Sunday, June 29, 2008

Consumer Trends- DIY and Customization

It seems like at least once a day I encounter a new example of the huge trend of DIY and customization. Just today I received one of my favorite weekly email newsletters, from, and learned about a new retail store called FashionologyLA ( Customers (think tween and teen girls) have the opportunity to design and create their own clothing. The store is appropriately located in Beverly Hills, CA. The design process starts when they walk through the door and customers are able to walk out with their custom designed garments that very day. Brilliant.

While this is especially key for brands focused on young consumers, it should be top of mind for all retailers. Are you offering your customers an opportunity to customize their experience with your brand? There are so many ways to capitalize on this trend:

*Home Furnishings – check out Bassett Furniture ( They offer a multitude of opportunities for customization. For example, you can design your own dinning table: you choose the finish, table size…you name it! They don’t just offer fabric choices for their couches…you can choose the arm style, cushions, even the type of legs.

*Fashion – there are many online only DIY design shops out there. Check out and design your own dress. Or go to and design your very own custom purse. What well-known multi channel apparel brands are capitalizing on this DIY trend? Not many that I could find…big opportunity!

*Domestics – check out and design your own duvet cover. Ballard Designs ( has a large customization section on their web site, offering custom bedding, curtains and more (and the fabric choices are vast – check it out!)

Many large brands that offer customizable products don’t highlight it enough. Why not feature it in an upcoming email? Consider a call out on a hot-spot page in your next catalog? If you do offer DIY in some form, would people find you in a targeted web search focused on customization in your product category? Even if this doesn’t apply to your business as it stands today, think about it the next time you’re asked for an out of the box idea on how to grow your brand!

Wednesday, June 25, 2008

Promotions- Friend or Foe?

I think we can almost all agree that we'd love to have a healthy active file of customers who shop at full price, eliminating the need to promote expensive offers that eat away at the bottom line! Unfortunately, in an economy where even the luxury market is taking a hit, it's hard to compete at full price. A recent report by comScore noted that "rising prices" was the number one concern for consumers, regardless of their income range. In fact, it was highest for the $100K+ HHI group.

More and more, we are hearing from clients that they are cutting back on promotions, especially during the fall/holiday season. The offer frenzy of the last few years has taken a toll on financial statements. On the flip side, clients are also looking to use promotions in a more proactive, strategic way.

We are seeing a renewed focus on the customer experience and lifecycle with the brand. Opportunities to proactively plan offers include:
1) New customer thank you program- Welcome to the brand (increases repeat purchase rates)
2) Event-triggered promotions, ranging from birthdays to shopping cart abandonment
3) Reactivation of lapsed customers (still less expensive, in most cases, than external prospecting)

There is good news. We have done extensive subsequent value studies on the impact of discounts, free shipping, and sale offers. Nine out of ten times we find that the subsequent value of customers acquired with a discount is higher in the long run than full price customers. The goal when testing offers is to focus on the impact to your average order size- and of course the bottom line. The more a customer spends initially, the more valuable they are in the long run.

Monday, June 16, 2008

Revisiting Email List Rental

The notion of email list rental surfaces every few years, after we've had a chance to forget the terrible ROI from our last hopeful test. We are all searching and digging for new customer acquisition opportunities, for ways to increase overall responsiveness from our prospects. And it seems that email list rental is again a hot topic.

Today, email opt-in lists are supposed to be "cleaner" and "enhanced" with more traditional RFM data- some sources even work with the co-ops to leverage their wealth of transactional data. You can also rent an email address to match a postal address for a prospect.

Unfortunately, the email marketing industry has been plagued with spam and over-saturation of contacts to consumers- with most companies mailing twice a week and some companies even mailing daily. Email is almost too good (cheap) to be true!

When it comes down to ROI, the numbers speak for themselves. For example:

1) You spend $6,000 to rent 100K qualified email addresses (approx. $0.06 per email address) and another $500 to deploy the campaign.

2) If you assume lower open rates and click through rates than your email housefile, then perhaps you might get an 8% open rate and a 4% click through rate, delivering 320 visitors to your site.

