New CEOs That Are Never Satisfied With the Customers They Have

Here’s another thought-provoking post from our good friend Bill Lapierre:

Why do so many new catalog CEOs want to become heroes by fixing a problem that doesn’t exist, while ignoring the low hanging fruit problems, which if fixed, could result in immediate profits?
I hope you all took the time last week to read this article (Inside Lands’ End’s Quest For A Younger, Cooler Customer) which documents Lands’ End’s new CEO efforts to attract younger customers.
First, I want to be fair and point out that Federica Marchionni, the new CEO, stated several times during this interview that her intent was not to make major changes with what was already working at the company. She recognizes that alienating her existing core customers could spell doom. “We will never, ever lose an inch of focus on our loyal customers”.
Second, she recognizes that the investors in the “newly” public Lands’ End want to see immediate results. I also recognize that the reporter that wrote the article had to be selective in what was included from the interview, and may not have included everything that was discussed.
The article states that Marchionni has a two pronged approach to fixing Lands’ End sales problem (sales have dropped 10% since 2012). Her solutions: 1.) tweak the existing line of clothes to make it more appealing to existing 35-54 year old customers (although I think that age range is drastically understated – I have to believe their core customer extends well beyond 55 to include baby boomers, who would be 55+); 2.) develop a new line of apparel, focused on “fit”, for a younger customer.
To me, this seems eerily similar to past attempts by companies like Talbots, which several times back in the 1990s and early 2000s completely change their marketing to go after a “younger customer”, and fell flat on their face.
I applaud Marchionni for being aggressive in making changes at Lands’ End, but let’s look at this from two perspectives.
Younger customers: Every catalog company wants to attract younger customers. After all, they are the future with regards to down-the-road revenue stream. But, I don’t see 20 to 35 years flocking to a brand – no matter how in tune that brand may be from a fashion standpoint and fit perspective – that is “paper based”. Regardless of what your printer wants you to believe, I just don’t see catalogs (or ads in Vogue) resonating with that demographic.
I’m sure that the folks at Lands’ End are developing supporting mobile apps that they expect will appeal to those younger prospects. But if they are still planning on using a catalog as the primary vehicle to find them and appeal to them, good luck. Lands’ End already went down that road previously with Canvas, which no longer mails. Similar younger audience catalogs from other mailers are not exactly lighting the world on fire either.
Existing Customers: I’m really not concerned with the company’s effort to go after a younger audience, as I suspect it will lead nowhere other than being a huge distraction from what they should be doing, which is focusing on the low-hanging fruit – which is the core customer.
As I’ve mentioned in this spot before, I love to wear simple wool sweaters, the heavier the better. When you live in New Hampshire and work in Vermont, you need a warm sweater. I have one from Lands’ End that I bought years ago that is large, bulky, thick and most important – warm. I love it. Since I bought that one, I’ve bought 4 or 5 additional sweaters from them, for about the same price, which all turned out to paper thin. The amount of wool from my old sweater would make five or six of the new ones. I hate the new ones and don’t even bother to wear them. More important, I won’t buy any new sweaters from Lands’ End because in my opinion, the quality of yore is gone. Conversely, my wife won’t buy anything from the company because everything she wants is always out of stock.
If I were at Lands’ End, I would focus on fixing the customer’s perception of quality (I can’t be the only one that feels it has slipped), and inventory (my wife can’t be the only one that always finds products out of stock). But fixing those problems are not as sexy, exciting or appealing as launching new creative in the catalogs, or new ad campaigns in fashion magazines. Further, they are “behind-the-scenes corrections that investors expect you would be doing anyway, and won’t give you credit for fixing.
Further, as I see it, the current focus to existing customers is actually on “fit”. My wife received the two catalogs below earlier this month (and oddly enough, I received a copy of the Women’s book too on the same day addressed to me – I’d love to know what they were testing with that!).

The Women’s book had eight full pages of branding similar to the spread below, all on “fit”, before you reached the first spread selling anything.

In a 68 page catalog, that’s 12% of the space (and the most important space at that) turned over to “branding on fit” and not selling anything. Just for a minute, forget about younger customers. Forget about quality and out-of-stock merchandise issues. Ask yourself what would have driven more sales and response – 8 extra pages of product, or 8 pages of copy no one read? What were they thinking? Go ask Ron Johnson, the former CEO at JCPenney, how tolerant his investors were with all of his creative changes aimed at “branding”, especially in the JCP catalog.
The Men’s catalog was not as bad. It was selling by page 4. But look at the model on the left (below), vs. the one on the right. The guy on the left appears once in 56 pages, while the guy on the right is representative of the models that appear about 8 or 9 times. Bearing in mind that I was born during the Eisenhower Administration, which do you think resonates with me? The guy with the gray temples or all the guys with 5 day old beard growth? Are we just months away from seeing the Lands’ End tattoo?

I keep going back to the comment that “We will never, ever lose an inch of focus on our loyal customers”. Lands’ End sales have not declined because they weren’t “hip” enough. I doubt that there are customers clamoring for a better “fit”. And they are not going to bounce back by trying to look more “hip” via creative changes to the catalog, or selling skinny jeans, to the middle-of-the-road average American baby boomer that is the core Lands’ End customer. But fixing the real problems are never as fun as fixing the problems that probably never existed in the first place.

by Bill LaPierre
VP – Business Intelligence and Analytics
Datamann – 800-451-4263 x235
blapierre@datamann.com