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Customer Acquisition: The Story of 2016 - 2020



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In this 4th draft of a presentation to be given to the Vermont / New Hampshire Marketing Group on March 31, 2016, Kevin Hillstrom, shares reasons why customer acquisition is the most important story of the next five years, and illustrates how numerous businesses approach the task of acquiring new customers. Finally, Kevin discusses a new department, called a "Brand Response Marketing Team".

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Customer Acquisition: The Story of 2016 - 2020

  1. 1. Customer Acquisition Is The Story Of 2016 - 2020 Kevin Hillstrom President, MineThatData
  2. 2. Lizard Logic
  3. 3. 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.
  4. 4. Examples of Lizard Logic
  5. 5. 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!
  6. 6. 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.
  7. 7. 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!
  8. 8. 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.
  9. 9. Mobile We invested millions in a sound mobile strategy. Mobile first or die, right? And our strategy is working. Our best customers love mobile. If that is true, then why is it that our repurchase rate is still 37%? 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.
  10. 10. 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. If that is true, then why is it that our repurchase rate is still 37%? 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!
  11. 11. 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.
  12. 12. 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.
  13. 13. 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.
  14. 14. 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.
  15. 15. It Is Time To Challenge Our Assumptions.
  16. 16. No More Lizard Logic. No More.
  17. 17. 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?
  18. 18. 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.
  19. 19. 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.
  20. 20. Merchandise Productivity Erodes Circ Depth
  21. 21. Merchandise Productivity: 2x Buyers
  22. 22. Older Items Grow Stale – New Items Are Needed
  23. 23. Estimate The Number of New Items Needed
  24. 24. 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?
  25. 25. Watch How Quickly A Business Is Consumed By The Customer Acquisition Channel It Prefers
  26. 26. Catalog Customer Acq. via Co-Ops: Year 1
  27. 27. Customer Acquisition via Co-Ops: Year 2
  28. 28. 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.
  29. 29. Customer Acquisition via Co-Ops: Year 3
  30. 30. Customer Acquisition via Co-Ops: Year 4
  31. 31. Customer Acquisition via Co-Ops: Year 5
  32. 32. Customer Acquisition via Co-Ops: Year 6
  33. 33. 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.
  34. 34. 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!
  35. 35. Worse, Customers Are Acquired In December. Those Customers Have Low Lifetime Value
  36. 36. And The Trend Holds As The Customer Migrates Through The Life Cycle
  37. 37. 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
  38. 38. Re-Focus 1 – Plant Seeds In Jan-Aug 2 – Harvest Your Bumper Crop Through October 3 – Generate Profit Next Year
  39. 39. 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?
  40. 40. Tolls Are Killing Print-Centric Marketers
  41. 41. 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).
  42. 42. 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.
  43. 43. 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.
  44. 44. 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!!
  45. 45. Where Are Print-Based Brands Headed?
  46. 46. The Modern Print-Based Ecosystem Minimal Tolls (Low Ad $) Teamwork (Chemistry) Merchandise Productivity Your Strategy Customer Acquisition Golden Gate Bridge Catalog Cul-de-sac Ranch-Style Remodel Abandoned Warehouse
  47. 47. My Thesis: Four Paths Golden Gate Bridge Catalog Cul-de-sac Ranch-Style Remodel Abandoned Warehouse
  48. 48. 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.
  49. 49. 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.
  50. 50. 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.
  51. 51. 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.
  52. 52. 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.
  53. 53. The Modern Print-Based Ecosystem Minimal Tolls (Low Ad $) Teamwork (Chemistry) Merchandise Productivity Your Strategy Customer Acquisition Golden Gate Bridge Catalog Cul-de-sac Ranch-Style Remodel Abandoned Warehouse
  54. 54. 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.
  55. 55. 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?
  56. 56. Avoid Lizard Logic. Focus On What Matters Merchandise Productivity. Stop Paying Tolls. Teamwork / Chemistry. Low Cost Customer Acquisition & New Customers. Brand Response Marketing.
  57. 57. Low-Cost Customer Acquisition Programs Via Our Own Platforms Are Very Important
  58. 58. Ready For A Discussion?
  59. 59. 5 Companies Earned 50% Of Black Friday Online Sales In 2015. Makes It Hard To Compete!
  60. 60. Lands’ End Struggles With Tactics – But Understands The Overarching Story “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”.
  61. 61. New Channels Pluck Customers From Old Ones
  62. 62. In Old Channels – The Audience Becomes … Old
  63. 63. Time To Get Busy Fixing The Problem, And If We Cannot Fix The Problem, It’s Time To Take Market Share From The Competition.
