Getting to The Core Of Catalog Marketing Advice

I received an email recently from the CEO of a company that, like Datamann, is a supplier to the catalog industry.  He was commenting on one of my recent blog postings, and offered an observation about a problem that he saw within the industry.

He mentioned that many online media outlets are reporting on companies that use Artificial Intelligence (A.I.) in their quest to find new customers and correctly target existing ones. He stated that in most of these articles the term A.I. is misused. The companies profiled are instead using “just predictive models (typically neural networks) and not true generalized ‘artificial intelligence’ at all. But claiming the use of AI is all the rage among Marketing Tech vendors (and the online media reporting on their activities) and causing massive confusion among the marketers I speak with.”

I knew exactly what he was meant. At a company I was previously associated with, every new service or product that was introduced – no matter how mundane – was promoted as having “advanced analytics”.   So we’ve progressed from advanced analytics to artificial intelligence, and both turn out to be an exaggeration.

This vendor went on to describe many of the innovative services and products that his company provides their clients.   Some of them sounded pretty cool – even cutting edge. But he wasn’t trying to impress me or sell me anything. Instead he wanted to make a point that so many of us have to contend with. Some of his products are really meant to make a mailer’s job more efficient and easier. But what is the client’s typical response? “Cool – but now what should I do? Can’t the system just act on these insights for me?”

He bemoaned the death of fundamental marketing skills among most catalog mailers, stating that “the Staples ‘Easy Button’ for marketing has become fully realized and it’s doing far more harm than good at many companies today.”

We all see it. When I polled mailers and marketers for what they wanted to learn at our seminar next week (yes, it is now less than two weeks away), the marketers I contacted almost universally asked for “the five most important metrics I need to run my business.”  When I explain to mailers that those metrics are different for everyone, they lose patience. They don’t want to hear that – they want me to skip to the “best” metrics and reports that everyone else uses.

I can’t blame mailers for not having the patience to understand that their business – as is everyone else’s – is unique. I’ve mentioned before (perhaps ad nauseam) that there has been a talent drain in the catalog industry. Maybe a more accurate statement is to say there just aren’t many staff left at many catalogs. It’s not that the individuals left lack talent – it is simply a fact that in just about every catalog company, the jobs of five people eight years ago are now being done by one or two people. The reasons that this has happened are endless.

It Is Always A Step Backwards

When staff is downsized, it is almost always a step backwards. What happens when someone is downsized or leaves and you are left to do your job and the other guy’s job? You cheat, and take short cuts to get your job done. Maybe cheating is not the right word, because it implies that what you did was ethically improper. That’s not the case. But you need to find a way to get more done, so you look for the easiest route. One of those routes is to outsource your marketing and circulation planning.

There are plenty of consultants in the industry that will do circulation planning and/or modeling for clients. The vast majority of these folks are ex-mailers. They know their stuff, and generally they are all good at what they do.  I perform the circulation planning for a handful of Datamann clients. My methods are no better or worse than those of other consultants. We each have our little quirks that make how we do it different from the other guy – but no one has a secret sauce, beyond experience.

But here is what bothers me. I view circulation planning as being a core function of the catalog. That’s because that was the role I filled as a cataloger. Of course I want to think of my job being “core” to the success of the company. I have always felt it was a mistake for catalog companies to “farm out” their circulation planning. To me it is a relatively easy exercise. But when you have someone else do it, you become that much further removed from the business. Once you start letting someone else plan the circulation, after a few seasons you start to skip looking at the reports that consultants like me provide that show how the last mailing performed, and how the next one is planned. You start to lose touch with how your customer is performing.

This phenomenon of losing contact with your customer is even more pronounced when you have someone doing your circulation planning via modeling. At least with RFM, if you wanted to, you could see how each customer segment is performing. But modeling requires a huge leap of faith. You are often mailing huge swaths of your customer file in very large segments, simply defined as Segment 1, Segment 2, etc. Yes, you can see a difference in response between the segments, but can you tell which portions of your customers are not responding?  Do you even take the time to ask the modelers, or do you simply assume that they are doing the best job that can be done?

It’s one thing to hire a consultant like Kevin Hillstrom or Frank Oliver to come in and provide you with an assessment of what you are doing. Maybe even have them build you a model. But, consultants like Kevin, Frank and me are always willing to teach you, the mailer, how to do what we just did for you, so you can replicate it and carry on the process when we are finished with our assignment. Rarely do mailers want to do that. They want that “Easy Button”.

I’m not knocking companies that do hire outside modelers. There are many of you that are big enough to justify modeling, but not big enough to hire your own in-house statistician to do it.  The problem is that it is not that much of stretch to go from the “easy button” of modeling to being confused by discussions of artificial intelligence to think that your model should be able to “learn by itself” what to do next.

I don’t see this as an issue with every mailer. People that have been “around for a while” know what is, and what is not, possible. It’s the younger professional, mostly from the ecommerce side of the business that suddenly find themselves also responsible for the catalog that think there should be an algorithm for everything. “Facebook can determine what kinds of people are most desirable to view my ad, why can’t your model just figure out the 2% of the people that are going to respond, and mail to them”.   They of course understand that Facebook’s response is not going to be 100%, but can’t understand why the postal model should not be attaining 100% response.

