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Success Story What Really Drives Sales Growth and Repeat Business? Negotiate as if Your Life Depends on It How Sandler Training Can Help Your Team
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Have You Met Mick Beam?
How Square Transformed the Way We Pay
HOW ONE MEGA COMPANY LOST $10 BILLION BY BEING PENNY WISE AND POUND FOOLISH AND WHAT YOU CAN LEARN FROM THEIR MISTAKE
The executive’s reason for cutting the swimwear was that its sales growth was flat in Q1 of 2016. The category had grown by 10 percent in Q1 of 2015, but after one bad year, I guess you go ahead and cut a half-billion-dollar category. Is it possible they just missed the trends for 2016 and needed to replace some fashion designers? Could it be that they weren’t marketing enough, and that’s why sales were flat? I guess we’ll never know, because these executives decided no one would miss half a billion dollars in sales. I don’t know who else they have on the executive team, but they should fire them all after this round of decision-making.
At the time, one Twitter user commented on the news that Victoria’s Secret had discontinued their catalog by saying, “In big news, the Victoria’s Secret catalog has been discontinued. ‘We have the internet; we don’t need it anymore,’ said 13-year-old boys.” I would expect nothing less from the internet, and even some people in the marketing community as a whole. The gross misunderstanding of how marketing works in 2016 and 2017 — especially by those in the media — is a huge part of the issue. All most of these folks know is what they read on Inc. or Business Insider. They see headlines daily about the death of anything that isn’t Twitter, Facebook, and Snapchat (although the alleged death of Twitter is often a story as well). They don’t understand that those catalogs were driving billions in sales. More on that in a moment.
In February of 2016, L Brands, the parent company of Victoria’s Secret, fired star CEO Sharen Turner. The new CEO, Stuart Burgdoerfer, decided to take a fresh look at the company. He asked, “If we started Victoria’s Secret in 2016, how would we go about marketing and selling?” On the surface this seems like a fair question, but there’s one big problem: The answer is irrelevant. They didn’t start the brand in 2016, and the way you build a startup is different than the way you build a multibillion- dollar company. If they were starting in 2016, they’d likely be online only, at least to start. Armed with this flawed approach, the executive team at Victoria’s Secret decided to make a huge change to their marketing plan and save $150 million per year by cutting their much-beloved catalog and discontinuing their swimwear line, despite its $500 million in sales.
I first wrote about the cutting of the catalog shortly after it was making the rounds on the
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CHANGING THE WAY SMALL BUSINESSES GROW.
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