The Aberdeen Group Openly Belittles Catalogers

On the Multichannel Merchant website, Aberdeen Group Analyst Jeff Zabin has this to say about catalogers in this article:

Reflecting on Al Gore’s recent acceptance of the Nobel Peace Prize for his tireless work in raising international awareness of global climate change, and opening my mailbox to discover yet another deluge of post-holiday merchandise catalogs, I can’t help but think about the environmental impact of the direct mail industry.

Each year, more than 100 million trees are destroyed, three million cars’ worth of energy is consumed and reprehensible-by-any-measure amounts of greenhouse gas is emitted into the atmosphere—all in the name of producing, distributing and disposing of direct mail solicitations.

The Aberdeen Group is owned by Harte-Hanks, a company that provides products and services that enable catalogers to distribute direct mail solicitations. The brand that published this article is Multichannel Merchant, co-sponsor of the ACCM conference, formerly known as "The Catalog Conference", the "largest conference for catalog, internet and multichannel merchants".

These are odd times ... organizations that have made millions of dollars of sales/profit on the backs of healthy catalogers now publicly belittle the very brands they profit from.

Lord & Taylor CRM Solution

DMNews announced that Lord & Taylor is going with a CRM solution from Harte Hanks.

Let's assume that that Lord & Taylor has the following future value metrics (these aren't actual metrics, they are being used to illustrate a point) for customers who purchased between March 1, 2005 and February 28, 2006 ... measuring performance from March 1, 2006 to February 28, 2007.

• An annual retention rate of 60%.
• 4.0 annual purchases.
• An average transaction size of $140.
• Twelve Month Sales Value of 0.60 * 4.00 * 140 = $336.
  

In your opinion, how much would a CRM solution from Harte Hanks cause these metrics to increase? Would the retention rate increase, and if so, how much? How about the annual number of purchases? The average order size? What do you think will happen, based on your experience?

Multichannel CEOs and CMOs: There is no doubt that CRM solutions can improve your business performance. At least five things contribute to the success of a CRM implementation.

1. The implementation should be driven by your own marketing or database marketing staff, not by information technology individuals, not by vendors. The marketing and database marketing folks will create and execute the ideas --- the IT folks will move on to the next project. Your vendor will care, but has to care for a veritable plethora of clients.
   
2. Take your financial estimates for a CRM implementation, and discount them by seventy-five percent. Share the low number with folks. Show me, in the marketing literature, the litany (i.e. more than ten) of successful CRM implementations that dramatically increased the bottom-line of the company implementing the solution, and I'll revise this observation.
3. You have to have your organization focused on the CRM initiative. A CRM solution is useless if your creative team will not produce on-demand e-mail campaigns that take advantage of the new software solution. A CRM solution is useless if your merchandising team will not purchase the merchandise your software suggests customers want.
4. Success happens in baby steps. Improving the overall response rate of a catalog from 4.00% to 4.05% is a reasonable expectation for a CRM implementation. Improving the open rate on an e-mail campaign from 20.0% to 20.3% is a fantastic result.
5. CRM does not solve your business woes. Given the choice between investing in a CRM solution, and investing in merchandise and the customer experience, always error on the side of merchandise investment and customer experience. Notice that I am not saying you shouldn't invest in a CRM solution. Rather, the solution has a level of importance that is below merchandise and the customer experience. Simply acknowledge that, and you may be pleasantly surprised by the performance of a CRM initiative.