dictates How We Convert Customers

Who Have Yet To Purchase

Zulily = 130 Product Images On Home Page

No $$ = Customer Acquisition Strategy

https://www.internetretailer.com/2015/11/04/how-scanmyphotoscom-builds-its-business-without-advertising

Health Signaling = Customer Acquisition Strategy

Point of View = Customer Acquisition Strategy

New Genre = Customer Acquisition Strategy … 36,000,000 Watched Finals Online

Old Genre Reimagined = Customer Acquisition Strategy …

Heartache = Customer Acquisition Strategy

Inventory = Customer Acquisition Strategy

An eBook = Customer Acquisition Strategy

Movies = Customer Acquisition Strategy

Poaching = Customer Acquisition Strategy

Media = Customer Acquisition Strategy

Media + Shop = Customer Acquisition Strategy

Guest Curator = Customer Acquisition Strategy

Social Anger = Customer Acquisition Strategy

Google Branding = Customer Acquisition Strategy

Merch/Offer = Customer Acquisition Strategy

Merchandise = Customer Acquisition Strategy

Zara has achieved global success with almost zero advertising, which the founder calls a ‘pointless distraction’.Speed and disposability are the new black.

Nearly 2,000 stores in 77 countries.

Staff churn out 30,000 designs per year – near carbon copies of fashion’s big names.

Lightning fast, locally targeted designs.

Vertically integrated business model limits outsourcing, making most of carbon copy merchandise in-house, guaranteeing quality levels.

Garments hit floors within three weeks of design, vs. six month industry average.

Fashion used to be sold in four seasons. Zara wants you to buy in 104 seasons (2x per week).

Styles arrive in stores twice a week, days known by customers as “Z” days, or “zed days”. This fuels the need to turn over your wardrobe.


Zara has achieved global success with almost zero advertising, which the founder calls a ‘pointless distraction’.

Items are ironed, and price tags are affixed prior to shipping to a store, saving store staff time so that they can sell.

Records are kept of any item tried on but not purchased.

Customers visit the store six times as often as customers visit competing brand stores.

When Zara opened a store in Sidney AU last April, 80% of the stock was snapped up within three minutes.

“We spend a fortune researching and working up ideas, and then Zara comes along and walks off with them for nothing.”

Zara has achieved global success with almost zero advertising, which the founder calls a ‘pointless distraction’.

A business built for speed, designed for addiction.

http://kottke.org/15/11/the-secret-to-zaras-success

http://kottke.org/15/11/the-secret-to-zaras-success

Be Different = Customer Acquisition Strategy

Cards Against Humanity ran this Black Friday promotion … you give them $5 … they give you nothing in return. > $63,000 raised. Needless to say, the “trade press” ran with this promotion, giving Cards Against Humanity “free marketing”. Free Marketing leads to new customers.

Then Tell People How You Spent Their $

Switching = Customer Acquisition Strategy

$200 to switch from Sprint to T-Mobile. I know, I know, you sell Widgets and cannot do this because you cannot lock a customer in to your brand. Fine. How about thinking about what you could offer that would lock your customer in to your brand?

Free Guns = Customer Acquisition Strategy

Social = Customer Acquisition Strategy

Think of social as your “prospecting list” … you expect to convert a tiny percentage of your prospects over time. This list is not monetized in the short term (if ever).

Product Review = Customer Acquisition StrategyExample From Evil Supply Company

Send More = Customer Acquisition Strategy

Ariana Bee ♥ @amosborneHow does @EvilSupplyCo make any money I just got twice as much as I ordered AND maybe a friendly ghost houseguest.

https://twitter.com/amosborne




https://twitter.com/EvilSupplyCo/

https://twitter.com/EvilSupplyCo/

Price = Customer Acquisition Strategy

https://www.retaildive.com/news/why-the-relationship-between-department-stores-and-luxury-brands-is-changin-/408703/

Packaging = Customer Acquisition Strategy

Frostbeard Studios in Minneapolis – Based on Stories.

Word of Mouth = Customer Acquisition Strategy

If we fail to acquire new customers, or fail to do so in a cost- effective manner, we may not be able to increase net revenue per active customer or achieve profitability. Our success depends on our ability to acquire customers in a cost effective manner.

In order to expand our customer base, we must appeal to and acquire customers who have historically used other means of commerce to purchase home goods and may prefer alternatives to our offerings, such as traditional brick and mortar retailers, the websites of our competitors or our suppliers’ own websites. We have made significant investments related to customer acquisition and expect to continue to spend significant amounts to acquire additional customers. For example, we have continued to expand our national U.S. television branding and advertising campaigns. Such campaigns are expensive and may not result in the cost effective acquisition of customers.

