Your E-Mail And Catalog Contact Strategy, And Profit

If you read the multichannel marketing literature, you're unlikely to find any discussion about how marketing channels truly interact with each other.

And that's a shame, because the interactions are where all of the magic happens!

Folks who test different combinations of catalog mailings and e-mail campaigns observe interesting results.

Take a look at the table in this post. Seven different combinations of catalog mailings were tested against five different combinations of e-mail campaigns, yielding thirty-five different test groups.

What do the results tell us?

• The organic percentage can be directly calculated ... the $20.00 generated at 0 catalogs / 0 e-mails divided by the $99.00 generated at 24 catalogs / 52 e-mail campaigns. The organic percentage is 20.2%. This is soooooooooo important!! If this company does nothing, customers will still spend 20.2% of the volume they spend if all direct marketing activities are executed. For most catalogers and e-mail marketers, results are over-stated, because organic demand is being falsely attributed to marketing activities. Ask your co-op or database provider to calculate the organic percentage for you, or ask your database marketing expert to calculate this metric for you.
  

• Notice that demand does not increase in a linear manner. Each additional catalog, and each additional e-mail campaign yield an ever-decreasing amount of additional demand. This rate of diminishing returns is not well known in the direct marketing community, and causes direct marketers to significantly over-invest in marketing.

• Notice that e-mail is able to re-capture demand that is lost as catalog mailings are reduced. This "re-capture" is not well known in the direct marketing community, and causes direct marketers to significantly over-invest in catalog marketing.

• E-Mail marketing is actually very productive at small quantities ... thirteen contacts are much more productive, on a per-e-mail basis, than are fifty-two contacts.
  

• As catalogs and e-mail campaigns are increased, profit begins to shift. Notice that the most profitable combination is 12 catalogs and 52 e-mail campaigns. However, if you only delivered 26 e-mail campaigns, you need 16 catalogs to maximize profit, and if you don't execute e-mail marketing, you need 20 catalogs to maximize profitability.

• "Profit Shift" is a very important concept. As more and more "free" or "nearly free" marketing channels become available, the profitability of traditional, expensive marketing channels (like catalog marketing) becomes worse, requiring less investment in traditional, expensive marketing.

When e-mail marketing and catalog marketing collide, a rich array of insights become immediately apparent. All you have to do is set up tests to identify the insights!

The Failure Of The Catalog/Multichannel Marketing Model

"The internet is the wild west. I keep advertising, only to send my customers out into the wild west. And they never return." Catalog Merchandising Executive, 2007.

When we conduct the post mortem on the failed experiment known as multichannel marketing, we'll look at this quote as being a key piece of the puzzle.

Back in 2001, it was a good idea to be "multichannel". We sent catalogs to customers, like we always have. Our analytics suggested that customers used our catalogs to shop on our e-commerce enabled websites. Woo-hoo!

And then Google took command of e-commerce. Ever since then, we've been leaking customers and prospects.

This manifests itself in the phrase I hear nearly every day ... "catalog customer acquisition performance continues to get worse".

Many smart people correctly point out that catalog marketing "creates demand". In other words, many customers do not intend to buy anything, but will buy something if advertised to. The catalog creates demand for an item. Paid search, in general, does not create demand --- it simply intercepts demand that is looking for a home.

Our industry mistakenly went down the multichannel path, believing that this form of demand creation was good. And in a pre-Google world, it was really good!

Today, demand creation is usurped by demand interception.

Go to Quantcast, and view the profile for Orvis. Notice that customers who interact with Orvis also interact with companies like RiverBum. To my knowledge, RiverBum does not have a catalog or stores.

So here you have the good folks at Orvis, doing the multichannel thing, sending paper out into the catalog ecosystem. They do a good job of creating demand for dry attractors.

But the customer isn't 100% sold on buying dry attractors on the Orvis website. He goes to Google and conducts the following search: Dry Attractors. Lo and behold, look who comes up #1 ... RiverBum!

Orvis creates demand for dry attractors. Google intercepts the demand, and funnels it to RiverBum. The customer places the order at RiverBum. The circulation manager at Orvis looks at the metrics, noticing that response continues to decrease.

