Mid Season Holiday Sales Pulse- Tuesday Webinar

Please join me next Tuesday for our Holiday Tune-Up webinar. We are speeding towards the close of the holiday season- a season fraught with tough economic news and weak retail results. Many of you often ask me how other retailers are performing. We will talk through results by category, promotional strategies, what is working, and then look ahead to 2009. Please click on the below link to register for our webinar.

http://www.brighttalk.com/webcasts/1785/attend

(copy and paste link if the url is not connecting)

We have partnered with NCR Ecommerce to co-host this webinar with us- they have terrific insight into other channels of business and we always learn something new in our conversations with them.

We look forward to connecting with you on Tuesday.

Happy Holidays!

Polly's Blog Today: 28 Promotions and Counting

I received a seemingly large volume of emails today, and as I was deleting them, I thought it might be helpful to list them out. The promotions are piling up this holiday season, from Eddie Bauer to Neiman Marcus, with more discounts than free shipping (so far).

In no particular order...

Eddie Bauer- Last Days: 30% Off Outerwear + Up to 60% Off 250 Styles!

Teleflora- Save 10% - Teleflora's Fall bouquets starting at $29.99!

Borders- 40% Off Holiday Music & More -- 2 Days Only

Coldwater Creek- $30 off + Favorite holiday looks (at fabulous prices!)

Frontgate- 20% Off Continues: Enjoy the Best of Outdoor Living

Sundance- Take 20% Off All Jewelry...But Hurry!

Ballard Designs- Shop our Estate Sale and save up to 65%

Teleflora- Introducing Teleflora's Colonial Williamsburg Sweepstakes! (yes, 2 emails in the same morning)

Shoebuy.com- Stay Warm & Save $15 on all Boots and Slippers of $40 or more!

Amazon- Free Super Saver Shipping to Kick-Start Your Holidays

Tiffany & Co - Complimentary Shipping Ends Today

Bluefly - One-Day SHOE SALE - Now up to 60% off

Ann Taylor - Final Day: 30% OFF Your Purchase

Overstock - LAST DAY 10% OFF

Neiman Marcus - NEW ARRIVALS: First Call SALE + Free online shipping AT ANY PRICE

Design Within Reach - Save up to 70% at the DWR Warehouse Sale

Restoration Hardware Baby & Child - Save 20% During our Friends and Family Event

Babies R Us - ONE DAY ONLY! Terrific Tuesday Savings, Veterans Day, Nov 11th

Lillian Vernon - Free Shipping on Christmas Gifts, Decor and More in the new catalog

All Posters.com - 25% off entire stie & up to 75% off VINTAGE clearance

Personalization Mall - Countdown to Christmas 25% off

Omaha Steaks - Save up to 64% and Get Your Free Ham (first 1,000 orders only)

Discovery Store - Final Email Secret Sale - 20% Off Site-wide

Nordstrom - Free Holiday Shipping (Details Inside) Half-Yearly Sale: Save 40% or more

Eastern Mountain Sports - Up To 50% OFF* Your Holiday Shopping! Act Now!

Exposures - Exposures the more you buy the more you save

Circuit City - Veteran's Day Savings on HDTV's, laptops, cameras and more

Snapfish - Get 20% off our Holiday Catalog


The vast array of promotions this holiday season only tells us what we already know... there is no easy way out of this recession.

How Much Change?

It’s November and our holiday season is officially here. The market is up and today’s election could make history. We are all planning for 09, and the number of revisions to our forecasts has hit double digits.

We are busy with cost-cutting measures, new initiatives, and plans to optimize our existing business (from page counts to merchandising). We can not use the economy as our excuse for weak sales and sit back and wait. Or can we?

Unfortunately, it is very difficult to understand, when you are down in sales 20% to LY, how much of that is the economy and how much of it is our own business decisions.

I was a Pottery Barn customer before I worked for Williams-Sonoma Inc., and I am still a Pottery Barn customer. This brand is struggling along with the rest of the home décor and furnishings market, but to my consumer eye, the catalog and the retail stores have never looked better. Perhaps expensive leather was not the right fall statement in a weak economy, but overall, the brand still looks great.

How do you preserve the brand you have created, while making changes to combat declining sales in a temporary economic climate?

In really tough times, we have to be smarter marketers. We have to find ways to do more with less. This means that creating valid, insightful tests is more important than ever. Here are some of the questions that require testing to answer:

*How will our rolling 12-month revenue per customer with an opt-in email be impacted by a reduction in catalog contacts?
*What is the incremental value of mailing catalogs to customers who only shop via web or at retail?
*Should we be emailing our lapsed customers with an opt-in email address every week (multiple times each week), or can we save on email costs by reducing the number of email contacts to this group?
*What is the incremental profit per customer with and without different types of promotions?
*What is the long term impact of the promotions we offer today?

