Archive for the ‘retail brand’ tag
You think you know a little something about catalog marketing and analytics? Take this quiz, and find out for yourself. You may just find out that you’re the best qualified candidate for a job at a major retail brand!
Question #1: You mailed a catalog to 1,000,000 households, and generated $4,000,000 in sales. Your CFO wants to “grow the brand”. She asks you what would have happened if you had mailed 1,333,333 households. If you mailed 1,333,333 households, what is the total amount of net sales you would have generated?
- Measure total sales generated at your call center.
- Match back all online orders generated by customers mailed the catalog over a three week period of time to the catalog you mailed, sum those orders to call center orders attributed to the keycode on the back of the catalog.
- Execute a mail/holdout test, subtracting the difference between the mailed group and the holdout group.
- A non-promotional strategy.
- A promotional strategy.
- Question #1 = 1. You use the square root rule to approximate sales.
- Question #2 = 1. You can also use the square root rule to approximate sales here!
- Question #3 = 1. AOV is unlikely to increase significantly with more pages, given the online AOV.
- Question #4 = 3. Mail/Holdout tests consistently deliver better results than those generated by matchback algorithms.
- Question #5 = $600,000: $4,000,000 * 0.40 – $1,000,000.
- Question #6 = 2. There will be cannibalization, meaning that you can’t assume that the fourth catalog will generate what the first three catalogs generate. That rules out answer three. Answer one makes no sense whatsoever, leaving only answer two as a reasonable answer.
- Question #7 = 1, Yes. (0.02*100*0.4 – $1.00)/(0.02) = Lose $10 up-front, generate $15 profit in the next year, net = +$5.00.
- Question #8 = 3 … You lose $10.00 up-front (see Question #7 above).
- Question #9 = 2 … No, your business is not a failure. The repurchase rate is irrelevant. Customer loyalty is irrelevant, it’s your management of customer loyalty that matters most. If your catalog business is generating 15% EBITDA, you are a highly successful business leader.
- Question #10 = 1 … the non-promotional strategy is far more profitable … non-promotional = (0.05*100*0.4 – 1.00 = 1.00 profit) … promotional strategy = (0.06*110*0.4 – 1.00 – 0.06*110*0.20 = 0.32 profit).
- Question #11 = 3 … you need 1,400,000 new+reactivated buyers. Work backwards. You need 2,200,000 to satisfy your CFO. You have 2,000,000 twelve-month buyers who repurchase at a 40% rate, meaning that 800,000 will purchase again. 2,200,000 – 800,000 = 1,400,000.
- Question #12 = 1 … you need 1,300,000 new+reactivated buyers. Work backwards. You need 2,200,000 to satisfy your CFO. You have 2,000,000 twelve-month buyers who repurchase at a 45% rate, meaning that 900,000 will repurchase again. 2,200,000 – 900,000 = 1,300,000.
- Question #13 = 3 … 130 / 3 = 43.33.
Today on Branding Strategy Insider, another question from the BSI Emailbag. Ahmed, an entrepreneur and brand marketer in San Francisco, California writes:
“I own a modern furniture company and sell numerous brands. At the same time, I want to build my own company brand, called Urban Loft, because (1) the name alone is the ideal name for the lifestyle/product and (2) I’ve successfully trademarked the name and want to take advantage of it. In an ideal world, the products I sell would be exclusive to me and this will be a non-issue. But in today’s internet era manufacturers are acting like retailers — pushing their own brands — good for them, but it conflicts with my interests and building awareness for my brand.
It seems I have two options. First, I can sell products (either on the web or in the retail store) without marketing my manufacturers’ brand. Or I can go with the flow (like most retailers online) and market that I sell other brands. This article recommends the second option. What do you recommend?”
Thanks for your question Ahmed. Is your store primarily a brick and mortar store or an online store? If it is a brick and mortar store, there are significant advantages to branding your store. Having a strong retail brand is a primary source of leverage when negotiating with manufacturers’ brands. Plus, the actual retail space allows you to create a specific branded environment and customer experience. Your store will come to stand for something, a certain style or lifestyle or something else. While I wouldn’t mask what manufacturers’ brands you carry in your store, especially if they are brands with allot of equity, I would focus on what your brand stands for and create the right environment, retail display, service level, mix of products, etc. to reinforce that brand. If you are primarily an online furniture retailer, the brands you carry, the website functionality and especially your product pricing, become very important to your success. The way you present products so that people can get a sense of the “look and feel” and the quality is also important.
If you are a manufacturer of modern furniture with multiple consumer brands in your portfolio, you should carefully think through your brand portfolio to determine if you have the appropriate brand architecture or if you are supporting too many brands, some of which could be merged into the other brands. The brand architecture exercise would also help you determine the proper relationship between the parent (company) brand and the individual product brands. Whether you are primarily a furniture manufacturer or retailer, a brick and mortar store would provide the most powerful platform for expressing your brand’s identity and promise. There is something to be said for creating a strong retail brand and, in the furniture category, I would believe that there is a significant advantage to customers being able to touch, feel, see and try out the furniture before purchasing it.