Catalog marketing still works ... especially for the folks at RiverBum, folks who are not executing multichannel marketing the way the pundits told Orvis to execute it.

Sure, you can criticize Orvis for failing to capitalize on an obvious search opportunity (they don't appear in the top ten for the term dry attractors and did not appear in paid results either). But that criticism misses the point entirely.

The point is that traditional multichannel marketing, executed via catalogs and stores and websites, is a leaky bucket that can never be fixed in a world dominated by Google. No matter how effective you are at catalog marketing, no matter how hard you work to optimize page counts and stimulate demand via enticing copy and manage trim size and use recycled paper and send remails and remails of remails, you will constantly send customers to Google. And Google will send customers to your competition.

E-mail marketers ... you're in the same boat.

This is the grand failure of the catalog/multichannel marketing model, a failure nobody in our industry wants to talk about. When we get away from over-thinking catalog productivity, when we focus on executing the nuts and bolts of online marketing, we begin to view the world differently. And maybe, we can stabilize the leaky bucket problem we face.

Mailbag: Kill The Catalog

"You frequently talk about what will happen when catalogs go away. Maybe you don't understand cataloging. When we don't mail a catalog, nothing happens online."


I get this feedback a lot. Multichannel Forensics will clearly tell you what the relationship is between catalogs and a website.


Catalog = Isolation, Website = Transfer: This situation suggests that you mail a catalog, customers buy the product online, then the customer uses the telephone for future purchases. In this situation, your catalog means everything to you. Don't kill it!!

Catalog = Equilibrium, Website = Equilibrium: This scenario is what multichannel pundits talk about. Catalog drive e-commerce sales, e-commerce activities drive catalog sales. Everybody wins. Don't kill the catalog!!

Catalog = Equilibrium/Transfer, Website = Isolation: This is when you start to think about killing a catalog. The catalog sends customers to the online channel. Once the customer goes online, they stay there, and don't order over the phone anymore. Ordering over the phone is a proxy for catalog effectiveness. When customers shift their behavior online, and stay online, start seriously thinking about the future of cataloging. Could you match your catalog sales by shifting spend from catalog advertising to online and search marketing?

Catalog = Isolation, Website = Isolation: When this happens, then you have two separate customers, one that likes catalog, one that likes the internet. The customers don't cross-shop channels. In this instance, you can do whatever you feel is appropriate for your catalog and online channels. If your catalog is unprofitable, you probably won't hurt your online channel ... but you probably won't recoup the sales you lose by not having a catalog.


The key is to run the Multichannel Forensics analysis, and let your customers tell you what your strategy should be! Don't listen to me, don't listen to the gobbelty-gook that vendors and pundits toss at you. Simply do the Multichannel Forensics analysis, and let the data guide your thought process.

In the first two examples, you'd never kill a catalog. The catalog "is" your brand.

Transition

Those of us who have been in the catalog industry since 1995 know that we are going through a period of significant transition. We may not always acknowledge this fact. But it is happening.

To use broad generalizations, Baby Boomers fueled rampant catalog sales growth in the 1980s and 1990s. Gen-X brought us e-commerce and e-mail marketing. Millennials are fueling social networking, and in many cases are ignoring "traditional advertising".

If you are a cataloger with a target customer this is sixty years old, you might be insulated from this period of transition, only impacted by increasing paper and postage costs.

If you are cataloger with a target customer that is forty or forty-five years old, you are going through a significant transition. A generation of print-responsive customers are being replaced by a generation of e-commerce customers. In the next ten years, your print-responsive customers will be a minority of your business.

Even more fascinating is the fact that in ten years, your e-commerce and e-mail business will be going through a "transition", thanks to dramatically different shopping behavior exhibited by Millennials. We simply can't envision how this generation will shop when they are forty years old. It is highly unlikely they will embrace catalogs or e-commerce as we know it today. They will probably create their own version of internet shopping.

Regardless, direct-to-consumer shopping will be very different from what we know today as "e-commerce". We'll be reading articles from today's e-commerce and e-mail experts about how "E-commerce isn't dead, it's still highly relevant ... Amazon is spending $400 million on an online marketing campaign featuring Gwen Stefani".

