Catalog Choice: Affiliate Program

What are your thoughts about Catalog Choice entering affiliate marketing?

• Announcement on the Catalog Choice Blog
• Example with Gardeners Supply

Most of my clients carefully analyze affiliate marketing relationships, and thoroughly understand the new customer / existing customer issue with affiliates. Hint: It's a good thing if you get at least 80% of your affiliate marketing business from new customers.

I mentioned to several people this week that 2009 is the most interesting year I've seen in Catalog Marketing in the past decade. In so many ways, the industry has been in a decade-long "multichannel" fog that is finally being exposed for not delivering unfettered profits. Business models are being dismantled, unpredictable alliances are emerging, and a deep split is forming between catalog tradition and survival/adaptation.

Where do you think the catalog industry is heading?

Response From Catalog Choice: Marketing Strategy

The direct marketing community expressed considerable interest in yesterday's post, entitled "Catalog Choice: You Decide What Gets In ... Except When They Market Catalog Choice Webinars To You". This essay is one of the most read articles of 2008, and has been forwarded via e-mail at a rate far greater than the typical article. Many of the world's largest catalog brands frequented the site today to read about a Catalog Choice webinar marketing strategy that is, for all practical purposes, the same strategy they are encouraging the catalog marketing community to change.

A response from Chuck Teller of Catalog Choice can be read in the comments section of the original post. If you have interest, please review the response (click the link above) and offer our community of nearly 1,200 daily catalog, multichannel, e-mail marketing, online marketing, and web analytics subscribers your thoughts on the topic. Thank you to Catalog Choice and Mr. Teller for offering a comment.

Catalog Choice: You Decide What Gets In ... Except When They Market Catalog Choice Webinars To You?

Catalog Choice has been a blessing for consumers who do not wish to be marketed to via catalog advertising. When my clients ask for advice, I recommend they partner with Catalog Choice. Honoring customer requests is a good thing! Catalog Choice is like a "widget", if you will, and can be used to make the opt-out process easy.

This past week, Catalog Choice used marketing techniques that are very similar to those employed by catalog marketers. Allow me to explain what they did. I will ask you for your thoughts at the end of this essay.


Thursday, June 19: I receive the following e-mail from Catalog Choice. Please click on the image to enlarge it.


There are several things that are unique about this e-mail marketing message / webinar invitation.

1. I did not opt-in to receive marketing messages from Catalog Choice. They chose to send this marketing message to me without previously obtaining my permission to receive marketing messages from them.
   
2. The "from" line of the e-mail message is from an individual at a PR agency. The subject line does not mention Catalog Choice. The body of the e-mail message is from a staff member at Catalog Choice. I'm not sure where this stands from a can-spam standpoint. At minimum, the strategy is not aligned with standard e-mail marketing practices.
3. The PR agency employed by Catalog Choice graciously agreed to answer my question about how they received my e-mail address (they visited my website and copied the e-mail address), an act I appreciate.
   
4. The e-mail message does not offer me a link with the option to opt-out of future Catalog Choice e-mail marketing campaigns.
5. The privacy policy at Catalog Choice suggests that they may collect information on users, should the user ever send an e-mail to Catalog Choice (I previously responded to an e-mail from Catalog Choice. and may have sent an e-mail to Catalog Choice in the past). Catalog Choice offers an individual like me the opportunity to opt-out of marketing communications by e-mailing them at a unique e-mail address. Catalog Choice offers the following language, regarding volunteered PII: "Limitation of Liability By providing us with any PII you expressly and unconditionally release and hold harmless CatalogChoice, and our subsidiaries, affiliates, directors, officers, employees and agents from any and all liability for any injuries, loss or damage of any kind arising from or in connection with the use and/or misuse of your collected PII."

Wednesday, June 25: I received a phone call from Catalog Choice, asking if I was planning on attending their webinar.

1. I never gave my phone number to Catalog Choice.
   
2. I never gave Catalog Choice my permission to market webinars to me via telephone.
3. My phone number is part of the national do not call registry, though I give it out to my clients, family, and to potential clients at business-related conferences. It is probably true that .org brands can market to the do not call registry.
   