3) If those 320 visitors have a 3% conversion rate on your website, then you end up with 10 transactions. At a $150 AOV, your total demand is $1,500.

Clearly, spending $6,500 for $1,500 in demand is not profitable. We have run the math several ways, and even with a postal address, it's difficult to make the ROI work.

If you are one of the few lucky ones who can make email list rental work, please share your story with us!

Monday, June 9, 2008

Remembering the Fundamentals

With the outstanding growth of Ecommerce AND the continuous effort for marketing integration and advanced analytics (not to mention all the ad hoc requests that keep us occupied!), it’s easy to let some of the basic, core fundamentals of Catalog Marketing slip by. Here are five things to check off:

1. Identify the Percentage of Circulation Above and Below Breakeven season over season, year over year (70% to 80% above breakeven is most common)

2. Fully Loaded $/Bk Breakeven at various payback periods up to 24 months, and how it varies for reactivation vs. internal prospecting (for multi-title brands), and outside lists

3. Cum Cell Analysis to determine how much you can mail in any given drop or season based on your company goals- balancing active file growth with contribution is always key!

4. Catalog Matchbacks have become standard in our industry, with over 90% of our clients running them on a regular basis; we recommend you measure fully-loaded matchbacks (100% of transactions 60 days post mailing) and then apply your incremental factors from there

5. Contact Reporting is more critical than ever as we try to optimize costs; for every primary segment of customers, you should be able to determine their average number of catalog and email contacts per season and per year

This Basics List does not include some of our favorites like developing control panels for frequency testing and optimizing your catalog/email strategy. Not to mention, integrated email and catalog segmentation!

Stay tuned for 5 Online Marketing basics to check off…

What key reporting is on your to-do list?

Monday, June 2, 2008

Welcome to the inaugural issue of Directly Speaking!

Directly Speaking is published by Belardi/Ostroy and its Growth Strategies Group. We bring you this resource to better understand and help navigate through the myriad challenges and opportunities facing marketers today. Out in the general world, a weak economy, record gas and fuel prices, credit and mortgage crises and declining consumer confidence have greatly impacted marketers' overall performance. In our world, catalog glut, declining response rates and the quest to efficiently integrate marketing efforts across channels are just some of the challenges our clients are facing. So how do we proactively respond so that business not only survives, but thrives?

We're fortunate to work with dozens of best in class brands. Through these relationships, we understand leading-edge best practices and have created systems and services allowing us to become part of the solution. Over time through Directly Speaking, we'll be sharing this knowledge and expertise with you in many different ways, providing some insightful food for thought as well as more tangible ideas for growth.

We also wish to provide a forum for you to share your questions and thoughts on how the industry is challenged, what you're experiencing firsthand, and how you might be addressing these same issues. We're excited to hear from you and look forward to a great exchange of ideas!

The proof is in the data

Everyone has an opinion, including us! But one thing we can all agree on as direct marketers is that the proof is in the data…

There are at least five questions you should be able to answer about every one of your marketing efforts, from catalog prospecting to paid search and affiliates:

  • How many of the buyers (by marketing program) were new, active, or lapsed customers prior to their purchase through the program?
  • How many times had these buyers been contacted by your brand via direct mail or email prior to their purchase through the program?
  • What is the total marketing cost of the program when you consider their path to purchase (i.e. how many other marketing touchpoints were involved in their transaction)?
  • How does the 12M and 24M Subsequent Revenue and Profit per Customer vary based on the source of acquisition?
  • How much marketing demand across channels is really incremental based on consistent hold out groups?

Allocating costs & demand

We believe, like most of you, that today you have to be Channel Agnostic. You don’t care where the customer buys, as long as they buy! But this is too easily said and rarely done. Our P&L statements force the issue of allocating costs and demand, creating a need to justify every marketing investment dollar.

The way we see it, you have only a few choices:
  1. Simple assignment of customers to the last marketing effort that influenced their purchase- if only it were that easy! How do you define influence?
  2. Assignment of customers across the multiple marketing contacts influencing their purchase- ideal but fractionalizing demand is easier than fractionalizing customer behavior! How do you split Mary Jane between your catalog, email, and paid search program?

So, where does this leave us?