I lived through catalog transition during my time at Nordstrom. I watched a $400,000,000 telephone-based business collapse. I watched an e-commerce business grow from zero to a half-billion dollars. I actively participated in the tough decisions that result in marketing dollars being reallocated to e-commerce and "multichannel". I mourned as the catalog talent pool, my friends, were replaced by e-commerce, "multichannel" and "consumer intelligence" skill sets. My team artfully and willingly transitioned their skills to remain relevant in a post-catalog world.

And I rejoiced in my own renaissance!! I was able to re-brand myself as a subject matter expert in forecasting how customer behavior changes over time, across products, brands and channels. As it turned out, this transition was tremendously positive for me. My experiences going through the "transition" are so very important to the work I do for clients today.

If you are experiencing the transition of a career that was built on paper, this Vanity Fair article (forwarded by loyal reader Jennifer Thornton) should resonate with you: "Is This the End of News?".

The author artfully describes the transition he is experiencing in the news business, using common-sense language and everyday situations to describe how the internet, and differences in generational habits, are putting pressure on his career.

I felt the best part of the article was the way the author recognized all of the changes in his field, and is taking a chance on influencing the way news is presented to folks in the future. He may be right, he may be wrong. At least the author is positively using the transition of the news industry to try something different.

Time for your thoughts. Do you agree with the premise that cataloging is going through a significant transition? If you agree, how are you rolling with the punches?

Career Advice: Joyce, The Online Marketer

This is another composite, reflecting a situation I see repeated in our multichannel organizations. At the end of the story, please offer Joyce career advice.

Joyce is a 31 year old Director of Online Marketing at a multichannel retailer. She is responsible for Paid and Natural Search, Affiliate Marketing, Portal Marketing, E-Mail Marketing, and Shopping Comparison Marketing.

Joyce quickly rose through the ranks at her company. Hired right out of college, Joyce chose the E-Mail vendor, Web Analytics vendor, and Search Marketing vendor at a time when her company barely understood the online channel. The infrastructure she put in place is industry-leading.

However, almost nobody in her company understand her true contribution to the organization. She is routinely battered by store managers who want to run their own e-mail marketing campaigns. In fact, many store employees are running their own e-mail campaigns via gmail and hotmail accounts, campaigns that are not CAN-SPAM compliant. Some store managers and employees run their own personal blogs and websites, selling directly to customers.

Her catalog marketing partners are highly critical of her team, suggesting her team lacks the experience and analytical rigor necessary to manage the ad budget given to Joyce. The catalog marketing director routinely picks on Joyce, mocking $0.29 sales per e-mail results that are just one-fifteenth that of a catalog mailing.

Joyce reports to the Chief Marketing Officer. The CMO is a traditional marketer. He understands television, newspapers, radio, and magazine ads. He has a consumer package goods background, and knows how to "launch brands". He doesn't understand why Joyce has to manage six thousand keywords, doesn't understand why she has to bid more for some words than others. He doesn't understand why Joyce wants to launch a blog, he doesn't understand why a blog might help natural search results ... "our PR department speaks to the community, not you" was his response to a recent request for blogging tools and resources.

Joyce depends upon the Information Technology team for website improvements. Joyce has cost-justified various site improvements, improvements that could improve the profitability of her division by twenty percent. The Information Technology team appears to "pick and choose" the projects they want to provide support for, and because IT doesn't report to Joyce, she cannot directly influence what they should work on.

The CMO recently asked Joyce if she would be interested in a "Vice President of Direct Marketing" position, one that would combine all catalog marketing, direct marketing and online marketing responsibilities. Joyce knows that she would be responsible for managing a catalog marketing program she doesn't understand. Joyce knows that it is likely that catalog marketing leadership will leave the company in protest over this promotion.

Still, Joyce knows that she needs to expand her knowledge of marketing, if she wishes to influence her organization.

What should Joyce do? Should she accept the promotion? Should she decline the promotion and focus on online marketing? Should she quit the company, and work for an organization more appreciative of the value online marketing brings to the organization?

The Reminder E-Mail

It's 5:47am. I'm walking my dog, a dog that wants to investigate every newspaper lying in every driveway.

Each newspaper was wrapped with an advertisement from a large retailer. The ad tells the newspaper reader to eagerly anticipate a catalog that will be mailed to select customers in the near future.