4. Catalog Choice volunteered to me that they obtained my phone number from a presentation I gave in early 2007, a presentation they found via a hyperlink online. My thanks to Catalog Choice management for being honest and forthright about answering my questions.
5. Catalog Choice did, via e-mail and during the phone call, offer to remove me from future marketing campaigns, good for them!
6. I did not get to have a say (in advance) in the marketing frequency employed by Catalog Choice. In other words, I did not get to say whether I wanted one or two or seventy marketing messages. This is comparable to the practices of the Catalog industry.
   

Why Is This Important?

Catalog Choice goes by the tagline ... "you decide what gets in". When it comes to catalog marketers, Catalog Choice aims to give consumers control over what goes in their mailbox. When Catalog Choice markets to me, the marketing strategy is comparable to the practices of the Catalog industry, practices Catalog Choice are hopeful to change within the Catalog industry.

We also know the following:

1. Catalog Marketing requires that forests be harvested, potentially damaging the environment.
2. E-Mail Marketing uses electricity and plastics (computers/servers), often sourced from coal and petroleum, potentially damaging the environment.
   

Obviously, Catalog Choice has a right to run their business model as they wish, a business model that benefits consumers, catalog brands, and the environment --- win/win/win.

Here is my question to you, the e-mail, online marketing, multichannel, and direct marketing leader who subscribes to this blog:

• Is it reasonable for an organization to strongly request that the Catalog industry institute permission-based marketing, yet in their own marketing programs execute the very strategy that they are trying to get the Catalog industry to stop?

I am torn by this topic, since I have always recommended Catalog Choice to my clients. I genuinely believe that Catalog Choice means no harm. It is my opinion that they simply did not think through the parallels of their strategy and the very catalog marketing strategies they are trying to influence, making this an honest mistake. My hope is that the Catalog industry and Catalog Choice can have a strong, collaborative, and beneficial relationship. My hope is that, in the future, Catalog Choice employ marketing strategies consistent with those they wish to encourage Catalog marketers to adopt.

I'd appreciate your thoughts in the comments section of this post. Please forward this post to your colleagues, as the topics outlined are worthy of general discussion in the direct marketing community.

Audience Development: Here's A Mistake I Made

Back in November, I asked readers what they wanted to learn about. I received many responses from folks who wanted to learn more about my thoughts concerning Catalog Choice.

So I spent a lot of time writing about Catalog Choice in December and January.

Traffic, and more important, subscribers, increased by almost 20%. Almost instantly!

Good for Kevin, right?

Wrong.

Audience development is all about cultivating the right audience. In my case, I attracted an additional two hundred subscribers, folks who were actually offended by some of the topics I wrote about. I received e-mails from individuals who challenged my integrity and knowledge of my industry. All of a sudden, a vocal minority didn't like me!

I developed the wrong audience.

I began to receive unsolicited e-mail from organizations friendly to Catalog Choice, asking me to help spread the word about various ecological issues (ironic, given that stopping unsolicited mail is the objective of the folks marketing to me --- but unsolicited digital mail was ok).

When I stopped covering Catalog Choice, subscriber counts plummeted. The unsolicited e-mail campaigns slowed, but to date, have not stopped. It takes a lot longer to correct an audience development mistake than it takes to build a non-congruent audience.

For direct merchants, building a productive customer file is probably second to merchandising in importance. And yet, we make mistakes comparable to the mistake I made all the time.

I purchased an item from a company six months ago, at full price. Since then, nearly every e-mail campaign sent to me by this brand offers me up to sixty percent off my next purchase, if I use the code offered in the e-mail campaign. Clearly, this brand is trying to develop an audience that enjoys the thrill of "x" percent off merchandise offerings.

An executive recently told me that his e-mail marketing list of over a million individuals only responds to free shipping, buying more than four times as much merchandise if free shipping is offered than if it isn't offered. He developed an audience that only responds to free shipping. He cannot get away from free shipping unless he develops a new audience. It won't happen by wishing, only by hard work.

