If I Were You

Right after our catalog seminar a few weeks ago, I received a number of emails from attendees thanking me for the event, expressing their enjoyment with the presentations, suggestions for next year, etc. All good stuff and all sincerely appreciated.

(For My UK readers – please see the note at the very end of today’s posting).

One attendee, a vendor, wrote that “I totally get that it is fun to pick on vendors and the bright, shiny objects that we are peddling.  But as a former mailer/digital marketer, I am keenly aware that understanding the advances in technology and what they mean to my business prospects is critical.” He went to say that our seminar in the future could be a “neutral ground” to “educate marketers on what technology makes possible, and teaches (forces?) them to think about how they can leverage the technology advances to grow their businesses”.

A neutral ground? Hmmm…

How would I manage to have a neutral ground if I allowed one vendor to promote their “shiny new objects”, while denying that opportunity to others?  I couldn’t, and I’m not even going to try.

Our catalog seminar each March (you can circle March 29, 2018 on next year’s calendar) is almost a year-long undertaking for me, so I’m glad attendees found it worthwhile. I’m delighted when they take the time to write with suggestions.

But I believe the success of our event lies in not promoting “specific” new technologies or new methods of using old technologies. Rather, it lies in helping traditional catalogers see how they must evolve their business in general to stay competitive. Whether it is thinking less like a cataloger, thinking more like an ecommerce or even mobile marketer, or how to confront the reality of Amazon, our seminar will continue to offer more generic solutions that are timeless, rather than the bright, shiny new object that will be obsolete in a year’s time.

If I Were You

I have not been to the Internet Retailer Conference (IRCE) in a few years, but one of the things I always enjoyed about their conference was that it featured speakers talking about the newest/greatest technology. IRCE made little effort to screen speakers and keep them from giving a pitch for their product.  My feeling on this is that the online technology is changing so quickly, you have to have a forum like IRCE where the latest and greatest is presented, even if the presentations tip too much toward being a sales pitch.

Since there is no way Datamann’s seminar (which we host for the VT/NH Marketing Group) could ever offer the breadth of information on new technologies that are offered in the hundreds of presentations at IRCE, why even try?  At IRCE, let the buyer beware, just as catalogers had to pick our way through the maze of vendors and presentations back in the 1980s at the Catalog Conference.

If I were a catalog mailer today, I would attend the IRCE, with my eyes wide open. I’d look for every cool new idea, and zero in on the ones where the presenter/ vendor offered proven examples of how their technology could help me in the next three to six months.

When you are attending a conference with 15,000 other attendees, it is impossible to digest everything at once. But trust your gut instinct on who seems to have a believable story. Years ago, Ben Perez, my former boss at Millard Group, used to say that “some things just smell like 3 day old fish”. You’ll be able tell which vendors are pushing three day old fish, and which aren’t.

Learn to be skeptical. Here’s an example: at the NEMOA conference in March, the Postmaster General was a no show. She sent one of her trusted deputies in her place. He gave an overview of issues the postal services is dealing with, and the new services being offered. Plus, he provided some interesting statistics, one of which is that although since 2012 mail volume is down, “engagement with mail was up, with an additional 25% of households reporting a strong attachment to mail.” So what does that mean? What is a strong attachment to mail? How do you quantify that? How did they determine that “attachment” was up 25% in the past five years? Learn to be skeptical.

In addition, keep a check on your enthusiasm when you get home. As one person wrote to me before our seminar last month “I wanted you to know that although I will not be attending your conference, it’s (IMHO) the best in the business. I am not attending to allow two other staff  to go. Your other reader is absolutely correct, most conferences are a “vendor cesspool” and I welcome the day a newbie (or seasoned marketer for that matter) returns from the typical national conference with more than unbridled enthusiasm for some new start-up that plans to further squeeze our dwindling profit dollars. “

Finally, to my many subscribers in the UK, if I were you, I’d plan on attending the Direct Commerce Association’s Annual Summit (click here) on June 15 at the Hurlingham Club in London. (Awesome looking venue!).  Kevin Hillstrom will be presenting a new and improved version of the business simulation he presented at our seminar last month, and Amy Africa will be presenting her latest take on “The good, the bad & the downright ugly” of websites. Kevin and Amy together, in London – Wow!

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Don’t Worry About The 40X Names, Focus On The 1X Names

Think about what you ask the catalog co-op databases to do. You ask them to find you the best names for your mailings.  Those names are usually buyers at your closest competitor’s catalogs. If  I’m the circulation manager at LL Bean, I want the co-ops to give me names of good buyers from Lands’ End, Orvis, Eddie Bauer and Woolrich.

In theory, this is exactly what happens. If I have made purchases at all those other companies, I would look like a great prospect to LL Bean. My name would float to the top of every model LL Bean receives from their co-ops.  But, what if I’m just not willing to become an LL Bean customer?