This reminds me of all the e-mail campaigns you see, campaigns reminding the customer that an important catalog is going to be mailed in the near future.

Pundits sometimes like these e-mail campaigns, suggesting they provide an effective 1-2 punch in generating response. They call these "integrated multichannel marketing campaigns".

I'll grant you that these campaigns probably work.

But what does this say about you, the humble employee?

What, exactly, are you "selling"?

You are selling the customer the dream that better advertising is coming soon.

It may be in the best interest of the customer, and it probably is in the best interest of the brand, to execute these multi-step advertising campaigns.

But how do you, the employee, benefit from telling your co-workers and your customers that better advertising is coming soon?

E-mail will always be a second-class citizen in the minds of employees and customers when it is used to communicate that better advertising is coming soon. The employees executing these campaigns deserve better. These employees need to work on campaigns that are as close to selling directly to the customer as possible.

Career Advice: Jane

This character, "Jane", is a composite of numerous individuals I've met during the past three years. At the end of this brief career description, you are encouraged to offer "Jane" career advice.

Jane is the Director of Circulation for a multichannel cataloger. She worked her way up the corporate ladder, from an entry-level merge/purge analyst in 1992, to a housefile circulation analyst in 1995, to a housefile planning analyst in 1997, to a circulation manager in 1998, to her current position, which she was named to in 2002.

During the past five years, Jane has helped her organization go through a significant transition. In 2002, just twenty percent of transactions occurred online. Today, sixty-five percent of purchases occur online, and half of the online transactions are driven by Jane's catalog mailings.

Earlier this year, Jane's boss, the Vice President of Marketing, left the company to pursue other interests. The CEO decided to name the Online Marketing Director as the new Vice President. This angered Jane. The new VP of Marketing had just six years of total experience, though all of it was in e-mail marketing, paid search, affiliate marketing, portal marketing, and shopping comparison site management.

Since the promotion, the new VP of Marketing and Jane are not getting along. The focus of marketing has clearly shifted toward the online channel. With catalog marketing appearing to be less effective, the new VP asked that Jane give up catalog advertising dollars, so that the dollars could be allocated to online marketing activities, regardless whether the catalog marketing activities drive online sales or not.

Jane mentioned that her "file forecast" indicates that if this strategy is employed, the online channel is likely to lose sales, not gain sales. The VP of Marketing chided Jane for her comments, pointing out that online conversion rates are at a two-year high of 3.294%, thirty percent of all site visitors come from paid search, and that online sales are up thirteen percent over last year. Conversely, "telephone" sales are down seventeen percent vs. last year.

Jane also inquired about taking over the Online Marketing Director position. The new VP of Marketing informed Jane that catalog marketing skills are not relevant to the needs of the Online Marketing Director position.

If you were in Jane's shoes, what should the next step be in her career?

Multichannel Investment Options

In most multichannel businesses, there is one person responsible for combining all advertising investment opportunities.

At traditional catalogers, this person was the Director of Circulation. These days, the person could be the Director of Circulation, it could be the Director of Online Marketing. This person plays a critical role, one of the most important in any multichannel business.

Each organization has an annual budgeting process. This process is usually initiated by the finance division. The finance folks determine key dates when information is to be shared within the organization, with the executive team, and with ownership/board-level individuals.

In most companies, this investment process drives a series of discussions that can be exhilarating for some and frustrating for others. For most, the discussions are "circular" in nature.

The Circulation/Online Marketing Directors go through a process where they use internal analysis tools to forecast what they think sales will look like next year, for the marketing strategies they are accountable for.

In catalog circulation, changes in online/catalog customer files are measured, catalogs to be offered are determined, circulation cutoffs based on short-term and long-term profitability are established, resulting in a set of "rules" that are followed. A series of spreadsheets are crunched, resulting in a sales total across all channels, and profit estimates based on the investment totals.

A similar process occurs within the online marketing advertising channel. Traffic forecasts, conversion rate estimates, average order size guesses, keyword bidding projections, online marketing costs and affiliate strategies result in an estimated number of purchasers, yielding a sales total across all channels, and profit estimates based on the investment totals.

Catalog and online figures are combined, and presented to the executive team.

