Internet Sales

We should know by now that nothing ever remains the same.

This DMNews article talks about the fact that catalog brands are experiencing a drop in the percentage of sales coming from the online channel. I was moving into a new home on Friday, so this is the only story I read that morning. The results flummox me.

In an era when the entire world is slowly moving their lives online, how do you explain something like this (assuming the study is accurate)? Let's explore a few hypotheses:


Possibility #1 = Mailing Strategy: Many of my clients ask me how to stop mailing pure online customers. Stop mailing those customers, and the percentage of sales from the online channel will come down.

Possibility #2 = Generational Changes: This possibility should frighten all catalogers. Over the past five years, the differences among those over the age of 45, and those under the age of 45 have increased --- from an e-commerce perspective. Interview a 55 year old female shopper, and she'll regale in the romance of shopping next to the fireplace, catalog in hand, laptop nearby to place the order. Interview a 55 year old female shopper in Central Nebraska, and she might only have dial-up internet access. Now go interview the 30 year old female shopper in Suburban San Jose. Ask her what she thinks about catalogs, and you'll get a blank expression. It is my belief that catalog brands are losing the most important half of the customer base --- the half that ensures their long-term success --- folks under the age of 40. Catalogers rode the shopping power of the Baby Boomer generation (the catalog generation, if you will). We struggle with Gen-X (the e-commerce generation), and are utterly invisible to Gen-Y (the social media generation).

Possibility #3 = List Sources: As you know, catalogers obtain new customers in a different way than do e-commerce brands. Catalogers pick and choose potential customers from lists (well, others would say catalogers force unwanted mailings into the mailboxes of unsuspecting customers, a topic for another post) . What happens when the lists become comprised of customers who are pre-disposed to shop over the telephone, using catalogs? I call this the "co-op effect" --- having your co-op pick and choose potential customers for you, using statistical algorithms you don't understand, resulting in co-ops having a disproportionate level of control over customer acquisition. In many of my projects, I see that co-op names perform well, but are fundamentally different than the average customer acquired by a catalog brand. It is possible that we are causing our own problems.

Possibility #4 = Terrible E-Commerce Sites: Have you recently shopped an e-commerce website? Shopping online can be a cold, unemotional, heartless experience. Who wants a cold, unemotional, heartless experience other than an individual looking for the lowest possible cost? I can have an infinite number of "twits" simultaneously with folks worldwide on Twitter, but I cannot talk to other shoppers in real time on the Saks website. I've spoken with a few companies in the Pacific Northwest that are looking to change this, but it will be five or ten years before the technology rolls through the websites of leading catalog brands. And by then, it will be too late.

Possibility #5 = Stolen Market Share: There's no doubt that Zappos is stealing market share --- they didn't create a market for shoes, they just made it easy for you to buy shoes customized to your tastes, receiving the shoes almost immediately (for all practical purposes) after your order. It is entirely possible that, long-term, a Zappos or Amazon gobble up market share from customers who would normally shop on your humble website --- the operations infrastructure of these brands give them an infinite head start over us as well --- they ship quickly, and don't charge the customer much for shipping --- the opposite of the best practices of our industry.

Audience Development

Back in 1990 at Lands' End, our circulation department was called "Customer Planning and Development".

Now we read (thanks DMNews) that Circulation Managers are becoming known as Audience Developers.

I had numerous meetings at the recent ACCM conference with individuals about the evolution of jobs from "circulation" to "audience development".

Audience Development takes many forms.

• Renting or Exchanging names/addresses (with customer permission, right?) with competitors.
• Renting or Exchanging e-mail address (with customer permission, of course) with competitors.
• Developing audiences on Facebook, MySpace, Blogs, Forums, Twitter, etc. via audience participation, giving the audience something so that they have a relationship with you prior to having a need for your products/services.
  

Nine out of ten folks at ACCM offered blank stares when this topic was discussed. Lots of heads nodded with approval of the concept ... lots of head scratching over how to implement the concept.

Five or ten years from now, we'll be halfway through our transition from marketing to lists to developing audiences. Until then, this is a magical period where trial and error are the norm, a period where experimentation is highly encouraged.

Polarization

This message comes to us from the most recent e-mail newsletter of the Seattle Direct Marketing Association:

• "The direct marketing industry has been changing at a feverish pitch. First came email, then blogs, RSS feeds, rich media, word of mouth, viral, social networking and user-generated content. The SMDA is evolving right along with it, and we'll soon be introducing a new tag line "Thinking Outside The Mailbox" to help define the SDMA for the future."

