Before Changing Your Business Model, Consult a Direct Marketer
Prior to joining Zale Corp. as president, Mary Forté—the textbook non-tester and major screwer-upper of a business model that had been successful of 80 years—had been QVC’s vice president of marketing.
What was she thinking?
One of the pernicious aspects of public corporations is that all too often Wall Street dictates corporate strategy. If analysts downgrade a stock from buy to hold or hold to sell, the ripple effect is horrendous. Stockholders sell, depressing the price even more, while management—whose compensation is frequently tied to options and stock prices—panics. Decisions are made in haste with the hopes of giving the stock a short-term bump instead of the officers and directors gritting their teeth and looking at the long-term benefits to the company, stockholder and employees.
A marketer schooled in direct would not dream of rolling out without testing. In the case of Zale Corp., it had 1,464 retail stores, 812 kiosks and 69 shopping mall carts in the United States. and Canada.
Testing would mean splitting off some stores—perhaps in the East, West, North and South—and trying out the new business model while nearby stores with comparable demographics would serve as the controls.
This is not rocket science. Just very hard work. For example, limited editions of catalogs and solo promotions would have to be printed and mailed on a 9-digit ZIP code basis at the same time standard promotional material was mailed nationally. These test stores would axe the Valentine’s and Columbus Day sales with the results compared to the control stores.
The idea of discontinuing monthly payment plans—a marketing tool on which the entire business had been built—was simply nuts.
In the words of Stuart Lee, merchandising VP of Signet’s, which overtook Zale Corp. and is now America’s leading jewelry retailer: “If you’re going to make a mistake—which we do sometimes—make it on a 100-piece order.”