The Private and Lonely Database

The allure of a private prospecting database has attracted many large catalog companies over the year. Years ago, Williams-Sonoma created one for use on their multiple titles. Just as I was exiting the list industry, American Girl talked of creating one, and I don’t know if they ever pulled it off.

I bring this up because the only response to my posting in early November on the need for the catalog industry to act in a more collaborative manner (We Are No Longer Competitors) was an email from a list manager, sharing the news that Bluestem Brands was creating a private prospecting database for their catalog titles.

In 2015, Bluestem acquired a dozen of the Orchard Brands titles, including Appleseed’s, Haband, Norm Thompson, and Wintersilks. A few weeks ago, Bluestem sent a letter to list owners and list managers detailing their plans to create a proprietary prospecting database, seeking participation in that database by these list owners.

Here is the most important part of the letter “The primary objective of this initiative is to consolidate, enhance and model the prospect lists used by the individual brands listed above with the goal of driving increased prospect list usage and new customer acquisition across all brands, with an explicit focus on expanding the usage of non-cooperative database list sources. Over the past several years the cooperative databases have become a larger share of the new customer acquisition mix, however the productivity of co-ops has eroded over that timeframe resulting in increased new customer acquisition costs. We anticipate that by enhancing our prospect universe data and through the application of modeling technologies, we will be able to increase the usage of list universes from non-cooperative database sources.”

I don’t begrudge the Bluestem folks behind this initiative at all. It makes perfect sense for them to do, as they need to protect their investment, and grow their titles. If they can pull it off, more power to them.

Let’s be clear though on one point – this is a database for their 12 titles. It is not going to be a shared industry resource. Again, I have no problem with this, although it does run counter to my comments about the industry needing to be more collaborative (more on this in a minute).

But take note of why they are doing this: “the productivity of co-ops has eroded over that timeframe resulting in increased new customer acquisition costs.” Wow! The customer base and demographics represented by 12 Orchard Brands’ titles are what the co-ops know best – older Baby Boomers, middle-class female apparel buyers. These 12 titles are custom made for the co-ops’ target household. And yet productivity is eroding. In case you needed to hear it from someone else, and proof from a company that has a lot of skin in the game with 12 large titles, the co-ops are dying.

I have no doubt that Bluestem will successfully create some form of proprietary database. Based on the roadblocks I recall Williams–Sonoma faced, Bluestem’s efforts may not proceed as smoothly or as quickly as they had initially planned. But they have time and size on their side.

But what happens to the rest of you?  Let’s assume that Bluestem is able to create this proprietary database. Let’s assume they pull all of their customer records out of the co-ops, or at least significantly reduce the number of buyer records they are contributing to the co-ops. What happens to the rest of you trying to reach that same audience? As if Amazon wasn’t sucking enough transactions out of the co-ops, you just had another significant reduction in the potential prospect audience to which you can target.

As more multi-title catalog companies experience the same rise in new customer acquisition costs, there will be additional efforts to create other private prospecting databases, which will only put more stress on the existing co-ops, and more stress on the solo-titled catalogs still trying to survive on their own. Any of the new companies trying to start new co-ops will simply wither on the vine. Oh, what a vicious circle.

But, I see this as a start. The need to be more collaborative among catalogs will only grow. Yet, let’s be realistic.  I never would have expected any company to raise their hand and proclaim “Yes, we will lead the way. We will weather all the hardships and criticism to help the entire industry, not just our title(s), to grow in a collaborative way.”  No, history shows that companies would do exactly what Bluestem (and others before it) is doing, which is to go it alone – at first.

However, eventually, if more companies do what Bluestem is doing, something will have to give, because all of these individual prospecting pools will be missing the vibrancy that comes from having the entire industry involved. They cannot exist for long as isolated pods of names.

What’s the lesson here? First, you are going to be left behind if you are not aggressively developing new methods of customer acquisition. Second, don’t wait for the co-ops to implode because I fear that implosion is coming faster than many of you expected.

Finally, don’t email me complaining that I gave you vague advice to “find new methods of customer acquisition”, without providing you with a detailed list here of inexpensive, sure-to-win methods of catalog customer acquisition specifically aimed at your catalog. You are a marketer. If you are really talented, use the gifts that the marketing gods gave you to figure this out on your own for your company. This is what you get paid to do. You do not get paid to be friends with the co-ops or the other vendors that you are cozy with now, and ride their ship under the waves with them. Get moving. Try new things. Be aggressive. Push back on those that are so tied to sales forecasts that they won’t take a risk.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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How Far Back Should I Mail?