I've made countless mistakes developing an audience that enjoys and participates in Multichannel Forensics. Let's learn from our mistakes, let's develop audiences relevant to the niches we serve.

Attention Catalogers: Co-Ops (Abacus) And Matchbacks

If you do customer acquisition via catalog marketing, you undoubtedly elected to drink the co-op kool-aid. And why not? Based on our reporting (sometimes provided by co-ops like Abacus), co-op lists outperform outside lists.

I've mentioned this before, and I want to mention it again, because the topic keeps coming up in various projects I work on. Co-op customers tend to be more likely to purchase over the telephone than rental/exchange customers.

And since phone orders are nearly 100% attributable to the advertising vehicle sent to the customer (whereas online orders are at best semi-attributable if matchback analytics are performed properly), co-op names may "appear" to perform better simply because of the channel preference of the customer selected by the co-op.

This has long-term implications for the brands we shepherd. If co-op names work "best", with co-op customers more likely to order over the phone, we then "have" to mail catalogs in the future to get the demand. And by having to mail catalogs, we have to keep feeding the entire catalog ecosystem --- printers, merge/purge houses, USPS, the paper industry, and the co-ops.

By feeding the catalog ecosystem, we anger some customers and prospects, which feeds the rampant growth of Catalog Choice.

We create our own problems, folks!

If you are a heavy user of co-ops, please consider extensive matchback analytics. At minimum, use the Migration Probability Table as outlined in Multichannel Forensics to understand future channel preference of co-op sourced names. You're in for a treat if you do!

ACCM 2008: Catalog Choice

As best I can tell, Catalog Choice was not in the exhibit hall.

Attendees overwhelmingly shared with me that they were willing to speak with or work with Catalog Choice --- only a few individuals expressed frustration with constant calls from Catalog Choice to accept opt-outs.

There may be folks from Catalog Choice who are in attendance, and I simply haven't run across them. I'd have loved to have seen the DMA have the courage to invite Chuck Teller of Catalog Choice to speak at this conference, allowing their message to be heard along with the message of self-regulation offered prior to the keynote address.

Overwhelmingly, attendees told me they wanted to do "what is right" for their customers.

Part 4: What If Catalog Prospecting Stopped Because Of Do Not Mail Legislation?

For a recap of this series, please read part one, part two, and part three. For a view of the simulation tool used to create the scenarios in this series, click on the Multichannel Forensics Two Channel Simulation Link.

This exercise was created to give everybody, catalogers, vendors, customers, blog participants and third parties, an opportunity to understand how actual customers behave based on a simulation of actual customer behavior. The simulation ends speculation and opinions. The simulation simply illustrates how customers behave, and the business consequences that management may eventually have to deal with.

There is no getting around the fact that phone and mail volume are crippled when catalogs are not mailed. Many jobs would be lost if catalog mailings were limited only to loyal customers. Good, hard working call center staff, distribution center staff, and folks who make a living working in the catalog ecosystem (printers, co-ops, list brokers and managers, paper reps, USPS, merge/purge vendors, contact management software vendors), will have their lives interrupted if things ever get to this point. In many ways, this four part series should encourage the cataloger to partner with third party opt-out services in an effort to stem an outcome that is this bleak.

Remember, there is light at the end of the tunnel. Notice that at the end of the simulation, in years four and five, sales rebound, and profit increases. There is hope! Catalog management can follow a prescription to make sure that if things ever get bleak, the business is insulated from the dire situation illustrated in this series.


Catalog Management Prescription To Avoid A Dire Outcome

It is better to partner with third party opt-out services now than to deal with the dire consequences of this simulation later.

Test significant increases in online marketing NOW! See how far you can push the envelope in e-mail marketing, affiliate marketing, shopping comparison sites, portal advertising, banner/ppc advertising, paid search.