This is where things go haywire!

In most situations, the estimates yield sales and profit totals that are not acceptable to the executive team.

The executive team will immediately question the accuracy of the work done by the circulation/online marketing experts.

Assuming that the work was done accurately, a new series of questions arise. "What happens if we spend more money in e-mail marketing? What happens if we spend more money on paid search? What happens if we decrease portal advertising? What happens if we increase affiliates from 1,000 to 1,500? Are the catalogs driving more or less business to our online channel? What happens if your circulate to a -10% profit cutoff level verses break-even? What happens if you shift catalog acquisition out of Abacus names, into list rental and exchange names? What happens if we have six targeted versions of an e-mail instead of three? What happens if we no longer offer free shipping?

These questions set off a round of chaos that is very frustrating to the foot soldiers who do the actual work. Typically, the questions are answered in a sequential fashion.

In other words, the executive team learns what happens if free shipping is dropped. Then, they learn what happens if six targeted versions of an e-mail are offered instead of three. Then they learn what happens if all remail catalogs are dropped from the plan. All choices are explained in isolation.

As a result, there is a ton of busy work done by the foot soldiers, and a ton of anxiety felt by executives. The teams work together on an iterative process that ultimately results in one sales plan for the next year. Often, this sales plan is the result of a time deadline ... in other words, the plan must be completed by, say, November 25th. All work done by November 25th is put into the plan, scenarios not completed by November 25th are excluded.

One way to start getting out of this rut is to provide your executive team "options".

In other words, if you are the online marketing director, you can present five different options, based on different investment scenarios. This gives the executive team something to think about. The executive team can center their questions around one or two options that seem to yield the best outcome.

Similarly, the catalog marketing director can offer five different investment options. There can be scenarios with deep cutoff levels, scenarios with shallow cutoff levels, scenarios with a lot of customer acquisition, scenarios milking the top of the customer file with remails.

These scenarios are advantageous for many reasons. Maybe most important is the fact that the foot soldiers get to see which scenarios the executive team like best. Next year, the budgeting process will be smoother, because the foot soldiers know what the executive team want to see.

Multichannel investment options are an area you seldom hear about in trade journals or vendor-based publications. Yet, when you talk to executives, directors and analysts, you continually hear this as being an area of frustration.

Over the next five years, you will see a continued focus on improving the annual budgeting process. Online marketing leaders who invest time honing skills in this area will have a great opportunity to move into C-level management positions.

Vice President of Business Intelligence And New Business Development, American Girl

A fundamental shift in the job requirements of analytical individuals is occurring across Corporate America. The shift is not positive for E-Mail Marketers, Catalog Circulation Marketers, Online Marketers, Business Intelligence Analysts, and Web Analytics staff.

Read this job description, found on the Marketing Sherpa Job Board, for a VP of Business Intelligence and New Business Development at American Girl.

This position proactively leads the identification and development of actionable consumer insights, market and competitive understanding. This person will translate information gained through the Analytics Services and Consumer Insights areas into actionable implications and assist in the application of these insights into the American Girl strategic plan. Requirements: *Bachelor's degree, Master's degree (MBA) preferred *Minimum of 10 years of experience working in Consumer Products Industry to include Consumer Research and Analytical Services or significant experience in consulting with a major consulting firm. *Direct Marketing Analytics experience at a multi-channel company preferred *Experience contributing to the strategic planning process preferred *Familiarity with multiple channels of distribution, with special emphasis on direct mail and branded retail preferred *Significant P&L experience preferred *Consulting for a major consulting firm preferred.

Notice how this position focuses on using the insights of the Analytical Services and Consumer Insights areas. Notice that this person will come from the Consumer Products Industry, or will have Consulting experience from a major consulting firm (preferred).

In the past five years, our zeal to be "multichannel marketers" caused us to scatter in a dozen different directions --- all honing our skills in different specialties, becoming experts at a tiny fraction of what matters to our customers. We failed to develop a global view of our business. Our leaders don't have confidence in having a web analytics expert do anything else than study web analytics. Our leaders don't believe the e-mail marketer can also drive a social media plan, or can manage television advertising campaigns.