This may come as a surprise to anyone that has heard me give a speech, but the very first time I had to speak in public, I passed out at the podium mid-speech. Dropped to the floor like a rock.  I won’t go into the sordid details, but it was my first “real” job out of school, and in front of a crowd of 400 people. Oh the humanity….

So it was with a great deal of trepidation that 25 years ago, I accepted the invitation of the VT/NH Direct Marketing Group to speak at their 1991 conference. I was the Marketing Manager for the Brookstone catalog at the time, and I was going to speak on circulation planning and acquiring new customers (some things never change).

This was before PowerPoint. So, I typed out my “slides” using the biggest font I could muster (about 24 PT) on my old PC at Brookstone, and then printed them on a dot matrix printer (this was before inkjet printers too). Using special macro lenses on my old Canon 35 mm camera, I photographed each sheet of paper to create real “slides”, which I slid into a slide carousel.  This was high tech in 1991.

I was so nervous about the prospects of passing out again that I asked several Brookstone staff to sit through a trial run, including our HR Director. She had all the warmth and personality of Bill Belichick (Coach of the New England Patriots), so I knew if I could get through the presentation in front of her, I’d do OK for the VT/NH Group.

Which I did. I remember Jim Feinson (CEO of Gardener’s Supply) and Sam Cutting (President of Dakin Farm) were there, along with several other people that are still members of the Group.

Just as any junior circulation planner would do, I showed how you calculated response rate, and gross sales including “unknown sales” (and remember, this was back when we had 92% source code capture rate). I explained how you determined all your costs, to arrive at the profitability of each name mailed. I went into excruciating detail explaining how to use the profitability of each segment of names mailed to determine what segments and lists to mail in the future. Despite (what now seems as archaic) the poor graphics and visuals, I thought I had explained catalog circulation planning in such a comprehensive manner that anyone could understand it.

Finishing about five minutes early, I was already to sit down when the conference host said “Are there any questions for Bill?” About a dozen hands went up. And I can still remember the very first question: “I think I understand everything you explained, but you never really answered the one thing I want to know which is ‘How far back should I mail a customer?’ Should I stop mailing them after 1 year, 3 years or 5?”

OK, so this person had not understood anything I had explained. Moreover, he did not want to go through the process of actually calculating “how far back to mail”. That was work.  He just wanted a rule that said ‘mail back 3 years’.

The sad part is, after doing this for 30+ years, and compiling literally thousands of catalog circulation plans, I still encounter mailers who simply look at response rate as the determinate as to whether a segment/name should be mailed again. Worse, I still encounter mailers who question mailing any customer who has not bought in two years (those ungrateful, disloyal shoppers). These mailers are counterbalanced by the companies that mail every customer they have, regardless of age.  And no, I’m not referring here to small catalogers that have 10,000 customers. I’ve encountered this thinking among some huge mailers; ones you would expect would be more sophisticated.

I’ve come to realize that many companies – regardless of what the question is – just want you to give them a rule of thumb marketing shortcut, and don’t want to do any work. This happens because that’s how the CEO of that company operates. “Just give me a flash number – I’m so good at marketing that I don’t need to build a detailed plan. I know in my ‘gut’ what to do. My brother-in-law, the barber, told me to just mail back 3 years, so that’s what we are going to do.”

I bring all this up because today (Friday April 29) is the last day to register for this year’s VT/NH Marketing Group’s 28th Annual Conference and receive the early-registration discount. I’m not speaking this year, but the line-up of speakers is great, and I’ll be there. It’s a great conference to get advice and answers to today’s vexing problems on growth.  And if you are that guy that asked me 25 years ago how far back to mail, please let me know how my answer worked out for you.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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A Personal Acquisition Approach with Southern Charm

One of the questions that came up at our recent seminar on Customer Acquisition was “Facebook advertising has suddenly become a huge new channel for us. What’s the next scalable ‘Facebook’ opportunity online?”

I’m not going to answer that question directly, because it is the underlying question about “what can scale quickly” that is important here. Sure, you all want to participate in new methods of acquisition that will grow quickly, and grow big. With a couple billion users, it would be hard to find something bigger than Facebook.

But here is a business truth – every good new idea turns bad when too many companies try it at once, and those companies with unrealistic expectations are the first to panic at the slightest disappointment. So even if there was a new Facebook that came along, everyone else would jump on board at the same time, maybe even faster than they did when they jumped aboard Facebook. Results would be disappointing if everyone did it at once.