In my opinion, there is no “easy button” to catalog marketing. You have to be involved. You can hire others for their expertise, but don’t become too reliant on them. If you put too much of your business on “autopilot”, you will lose touch you’re your customer, and what they are doing. Your company will become an example of the old joke about the guy that jumped from a 10 story building, and people kept hearing him say as he passed each floor “Okay so far”.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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You Can Ignore Most of It

This week marks the fifth year anniversary of my starting this blog at Datamann.  I’m going to use the occasion to share a brief personal observation that relates directly to catalogs.

I received several emails last week from readers who agreed with my comments that their catalog could get along just fine with “less perfect” photographs and design. These comments were from the marketing and circulation people who are trying to stretch their budgets, and actually have some money left over to mail the catalog after the creative department has spent a big chunk of the budget on up-front fixed costs like photography and design.

Here was one comment: “Could not agree more that we could get by with ‘good enough’ photography. However, when this is suggested to our creative team, they lose their minds. Any suggestions on how to overcome that?”

Well, let’s try this.  Let’s say you were acquired by new owners, and they mandated that the budget for new photography be cut by 70%? What would you do? Some people would simply throw up their arms and say “You’ll kill the catalog. You don’t understand! We can’t just photograph this new light fixture in any old setting; it has to be done in just the right location, with at least three models, and a dog.” Others, who realize that they have to live within the confines of this new reality, would take some action.

The question becomes, what is important, and what is just noise?

Most of the readers of this blog are unaware of the fact that I am almost deaf.  Most of you have never met me, and if you have, unless you notice my hearing aid, you are probably unaware of the fact that I can’t hear a word you are saying if we are in a crowd.

Ten years ago, I contracted an illness which left me completely deaf in one ear, and with only 40% hearing in the other, which gets increased to 70% with my hearing aid. So, I have about 20% of the normal hearing range that most people have.

What does this have to do with catalogs? Everything.   You see, I have learned to get through the day by ignoring much of what is going on around me, because I can’t hear it anyway. Your customer does the same with your catalog.

In one-on-one situations, I’m OK. Even with three or four people in a room, I can carry on a conversation without too much difficulty. The worst situation is a large crowd – like the coffee break at a crowded conference. You can be standing right next me and practically yell into my good ear, and I can’t tell what you are saying.

I know I’m probably going to get in trouble for saying this, but I’ve learned that 90% of what most people are saying in situations like that can be ignored, and no one can tell that I’m not listening to them. I can tell when someone is asking me a question, because the tone of their voice changes. I can hear a change in frequency and tone, although I don’t know what is being said. So when I detect that someone is asking a question, I lean in and ask them to repeat it. Otherwise, I just stand there and smile and nod. Most people just think I’ve become more agreeable in the past ten years.

Your customer does the same thing with your catalog. They are browsing it. They are flipping through looking at products. They want to see that you have the product knowledge and authority to sell this product. But they are ignoring most of it.

I used this spread (below) from the Cabela’s catalog last fall in a posting on hunting catalogs. They used one lifestyle photo on the spread to show they had “authority” when it came to selling cold weather gear, but the rest of the product photos are all lay-flat studio shots. I know some catalogs where every item would have to be a lifestyle shot. Is that necessary?

The problem is that many catalog creative directors, and merchants, insist on a specific and consistent “look, feel, and theme” to the catalog, to convey a lifestyle, or as Kevin Hillstrom calls it, your “Unique Point of View”.  And there is something to be said for having a “unified” creative look to a catalog.  But everything does not have to be perfect. In my opinion, sometimes when everything looks “too perfect”, your catalog has the same appeal as a mailer from Verizon trying to get me to switch phone plans.

Stop thinking that your customer is curling up in front of the fireplace with a glass of wine to read your catalog – and only your catalog – cover to cover. If that ever did happen, it hasn’t happened in the last 10 years. Your customer has a thousand things going on in their life. Media is on all the time. Some will argue that this exactly the reason that you should, YOU MUST spend a ton of money and time on truly exquisite creative, that will standout and catch the reader’s attention.

But here is where my deafness comes in. “I have learned to get through the day by ignoring much of what is going on around me, because I can’t hear it anyway. Your customer does the same with your catalog.” Your customer is motivated by your merchandise. Your merchandise is your brand. The depth, variety and diversity of your product assortment are what will drive a response. Truly creative people can develop effective and affordable creative, that provides a “unique point of view”, but which puts focus on the merchandise, and how that merchandise meets the customer’s needs.

This is separating the noise from what is important. To answer that reader’s question from last week mentioned at the beginning of this posting, my suggestion is to pose a challenge to the creative folks and the merchants. What can they do to create a truly unique looking catalog, that drives response, and can they do it spending 50% less than what is budgeted? Anyone with some basic talent can spend a fortune on designing a catalog that is “perfectly” photographed, and properly executed. That’s no challenge. That’s just doing their job. Moreover, it is creating a catalog that is similar to thousands of other catalogs that have come before it.

