Tag Archives: Relationship Marketing

Best Seller Gone Bad

Customer Experience, DataBase Marketing, Marketing thru Operations

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.

Continue reading Best Seller Gone Bad →

SEO for Cable TV

Customer Experience, DataBase Marketing, Marketing thru Operations

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?

Continue reading SEO for Cable TV →

From Audience to the Individual

Analytical Culture, DataBase Marketing, Measuring Engagement, Web Analytics

Prompted by Avinash’s post on Recency (if this topic interests you, there is much more here), I have to return to an idea that keeps running through my head:

Why do so many Marketing people fail to understand the basic underlying dynamics of Interactive / Online Marketing?  Relative to the Comments on Avinash’s post, why would Marketers not be interested in the Recency metric?  If the Marketers are not aware of it, why would Analysts not push it to them, show them the power of it?

The more I think about this issue, as I have been for several years now, the more confident I become the answer is quite simple: Nobody ever taught most Marketers how to communicate properly to Individuals.  Their training, their experiences, their peers, their conferences, all of it is about Marketing to Audiences.  The nameless, faceless hordes represented by GRP’s.

They simply don’t know how to do it any other way. 

And as a result, neither does whoever they report to. 

Which means any Marketing Accountability or Productivity Metrics, if they exist, are about Audiences, not Individuals.

So, all the Marketers care about are Audiences, these one-off blips on the screen, as opposed to Individuals, who carry longer-term, Potential Value to the Company that can be measured with Recency.

That’s why they allow the blasting of e-mails, they buy untargeted impressions.  They repeat what they know from offline, online.

Sad, really.  A one-way thought process in a two-way world.

What can we do about it? 

I’m going to talk about these concepts with a few Marketers during the AMA’s Digital Marketing Lab at M.planet next week.

I’ll let you know how it goes…

Update: I should probably skip Marketing, go straight to the CFO.