To Err is Human — to Really Muck Things Up Takes a CEO, Part One

Maybe it’s the fact that I live and work (mostly) in Florida — the sun, scam and lazy person’s escape capital of the world. Or maybe it’s just that I’ve worked for so many entrepreneurial companies that “hit” with the right product at the right time — and had no idea how to spark the lightning to strike twice. Or perhaps, it’s because as a consultant I’m usually called in when there are problems (sometimes insurmountable) that need to be fixed, and start-ups that need to be funded.

Or maybe it’s just my dumb luck? Neh!

Be that as it may, I’ve had the opportunity to live through (survive) and learn from the mistakes of others.

The following is the first of a two-part series of things you never, ever (did I say ever?) want to do if you want to be a successful mail order company.

1. Never fall in love with your products. Your customers really don’t care if you had a vision of your new product while on a retreat to Tibet, or if it’s been blessed by the Dalai Lama himself. Plain and simple: If it doesn’t sell, stop selling it. Furthermore, just because you love your new creation, don’t put it on every cover of every catalog in your drop schedule in an effort to turn a sow’s ear into a silk purse just by sheer force.

The goal of all direct marketers is to be objective — ruthlessly objective if need be. We’re in a numbers-driven business. If you really love products that don’t sell, buy some billboard space by your exit on the interstate so you can enjoy your product daily.

2. Inventory loses its value daily. If you overbuy for a season, don’t just store it in your warehouse. Sell it off or liquidate it immediately. Don’t wait (see No. 1 above). Who cares if it’s passé or doesn’t really fit your evolving brand image anymore. There must have been some reason you bought it in the first place.

3. Never forget the SQUINCH that stole Christmas (season). It was a super smart direct marketer who invented square-inch (squinch) analysis. It provides catalogers with a surefire way to understand the correlation between what’s selling in their catalog vs. what’s not. It’s a key measurement of how each item in your catalog contributes to profits based upon the space the product occupies. Yet I can’t tell you how many marketers I see not using it. Which leads me to the next item (why it’s not used)…

4. Don’t ever assume that you, and only you, know what your customers want. This is the surefire way to destroy your company. Yes, it may be your company. And yes, you may have invested all of your time, money, blood, sweat and tears into it. And yes, you have in the past picked products your customers loved. But stop! Nothing substitutes for listening to your customers.

Conduct surveys, have your customer service reps ask questions and evaluate squinch and other product sales measurements. In short, don’t let your ego write a check your business can’t cash! Better yet, get into your call center and answer calls yourself. You’ll learn a lot, and your employees will see you in a whole new (and positive) light.

5. Never forget the basics. Response analysis, lifetime value, P&L management, RFM, squinch and product sales forecasting are your tools in this business. If I never hear the galvanizing cheer “we need to think outside the box” ever again, it will be too soon. The direct marketing playbook (inside the box) contains all the tools you’ll ever need. Throw away those rules and you have a recipe for failure. In short, think inside the box to be successful.

6. Never fill key positions with people you know. Family, friends and even your former housekeeper have no place occupying key roles in your company. I’m aware that you know and trust them, and they would never (theoretically) hurt you, but if you want to keep your company healthy, hire people who have a demonstrated record of success in the specific field the expertise is needed. Yes, they’ll cost you more to hire. But in the long run, you’ll see real ROI from these individuals.

7. Never be cheap with your employees. One incongruity I see in the business world that boggles my mind is how employees always feel underpaid. If you have employees who make a difference in your company, give them bonuses and/or offer them stock. Happy employees feel good about their jobs and their lives and perform better. Unhappy employees feel cheated, resent their superiors and lose motivation. Ask yourself this question: When was the last time an employee quit because they were making too much money? And don’t be cheap with the praise, too. Everybody likes a pat on the back. Money and praise are the world’s best motivators. Overpaid employees don’t leave.

Caveat: Don’t overpay, or for that matter, keep poor or marginal employees. They bring you down and won’t motivate your staff.

Author’s note: If you find yourself angry or upset by my column today, that’s OK. I may have hit a nerve. Feel free to dispute anything I said by commenting below. Oh, and if I know you and have worked for you in some capacity over the years, please know that I am NOT talking about you. Most of what I wrote about happened on multiple occasions with some very diverse companies.

Speak to you next week.

Jim Gilbert is president of Gilbert Direct Marketing Inc., a full-service catalog and direct marketing agency. His LinkedIn profile can be viewed at www.linkedin.com/in/jimwgilbert , or you can e-mail him at jimdirect@aol.com.