Let's compare and contrast that statement with what DMNews told us last week:

• "In case there were any lingering thoughts that the printed word is dead, consider this: Hewlett-Packard has launched a $300 million-plus, integrated marketing campaign that reflects just how important printing-related services and products are to the company ... the campaign is one way HP is trying to drive its Print 2.0 strategy ..."

Maybe it has always been this way, but the marketing voices we have to listen to seem to want to polarize us.

It's like going to a direct marketing Farmers Market, where everybody is SCREAMING at you about how 'right' they are for your business. You find a dizzying array of booths ...

• The "print" booth.
• The "e-mail" booth.
• The "compiled list" booth.
• The "list rental" booth.
  
• The "portal advertising" booth.
• The "affiliate marketing" booth.
• The "shopping comparison site" booth.
  
• The "search marketing" booth.
• The "RSS" booth.
  
• The "blogging" booth.
• The "facebook/twitter/social-graph" booth.
• The "word of mouth and viral marketing" booth.
• The "PR" booth.
• The "loyalty marketing" booth.
• The "multichannel marketing and operations" booth.
  
• The "business intelligence and SAS programming" booth.
• The "web analytics" booth.

Each booth has a small but fiercely loyal tribe of believers. Each tribe is able to "prove" to you why they are right. And each tribe "is" right ... to an extent.

I want to be presented with a bowl of direct marketing cioppino. Instead, all I see are cutting boards full of uncooked ingredients, arguing with each other about why each individual ingredient is best.

New Jos. A. Bank President

This article in DMNews hit it right on the head --- merchandisers own whatever we define "multichannel" to be.

From a career advancement standpoint, most of us really butchered the "multichannel thing".

• Creatively, we were told to "integrate" our marketing. Show me the instances where "integrated marketing" drove consistent, dramatic increases in sales, beyond an individual campaign? I'm not talking about improving the open rate of an e-mail campaign by 11%, I'm talking about what it is that has been done that increased total sales by 11% on a sustained basis.
  

• From an IT standpoint, we learned that "multichannel" is "expensive". We're busy securing capital. At some point in 2010 or 2015, we'll have the systems infrastructure to deal with the realities of the business world of 2007. Then what?

• From a marketing standpoint, we've failed in at least three ways. Many catalogers failed to embrace online marketing. Most online marketers failed to embrace print marketing. Many Chief Marketing Officers have not invested the time to understand how marketing has fundamentally changed in just the past two years.
  

• From an HR standpoint, we failed to build organizational structures that cross-pollinate skills across employees. The reality is that catalog marketing, online marketing, and retail marketing require VERY DIFFERENT SKILLS. We haven't cross-pollinated enough talent to have truly brilliant marketers, creative employees, copywriters, etc.
  

• From a Finance standpoint, our leaders usually fail to understand how to properly measure ROI, and consequently, can't provide a vision for how to move the business forward.

• From a Database Marketing standpoint, we are too technical, too geeky. We don't tell a "multichannel story". This holds us back. Tell me the last time your Database Marketer clearly explained (using ordinary English language) how customers utilize the website to make a purchase over the phone, online, or in a store?
  

• From a Web Analytics standpoint, we fail to ever measure anything more than the outcome of one visit. This has to stop. This isn't how customers behave. Web Analytics practitioners and Web Analytics vendors must analyze customer behavior across time, across channels --- not just in isolation within one visit.

• Pundits have failed us. There is little insight and vision into the future. There is a lot of talk about systems integration, or that "multichannel customers are the best customers", or that "customers demand a flawless multichannel experience". Duh. Worse, we pay for this type of insight. We need an ROI-matchback solution that's not so heavily skewed toward favoring catalog mailings.
  

Merchants have been able to avoid most of these problems. They simply are required to sell merchandise wherever the customer wants to buy it. If the merchant fails, s/he is fired. Merchants have largely succeeded, given the ordinary systems they've always had, by having a gut feel about multichannel customer behavior. Merchants are taking ownership of the top leadership positions in our businesses.

Selling Homes Via Catalogs, In 1908 And 2007

Bass Pro Shops joins Orvis in the sale of log cabins via catalogs, according to DMNews. This is an interesting way to differentiate yourself from all of the other businesses targeting middle and upper-income Americans. The gross margins can't be bad either.

