Marketing Productivity Blog

Electronic keyboards were expensive in the 80’s and early 90’s, especially good ones.  Then came Casio, and the whole business changed.  At HSN, we loved the electronic keyboard business.

The category was made for TV shopping – the demonstrations were killer, and with all the new-fangled automation on board, “anybody can play the keyboard”.  In HSN language, “keyboards screamed” and you always got a call center “whoosh” – the sound you hear when inbound calls ramp from 100 to 1000 in 30 seconds.

So I’m talking with the keys merchant, and he says they’re having a supply disruption, and there will be challenges keeping the keys in stock because they sell so well.  This is a problem for me, because I’m publishing the monthly customer (offline) magazine and we’ve got some layouts and articles on the product.

I ask for a simple merchandising run on the SKUs to get a feeling for product in pipeline, to see if maybe I have to kill the spread.  We’ve sold 45,000 of the little beggars, which is pretty good for (what was then) a $500+ item.  It averages about $1,000 a minute in Margin, which is great versus network overhead cost of $300 per minute.

Problem is, we’ve only ever purchased 17,000 of them.

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Riffing off a great post by George on marketing measurement, here’s a very specific example of how Marketers have to think differently when they are dealing with interactive environments, from my days at HSN.

We spent about 5 years and $100 million dollars trying to prove offline media would drive new customer acquisition and sales.  We tried everything.  Billboards.  TV.  Radio.  Newspapers.  TV Guides – local, national, and cable.  Flyers,  Shoppers, FSI’s.  Spot cable.  All of it, in just about every combination you can think of.

Each time we did these tests, we set up control markets and looked for Incremental sales in the media markets versus those with no media, based on revenue per household.  We found incremental sales in just about every case. 

The problem was this: even though the media created incremental sales, these sales were never enough to pay back the media on a net basis, meaning (roughly) (Gross Margin - Campaign Cost) – Variable Overhead was negative – even when you took into account the LifeTime Value of a new customer.  Even when you looked at the test markets versus control 3 months, 6 months, and 12 months later, for those who might be thinking about “Brand” or “Awareness”.

If you’re thinking perhaps the campaigns were weak or light on exposure, I offer you this: when the campaigns included coupons, the redemptions were absolutely huge.  That’s good, right?

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What’s Marketing Alignment?  Search Google for this phrase and you will find a lot of discussion on aligning Marketing with Sales, the old B2B chestnut.  I’m not going in that direction.

I’m talking about making sure all the Operational interfaces to the customer have Marketing input, that the messaging and interactions with customers reflect the Marketing Strategy.

Marketing Alignment is making sure Marketing as a discipline is always facilitating Demand Fulfillment across the entire enterprise.  If Management is looking for a “big idea” during these times of change, a new way to approach the business as opposed to simply cutting budgets, Marketing Alignment just might be the ticket.

This Marketing Alignment issue can be a particularly important for growth companies.  When you started out, it was all about the customer – when there was less than 10 of them.  Now that you have 1,000 or 100,000 customers, you have probably created processes, procedures, and goals that unintentionally create barriers to closing new customers and fostering repeat business.

Here’s the basic argument for the Marketing Alignment idea:

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