The End Of An Era In Catalog Marketing

It is nice not to be the only person out there (thanks Mr. Rimm-Kaufman) willing to publicly state the obvious ... that catalog customer acquisition is nearing the end of an era.

Even the best conferences aren't covering this important topic. The Spring 2009 NEMOA Conference. features a talk from REI guru Mike Bowcut on "Why Catalogs Still Belong In The Toolbox". Certainly, you'll learn something valuable from this talk. Mike is brilliant, his discussion won't lead you astray.

Our industry also has an opportunity to allocate time to talk about one of the two biggest issues our industry ever faced:

1. Catalog Customer Acquisition is dying.
2. Catalog brands with strong retail channels have loyal multichannel buyers who no longer generate any incremental volume when a plethora of catalogs are mailed to them --- the "organic demand" concept we observed at Nordstrom back in the first half of this decade.
   

Combined, these two trends represent the giant red blinking lights we see as we approach a railroad crossing. We are being given unmistakable warning signs that change is coming. Why won't our best and brightest talk publicly about these issues?

Analyze your data from fourth quarter, for the past ten years. Take a look at customer acquisition productivity, using your matchback analytics, combining data across all channels. You're going to see productivity declines of between twenty and seventy percent over the past ten years. Heck, when Google generates 32 billion searches a month compared with 2 billion searches a month just four years ago (and zero more than a decade ago), we know the world is changing ... dramatically changing!

Why aren't we asking strategic questions?

1. If catalog customer acquisition is dying, and the majority of our new customers come from catalog customer acquisition, how will we acquire new customers in five years?
2. If the soul of our organization is built around catalog marketing, what does this mean for the soul of our organization?
3. What kind of talent do we need to meet the future marketing needs of our business?
4. How are online pureplays acquiring new customers --- how does Zappos do it? How does Amazon do it? How does the $10 million dollar online business down the street do it? What can we learn from others? When can we schedule a field trip to visit the online pureplay?
   
5. If we have a retail channel, and customers are not spending incremental revenue in spite of catalog marketing, why do we have a catalog marketing channel?
6. If rural customers still require catalog marketing, but urban/suburban catalogs no longer need catalog marketing, how do we configure a contact strategy that meets the needs of a significantly smaller universe of shoppers? And how does this new catalog contact strategy impact merchandising, creative, and inventory staffers?
   
7. What is the future of the co-op brand, brands that ran list rental organizations out of business on the basis of cheap, targeted customer acquisition names? These brands will undoubtedly provide significant future value to your business, right? But how? Are we working with them to map out our future?
   

Since a portion of our country is embracing "change", it might be helpful for all of us in the multichannel retailing industry to embrace change as well.

NEMOA --- Growing Green This September

Catalogers are sometimes stuck in a dilly of a pickle. On one side of the spectrum is the need to keep catalogs in the mail to grow sales. On the other side are the environmental issues associated with growing sales via catalog mailings.

Yikes!

My friends at NEMOA were first to offer me a chance to speak at a conference, so I am more than happy to share with you things happening at NEMOA. In this case, they extended their early bird discount for the Fall 2008 conference through August 25. The conference is focused "... on the sustainability --- of the catalog industry".

On September 17-19, some of the best thinkers in the catalog/etail world will be gathering in Burlington, Vermont. The theme of NEMOA’s Fall ’08 Conference is “Growing Green”.

On Wednesday and Thursday, industry leaders will present best practices for ways to grow a business, stay green, and stay profitable.

On Friday, NEMOA’s “Virtual Tour” features six Internet experts, including Rick Klau from Google, who will walk NEMOA attendees through best practices in redesign, SEO, email marketing, RSS, web analytics, and paid search.

Visit the NEMOA website for more details.

Multichannel Forensics Interview Hosted By Alan Rimm-Kaufman

Alan Rimm-Kaufman, blogger, guru, and leader of the Rimm-Kaufman Group, was kind enough to interview me on the topic of Multichannel Forensics.

Here is a link to the Multichannel Forensics interview, and here is a link to the Multichannel Forensics podcast.

If you are in Boston this week, you can hear Alan speak at the NEMOA Conference.

Me, Myself & Bob

If you'd like a quick read about the story of a creative individual who started a media empire, only to have it dramatically crumble within a short few years, give Me, Myself & Bob a try.

Written by Phil Vischer, the creator of VeggieTales, the book dramatically illustrates why a business dies without a healthy balance of creativity and fiscal discipline.

This week, catalogers attending NEMOA heard industry veteran Bill LaPierre apparently criticize the purveyors of paper for a lack of creativity in their marketing activities.

I fear that catalog and (especially) online marketing creativity is being smothered by technology. Fiscal discipline is better than it was during the go-go days of the internet bubble. Creatively, we're struggling.

A business leader recently told me it would take eighteen months for the technology team to make the appropriate changes to the website so that the creative team could present merchandise the way the creative team wanted to present merchandise.

And if the pundits are right, if we have to integrate marketing, merchandising and creative strategies in our online and catalog channels, then the whole darn thing hinges on our ability to integrate the technology folks, creative folks, and marketing folks.

That's not an easy thing to do.

NEMOA Friday

Breakfast was a lot of fun, this morning. All of the speakers hosted a table, my table was filled with really nice people, folks willing to share details about their business. Thanks so much to everybody who spent an hour with me this morning. Pete --- sorry we didn't have more of a chance to compare notes, it was nice to meet you, in person!

There was a fun session this morning, hosted by Colin Hynes, the Director of Usability at Staples. We don't always consider the fact that Staples moved $4.9 billion of merchandise via its website during 2006. Wow. After Amazon.com, can you think of anybody doing more volume than that?