Thanks for your question Ahmed. Do you have a question related to branding? Just Ask…
Sponsored By: The Brand Positioning Workshop
Dear Catalog CEOs:
There’s a reason why cataloging evolved to a 55+, rural-based business model.
Let’s say you live three miles from your nearest Pottery Barn store. You receive a Cuddledown of Maine catalog in your mailbox on a Monday. Interesting items, interesting prices. But you also live three miles from your nearest Pottery Barn store.
Until 2011, retail always beat online, online always beat catalogs, leaving catalogs to cater to an older, rural audience.
If you worked for a retail brand, and you analyzed tests, you knew that a few things were “true”.
- If a customer lived 0-5 miles from one of your stores, catalogs had marginal utility, and emails were more likely to drive volume into stores than to your website.
- If a customer lived 6-10 miles from one of your stores, catalogs inspired some customers to visit stores and some customers to visit your website. Emails were equally likely to drive volume to stores or to your website.
- If a customer lived 11-25 miles from one of your stores, you were in multi-channel heaven! Just about everything worked.
- If a customer lived 26-50 miles from one of your stores, the story shifted. Catalogs drove customers online, while websites were much less effective at getting customers to get into a car and shop at a store. The website became the anchor of the business for customers 26-50 miles from a store.
- If a customer lived 51+ miles from one of your stores, the story shifted again. Catalogs fueled the relationship, as rural customers embraced tradition, routine, comfort, and habit, all offered in catalogs.
Mobile doesn’t compete with cataloging, be honest! The 27 year old Jasmine that is using a mobile device is not trading a catalog order for a mobile order.
Dear Catalog CEOs:
Last week, you read about a CEO transition at Best Buy. Regardless of why the CEO transition is happening, Best Buy has been struggling to find ways to combat mobile and Amazon.
Last week, you also read that Instagram was purchased by Facebook for just a billion dollars.
I was in a retail store last week. A manager and an employee were standing next to me. The manager was explaining that his company was being beaten silly by Amazon. He told the employee that there was a new plan to combat Amazon. The plan was to cross-sell services to the customer. The manager explained how the program would work, how the employee would explain to the customer that the company offered services, valuable services, services that Amazon could never hope to match. The employee would attempt to cross-sell services, even if the customer had not yet purchased an item!
The employee had that “how fast can I get a job at Jiffy Lube?” look. You could just see the dread on his face … the dread of having to try to sell a service that the customer didn’t ask for and probably doesn’t want to purchase.
We’re all placing bets these days, aren’t we?
Take my former employer, Nordstrom.
- 2011 = Purchase of HauteLook.
- 2012 = Investment in Bonobos … a “Jennifer” skewed business (click here).
What is relevant is that folks are placing bets. People are betting as to what they think the future of commerce is.
Are you betting on free shipping as a way to compete with Amazon?
Are you betting on proprietary merchandise as a key differentiator?
Are you betting on selling the same merchandise readily available online, but with better customer service?
For those who have a retail channel, you don’t have much data to tell you if Judy, Jennifer, or Jasmine are shopping retail stores.
You do, however, have data that tells you which direct-channel customers are shopping your stores.
So, segment your direct-channel customer base … I like to look at 12-month buyers, but include all purchase history, weighted by recency of course. Once I have everybody coded (Judy, Jennifer, Jasmine), I split this audience by direct-channel only and retail+direct-channel.
Here’s an example:
Direct-Only Channel Buyers
- Judy = 28%.
- Jennifer = 22%.
- Jasmine = 50%.
- Judy = 24%.
- Jennifer = 24%.
- Jasmine = 52%.
- Judy = 44%.
- Jennifer = 31%.
- Jasmine = 25%.
- Judy = 25%.
- Jennifer = 35%.
- Jasmine = 40%.
Chronicle is a movie about “friends who gain powerful superhuman abilities.” And one of the ways it was promoted turned into its own hit of sorts.
99-Cent Flat Screens
Big successes like the pitches above require a connection between a smart strategy and a creative execution of that strategy. It didn’t hurt both stories that it was a Sunday afternoon. But without asking questions to make sure you’re not “adding on stuff” to gain attention, you’ll just end up adding to the noise competing with your news.
You can’t avoid the commentary from the vendor community.
- “There is no such thing as a store … retail is now portable.”
- “Today’s highly empowered consumer is fully in charge of the brand experience. Brands that fail to relate to this social shopper do so at their own peril.”
- “Kevin, you keep calling us catalogers. We’re not catalogers anymore. We’re multichannel merchants. Why do you do that?“
I do that because you are catalogers.
Would a retail brand say that they are not a retail brand because they have had a website for the past thirteen years?
Would an e-commerce brand say they aren’t an e-commerce brand because they added a social commerce component to their tool set? Or because they enabled commerce on Facebook?
Be proud of yourself.
Name one customer, yes, a customer, who calls you a “multichannel merchant”. Go ahead, find one … I’ll wait right here while you go look for just one customer who would voluntarily call you a “multichannel merchant” …
You are a cataloger.