These consumers that are actively purchasing from other catalogs have nothing against you. They are simply comfortable with the companies from which they purchase now. In the apparel world, they know that what they purchase from these other companies will fit, and fit the way they like. They don’t need to add another apparel catalog to their fashion mix with the risk of dissatisfaction over an order.

The same phenomenon happens in hard goods and gifts. If I’m strong buyer of Virginia peanuts and Pacific salmon by mail, it doesn’t mean that I’m guaranteed to want Wisconsin cheese or Vermont maple syrup, although my name probably floats to the top of models for those other food catalogs as well.

You have prospects like this too. You have a core group of prospects that you mail over and over because they are either good customers with your competitors or with companies close to your product mix.  You either rent these names directly from those companies, or receive them in your co-op models.  But these consumers are never going to buy from you because either they don’t need you, or they choose to stay loyal to the other brand. You just keep mailing them over and over.

But, that may not be a bad thing.

Datamann builds and maintains prospect contact histories for our clients, which is a database that tracks the number of times you mailed a prospect name (individual or household) before you finally received an order from that consumer, as well as tracking those that have never ordered.

The report shows the optimum number of times to mail a prospect to get the maximum response rate, but more importantly, it illustrates the point at which it is no longer profitable to mail that prospect name. You can suppress these “over-promoted” names from future mailings, as well as send them to the co-ops to have them suppressed from the files you order.

Every client for whom we produce these reports uses them differently. Further, every report we produce has vastly different patterns of response. In the sample report above, there were 67,450 prospects mailed for the 12th time in five years (not consecutively). 3,476 of those prospects finally responded to their 12thth mailing, generating a 5.15% response rate for that group of names – not bad. We always see that the response builds over time, but where it reaches the maximum response differs widely. For some mailers it may occur on the 5th mailing. For others the highest response rate may not be achieved until after the 20th mailing.

It is always shocking for some mailers to see that they have prospects which they have mailed 20, 30, and sometimes 40 times, without ever placing an order. Some mailers thought they were always getting “totally fresh names” with each mailing. But think about this – the co-ops are doing what you asked them to do – which is send you the names most likely to respond, which would be those buying from your competitors. The co-ops are not coordinating with each other to say “Oh, I sent that name last time, so you shouldn’t send it this time.” However, this is not necessarily a bad thing.

If you are a longtime reader of this blog, you know I’m not a big fan of the co-ops. It would be great if they could identify those buyers that are extremely loyal to your competitor’s brand, who are unlikely to ever buy from you, and not send them to you.  But in this case, I’m not sure they ever could, or that you want them to. You need to determine how to structure an offer to these names that you have mailed 20 times, or 40 times, to get them to buy from you. What’s it going to take to get them to buy from you?

Look – this is not rocket science.  The co-ops are NOT analyzing 320 million US residents, sifting through tiny bits of data that reveal a fresh new consumer that no one has ever mailed before, who is destined to become your greatest customer ever. No, if the co-ops are doing their job correctly – meaning they understand who your customer is – then they should be sending you these top prospects that are actively buying from your competitors over and over. Those are the names with the highest propensity to convert to being your next new customer. The problem is that this scenario repeats at every other catalog company too. The catalog that raises their game and determines how to appeal to these active prospects/consumers will be the winner.

Here is the bigger issue I see. Look at the top row – the 1X names. Every time we create this report for clients, we see a similar pattern. The 1X names are two to three times greater than the 2X names. Overall, the 1X names are 38% of the total quantity of names this mailer has ever mailed. Doesn’t that seem odd? The co-ops are supposed to be giving you the best names. They “model” what they send you. You are supposed to be getting the best of the best. That would mean you should be getting more of the same names more often.

But, almost 40% of the time, the co-ops sent you a name that they subsequently decided was not worth sending you again. Those are the names you need to focus on. Were those “filler” names that the co-ops gave you to get your quantity up? When you are planning your Fall and Holiday circulation this year, ask the co-ops their strategy on giving you names only once vs. multiple times.

Here is another aspect of this report. Let’s assume this mailer is willing to generate a loss of $45 in profit to acquire a new customer. On an incremental basis – looking at each mailing as an event unto itself – this mailer does not reach this threshold until the 34th mailing.  But, what if you looked at this cumulatively? Go back to the 12th row. You did not just mail 67,450 names to get those 3,476 orders.  You mailed 809,395 catalogs (12 x 67,450).  If you include the cost of all those additional catalogs mailed to get those first orders, you actually lost $97 in profit (far right column).  You would attain your allowable profit per new customer (-$45), measured cumulatively, on the 7th mailing.

Should you stop mailing after that 7th mailing? It depends on how you view your “sunk cost” of those cumulative mailings. Most of our clients want to continue mailing prospects as long as it remains incrementally profitable to do so. However, some want to include those “cumulative expenses” in their lifetime value calculations to determine if a customer that required 40 mailings from you to make their first purchase, was really worth it in the long run.