To thank us for diving headfirst into a niche, becoming a subject matter expert, our companies are looking to hire leaders who know how to position eight varieties of Cheerios among potential customers, or know how to articulate opportunities to what is know as individuals in the "C-Level Suite".

If you're an individual working at a catalog, online, retail or multichannel organization, and you have less than ten years of corporate experience, this is a really good time to change course.

Instead of being the expert at working with CheetahMail to get e-mails delivered through AOL, or being the expert at getting CoreMetrics to help you accurately measure the effectiveness of various landing pages, or being the catalog circulation expert who measures the LTV of Abacus-sourced new names --- become the person who is the expert at knowing how EVERYTHING FITS TOGETHER, telling a story that helps executives know what they need to do to be successful.

Right now, your business leaders don't believe in you. They believe in a person who knows how to build a business plan for Cool Ranch Doritos, who knows how to speak to executives. This is the third job description of this nature I've run across over the past four months.

One person, working a division that is now being led by one of these "newly qualified leaders", told me that the new leader (with qualifications similar to this job description) communicated that the circulation folks "knew nothing of actual customer behavior".

Ouch.

It's time to stop talking about RFM, HTML vs. Text, Black-Lists, SEO, PPC, CGM, DMPC, Conversion Rate or Landing Pages.

It's time to stop talking about subject line testing as a "strategy".

It's time to stop talking about paid search as a "strategy".

It's time to stop talking about getting e-mails through GMail as a "strategy".

It's time to stop talking about working with Abacus or Millard/Mokrynski as a "strategy".

It's time to actually create actionable business strategies that merchants and executives understand, and can act upon. More important, it's time for us to be able to articulate our strategies in a way that executives and merchants understand.

If we fail to do this, the folks who manage the "Twinkies" brand will do this for us. I've been impacted by this evolution in job description. I don't want for you to be impacted.

Your thoughts?

Multichannel Retailing Week: Catalog Circulation

This morning, an article arrived in my RSS reader, promoting the power of catalog marketing.

You can't argue with the fact that more paper is being deposited into our mailboxes than ever before. Does the incremental increase in paper drive an incremental and proportionate increase in sales in the telephone, online and retail channels? Vendors don't answer that question for you.

Your catalog circulation expert knows the answer to that question. In fact, the catalog circulation expert knows the answers to more questions than almost any other marketing individual in your company. Ask the online marketing executive if natural search results in an increase in store sales, and see if you get an answer you can trust. Ask the e-mail marketing executive if e-mail campaigns cause customers to order merchandise over the telephone, and see if you get an immediate, confident answer. Ask the web analytics individual if an abandoned shopping cart resulted in a store purchase, and see if you get an honest answer.

But ask the catalog executive how effective catalogs are at driving sales to the telephone, online and retail channels, and you'll get an earful. You may not understand a geeky word that the catalog circulation expert says, but you'll at least get the inkling that this person has measured the concept, and markets to a combined ROI across channels.

So if the catalog folks have all this "tribal knowledge", why are they largely being under-utilized at many multichannel retailers? Why would multichannel retailers make the decision to eliminate traditional circulation teams and list vendor relationships in favor of an outsourced solution from the folks at Abacus?

Today, I am seeking your feedback on this topic, your thoughts on catalog marketers and catalog marketing.

If you work at a catalog/online retailer, or a catalog/online/retail organization, please share your thoughts about what you think about catalog marketing, and about the folks who do catalog marketing in your organization.

How do you view these individuals? What value do these individuals bring to your company? Let's not cloud things with my opinion --- let's get your thoughts on the topic. Please discuss!!

The Day E-Commerce As We Knew It Died

Of course, e-commerce didn't die today.

But symbolically, e-commerce changed today, with the ousting of Yahoo! CEO Terry Semel and a New York Times piece about the end of rampant e-commerce sales growth.

Both stories point to the maturation of the online channel.

To me, the New York Times article is particularly delicious, drawing the ire of Shop.org and various e-commerce bloggers (here, here and here), all quick to defend their channel at the first hint of criticism or sales slowdown. To be fair, the criticisms are valid and even enlightening --- but it was fascinating to see how defensive some of the responses have been.