The challenge to everyone – including the marketing and circulation team – is to ALL work together at developing a merchandise and creative direction for the catalog.  Creative, merchandise and marketing cannot work independently of each other. Their over-riding goal – what is important, and not noise – is to develop something that drives response. Unique creative does not have to be expensive and perfect. It has to be unique. That’s why it is called “creative”. Everything else you can ignore, and you’ll still manage to get through the day just fine.

By the way, if you have not visited the Datamann website lately, it was recently redesigned, with a new format for the blog that allows you to search on my last five years of musings. (Click here to visit Bill’s new blog site). Awesome stuff!

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Time For Questions

With just three weeks to go before our catalog seminar in Concord, NH on catalog metrics, I’m happy to announce that we have over 200 registrations, and the conference hotel is sold-out (but there are other hotels nearby).  I keep getting notes and emails from attendees expressing how much they are looking forward to Kevin Hillstrom’s business simulation.

But before Kevin presents his simulation, I’ll be presenting my annual update on the present status of the catalog industry and my take on catalog metrics. Each year, I start out by asking for a show of hands to reveal how many of the companies in attendance grew the prior year by more than 10%, then 5%, then 1%.

Last year there were only a few that had grown by more than 5%. There is growth out there, among certain retailers. People are still buying stuff. So why is there such little growth among most catalogs?

Let’s forget about the co-ops for a minute and whether they are good or bad, dying or growing. Let’s just focus on one thing – there is not much prospecting for new customers going on at most catalog companies.   Why?

Before I answer that, let me share with you a brief story.  In the early 1990s while working as the catalog marketing and circulation guy at Brookstone, the company hired a new CEO who had no catalog experience.   The company was in rough shape, but the drain on our financial success was not the catalog, it was the 200+ stores. The new CEO turned his attention on the stores because that was the biggest part (80%) of the company, and because the catalog was making plan.

Then one day, my boss, the VP of Marketing hurt his back and was out for two weeks. During those two weeks, every time someone had a question about the “financials” on the catalog, they came to me. One day the CEO called me into his office to ask why list rental income was down.

This was the income we derived from renting our list to other mailers. In the company I had worked at before Brookstone, we did not actively promote the rental of our file. We exchanged a great deal, but had limited rentals. Upper management at that company had “strategic reasons” for this. So, when I got to Brookstone, I continued this “laissez faire” approach to list rental income.

At Brookstone, it was very unusual for the CEO to be quizzing a manager on a specific line item. However, because this CEO had no mail order experience, I thought he would appreciate an explanation from me on my “strategy” towards list rental income, and the fact that I had no control over list rental income, as it depended on other companies using our list, which was dependent on their circulation plans.

Big mistake. HUGE mistake.

For a guy that knew nothing about catalogs and mail order, he started to ask some pretty probing questions. That’s why he was CEO. He knew that Millard Group, located right across the street from Brookstone in Peterborough, NH, was our list manager. “Put some pressure on those guys over at Millard to proactively sell our list. Do some promotions. Get the word out in the industry that you are ready to deal. Change the price. Do whatever you have to do, but get that income up. YOU control and YOU are responsible for this line item – don’t blame it on other mailers.”

To that CEO’s credit – whose name was Hank Kaminstein – he never raised his voice at me, never uttered a swear word, never spoke to me in a sarcastic or demeaning way. Instead, he taught me the value of taking action.

That is what we are going to focus on in three weeks at the seminar – taking action. You wanted to learn about which catalog and ecommerce metrics you need to know and use to grow your business. You wanted to know how merchandise analysis could help you grow. But in reality, you need to see that metrics really don’t help you if you are unwilling to change, and unwilling to take action.

To answer my original question – there is so little prospecting for new customers because you won’t take action and you don’t want to change the way you acquire customers. Carpet bombing with prospect catalogs with names sourced from the co-ops is not working to the degree it used to, but you are reluctant to try other options. Hopefully by the time you leave our seminar, you will have the ammunition you need to impart that sense of urgency for change at your company.

There are four parts to our seminar – my presentation, Kevin’s business simulation, Frank Oliver’s presentation on merchandise analysis (which he has been hinting will include something on “merchandise warfare”), and our closing Q&A session, which in years past could have lasted twice and long, and we still would not have gotten to all the questions.

So, if you are registered to attend, start thinking about your questions for Kevin, Frank and me. If you send them to me before the seminar, they will get priority at that session. I’ve already had a few submitted, which I will share:

One for Frank – My boss keeps telling me that our merchandise needs to be a “curated collection”.  What did catalog merchants do before they became the equivalent of a museum curator?

One for Kevin – A while back, you asked in your blog if it was better to have 100 potential customers that were “engaged” with the brand, but who had not ordered, or one customer that had placed an order. What is the answer for my company?

If you have not already registered for the seminar, click here to visit the VT/NH Marketing Group’s website.

Registration costs for this all day event:

  • $135 for VT/NH Marketing Group members
  • $200 for non-members
  • Registrations are accepted until March 28, 2017

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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