Colin brought a woman up to the stage, to join him in a brief usability test of the Geerlings & Wade website. The point of Colin's presentation was not to judge the Geerlings & Wade website, but rather, to show seasoned e-commerce leaders what an e-commerce experience is like for the average customer.

The presentation included a discussion of the use of Personas to improve the website experience (including a before/after conversion rate graph --- where conversion briefly dipped after implementing changes to the site suggested by research and Persona use, then improved nicely, up to 28% more than the prior version of the website).


P.S.: DMNews covered a few of the comments I made during my presentation on Thursday.

NEMOA Thursday

There were many interesting discussions today.

A couple of memorable things from the Small Cataloger Panel

• Jim Ruma, Ruma's Fruits and Gift Baskets ... "A lot of sales cover a lot of sins".
• Peggy Glenn, Firefighters Bookstore ... "Sales were down in 2001. You have to remember, I lost 345 firefighters / best friends on 9/11".

If only the folks who write about customer service could see the passion these folks had for their customers. Their desire to please reaffirms one's faith in business.

Industry legend Tim Litle hosted the lunch discussion, talking about the sixty year history of NEMOA. When we think about tricks for measuring things, we sometimes forget our history. Tim spoke of putting mail orders (the orders that came in envelopes in the 1970 and early 1980s, with a check inside the envelope) on a scale. The weight of the envelopes was directly correlated with the sales expected for that day. Wow.

Today's badge of honor goes to Laura Wojtalik of Abacus. She spoke about developments at Abacus surrounding the allocation of orders to the advertising path that led to a customer purchasing merchandise (frequently referred to as a 'Matchback Analysis').

Laura exhibited a tremendous amount of professionalism, following her presentation in front of a standing room only crowd (and the term is appropriate here, there wasn't a place to sit in the overcrowded room). Many in the audience peppered Laura with "what if" questions that were theoretical in nature, questions that don't necessarily have (and may never have) straightforward answers.

The audience had every right to ask the questions of Laura. It is not easy to measure the vehicle that drove the response when a customer received three catalogs and six e-mails in a twenty-one day period of time, and yet purchases following a search on Google on day twenty-two.

In today's world, Google gets paid for this --- yet online and catalog marketers are aware that the three catalogs and six e-mails played an equal or greater role in driving the order. I think the audience wanted a definitive answer on how to quantify this in a way that makes the audience feel comfortable. I don't think a definitive answer will ever happen, it is part of our new reality. When Laura gave honest and fair answers, some in the audience weren't thrilled.

This is yet another reason I harp on online businesses and catalogers getting in too deep with Google. I don't think Google is trying to be evil. But we pay them anyway for actions/purchases they didn't fully cause, because Google takes the credit for the last action in the "path to purchase", as coined by Coy Clement of Clement Direct.

NEMOA Presentation

Many folks have asked to have a copy of my presentation available on the blog ... here is a link to this morning's discussion.

NEMOA Wednesday

Some really great questions were raised and comments made during the first afternoon of sessions at the NEMOA conference. I'll list the questions now, I'll consider possible answers once I've digested the full context of the conference.

• Catalog is not truly a channel, it is an advertising vehicle that drives sales to the telephone, website or retail channel.
• How do you deal with price changes in print (where prices are fixed in stone for the life of a catalog), verses in stores or on a website?
• Do you have a separate sale/discount website, or do you integrate it with your primary website?
  
• How should the online/catalog business allocate sales to the advertising vehicle that drove the sales? For instance, if a customer received two catalogs and four e-mail campaigns, and uses Google to search for merchandise, which of those six advertising vehicles and/or search is responsible for a website purchase? And if all are responsible for the purchase, how do you allocate the sales in a way that is fair?
• Once allocation is done "right", how should the executive allocate marketing budget across various advertising tactics?
  
• The importance of collecting accurate data --- as well as the importance of not getting bogged-down in having "too many metrics".
• Do you use e-mail campaigns for sale offers or free-shipping, verses SHOULD you use e-mail campaigns for sale offers or free-shipping?
• Are square inch analyses of catalog offerings still valid?
• What is the next big thing in multichannel retailing?

FYI, I strongly believe we will see a shift, over the next five to ten years, in how retail websites are constructed. We spent time from 1995 - 2005 building the infrastructure that allows us to execute e-commerce in a seamless and trusted manner. From 2006 - 2016, I strongly believe we will see a sense of community, imagination and entertainment infiltrate our e-commerce enabled websites. While e-commerce will still be important, it is clear that we've built e-commerce websites that lack warmth, and lack interaction. The seeds of Web 2.0 will take hold over the next decade, resulting in websites that support e-commerce, but more importantly, become a complimentary tool that customers use to interact with a brand.

More information tomorrow.

What Do You Want To Learn From The NEMOA Conference?

If you have any questions you want me to ask the attendees and speakers at the NEMOA conference, send me an e-mail, or leave a comment below. I'll try to share what I learn via my posts on Wednesday, Thursday and Friday evening.

New England Mail Order Association Spring 2007 Conference

I will be speaking at the NEMOA Spring 2007 Conference, scheduled for March 21-23 at the Royal Sonesta in Cambridge, MA. I plan on talking about using Multichannel Forensics to undestand how customers migrate across products, brands and channels, using techniques harvested during my illustrious stay at Eddie Bauer in the late 1990s. My discussion will be held Thursday morning.

Friends of MineThatData blogger Alan Rimm Kaufman is participating in a panel discussion about allocating resources for maximum ROI on Wednesday afternoon.

If you are in New England in late March, take advantage of this conference opportunity.