Do everything possible to make your site natural/organic search friendly. Contact our friend Alan now, and have his organization help you with natural/paid search strategies that insulate you from tough choices associated with the long-term prognosis of catalog marketing. His catalog marketing experience is very beneficial for making the transition from catalog to online marketing.

Test not mailing catalogs for a quarter to various segments of your customer file. At the end of the quarter, run matchback analytics on the mailed group, and the holdout group. Truly learn what will happen to your business if you were not allowed to mail catalogs.

Run Multichannel Forensics simulations (there are free links on the homepage of the blog), so that you know the long-term trajectory of your business. You may find that your phone/mail customers are very willing to shop online if not mailed catalogs, which would be highly beneficial to you!

Cultivate organic business. This is easier said than done, but is means EVERYTHING to your business. Organic business happens when customers purchase from your brand because they love you, not because you advertise to the customer. Organic e-commerce sales protect you from any catalog or online advertising issues. Organic e-commerce sales are highly profitable. In this simulation, had the catalog brand had significant and growing organic e-commerce sales, the outcome wouldn't have been as dire.

Be proactive! Test everything now! There is hope!

Part 3: What If Catalog Prospecting Stopped Because Of Do Not Mail Legislation?

In part one of this series, we explored how rapidly a catalog brand implodes when prospecting is discontinued. In part two of this series, we got to see the bottom of the pit, with the majority of employees being laid off from a crippled catalog business.


Light At The End Of The Tunnel

Most catalogers shudder at the thought of third parties telling them how to run their business. In reality, the third parties wouldn't exist if customers weren't frustrated. Do not mail legislation wouldn't be a possibility unless customers were tired of their mailbox being stuffed with advertising they weren't interested in. So this is a reality that we helped create via our actions.

But there is light at the end of the tunnel! The reality is that there is an online channel, a channel that allows customers to purchase from catalog brands, regardless whether catalog advertising exists or not.

Take a look at the profit and loss statement from years four and five of the simulation. Please click on the image to enlarge it.



Notice that the business is finally growing. Yeah!!

What happens is that the catalog side of the business hits rock bottom. Customers who are no longer mailed catalogs trickle over to the online side of the business, purchasing small amounts without advertising. The end result is a business that is beginning to become profitable again.

Of course, the business is sixty percent of the size it was five years ago. But that's the consequence of not prospecting via paper for a long period of time.

From this point forward, this is an online brand. In reality, the brand could quit mailing catalogs, as the entire exercise of mailing catalogs to loyal phone customers only breaks even.

In part four of the series, we'll talk a bit about the strategic implications of this simulation.

Part 2: What If Catalog Prospecting Stopped Because Of Do Not Mail Legislation?

We explored what happens in year one when catalog prospecting (and reactivation) is discontinued due to do not mail legislation. Now let's take a peek at years two and three in our simulation.



Please click on the image to enlarge it.

Recall that we were managing a $32 million dollar business that was generating $3 million in profit. This business would have still been growing in sales and profit, in all likelihood.

However, without a steady diet of new customers, this business is starving. The business is now half the size it used to be, generating about $16 million in sales, and around a half million in profit. Take a look at the catalog-driven component of this business. Catalog used to drive $13 million to the call center, and $12 million to the internet. Without catalog prospecting, only loyal customers are left, and these customers drop off at a rate of about fifty percent a year. By year three, catalogs are only driving $4 million a year. A few million dollars are made up via the online/organic channel, as a few catalog customers decide to buy online in spite of the fact that they no longer are advertised to.


Key Issues, After Three Years:

Seventy five percent of the remaining call center staff must be laid off, as there isn't enough volume to provide jobs for these individuals.

Twenty five percent of the remaining distribution center staff must be laid off, as there isn't enough volume to provide jobs for these individuals. Management must also consider what to do with a distribution center that is half empty, compared with three years ago.

Given the severe decrease in profitability, management would have to seriously consider mass layoffs among salaried staff.

The reduction in profitability severely limits the ability of the catalog brand to invest in anything.