Many of you may not be aware that selling homes via mail order is a concept that is a hundred years old. Sears, which amazingly placed catalogs in one out of every four homes back in 1908, sold homes via catalogs.

The article is worth reading, proving yet again that Multichannel Marketing has been around for a century, proving this is not some new, mysterious concept.

What Are The Real Multichannel Marketing Trends?

Say you work at a direct-to-consumer organization, like I do. You want to learn what is being talked about in the multichannel marketing industry. Your competitors won't talk to you, and other businesses are not particularly forthright with you.

So, you turn to trade journals, like DMNews, hoping to learn what is happening. You click on their Catalog/Multichannel Retail link, to see what folks are writing about.

I scanned the last twenty pages of articles categorized in the Catalog/Multichannel Retail section of DMNews. I categorized articles as follows:

• Strategy and Innovation --- Example = Orvis announcing a loyalty program.
• Business Results, Mergers, Acquisitions, Lawsuits.
• Catalog Discussions
• Vendor-Based Technology Solutions and Vendor-Based Consumer Studies
• Hirings, Firings and Deaths
• Conference Discussions

I studied more than 150 articles printed by DMNews. Here is what I observed:


Strategy and Innovation represent 33% of all articles. This is probably a good thing!

Business Results, Mergers, Acquisitions and Lawsuits represent 24% of all articles.

Catalog Discussions represented 17% of all articles. Most interesting about this is that fifteen of the seventeen articles were positive --- talking about catalog launches, how catalogs drive multichannel sales, how young readers like print, "green" initiatives, you name it. The only negative articles were about Home Depot dropping their catalog titles.

Vendor-Based Solutions and Vendor-Based Studies represented 13% of all articles.

Hirings, Firings and Deaths represented 8% of all articles.

Conference Discussions represented 5% of all articles.


Of interest to me is the amazing skew toward catalog discussions being positive. Any of us in the multichannel marketing industry know catalog is in utter free-fall, quickly becoming the fossil of the marketing toolbox. That being said, almost all of the articles DMNews wrote about catalogs were positive.

Three questions for you, the loyal multichannel marketing executive who reads this blog.

First, does the mix of articles represent the mix of content you want to read?

Second, it is better for a publication like DMNews to focus on what is really happening, or should it focus on positive stories, success stories? Should it encourage the multichannel marketer at a time when catalogs are in free-fall, or reflect reality?

Third, how can a publication like DMNews (or this blog) get actual feedback from actual employees who don't work in the vendor community? How does a publication get real, honest feedback about what is happening?

Your comments?

The MineThatData Honor Roll: February 16, 2007

Several articles caught my attention during the past week.

DMNews talks about happenings at the eTail conference. Pay attention to the comments from Jodi Watson at Williams Sonoma. Over the next few years, you are going to see a separation between the concepts of "e-commerce" and "website". The website will become the primary marketing tool for a multichannel retailer --- it will be an indispensable tool for marketing retail brands. I really believe a skillset will emerge, people will finally learn how to utilize a website to maximize retail sales, not just e-commerce sales. These are the folks who will drive our multichannel businesses in 2012 and beyond.

This story in CRMBuyer, written by Denis Pombriant, illustrates one of the biggest failures of "CRM" systems, and highlights the future of analytics. Our industry spent so much time collecting purchase information. Denis correctly illustrates the uselessness of the information. In so many ways, the data collection systems we have today represent a 1995-style world, one where the data could be used for old-school targeting programs. Today's data needs are so very different. We don't have a lot of control over marketing anymore. Catalog don't drive sales like they used to. Google controls the customer via search. Mass marketing is largely dead because we don't have a mass to market to. We marketers need to harness customer intentions, and use that information to influence merchandise assortment and in-store/website presentation, which drives sales.

Andy Monfried writes about his efforts at landing a key client. Pay close attention to what he talks about. Technology doesn't play a role in his success. Hard work, perseverance, and an element of humanity result in success.

Finally, on Fallon's Trendpoint Blog, we learn about plucky ad agency Anamoly's acquisition of the Virgin America account. Funny how Anamoly didn't pitch classic advertising techniques ... they offered to help grow sales. After a deluge of Super Bowl ads designed to drive "buzz", we learn about somebody who wants to increase sales.

A Little Love From DMNews

An article about forecasting your online business.