Catalogers And Co-Ops: A Question

A question for my catalog readers.

Would you like for your co-op vendor (i.e. Abacus or Z24 or others) to do a multichannel forensics analysis, one that tells you the companies your customers are in transfer mode with (i.e. the companies your customers are leaving you to shop at), one that tells you which companies transfer customers to you?

And if you knew that information, would it be actionable?

Many of you already pay companies for panel data that provide you with similar information. Your co-op has a much better sample of information than organizations that use panel data.

Your thoughts?

Prospect Catalogs

The concept of special catalogs used to minimize prospecting expense is not a new one. Given the increases in the expense structure facing most catalogers, it is a concept worth revisiting.

Simply put, the prospect catalog is merchandised with the best products, products that perform well in the short-term, and cause customers to be acquired that spend a lot in the future (i.e. high lifetime value).

The prospect catalog features a proven creative presentation, there is no time for experimentation in prospect catalogs. However, be concerned if at least half of your circulation is in compiled lists like Abacus or Z24. If you prospect in these universes, you don't have as much control over who receives your catalogs, based on the models the compiled list vendor uses. It is possible you are prospecting to the same name repeatedly --- this can be a problem when using the same creative and same merchandise presentation. Ask your compiled list sales representative to provide reporting for you that proves the same prospects are not being mailed repeatedly,

Liquidation and sale merchandise is typically avoided as a merchandising strategy. This is a customer acquisition tool, not an inventory management platform.

Many marketers apply lower price points on the items in the prospect catalog. Many marketers use free shipping or a percentage off orders achieving a certain hurdle in order to entice customers. If this is an effective short-term and long-term strategy, feel free to use these tactics in the prospect catalog.

The prospect catalog is often half the size of the main catalog being mailed, with a minimum of forty-eight pages of merchandise offered.

Circulation managers employ three different circulation strategies with prospect catalogs. The starting point is to determine how productive a catalog half the size of a main catalog will perform. Typically, you'll get seventy percent of the demand on fifty percent of the pages, though it is not uncommon to achieve ninety percent of the productivity on half the pages. If you find that you are getting half the sales you get on half of the pages, you know your merchandise and creative strategy is not appropriate for a prospect catalog.

One strategy is to send the prospect catalog to everybody. This results in a highly productive mailing mailed very deep into the housefile and prospect list. This can be a better strategy than wrapping an existing catalog with new cover and back cover (i.e. a remail), though adequate testing is required to prove this.

Another strategy is to mail your housefile and outside lists to "breakeven", or whatever your lifetime value threshold is. After that point, you mail the prospect catalog to customers down to "breakeven", or whatever your lifetime value threshold is.

A third and more profitable strategy is to simultaneously compare which catalog is more profitable across every segment you plan to mail. This strategy results in a shallow circulation depth for your main catalog, with the majority of your circulation in your prospect catalog.

As always, it is important to track online orders driven by main and prospect catalogs. It is not uncommon for a smaller catalog to drive just as much volume online/in-stores as a larger catalog.

One limitation of prospect catalogs surrounds the average order size of the prospect catalog. With fewer pages, customers tend to place orders that are between ten and twenty percent smaller than in the main catalog. As we all know, customers with initial order sizes that are smaller than average tend to have lower lifetime value than customers placing average or above-average initial order sizes.

As you develop your Spring and Fall 2008 mail plans, it may make sense to sit down with your creative team, merchandising staff, compiled list vendor, outside list broker, and print vendor to discuss the opportunities surrounding prospect catalogs. There are cost efficiencies in leveraging existing creative, and your printer can help you understand cost efficiencies at various page counts.

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?