Light At The End Of The Tunnel

In part three of this series, we'll show how the cataloger becomes an online brand, and begins to grow once again. Hope isn't lost. As leaders, we'll need to consider what we can do today to grow the business in a way that insulates us from the headaches associated with discontinuity in catalog marketing.

Part 1: What If Catalog Prospecting Stopped Because Of Do Not Mail Legislation?

Alan talks about third party opt-out services in the catalog industry, wondering what would happen if catalog prospecting were illegal?

So let's run a simulation and find out! Because I was part of the elimination of a catalog division at Nordstrom, I've experienced what happens when you aren't allowed to do catalog prospecting anymore. I took the metrics and customer behavior obtained in that painful multi-year experience, and plugged them into a simulation model that analyzes a $30,000,000 multichannel cataloger.

We know that when do-not-call legislation was enacted, marketers could not market to folks if their last purchase was more than eighteen months ago, or if the household had not purchased previously. We'll go with that assumption for catalog marketing in this simulation.

Here's the profit and loss statement of a multichannel cataloger, assuming catalog prospecting is allowed, and assuming that catalog prospecting is not allowed.



Click on the image to enlarge it.

As catalogers know, there are four primary sources of revenue generation. Demand is generated from catalogs, over the phone or mailed to the brand by the consumer. Demand is generated from catalogs over the internet. Demand is generated from online marketing. Finally, demand is organically generated online (the least well understood aspect of demand generation for catalogers).

If catalog prospecting were stopped, the cataloger is starved of a significant source of future revenue. A considerable amount of unprofitable prospecting is offset by future profitable sales generated by the new customers. In total, this brand sees demand from catalog marketing decrease by about fifty percent. Variable catalog marketing expense decreases by seventy percent, because catalogs are no longer mailed to 13+ month recency buyers and prospects. However, the fixed costs associated with producing catalogs remains constant, eating up any profit increase.

A very small amount of phone business transfers to the online/organic channel. But for the most part, these customers buy because catalogs are mailed to them, so they stop buying when catalogs are no longer mailed.


Key Issues, Year One:

Phone demand decreases by fifty percent. This means half of the call center staff must be laid off.

Total demand decreases by one-third. This means one third of the fulfillment center staff must be laid off.

The online marketing budget is doubled, in an attempt to grow the brand. With luck, this investment is at break-even. In many cases, this will accelerate losses. We assume break-even in this case.

Total profit decreases by one-third, restricting the ability of the cataloger to make capital investments or make any kind of investment.

The fixed costs associated with producing catalogs (about $1,000,000 per year in this simulation) are about to play a major role in squelching the profitability of this brand. Catalog prospecting allows the catalog to spread out fixed costs across a much larger customer base.

After one year, the cataloger has been hobbled. Management will part ways with at least a third of the employees. Sales and profit decrease by a third.

In Part 2 of this series, we'll see what happens to the cataloger in year two and year three. I'm sorry to say that the story doesn't improve for a little while. But there is hope as we look to years four and five.

Survey Results: What Purpose Does Catalog Choice Serve?

Please visit the homepage for the latest survey, asking why you read The MineThatData Blog.

You were given a chance to speak out about Catalog Choice, the customer-friendly and eco-friendly organization that protects customers from the misery of receiving unsolicited catalogs.

Here is how you responded:

• 43% = Catalog Choice simply gives customers a way to opt-out of unwanted and unsolicited catalog mailings.

• 14% = Catalog Choice uses this service to promote an eco-friendly agenda.

• 29% = Catalog Choice wants to dictate a new business model to catalogers.

• 14% = We cannot possibly know or understand what Catalog Choice wants to accomplish.

As you can clearly see, our readers are split in their perception of what Catalog Choice wishes to accomplish.

I truly believe catalogers want to honor opt-out requests. I have yet to hear information contrary to this.

Catalogers want to trust one or both organizations (Catalog Choice and the Direct Marketing Organization, contrasting organizations promoting common objectives). Catalogers are reading your press releases and blog discussions, scrutinizing your words and actions. Use your platforms to do good!

