COVER CONTINUED ... business news sites. I felt it was a dumb decision. This catalog was driving people online and into the stores. I could literally see it play out in my own house. Some of my friends and I talked about the massive hit the stock price was going to take and how it might make sense to short the stock — ultimately a good investment. About 16 months have passed since the amazing executive team at Victoria’s Secret made these calls, and now we can see how things played out. On April 1, 2016, the stock price for L Brands, the parent company of Victoria’s Secret, was $88.08. On September 1, 2017, the stock price was $37.46, with sales down 20 percent. Six percent of the decreases comes from the discontinued swimwear line. The other 14 percent ... perhaps it was the discontinued catalog. These yahoos saved $150 million in advertising costs, likely gave themselves a bonus for doing it, and cut the stock price by 67.5 percent, erasing roughly $15 billion in market cap — 100 times what they saved in advertising costs. On the surface, we all do what these executives do. We want everything to work perfectly and to neatly fall into fully trackable and calculable ROI. Well, good luck with that, because that’s not the world we live in. The catalog has been shown time and time again to be difficult to track, but it has a massive effect on the bottom line. Why? Because
people get the catalog, browse it, and then feel eager to visit the website or store.
okay-sized business (I’m not really sure), but it’s a simple business that lives and dies by Facebook traffic, which means it is a dead man walking.
Catalogs are so effective that there are online- only companies that mail them out. Bodenusa.com and Bonobos.com are two online-only retailers that both mail catalogs. In the age of online ordering, the death of retail, and the fact that all shopping is going to be done on your phone starting any day now, why would anyone in the online arena bother with catalog sales? The only logical guess is that they are making money. It’s hard to track the catalog and its direct sales, but what’s not hard to track is an overall increase in sales. This brings me back to the start of this rant, which is this: You cannot track 100 percent ROI if you have any complexity to your business. And if you don’t have a complex business, you have a very, very small business. Let me explain. We’ve all seen the company that sells $27 trinkets or info products. When we look at a case study, those items show an amazing ROI on Facebook or insert media, but they come from a small business that does one or maybe two things. I recently bought a $27 item that keeps my head from bobbing and allows me to sleep on a plane, and it is awesome. But I’ve heard nothing from these people since I got my product. They may have an
What happens when you have a complex business — a business that has many products and a ton of moving parts? What happens when you have to first generate a lead before you can make a sale? What happens when you have tons of competition? What happens when you are a service provider, like a dentist, lawyer, PT, or an HVAC provider, and there are dozens — or hundreds — of competitors in your area? You don’t have a simple business anymore. How are those simple Facebook ad strategies working for you now? Do you possibly need people on the phone closing leads? Well, that’s complicated. Do you need to first generate the lead and then nurture them? If so, that’s also complicated. You get the point. For most businesses, it isn’t as easy as putting up an ad, making a sale, and shipping a product. Most of us need to work a little harder, and if we do, if we need people to answer the phone or nurture campaigns, or one of a hundred other possible scenarios that make our business work. You now have a problem if you want to track 100 percent ROI on every campaign. You may be thinking, “But Shaun, I can totally track 100 percent ROI. We do it in my business all the time.” That’s because you’re tracking first touch or last touch, not 100 percent direct ROI. So, if you track first touch and the lead comes in from Facebook (after eight months of getting emails and direct mail, seeing you at a trade show, or reading your newsletters) and finally makes a purchase, you give the credit for the sale “All the research shows that, on average, PEOPLE NEED TO BE EXPOSED TO YOU AT LEAST EIGHT TIMES BEFORE THEY EVEN KNOW YOU EXIST , which means they saw you in some way, shape, or form numerous times.”
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