Datamann’s Prospect Contact History is easy to implement, and provides you immediate return because in most cases, there is no testing involved. Your accumulated mailings over the past 5 or 6 years are the actual testing grounds where you mailed all those prospect names. As long as we have your old mail files, we can build a similar database for you. Contact me for details.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Bill’s 21 Irrefutable Catalog Creative Rules – Last Chapter

We’re almost done – let’s wrap these rules up today.

In case you missed Part One, Two or Three of my rules, click here:

Bill’s 21 Irrefutable Catalog Creative Rules – Part 1 (with rules 1 to 6)

Bill’s 21 Irrefutable Catalog Creative Rules – Part 2 (with rules 7 to 12)

Bill’s 21 Irrefutable Catalog Creative Rules – Part 3 (with rules 13 to 18)

Rule #19 – Do not change for the sake of change

Constant creative tinkering rarely leads to significant gains in response. Unless your customers are calling or emailing and saying “Hey, I can’t order from this catalog/website”, you will see no meaningful increase in response rate from completely changing the format of your design. In fact, you will probably alter the product density and/or the mix of price points, which will hurt response.

Rule #20 – Don’t be afraid to sell

Over and over I see mailers throw a bunch of similar products on a page, with no thought given to helping the customers determine what is best for them. Don’t assume that your customer has the same love for or knowledge about your products that you have – you have to sell them. You have to rekindle that love for your products with every customer, with every new book.  In creative terms, that means going beyond a simple “hero shot” presentation, and going for the “WOW” presentation. Be bold.

Most B2B catalogs are the worst offenders of this rule. They typically make the assumption that the professional to whom this catalog is aimed (regardless of profession) can immediately tell what every product is for, and which of the 17 versions of the same product shown in the catalog, is ideal for their needs. You do no selling – every product is exactly the same, just thrown on the page. There is no effort to be creative, or sell; you are simply SKU barfing page after page.

Rule #21 – You must have a sense of urgency

Our greatest threat is not the online world, or Amazon. It is our own retreat into “catalog narcissism”. We believe it when printers and other industry leaders tell us that catalogs are not dead, and that our industry is fine. We listen to the co-ops when they tell us they are growing, yet we instinctively see all those orders flowing to Amazon and wonder how it could be that the co-ops are growing when they are missing all those orders.

The internet has been challenging catalogs for the past 20 years, and certainly has been pushing the catalog industry hard for the past 10 years. But most catalogs have no sense of urgency in making any changes. You still debate cover strategies, and timing tests. Your merchants maintain the same level of lousy productivity per catalog that they did 10 years ago – largely because no one has held them accountable for increasing productivity.

And because you are focused on the things that matter little, most of you have not had the inclination, the wherewithal, or the luxury of time to really look at your business from a strategic perspective. Neither Datamann nor I have all the answers. Few consultants do. But all consultants have an advantage – we get to walk in the door and view your business without all the day-to-day junk that you have to deal with. We can advise you on where to start making changes. But YOU HAVE TO HAVE THE SENSE OF URGENCY.  Stop fooling yourself that you are unique (there is no such thing as a unique catalog), and stop fooling yourself that your customers have any loyalty to you or that they see you as a lifestyle brand. And stop wasting your day dealing with things that have no impact on the future of the business.

The way to fix this is not to simply say, “well, we’ve got a website, we’ve got an email program, and we’ve got a mobile site, and we’re on Facebook, so we have all the bases covered”. I’ve seen most of your mobile sites and they do not make you a mobile marketer – they make you a catalog from which I can order with my phone.

The way to fix this problem is to review the list of factors above that truly have an impact on your catalog’s growth and future, and determine which ones have the biggest impact on your business. (Contact me if you want help). Start there. Then ask yourself these questions to tell if you are thinking like a company that can/wants to grow, as opposed to being simply another catalog caught in a downward spiral:

  • Do you have at least twice the number of products available online for purchase than you do in your catalog?
  • Do you have a program in place to reduce your cost of goods by 20% in order to enable you to increase prospecting to more marginal new customer sources?
  • Do you introduce all new products online first, before they even get included in the catalog?
  • Do you ever keep any of your absolute best products out of the catalog, and make them web-only?
  • Are more than 50% of your incrementally new customers being acquired with no help from a catalog?
  • Have you done a hold-out test to determine the percentage of online demand that comes from existing customer if you stopped mailing them a catalog?
  • Do you spend the same amount of time and attention on updating your website and (separately) your mobile site, as you do on paginating and creating your catalog? (I already know the answer on this one is “No”.)
  • Are you creating separate product specific catalogs/mailers targeted at specific portions of your file?
  • Do you have that sense of urgency?

Repeating what I said at the beginning of this long posting, I’m not a creative person. You would not want me to design your catalog. But, I am convinced that 90% of the catalog creative people in this world could create a really great, innovative, response generating design – if only you would let them. Take the restrictions off – let your creative people spread their wings, and show you what they can do. Let them inspire your customers. As long as they don’t monkey around (too much) with product density, what have you got to lose?

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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