  64. 64. 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!!
  65. 65. 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. tflix-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).
  66. 66. 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.
  67. 67. For My Average Client … The annual repurchase rate (% of those who purchased last year buying again this year) is … 37%.
  68. 68. 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.
  69. 69. 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?
  70. 70. Customer Acquisition!
  71. 71. For Most Businesses, New Customers Matter
  72. 72. How Do I Know If I Have A New Customer Acquisition Problem? (See The Red Numbers)
  73. 73. 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?
  74. 74. Other Companies (Amazon) Think Differently
  75. 75. Your Tactics Dictate Who Your Customer Is
  76. 76. It Is Tough To Trust 3rd Party Channels
  77. 77. A Digital Monopoly
  78. 78. Take Control – Leverage Your Platform
  79. 79. Trust Your Platform
  80. 80. 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?
  81. 81. 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.
  82. 82. How We Display Products And How We Tell Stories Dictates How We Convert Customers Who Have Yet To Purchase
  83. 83. Zulily = 130 Product Images On Home Page
  84. 84. No $$ = Customer Acquisition Strategy
  85. 85. Health Signaling = Customer Acquisition Strategy
  86. 86. Point of View = Customer Acquisition Strategy
  87. 87. New Genre = Customer Acquisition Strategy … 36,000,000 Watched Finals Online
  88. 88. Old Genre Reimagined = Customer Acquisition Strategy …
  89. 89. Heartache = Customer Acquisition Strategy
  90. 90. Inventory = Customer Acquisition Strategy
  91. 91. An eBook = Customer Acquisition Strategy
  92. 92. Movies = Customer Acquisition Strategy
  93. 93. Poaching = Customer Acquisition Strategy
  94. 94. Media = Customer Acquisition Strategy
  95. 95. Media + Shop = Customer Acquisition Strategy
  96. 96. Media + Shop = Customer Acquisition Strategy
  97. 97. Guest Curator = Customer Acquisition Strategy
  98. 98. Social Anger = Customer Acquisition Strategy
  99. 99. Google Branding = Customer Acquisition Strategy
  100. 100. Google Branding = Customer Acquisition Strategy
  101. 101. Merch/Offer = Customer Acquisition Strategy
  102. 102. 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.
  103. 103. Merchandise = Customer Acquisition Strategy 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.
  104. 104. Merchandise = Customer Acquisition Strategy
  105. 105. 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.
  106. 106. Then Tell People How You Spent Their $
  107. 107. Then Tell People How You Spent Their $
  108. 108. 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?
  109. 109. Free Guns = Customer Acquisition Strategy
  110. 110. 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).
  111. 111. Product Review = Customer Acquisition Strategy Example From Evil Supply Company
  112. 112. Send More = Customer Acquisition Strategy Ariana Bee ♥ @amosborne How does @EvilSupplyCo make any money I just got twice as much as I ordered AND maybe a friendly ghost houseguest.
  113. 113. Price = Customer Acquisition Strategy
  114. 114. Packaging = Customer Acquisition Strategy Frostbeard Studios in Minneapolis – Based on Stories.
  115. 115. 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
  116. 116. Language Designer = Customer Acquisition Strategy
  117. 117. 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!!
  118. 118. Personalization = Customer Acquisition Strategy
  119. 119. Personalization = Customer Acquisition Strategy The 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.
  120. 120. Ship Something = Customer Acquisition Strategy Sure, 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?
  121. 121. Annual Report = Customer Acquisition Strategy
  122. 122. Personal Stylist = Customer Acquisition Strategy
  123. 123. Commitment = Customer Acquisition Strategy
  124. 124. 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?
  125. 125. People = Customer Acquisition Strategy (
  126. 126. People = Customer Acquisition Strategy
  127. 127. Call Center Employee in 1996 = Personal Stylist in 2016
  128. 128. TV = Customer Acquisition Strategy
  129. 129. TV = Customer Acquisition Strategy
  130. 130. Defective Merch Is Not A Good Strategy
  131. 131. TV + Omnichannel = Cust. Acquisition Strategy
  132. 132. TV + ???? = Customer Acquisition Strategy
  133. 133. More TV = Customer Acquisition Strategy
  134. 134. TV + PR + Stores = Customer Acquisition Strategy
  135. 135. 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
  136. 136. 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.
  137. 137. I Know, I Know. “You Are Unique.” “You Are Different.” “Their Success Doesn’t Apply To Your Business.” But They Are Growing. Your Business??