Forrester Research Survey On Green Direct Marketing

Last fall, you asked me to cover "green" issues in cataloging. We've had many good discussions, haven't we?

Today, Forrester Research analyst Dave Frankland asked direct marketers to participate in a survey on green direct marketing. Here is a link to the Forrester blog post, and here is a link to the survey. Let your voice be heard!

Ann Curry And The Today Show Feature The Cute Kids Cancelling Catalogs

If you were at work this morning when The Today Show featured a piece on how to cancel catalogs, please watch the segment here.

Ann Curry sat at a computer monitor, and opted-out of Red Envelope, Pottery Barn and Mrs. Fields catalogs.

Kudos to Catalog Choice and those cute kids for getting attention via grass roots efforts. This goes to show you how individuals and small teams can make a difference. How things get done in this world is rapidly changing ... Catalog Choice provides a great example of how to market a useful service via social media, illustrating how mainstream media does the work for you when social media is executed properly.

Catalog Choice reports that they've had an onslaught of traffic today. Ted Wells reports that 500 visitors an hour are checking out his blog.

The Today Show, via their website at MSNBC, is challenging all schools to do what the cute kids accomplished. Here is a link to the Today Show Challenge.

Of course, there's some level of irony involved in having NBC and The Today Show take shots at companies like Red Envelope, Pottery Barn, and Mrs. Fields.

When I ran Ann Curry's video on the MSNBC site, I was subjected to unsolicited advertising from Best Buy, I could not fast-forward over the ad, MSNBC forced me to watch it. I might have wanted to opt-out of that advertising opportunity, however, I could not.

Here's a sampling of the national companies that pay the salaries of employees of The Today Show via unsolicited commercials I did not have a choice to opt-out of while watching the program in real-time this morning:

• Honda, Smuckers, Hyundai, Pillsbury, Olay, Air Wick, Dannon, Clorox, Turbo Tax, Slim Fast, Pampers, Cheerios, Kashi, Olive Garden, Progresso, Oreo, Bank of America, Head and Shoulders, Nestle, Lysol, Visine, Capital One.
  

Obviously, I cannot speak to any details on the practices of these companies ... I am simply hopeful that all of these companies don't over-harvest trees or mis-use fossil fuels to produce the products, services and packaging that paid the salaries of the folks bringing us The Today Show, the show that promoted Catalog Choice.

Response From Catalog Choice Executive Director Chuck Teller

I am including text from comments received by Catalog Choice Executive Director Chuck Teller. I think it is important that our catalog audience get to hear all sides of this discussion.


Response to Looking Ahead To 2008:

In 2008, there will be a conversation between consumers and merchants about eco-friendly and privacy matters. I look forward to having you and as many members of the multi-channel merchant industry involved in the conversation. I know the consumers are ready to voice their opinion.

I like the fact that you refer to Catalog Choice as an eco-friendly organization. There is a seat at the table for merchants who want to be eco-friendly. In 2008, we will be rolling out a series of Eco-Friendly Best Practices.

My only request at this time is to not add the pre-fix "third party". Catalog Choice and our sponsor organizations (NWF, NRDC and Ecology Center) are not "third-parties". For example, the Ecology Center runs the curbside recycling program in the city of Berkeley. We are an integral component of the direct marketing lifecycle. We do the dirty work of driving around picking up those recycled catalogs.

Happy New Year - looking forward to 2008.


Response to Extreme Makeover, Catalog Edition:

Great post. I think I will point to it from my blog over at Catalog Choice. One item I would like you and your readers to consider is how you can work with Catalog Choice to drive more sales and communicate with your customers that are using our service. We have some programs that we are developing for merchants. Sign up for your free Merchant Account at http://catalogchoice.org/merchants to start your Extreme Makeover.

Chuck

Extreme Makeover: Catalog Edition

The love (customers/press/bloggers) / hate (some catalogers) relationship with Catalog Choice dominated my in-box and comments over the past week.

