The Future of Catalog Acquisition?

Much has been written about the future of catalog acquisition, with the growth of ecommerce, the bankruptcy of so many major mailers in the last year, and now, the green movement and consumer opt-out programs.

But I wonder how many truly targeted acquisition opportunities exist today where we can proactively drive new consumer demand. As marketers, we can’t control how many consumers each month will search for “wood daybed” or “turquoise necklace” on Google. And Mary Jane doesn’t just wake up one morning, unaided, and decide to type in your brand name.

Viva La Terra and Acacia are two of my favorite catalogs I just discovered in the last year. I received each of these catalogs a few times as a prospect before a need (in one case, Mother’s day) drove me to the web to make my purchase.

Now, I am by no means a traditional direct shopper. I could probably count on my hands the number of phone orders I have placed in my life. And I prefer the immediate gratification of in store retail shopping more than anything, but I find more and more that the merchandise in retail stores is the same, same, same.

Did mailers potentially mail too deep as response rates declined? Or did response rates decline because we pushed too deep?

Web merchandising has a long way to go before it can deliver the advertising impact of a well-executed catalog. It’s time we shifted our thinking to the catalog as a targeted advertising vehicle, rather than an order channel. The question we should be asking is whether we can make the same advertising impact with 40 pages instead of 80???

Product is King

It’s not all doom and gloom. I talked with a handful of clients in the past week who are pleased with results this summer. (Of course, it depends on how you define success- sales growth vs. LY, improvements in operating profit, achieving Plan.)

As Kevin Hillstrom pointed out in a recent blog, it is frustrating to read headlines such as Five Easy Tips to Boost Business- as if anything is easy right now! But it got me thinking about the similarities in recent strategy for the brands reporting success. It also reminds me of something we used to say at Eddie Bauer…

Product is King.

Some marketers have a tough time admitting this, but even the most brilliant marketing strategy can only sell so much mediocre product.

Some of the companies achieving strong results this summer include brands in the following categories- home furnishings, children’s merchandise, and specialty gift. The one common element they all share is an intense focus on the “freshness” of their merchandise strategy: introducing new product, spinning existing product in a fresh way, providing content and solutions, establishing authority, and putting a new look on the catalog creative.

These brands prove that it’s possible to succeed even with all the challenges we face!

Speaking Out on Postal Reform

With prices increasing in all phases of our business, it sometimes feels that we are at the mercy of the postage system, paper vendors, and other suppliers.

Last week, the American Catalog Mailers Association (ACMA) held an advocacy and strategy forum in Washington, DC. As an industry, we have been remiss in making our collective voices heard.

Representatives from the USPS, PRC and Congress indicated that they had very limited contact from catalog mailers and the lack of contact allowed other special interest groups to gain ground and to adversely affect the industry.

We need to be speaking directly with our local representatives, to help them understand the impact of postal increases on our businesses. Here are some tips on how to connect with your representative:

1) Assign someone as your Postal Reform Advocate
2) Write a letter to your Congress representatives
3) Be specific about your individual issue (avoid form letters)
4) Reference how many constituents in your district will be impacted by your issue
a. Potential jobs lost is a powerful argument with Congress
5) If you have multiple locations – write letters to all representatives
6) The letter will start a file – so keep in contact via email, letters, calls, etc.

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 springwise.com, and learned about a new retail store called FashionologyLA (www.fashionologyla.com). 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 (www.bassettfurniture.com). 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 www.styleshake.com and design your own dress. Or go to www.elementaltreads.com 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 www.inmod.com and design your own duvet cover. Ballard Designs (www.ballarddesigns.com) 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!

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.

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!

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?