I often join earnings conference calls with public companies to hear how they see market trends and learn from their experiences.
Here’s a lesson I was not expecting.
This past Tuesday, I listened in as Erik B. Nordstrom, Co-President, slashed his forecast for sales and profit after they had a weaker than expected quarter.
Well, this part, I mostly expected.
But the reason as to why sales fell is what caught me by surprise.
According to Erik, their results were in part hurt by their decision to stop using direct mail to reach its customer for their loyalty program.
Here’s precisely what Erik said:
During the first quarter, we had some executional misses with the customer experience that had an impact on sales.
We have a well-established program with nearly 12 million active customers contributing more than 60% of sales in the first quarter.
Last fall, we evolved the program with the introduction of The Nordy Club, which allows customers to earn reward notes faster and provides early access to product and events.
However, the execution of our rollout was not as successful as we had planned.
As part of our decision to move to a digital-first program, we eliminated paper notes but later discovered that a segment of our customer base relies on receiving these notes by mail.
You catch that?
He claims that Nordstrom stopped sending rewards “notes” to its loyalty customers by mail in an attempt to get the program online and reach customers faster.
But what happened instead?
That decision caused a reduction in foot traffic at all of its stores, Erik said, as many customers relied on receiving those rewards by mail. It seems that Nordstrom executives were not expecting this outcome.
Honestly, I cannot recall the last time I heard a company of Nordstrom’s size say that cutting direct mail from their ad budget is having such a negative impact on sales.
But that’s what he’s saying, right?
So here are your takeaways:
- I’m not sure if they’ll put their direct mail program back in place (but my guess is they will). To those of you who can help, I suggest you start calling on them right now!
- This research from the DMA shows some startling facts about direct mail response rates — which further supports Erik’s findings.
[Related: Looking for more market data about the print industry? Download “The 25 Hottest Markets for the Printing Industry for 2018-2019”]
Whatever the case may be, I’m wondering: Maybe direct mail is having a resurgence due to the electronic noise from all the social channels. Do you think direct mail is making a come back?
Would you have made the same decision as Erik and his executive team?
Source:
MAY 21, 2019 / 8:45 PM, JWN – Q1 2019 Nordstrom Inc Earnings Call
Well friends, what do you think? Would have seen this coming had you been in Erik’s boardroom?
This is an amazing example of how Smart Mail programs kick butt and how MindFire has the solution for everyone to increase revenue and/or sustain a constant flow of business when using a successful Direct Mail program.
Thank you, Jennifer!
Interesting…… So many people want to get rid of anything to do with paper
This post has gained significant traction on LinkedIn and and Facebook. If re-purposing it for your audience would be useful, whether in blog form, podcast, or something else, please drop us a comment here and we’ll talk about how you can do that. We definitely want to share the direct mail gospel and are happy to make this available to you!
I only look at my email to look for coupon codes when I’m ready to buy something – so I don’t see special events or sales. I even use separate email accounts for things like this and personal communication, so I very very rarely check it. The direct mail reaches me and prompts me. Text messaging is the only channel that gets my attention the way mail does. But that would wane if everyone started doing it (and they will). And for those saying mail is only for Octogenarians — I’m 43 years old.
Love your points! I am exactly the same regarding the coupon codes. I rarely open the emails but the second I want to buy something, I search my email for the company name and locate the latest coupon/sale — typical I’ll buy then, but if the email shows an upcoming sale I may wait. 100% also agree with direct mail prompting you — and honestly I wish I would actually get more direct mail from the brands and companies I buy from/like because email is just so crowded. Text is my favorite method of communication but ya not so much on the marketing front, I always find myself opting out after a while unless it’s a service I consistently use.
I believe there’s a segment of public that still will enjoy and want paper in the mail. Evidently Erik Nordstrom found that out as well, booyah! We in the print community, certainly, want to see it continue and grow. Let’s face it after 2008/2009 we’ve seen a precipitous drop in direct mail and print for sure, but there is a definite resurgence. It works, it’s tangible and for the right customers it is effective. My 29 & 27 year old millennial children, might not see it or use it as effective but I think they from time to time want to be touched with something physical in the right way.
I couldn’t agree more Bob — and I’m a millennial! Maybe I’m more old-fashioned than most millennials, but I love receiving catalogs and flyers in the mail from my favorite companies and brands. In fact, it is something I greatly look forward to! I even keep a small stack of the most recent catalogs on my dresser — and now consider them a part of my room’s decor 🙂 — seeing them everyday keeps that brand top of mind, which in turn drives me to their store and/or site, which then (more likely than not) turns into a sale! It’s a WIN WIN for everyone! Direct Mail Is FAR From Dead!
I would have not eliminated direct mail – and doing is likely a poor decision without first running several tests.
I heard a similar story from one of the largest growers of cherries. They decided to eliminate a print newsletter because employees were afraid to throw it away (a benefit, not problem, right?). Now the newsletter is going online. My guess less readership will result in the online version.
An interesting offer is set aside for thought and will be referenced at least one more time before discard. Emails are discarded at once , rarely referenced. the investment in USPS mail is going to be recognized as a premium offer worthy of review especially because of previous contact if teh sender has held the viewers interest .
haha I saw your post after I commented above and we’re both on the same page. If I get something in the mail with an interesting offer, I typically save it in my handbag or a specific drawer and when a need arises or when I see it again I reference it for use. With emails, I either immediately delete them or if it’s something that I think I’ll want later, I keep it and only reference if it I am searching for it. But every week or so I mass delete all my ‘promotion’ emails so I if I don’t use it that week, it’s out. A good recent example is for Nespresso, I keep the emails bc I buy Nespresso but only need refills once every few months so for those few months when I have coffee pods, I just mass delete, but when I know I am getting super low, I keep them and then when I order I’ll search my inbox for the specials/codes. But like I was saying above, I honestly wish more brands would send me mail bc it’s th best way for me to remember that there’s a sale and since I keep them often in my handbag, I am reminded every time I open it!
A smarter attempt to contact their customers would have been to ASK them how they would prefer to be contacted in the future – DM, EM, text. Then do so accordingly. If no reply, continue with current contact channel. Not rocket science.
AMEN MEL! Golden Rule: treat others how you want to be treated… Platinum Rule: treat others how THEY want to be treated. I recently did a presentation all about leads where I included this – let me know if you are interested in checking it out! I am happy to send it over!
I think now that everyone uses email and online touches, getting something in the mail stands out. I remember getting Nordstrom’s catalogues in the mail and always enjoyed flipping through them, whereas emails go straight to the trash can.
As a past recipient of Nordstrom’s direct mail I say BAD IDEA! Like many have stated, my inbox is so inundated with mail that I just mass delete. The catalogues, coupons, etc that I receive in the mail get set aside until I’m ready to shop. I agree with Mackenzi and Mel, why not ask before making such a huge (bad) decision?!
I couldn’t agree more with many of the comments. I still love the mailbox moment and getting my coupons. Nothing aggravates me more than the daily emails from every store I shop. Frequency of communication and communication preferences should be asked. Direct mail is highly effective especially when personalization is applied! Long live direct mail!
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