Ask yourself this question: Since getting new customers is not easy, which option would you rather have – a large source of prospect names that every one of your competitors has access to as well, or a smaller pool of prospects that is unique to you? The answer is that you probably want both, but here is an example of the latter.

One of the people that work at Datamann is originally from Texas. She subscribes to a continuity program called Made South, which sends her a quarterly gift pack of products that have been procured from southern craftspeople, and southern foods – sort of a Dixie Care package.

About a year ago, I signed up for emails from Made South. Last week, I received the following email from the company:

Subject Line was “I’m starting a personal email list”.

“I promise you’ll receive this email only once. From time to time I want to recommend things that I think are really great, but they just don’t fit with MADE SOUTH. It might be a productivity tool or an article on running a small business. Maybe it’s related to vintage watches. Maybe it’s a book or an album or a podcast I’m really enjoying. Whatever it is, I want to find a way to start sharing those things. So I’m creating a bi-monthly email to share those things. If you’re interested in signing up, just go here. If you’re not interested, just delete this email and we’ll pretend like this never happened. Just wanted to let y’all know.”

Some of you might be thinking “Yeah right – do you really think I’m going to try and build a mailing list one name at a time?” Well, that’s essentially what I’ve done with this blog. Every time a new reader signs up, I add their name to my “mailing list”.   I use that list for the mailing for the Datamann seminar in March, which sold out this year.

Think about what this guy from Made South is doing. He’s saying “I’m not going to keep bugging you, but if you sign up for my list, I will send you some cool information on stuff I think you will like”. This is how you cultivate prospects and customers that will be unique to you. Sure, these people get other media messages, and they are not going to be truly unique to Made South, but the owner of Made South does not have to worry about everyone else in the world having access to his personal email list to whom he sending his personal emails.

Will this scale quickly? Probably not. If he offers to sell these subscribers  something down the road, will the response rate be strong? My guess is that it probably will – just like when I send out a particularly good blog posting that resonates with you (my subscribers) – the response rates soar.

What does this have to do with catalogs?  I believe that catalog owners or CEOs that want to help set their company apart from the pack, should consider having his/her own blog. If you are truly passionate about your product, and you have compelling product, you should be able to build that passion among your customers. If you can’t, that says a lot about your business.

Once you start with your customers, and they feel your warmth, sincerity and passion about your company and your products, prospects will start to subscribe as well. Is it hard work? Absolutely. But it is one more arrow in your quiver that is unique to you, is low cost and if done well, can drive response much higher than more Facebook ads.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Changing Your Thinking About Merchandise to Acquire New Customers

This may not seem as obvious as it is, but most of you think in terms of what you want your customer to buy. You don’t think in terms of what the customer wants to buy.  That prevents you from maximizing your efforts to acquire new customers.  Here is an example I presented at our seminar on Customer Acquisition.

I love to bake bread, but usually only have time each winter to bake bread four or five times. I am a King Arthur Flour customer, from both their catalog and their store, located just up the road a few miles from Datamann here in Vermont.

King Arthur sells products two ways to bake bread. First, they sell bread mixes, with all the ingredients in one box. Just dump the contents into a bowl and add some water or maybe milk. The second way is they sell all the ingredients individually which is what I prefer. It actually may be more expensive buying the ingredients that way, but that’s what I want.

A client once told me about the evolution of birthday cakes in his family. His grandmother made them from scratch. His mother made them from a mix. His wife bought them at a bakery, and his daughter just takes his grandkids to Chuck E Cheese. I equate baking bread from a mix being no different than going to Chuck E Cheese. I want to think that I’m creating the experience that client’s grandmother created.

But here’s the problem. KAF sells all of their ancillary bread baking supplies (non-diastatic malt powder, whole-grain bread improver, baker’s special dry milk, etc.) in large quantities – usually 1 lb. bags. That’s enough to make waaaay more bread that I’m going to make per year, since most recipes call for a tablespoon or two of the stuff. Thus,  when I do go to make bread, many of the supplies are out of date.

Bill's-outdated-bread-bakin

I’m sure the folks at King Arthur think this is what is best for their customers – selling these supplies in one pound bags, because it is the most economical way for the consumer to buy it. And, if you aren’t going to bake at least 50 loaves of bread this winter, well, then you really aren’t much of a bread baker, are you?

But I buy my yeast in the little ¼ packets at the supermarket.