  138. 138. YouTube Celeb = Customer Acquisition Strategy
  139. 139. Celebrity = Customer Acquisition Strategy
  140. 140. Mobile/Podcast = Customer Acquisition Strategy
  141. 141. Tours/Performances = Customer Acq. Strategy
  142. 142. Events = Customer Acquisition Strategy
  143. 143. Industry News = Customer Acquisition Strategy
  144. 144. Expensive Stuff = Customer Acquisition Strategy
  145. 145. This, Too, Is A Customer Acquisition Strategy
  146. 146. Hats = Customer Acquisition Strategy
  147. 147. Headphones = Customer Acquisition Strategy
  148. 148. Lies = Customer Acquisition Strategy
  149. 149. 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.”
  150. 150. Sponsorship = Customer Acquisition Strategy
  151. 151. Billboards = Customer Acquisition Strategy
  152. 152. Humor = Customer Acquisition Strategy
  153. 153. Video = Customer Acquisition Strategy
  154. 154. Arby’s Meat Bus = Customer Acquisition Strategy
  155. 155. New Business = Customer Acquisition Strategy
  156. 156. Access = Customer Acquisition Strategy
  157. 157. Help = Customer Acquisition Strategy
  158. 158. Creative = Customer Acquisition Strategy
  159. 159. Creative = Customer Acquisition Strategy
  160. 160. Copy = Customer Acquisition Strategy
  161. 161. Silliness = Customer Acquisition Strategy
  162. 162. Creative Brands For Millennials = Imagery, Fun Brands For Baby Boomers = Text / Links / Information
  163. 163. Baby Boomers
  164. 164. Baby Boomers
  165. 165. Baby Boomers
  166. 166. Baby Boomers – Gen X
  167. 167. Baby Boomers – Gen X
  168. 168. Baby Boomers
  169. 169. Baby Boomers
  170. 170. Baby Boomers
  171. 171. Baby Boomers
  172. 172. Baby Boomers
  173. 173. Millennials – Gen X
  174. 174. Millennials – Gen X
  175. 175. Millennials
  176. 176. Millennials
  177. 177. Millennials
  178. 178. Millennials / Gen-X
  179. 179. Baby Boomers
  180. 180. 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.
  181. 181. How One Brand Uses Low-Cost Advertising And Viral Techniques And Website/Mobile To Clearly Communicate A Customer Acquisition Focus
  182. 182. Betabrand
  183. 183. Betabrand
  184. 184. Betabrand
  185. 185. Betabrand
  186. 186. Betabrand
  187. 187. Betabrand
  188. 188. Betabrand
  189. 189. Betabrand
  190. 190. Here Is Where The Reader Begins To Complain
  191. 191. “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?”
  192. 192. 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
  193. 193. Turn Your Company Into An ATM For Ownership
  194. 194. ATM For Ownership Example = Lowes
  195. 195. Think About Managing Your Customer Database Differently.
  196. 196. 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.
  197. 197. Care/Feeding of 0-3 Month 1x/2x Buyers Customer Profit = Loyal Buyers.
  198. 198. Care/Feeding of 0-3 Month 1x/2x Buyers Corporate Profit = 0-3 Month 1x/2x Buyers.
  199. 199. 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.
  200. 200. The Modern Print-Based Ecosystem Minimal Tolls (Low Ad $) Teamwork (Chemistry) Merchandise Productivity Your Strategy Customer Acquisition Golden Gate Bridge Catalog Cul-de-sac Ranch-Style Remodel Abandoned Warehouse
  201. 201. 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.
  202. 202. 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.
  203. 203. 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.
  204. 204. Brand Response Marketing Team 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).
  205. 205. Brand Response Marketing Team 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”.
  206. 206. Brand Response Marketing Team 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.
  207. 207. Brand Response Marketing Team 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?
  208. 208. Brand Response Marketing Team 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?
  209. 209. 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?
  210. 210. Brand Response Marketing Team 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.
  211. 211. Avoid Lizard Logic. Focus On What Matters Merchandise Productivity. Stop Paying Tolls. Teamwork / Chemistry. Low Cost Customer Acquisition & New Customers. Brand Response Marketing.
  212. 212. Re-Focus 1 – Plant Seeds In Jan-Aug 2 – Harvest Your Bumper Crop Through October 3 – Generate Profit Next Year
  213. 213. Need Help Determining If You Have A Customer Acquisition Problem?? Kevin Hillstrom President, MineThatData Blog - Twitter - @minethatdata Podcast –