We believe that many of our new customers originate from word-of-mouth and other non-paid referrals from existing customers.

Wayfair Fiscal 2014 10-K Statement

Language Designer = Customer Acquisition Strategy

Software = Customer Acquisition Strategy

Personalization of merchandise typically leads to 15% - 50% increases in sales per visit / conversion, and consequently, more new customers. And it isn’t hard – vendors are ready to help. Just do it!!

Personalization = Customer Acquisition Strategy

Personalization = Customer Acquisition StrategyThe question of how to provide personalized shopping experiences to consumers is one that has long puzzled digital retailers. But Stitch Fix, an online personal styling service for women, thinks it has the answer.According to Chief Operating Officer Julie Bornstein, “the founder of Stitch Fix, Katrina Lake, had the theory that there is probably someone out there better at shopping for me” than me.

So how do they do it? A new client fills out an online quiz where she provides her “size, her fit, her budget and her style preferences.” Stitch Fix then looks to its team of personal stylists — assisted by an algorithm — to select five items that will fit the client’s needs. Once the client receives her stylist’s picks, she keeps the things she likes and returns the rest, along with feedback explaining why she did or didn’t like the items.

As the company comes to fully understand the client’s style and needs, Stitch Fix becomes an indispensable part of the client’s shopping experience. And it shows: “80 percent of our first-time clients come back within 90 days to have a second fix,” Bornstein said.

https://www.stitchfix.com/

Ship Something = Customer Acquisition StrategySure, your return rates might be 65% … but that also means that 35% of the folks you shipped something to became new customers … that’s a bit higher than the 0.4% response rate on a co-op mailed catalog, don’t you think?

Annual Report = Customer Acquisition Strategy

Personal Stylist = Customer Acquisition Strategy

Commitment = Customer Acquisition Strategy

Employees = Customer Acquisition Strategy

Nordstrom pays retail employees a commission, often close to 7% of the sale. The most successful employees earn in excess of $100,000 per year.

Competing retailers pay employees $10.00 per hour.

Which business model is going to attract highly motivated employees who love to “sell” merchandise, and consequently, which business model is able to

generate new customers easier?

People = Customer Acquisition Strategy (Enjoy.com)

People = Customer Acquisition Strategy

Call Center Employee in 1996 = Personal Stylist in 2016

TV = Customer Acquisition Strategy

http://recode.net/2015/11/11/draftkings-and-fanduel-look-wobbly-and-so-do-220-million-in-tv-ads/

TV = Customer Acquisition Strategy

Defective Merch Is Not A Good Strategy

TV + Omnichannel = Cust. Acquisition Strategy

TV + ???? = Customer Acquisition Strategy

More TV = Customer Acquisition Strategy

TV + PR + Stores = Customer Acquisition Strategy

Read What Duluth Trading Said In Their S-1 Statement (24 Consecutive Quarters Of Growth)

Building Brand Awareness to Continue Customer Acquisition. We are a rapidly growing lifestyle brand, have built strong brand awareness and have successfully acquired customers over the past five years. As a relatively young brand, we believe that we have a significant opportunity to build even greater brand awareness. According to IRI, once we bring customers to our brand, they are more satisfied with Duluth Trading than any other brand in our competitive set. We intend to leverage our unique and compelling marketing strategy, retail expansion and continued catalog prospecting to capture potential new customers.

Humorous and Distinctive Marketing: We make shopping for our products fun by using attention-grabbing advertisements that are humorous, irreverent and quirky. Our national advertising campaigns that feature characters such as our Giant Angry Beaver, Buck Naked Guy and Grab-Happy Grizzly continue to increase our brand awareness and drive customers to our brand. We use storytelling to differentiate our products in the marketplace and create emotional connections with our customers. For example, we inspire our female customers by featuring women of “grit and substance” whose professions range from ranching to horse training to dog sled racing to landscape design. We believe our approach to marketing gives our products a distinct identity, enhances our brand and helps us stand out in the market.

We have a long history of product innovation. We have introduced a number of solution-based products.

+/-10% Pre-Tax Profit, > 30% Growth. Catalog-Centric Company That Is Evolving Outside Of Catalogs

Duluth Trading S-1 Marketing Tactics

We pursue our marketing strategy through multiple forms of media, which gives our products an identity and enhances our brand.