All of these questions can be answered by setting up the right tests. Here are a few key rules:

1. Understand your expected response when you are selecting your segment sizes- you need enough orders to be statistically valid.
2. Only compare like groups. We all know this goes without saying. The segments in the test must be equal representations of the customer group in question (a random nth).
3. Only compare like segment sizes. Your segments must be the same size- comparing the results of a 25K test cell against a 200K control cell is not valid.
4. Don’t try to test too many variables at once. For example, using the same segments to measure the incremental value of mailing catalogs to web only customers AND creating a test to optimize your catalog/email contact strategy is hard to accomplish in one mailing unless you have large segment sizes.
5. Focus on creating a few, meaningful tests. For example, if you know you will always mail catalogs to your 0-12 month customers even if they have an email on file, then only test limiting catalogs to your lapsed customers or low dollar customers. If you know you would not give up mailing catalogs to your older customers unless they have an opt-in email address on file, then make sure you are only testing a segment with opt-in email addresses.
6. When testing promotions, consider the open use of the coupon code on the web and how you will account for those sales. When you look at the subsequent value of customers acquired with a promotion, be sure to include the initial costs of the offer.
7. Create sustainable control groups that last over a season (at least) and understand the prior contact history of customers in these control groups when you are evaluating results.


These are basic rules for tests that we are all aware of, but as we position ourselves to learn more and optimize our businesses in this economy, it is good to remember!

"Major in the Majors"

Clearly, it’s been a tough week. How our world has changed over the last few weeks and months:

-- We went from file growth planning to helping you determine the impact of closing stores. How much of the customer’s demand will shift to DTC and how much of it will be lost? What promotional contact strategies are necessary to continue to engage these store customers in other channels?

-- The focus on true contact strategies has kicked into gear, as you look to cut circulation and page counts in 2009 without impacting demand to the same degree.

-- The previous shift away from promotions to focus on the bottom line is swinging back to coupons as sales fall to plan and inventory backs up. Understanding the LTV of these discount customers is now more important than ever.

-- Communicating with investors is now part of our daily responsibilities as M&A activity continues in the world of direct marketing.

Yes, these are tough times. But for those who remain proactive and focused on those efforts that can truly move the needle, this is a time to fine-tune and evolve our marketing practices and come out on top. My mentor used to tell us to “major in the majors.” Now it couldn’t be truer.

How Important is Promotional History?

It seems like common sense. If you mail Mary Jane your catalog, as a customer (because she spent $500 three years ago) or a prospect (because she shops from your core lists) for two years and she never responds, perhaps she is likely to never respond and you should stop mailing her the catalog.

We find that:
1) Promotional history is very rarely used in developing contact strategies for customers, and
2) For those who have done the analysis, promotional history is not as predictable as it seems it should be. Mary Jane repeatedly appears on your core prospect lists, so you keep mailing her even though she doesn’t buy, AND studies show that you should keep mailing her because a recent hit on a core list is more likely to predict a response to purchase.

The reason I bring this up is that I have been receiving the same home décor and furnishings catalogs for years without buying anything. I suspect I get them because I am a gift buyer from catalogs like Sundance and Acacia, and these catalogs are core files for many home brands.

Here’s the thing- even though I have not bought from these home décor and furnishings catalogs in a long time, I really enjoy looking through them. Now, I am buying a home and suddenly these old catalogs are coming off the shelves and my wallet is coming out.

How important is promotional history?

6 Ways to Segment Customers (Other than RFM)

1) Email Activity- (Last Opened Email)

Understand how recently a customer has opened an opt-in email from you. For example, Mary Jane is a lapsed customer that you are not planning to mail until you see that she just opened an email last month and she is engaged again with the brand.

2) Promotional History Flags - (Mailed Last 30, 60, or 90 days)

It can be difficult to execute contact strategies because customers are migrating in and out of segments. As a brand, you may make a decision that you want to contact even your most lapsed customers once a quarter. If you add flags to your backend or promotional history, you can just select those names from an older segment that have not been mailed in the last 60 or 90 days.

3) Source of Acquisition- (This is something you hear from me a lot!)

Defining customers as web only does not tell us a whole lot, especially how responsive they are likely to be to the catalog. Understanding that a customer is a catalog-driven web customer or a pure web only drive from a program like non-branded paid search or affiliates is critical to optimizing contacts and costs. It also requires storing matchback data on your database.

4) Product Category- (Might seem obvious to some of you but it is still rarely used)

We most often see product categories included in the segmentation for apparel companies where differentiating shoe or accessories buyers is important, but it also has implications for general merchandise, children’s, gift, and home décor and furnishings.

5) Sale/Discount/Free Shipping Buyers- (These are large segments of customers for most retailers now)

Try testing different segments based on their type of purchase- full price, free shipping, discount, sale, etc. You may find that certain segments of buyers are more responsive to different contact frequencies/messages.

6) Presence of Opt in Email (Critical for optimizing catalog/email contacts)

Similar to the promotional history flags, adding a flag to your backend for presence of opt in email can also help you decide who to mail and who not to mail when you are cutting back circulation, especially to marginal segments. If customers will hear from you anyways, there is less risk in reducing catalog contacts (though it should be tested first!).