Those articles and comments look an awful lot like the musings of catalog executives between 1999-2003. Catalog folks were defensive, quick to defend the catalog channel when e-commerce pundits predicted doom for anything not associated with the online experience.

In reality, the data used in the study has been readily available from Forrester Research for years, and publicly traded companies have repeatedly talked about this slowdown over the past year, so this news isn't news.

Over the next three years, our profession will see a separation in talent. As e-commerce growth becomes harder and harder to achieve, management is going to need e-commerce folks who are skilled, maybe "gifted" at driving sales.

For the past decade-plus, multichannel e-commerce executives benefited from the efforts of their catalog and retail leaders. The catalog executive mailed catalogs, the customer shopped on the internet. The online executive received hefty bonuses, the catalog executive was fired.

The retail executive spent decades building a brand, the online executive received credit for sales cultivated through years of positive retail experiences. With e-commerce maturing, it will be up to the e-commerce executive to stand alone, to drive incremental sales increases without the benefit of seasoned leaders in other channels pushing free, incremental sales to the online channel.

There are hundreds of really good, really talented online executives at multichannel companies. These folks honed their craft, while learning how to get things done politically, while learning offline marketing skills that transfer to the online world.

These online executives will have a tremendous advantage. These are the folks who will continue to drive true incremental sales increases over the next three years, while other online businesses flatten-out, or flounder.

June 18, 2007. The day e-commerce as we knew it died.

More On Abacus, Google, And Customer Biodiversity

Please click on the image to enlarge it.

One of the most popular pieces I've written this year was Tuesday's discussion about Abacus, Google, and Brand Implosion.

Almost nobody chose to leave a comment. But you're reading this article, you're forwarding this article to friends and co-worker. When you come to the site to read it, you're interacting with the site much more than usual.

Interest in the article made yesterday the busiest day on the blog in the past eight weeks.

Why is this article interesting to you, and why is the topic so divisive among the catalog marketing community?

Why is this topic of interest to me? To me, it all boils down to "customer biodiversity".

Online marketers excel at using customer biodiversity to their advantage. They drive traffic through a massive network of affiliates, often numbering in the thousands or more. Online marketers utilize portal advertising to reach larger audiences. Brilliant online marketers cultivate traffic through natural search, at close to no incremental cost. Most online marketers use paid search across hundreds, thousands or more keywords. All of this guarantees a diverse audience of potential and existing customers. Some strategies work, some fail. The marketer manages a complex ecosystem of marketing strategies and customers.

Retail marketing is all about a complex interaction between "who you hang out with" and "target customer demographics". Nothing happens when you put a physical presence in front of the wrong target demographic. The right demographics and the wrong shopping center or wrong set of competitors cause problems. Combine the right demographics, competitive biodiversity, and a modern shopping environment, and cash registers sing.

Catalog marketing, however, is being threatened by a lack of customer biodiversity. The entire left side of the diagram represents potential customer biodiversity for catalog marketers. In the past, the list broker was the gatekeeper of biodiversity. S/he managed hundreds of outside lists, s/he even fueled the growth of compiled lists because s/he wanted to do "what is right for the client". In the process of doing that, s/he ceded market share to the compiled lists. This hastened the decline of the list broker, and accelerated the rise of the compiled list vendor. In 1990, one list broker ensured customer biodiversity by simultaneously managing a hundred relationships with competitors. Today, the same service can be provided by one statistician creating a statistical model at a compiled list vendor.

There was a lot of discussion about postal rate increases at last week's catalog conference. Obviously, this is an important topic in the short term.

Long term, there must be a significantly increased focus on customer biodiversity. The success of a multichannel business is predicated on the ability of the retailer to align with the target customer across a wide variety of potential sources.

My experiences tell me I want to spread my marketing efforts across a thousand affiliates, several large portals, natural search, paid search focusing on several hundred or more keywords, e-mail marketing, RSS and applicable Web 2.0 marketing, several compiled lists, several dozen or more rented/exchanged catalog lists, catalog requests, and other prospect lists. This gives me a portfolio of opportunities to manage.

I do not want one statistician who knows nothing about my brand culling prospects out of a compiled list as my primary source of new customers. I'd love for this statistician to be a piece of the puzzle, not be the entire puzzle.

Your turn, what do you think?