Television: We advertise on cable and broadcast television networks to build brand awareness for both men’s and women’s products and to reach a large, national audience. These advertisements feature our animated characters and are intended to be humorous, irreverent and quirky in order to grab the viewer’s attention, while highlighting the particularly innovative, solution-based features of our core products and the Duluth Trading name.

Catalogs: Our catalogs are an important part of our heritage and represent a tangible vehicle for our authentic and humorous storytelling. In fiscal 2014, we published 35 issues and distributed over 43 million catalogs, approximately 19 million of which were mailed to prospective customers. Our catalogs support both sales channels, and we believe they serve as an important customer acquisition tool by driving visits to our website and retail stores.

Other Tactics: Digital and Email Marketing (display, digital video, search, targeted email), Social Media, Radio, Collateral Print, Outdoor Marketing, Event Sponsorships.

I Know, I Know.

“You Are Unique.”

“You Are Different.”

“Their Success Doesn’t Apply To Your Business.”

But They Are Growing. Your Business??

YouTube Celeb = Customer Acquisition Strategy

Celebrity = Customer Acquisition Strategy

Mobile/Podcast = Customer Acquisition Strategy

Tours/Performances = Customer Acq. Strategy

Events = Customer Acquisition Strategy

Industry News = Customer Acquisition Strategy

Expensive Stuff = Customer Acquisition Strategy

This, Too, Is A Customer Acquisition Strategy

Hats = Customer Acquisition Strategy

Headphones = Customer Acquisition Strategy

Lies = Customer Acquisition Strategy

Knowledge = Customer Acquisition Strategy

Going Pro

Beginning in 2014, Threadless A/B tested every single campaign they sent for a year and a half: subject lines, from names, send times, the works. This summer, when we launched MailChimp Pro, Lance jumped at the chance to learn even more using the new Multivariate Testing features.

Since upgrading, they’ve been able to get even more granular, testing the placement and length of content modules, the number and size of images, and the effectiveness of underlined links versus linked buttons. Sometimes, the results are inconclusive (for instance, their subscribers didn’t strongly respond to one type of link over another), which gives their email designers room to play with visuals without worrying about negatively impacting engagement.

Other times, test results are more nuanced. “The tests with promotion-based subject lines versus non-promotion subject lines have resulted in the most learning,” Lance says. “In our tests, a bigger percentage of people open the non-promotion subject lines—which you would suspect. But there’s something interesting once you look at clicks. Far more people click the promotion-based subject lines. That’s resulted in creating 2 segments: people that care about promotions, and people that might not.”

http://blog.mailchimp.com/introducing-mailchimp-pro/

http://blog.mailchimp.com/multivariate-testing-for-mailchimp-pro/

http://mailchimp.com/features/segmentation-and-groups/

Sponsorship = Customer Acquisition Strategy

Billboards = Customer Acquisition Strategy

Humor = Customer Acquisition Strategy

Video = Customer Acquisition Strategy

Arby’s Meat Bus = Customer Acquisition Strategy

http://www.adweek.com/news/advertising-branding/arbys-rolled-out-meat-bus-tour-nyc-promote-its-new-times-square-location-168428

New Business = Customer Acquisition Strategy

Access = Customer Acquisition Strategy

Help = Customer Acquisition Strategy

Creative = Customer Acquisition Strategy

Copy = Customer Acquisition Strategy

Silliness = Customer Acquisition Strategy

Creative

Brands For Millennials = Imagery, Fun

Brands For Baby Boomers = Text / Links / Information

Baby Boomers

Baby Boomers – Gen X

Baby Boomers

Millennials – Gen X

Millennials

Millennials / Gen-X

Baby Boomers

Baby Boomer site conversion rates are mostly similar to Millennial brand conversion rates.

Therefore, we can conclude that creative doesn’t dictate conversion rates.

Yet, put Millennial creative in a Baby Boomer brand, and it “won’t work” – it will be viewed as “wasteful

branding”. Similarly, Boomer creative in a Millennial brand won’t work – it will be viewed as “antiquated”.

Creative aligns with demographics. Use appropriately.

How One Brand Uses Low-Cost Advertising And Viral Techniques And Website/Mobile To Clearly Communicate A Customer Acquisition

Focus

Betabrand

Here Is Where The Reader Begins To Complain

“Our brand is unique.”

“Our brand is different.”

“These tactics won’t work for us, we sell Widgets. We tried this stuff and it didn’t work.

Where are the good ideas that work?”

“Do you have any free ideas we can borrow from your client base? What do they do?”

