At one point before I left graduate school I learned that the Peloponnesian War was really a precursor of one of our modern conflicts – the Vietnam War. I learned Napoleon marched his French troops to invade Russia, almost all of his troops died from frostbite, hypothermia and starvation. Hitler did the exact same thing. In the direct marketing industry we are constantly repeating ourselves but we don’t call it best practice and tend to be cautious about adjectives like ‘innovation’.
My partner and I were sitting around recovering from the day. I think it was about 11:00 PM and we were talking about calling it quits for the day. But our conversation rambled on and into a discussion of analytics strategies. Our head of analytics, Steven Shaw, wandered over to put in his two cents in. Of course he is a little biased in his point of view but his opinion is that the relationships between ideas, objects and numbers are all predetermined in one fashion or another. There are no truly new ideas. What we represent as new is really the discovery of something that was already there.
So I asked what does that mean in the end or is this just the blather of three agency hacks. Oops, sorry Steven I shouldn’t have included you! Brian, my partner, jumped in to say that none of this is really meaningful in that the new idea or the idea of the moment is just that. Where it might have emerged from or been adapted to is more often forgotten or simply considered old fashioned news of another generation. We’re cool aren’t we?
Steven brought us back to reality and an analysis we were working on for Holt Renfrew. The objective was to understand the characteristics of best customers. The strategy was simple – figure this out and find more. Not complicated from an analysts perspective but a challenge in the Toronto market where the top end of the file is measured in tens of thousands rather than 100s. The approach he followed was to first cut the file based on an Arthur Hughes standard view with a ranking of Recency, Frequency and Monetary. But he knew, in and of itself, that wouldn’t be enough to meet the objective of the analysis. What emerged was a three step approach: first with RFM; second, to build persona on RFM and third, enhancing the result with modeling to asses specific points of propensity within the best customer group. He asked the question whether there was any innovation in the process.
My quick off the mark response what that the steps in isolation were standard stuff of our business but the integration of the steps into a strategic progression of understanding of a group of customers behaviors is a significant innovation. It’s the process that’s the innovation not the parts and pieces.
Brian jumped in to add that as corporate culture continues to degrade from the disciplined strategic planning methods lead by the packed good industry to something closer to organized ad hoc decision it’s the creation and management of process that will deliver a company a strategic point of difference.
Steven and I laughed but we knew he was right!
Things in Toronto were changing and changing rapidly. Business as moving south as quickly as it once came to the city. Marketing departments were being dismantled with the center of gravity moving to New York and Chicago. With change came ambiguity and dysfunction to a marketplace that was, frankly, the best run in North America.
Steven again pulled us back on track. We had executed the RFM analysis for Holts. Brian and I both wondered why they hadn’t done this themselves. Is it that hard? Steven laughed and said no not hard but complicated. It’s not so much the analysis that’s the challenge it’s the application across customer tough points that’s the problem Holts was a little more confused than most retailers because they believed that monetary was the key driver of next purchase rather than recency.
Steven then remembered a story from his good friend Lester Wunderman – there are a multitude of steps in any direct to consumer program but success isn’t in any one single step but is in the collective. In other words it’s a successful process that delivers profitability.
So the process becomes the innovation today.
Our ramble ended at about 1AM. We know that the Holts project would work. We were less optimistic about where the practice of business was headed.