We Americans love to assign blame. We love to hold people accountable. We also love to forgive people, and where possible, we love to rescue people from dire situations (i.e. Extreme Makeover, Home Edition on ABC).

It's probably time we, as Catalog industry leaders, conducted a post-mortem on our own business practices, asked for forgiveness, and then rescued ourselves from what may someday become a dire situation.


The Problem: Some Folks Don't Like Us

You're probably not knee-deep in complex business issues the week between Christmas and New Year's Day, so why not take a lap around the internet and learn a little about all the ways various folks hate catalogers.

Read the comments that come after the articles. You'll notice that folks use phrases like "unwanted catalogs". You won't see somebody write something like "I've been a lifelong L.L. Bean customer, but I hate the fact that they send so many catalogs."

So folks don't like our industry when we "send unwanted catalogs".


Why Does Our Industry Send Unwanted Catalogs?

There are many instances when we send catalogs to customers who may not want them.

1. Customers who exclusively purchase via the online channel.
2. Prior catalog customers who have not purchased in a long time.
3. New catalog customers who weren't expecting an onslaught of mailings from a brand.
4. Customers who have never purchased from our brand (i.e. customer acquisition).

Catalogers directly control issues one, two and three. Circulation teams create profit and loss statements for customers in groups one, two and three. If catalogers lost money mailing those groups, the flow of catalog mailings stop.

The fourth group is an intriguing one. Historically, a catalog brand could not survive without a massive customer acquisition effort. As a result, catalogers might mail half of their circulation to customers who never purchased from the brand previously --- with start-up catalogers and low-retention-rate brands mailing maybe eighty percent of catalogs to customers who have never purchased from the brand previously.

Prior to 1995, catalogers rented the lists of similar catalog brands, and exchanged lists with other companies. In the past five years, however, there has been a dramatic shift in circulation away from rented/exchanged lists, to cheaper and better performing co-op lists.


Co-Ops And Dissatisfied Consumers?

While the numbers vary, many catalogers allocate about half of customer acquisition circulation to co-ops (Abacus, Z-24, NextAction, I-Behavior, Circ Base, Prefer Network, Wiland Direct).

So if the cataloger allocates half of circulation to customer acquisition activities (customers who have never purchased from the brand), and half of the customer acquisition circulation is allocated to co-ops, then that means that co-op statisticians decide who receives one out of every four catalog mailings.

To be fair, this isn't dramatically different than cataloger practices in the early 1990s, when the Garnet Hill list might be rented by Newport News. In either case, customers received unsolicited mailings.

There is a subtle difference, however. Customers might have been tolerant of receiving catalogs from a "similar brand" ... the fundamental difference between Eddie Bauer and L.L. Bean isn't enough for the Eddie Bauer customer to get ticked-off when an L.L. Bean catalog arrives. However, the co-op statistician uses equations to decide who receives catalogs. And equations, while more precise and profitable than list rental/exchange models, will frequently target customers incorrectly.

If the co-op statistician notices that apparel customers have an "affinity" with another merchandise line, the statistician builds that information into the model. This might result in an increase in response rate, from 1.5% to 1.65%, a wonderful result for a cataloger. But it could also mean that twenty or thirty percent of the names mailed are "different".

It is in this twenty or thirty percent that problems occur. If the statistician gets creative, there will be better response, but more "risks" are taken with the customers who are mailed. Co-ops may substitute "brand affinity", which customers might be tolerant of, with "product affinity", which customers might not be tolerant of (this is simply a hypothesis of mine --- co-ops, feel free to jump in and comment about this).

Is this the fault of the co-op? Does the co-op provide enough information for you to know who the co-op is mailing on your behalf? Do you provide enough oversight of the co-ops to know who they are mailing on your behalf? Did you pre-think how your customers might respond to knowing that you dumped their purchase information into multiple co-ops, so that they could be mailed complimentary offers by competing brands?


Forgiveness

It might be time to consider asking customers, bloggers, and the press to forgive us. Especially if co-ops determine the names/addresses of individuals who receives a quarter or more of your total circulation.