No Wonder Omnichannel Theory Is Trendy Among Publicly Traded Retailers Who Are Out

Of Customer Acquisition Ideas

1 – Digital = Cheaper.

2 – Stores Will Close = More Cash Available.

3 – Cash Goes To Ownership Via Stock Buybacks And Dividends

Turn Your Company Into An ATM For Ownership

ATM For Ownership Example = Lowes

Think About Managing Your Customer Database Differently.

Three Steps To Customer Management

1 = Low Cost Customer Acquisition.

2 = Care/Feeding Of 0-3 Month 1x / 2x Buyers To Help Them Move To Frequent Status Faster.

3 = Harvest Profit From Loyal Buyers.

Care/Feeding of 0-3 Month 1x/2x Buyers

Customer Profit = Loyal Buyers.

Care/Feeding of 0-3 Month 1x/2x Buyers

Corporate Profit = 0-3 Month 1x/2x Buyers.

Three Steps To Customer Management

We focus our efforts on loyal buyers. But there aren’t enough loyal buyers to “push the

peanut”.

The bulk of profit comes from recent, low frequency buyers. The key is to acquire many

customers at a low cost, and then rapidly move those customers along the life-cycle.





YourStrategy


Golden Gate Bridge

Catalog Cul-de-sac

Ranch-Style Remodel

Abandoned Warehouse

What Is Holding Us Back?

Decreasing Merchandise Productivity makes all marketing efforts less productive.

Tolls drive up the cost per new customer, drive down the number of new customers we can acquire.

Teamwork / Chemistry is, in so many cases, non-existent. Makes it hard to do new/interesting things.

New Concept = Brand Response Marketing Team

A cross-functional team comprised of Marketers, Merchants, Creative Staffers, and Online Experts. The team has one job, and one job only … Increase The Number Of New Customers On An Annual Basis At An Ever-Decreasing Cost Per New Customer.

Brand Response Marketing Team

The cross-functional team is given authority to change the website, change catalog creative and catalog format, and is given authority to invest in new areas that will lead to an increase in new customers at a decrease in cost per new customer. Without the authority to make changes, change will not happen.


The team is comprised of 30-39 year old professionals. Once you are 40 years old, you are out. We want new ideas for improvement.

The team earns a 50% salary bonus if New Customer and Cost Per New Customer goals are exceeded. All other employees earn a 20% bonus (shared responsibility).


Success is measured annually, not (I repeat, NOT) on a campaign-by-campaign basis. Who cares if an individual campaign works or not? This team plants seeds in April that are part of a bumper crop harvest in October. This team is not measured like Direct Marketers. This team is far more accountable than are Brand Marketers. Hence, the term “Brand Response Marketing”.


If goals are not exceeded, new marketing / merchandising / creative members are brought in.

If goals are exceeded, Brand Response Marketing Team members are promoted to Executive roles.

This is your “AAA” Farm System, if you will … this is the place you develop future Executives.


Do you have the courage to give a team of 4-8 Director-Level professionals accountability for New Customer Acquisition counts at a lower Cost per New Customer?


Are you willing to pay these employees a 50% annual salary bonus when they exceed your goals and objectives?

Are you willing to pay all other employees a 20% annual salary bonus to encourage them to support the Brand Response Marketing Team?


Are you willing to go beyond simplistic channel-centric tactics that yield tepid results, focusing instead on the slides in this presentation, slides that illustrate how other Brand Response Marketers approach Customer Acquisition?


Do you agree that Customer Acquisition is the most important issue we face in the next five years?

No? Then let’s have a discussion, right now, about what is more important. Because what we’ve always done & how we’ve always done it is not working. It’s time for change.

Avoid Lizard Logic. Focus On What Matters

Merchandise Productivity.

Stop Paying Tolls.

Teamwork / Chemistry.

Low Cost Customer Acquisition & New Customers.

Brand Response Marketing.

Re-Focus

1 – Plant Seeds In Jan-Aug

2 – Harvest Your Bumper Crop Through October

3 – Generate Profit Next Year

Need Help Determining If You Have A Customer Acquisition Problem??

Kevin HillstromPresident, MineThatData

Blog - http://blog.minethatdata.comhttp://minethatdata.com

[email protected] - @minethatdata

Podcast – http://soundcloud.com/minethatdata

http://blog.minethatdata.com/

http://minethatdata.com/

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Customer Acquisition: The Story of 2016 - 2020

Marketing

Transcript of Customer Acquisition: The Story of 2016 - 2020