Extreme Makeover: Catalog Edition

Here are nine ways for us to begin to repair our reputation, and be good stewards.

• It is time for the DMA to do something with the $10,000 to $50,000 each of our organizations pay them each year. And that something is not telling us to "just say no" to Catalog Choice. If one of our customers or one of our prospects doesn't want to receive a catalog, we have to honor that request. Honor the customer, and challenge the DMA for modern solutions and real action.

• Have you considered joining the American Catalog Mailers Association? It won't cost you the $10,000 to $50,000 it costs to join the DMA. While this organization believes that the response of the press to the folks at Catalog Choice "give them the willies", I perceive this organization wants to "do what is right". Best of all, you could play an active role in doing "what is right".
  

• Make it easy for your own customers to opt-out of catalogs. You make it easy for customers to opt-out of e-mail campaigns, don't you? The reality of the marketplace is that you have to do this for catalog mailings as well. Times have changed.
  

• Strongly consider the mailing strategy you employ for online-only customers. These customers may consider you as an online brand, not as a cataloger, hence their dissatisfaction of your online mailing strategy.

• Give customers a say ... give them an option to receive half of your mailings, and brand this choice as being "eco-friendly". Test the living daylights out of this ahead of time, so you know the ramifications this will have on your business.
  

• Oversight ... do a "deep dive" with the co-ops. If you allow co-ops to mail a quarter of all your catalogs, you have given a quarter of your brand authority to co-ops. Wow. Do you oversee the vendors you work with in China to ensure that the working conditions are acceptable? If you do, don't you think you should provide the same oversight with co-ops? And if co-ops won't provide transparency, well, then, you need to think about your relationship with them, don't you? The folks who work at co-ops are good people, they will respond to a catalog industry that demands oversight.
  

• Would a little "PR" hurt? Catalog Choice gets picked up by major publications all over America, quoting the billions of trees catalogers harvest each year. As a result of our inactivity, Catalog Choice muscled in, and now has a seat at our Executive Table, managing our brands for us. Why can't catalogers go on the offensive? How much would it cost for a catalog to plant "x" trees each year? And how much good will would be done by having the press, bloggers, and TV stations all reporting the fact that two hundred employees spent a random Wednesday in July planting trees? Why aren't we good stewards? Why don't we "toot our own horn" when we do good? Why don't we tell our customers that we're planting four trees for every tree we cut down? And if we don't plant four trees for every tree we cut down, why don't we start doing this?
  

• Speaking of PR, why not tell the world that over the past five years, we spent "x" dollars less on catalog mailings, moving that money into online marketing that theoretically reduces our carbon footprint?

• Launch new initiatives online. Test various new products and brands online, and via e-mail. Use online marketing to test the initiatives before rolling out new products and brands via paper. And then tell the world how many trees you saved by doing this.

I could go on an on. Catalogers, it is time for an Extreme Makeover. It is time for action.

Cutting The Stack Of Catalogs

The DMA is forwarding an article from Business Week entitled "Cutting The Stack Of Catalogs", featuring an organization called "Catalog Choice" that allows consumers to easily opt-out of catalog mailings.

By the way, Catalog Choice has a blog. This organization "appears" to have an open conversation with consumers. Who "appears" more open, honest and transparent --- this organization, or the DMA, an organization that used a one-way communication to paying members earlier this year urging them to not honor Catalog Choice requests?

But that's neither "here nor there". Let's assume that Catalog Choice is acting with honesty and integrity. Let's assume that your customer is truly requesting to be removed from your mailing list. Let's assume that the DMA has your best interests at heart (which they do).

If you respect your customer's wishes, and you operate your business with honesty and integrity, what should you do when your customer opts out of your catalog mailings via a third party like Catalog Choice?

This isn't 1988. If the customer wants to purchase from you, she can use your website.

Simply remove the customer from your list.

Better yet, for every request you get from Catalog Choice, call the customer, and ask the customer if it was her intention to opt out of your catalog strategy.