Fleischmann's-yeast-packet

Why doesn’t King Arthur make all of their ancillary bread supplies available in similar smaller packets, just enough to make two loaves at a time. The margins would be much better. Actually, they’d be fantastic. I would feel that I’m actually being more efficient, because I’d be buying only as much as I’m going to need, with no waste. Psychologically, I’d rather spend $2 for a ½ ounce packet of something I know I will use, than $8 for 12 ounces of something that I know will expire before I get a change to use it all.

As a result, I often don’t buy those “extras”.  It’s a lost sale, and lost customer. Plus, even though my bread still comes out OK, there’s always that nagging feeling that because I didn’t add that tablespoon of enhancer, Julia Child is going to show up in my kitchen and declare my bread a flop. It would be a win-win for King Arthur to develop a product line like this – I would feel better about my bread (even if it came out the same), and they would make more money and acquire more customers.

We need to get inside our customer’s heads and figure out what they want to buy, how, and why. We can’t just always impose our ideas of what constitutes a good product on our customers and prospects. We need to rethink every product in the assortment – especially true for hard goods mailers – to envision how the product could be adapted to reach another audience of customers we have neglected. Otherwise, rest assured that Amazon will step into the void with a product for your customer.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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Everyone in the Room Is Feeling the Same Pain

I spent most of last Friday answering emails like this one: “Nice job yesterday at your seminar – lots of thought provoking stuff, and it was like you, Amy and Kevin were speaking directly to our company – obviously everyone in the room is feeling the same pain.”  The pain this person refers to is the pain of growing their catalog business, and the pain of acquiring new customers.

My mother taught me not to boast – so I’m just going to say that last Thursday’s seminar which Datamann hosted for the VT/NH Marketing Group was pretty good. We had a few last minute no-shows, which is a good thing because there was hardly an empty seat in the house. More important (I take this as a good sign), the Q&A session at the end of the day went right to 4:30 PM, and the room was still full except for a few people who had left early to catch flights. Attendees wanted to learn and wanted the realistic and unbiased advice which the three of us furnished.

Yes, most of you are struggling to grow. At the start of my presentation, I cited how Amazon had grown 20% last year, and asked for a show of hands of how many companies had grown by an equal amount. Two people out of 225 raised their hand, and only two more people raise their hand when I asked for companies that had grown by 10%.

The Q&A session was a microcosm of the whole day, summed up by what I think was the best question of the day, which was basically this: “how do you bring about the change that we all discussed to companies and an industry as a whole, that is dominated by old-school marketers who are ignoring the realities of where the consumer is going, and ignoring how the consumer is behaving?”  (Note: because of my deafness, I did not hear the whole question, so I am paraphrasing here.)

Each of the speakers had given their take on the answer to that question during their presentations. I showed numerous examples of how catalogs fail to act like online companies, even though every catalog will tell you they do act in that manner. Amy Africa told attendees which of the many options she presented were the places she would start first, and which ones were the “must-haves”. But the heart of her advice for change was this: “Start small, and get a few successes. Support of change will follow the money of those successes”.

Kevin Hillstrom’s advice was more revolutionary. He called for implementation of what he called the “Brand Response Marketing Team”, a cross-functional team given authority to change the website, change catalog creative and catalog format, and given authority to invest in new areas that will lead to an increase in new customers at a decrease in cost per new customer. Kevin’s contention is simple: without the authority to make changes, change will not happen. He believes the Brand Response Marketing Team should be comprised of 30-39 year old professionals that have new ideas for improvement, not excuses for why the existing staff does not use the catalog better.

One of the advantages of being a consultant, and working with many clients, is realizing how similar every company is, rather than how unique they are. In my opinion, all three of us know something that most of you fail to realize. We know a simple truth. We know that you all share similar tendencies, you all think alike, and you are all gripped by the same aversion to risk. We know most of you really don’t want to change – you want to return to the world of mailing a catalog and getting 3% response rates to prospect lists. But we, and any other consultant, can lead you only so far. We can inspire you only so much. There is no magic password that we can chant that will motivate you. You need to want to change. And Kevin is right – without authority to make changes, change will not happen.

Selling Stuff:

I revealed to the audience that the license plate on my truck is HISTORY, which many faithful readers of this blog already know. But I did so because I wanted to give a quick history lesson. One of the most famous businesses from Concord NH (location of the seminar) was the Concord Coach Company, makers of stage coaches.

Concord Coach failed to grasp what business they were in – they thought they were in the stage coach business. They failed to see they were in the transportation business. When the railroads came along, they failed to grasp that they knew how to make vehicles on wheels to move people – and they could have made railroad cars. But they stuck to making stage coaches, and went out of business in 1915, finally bowing to the omnipotent Model T.

Catalogs are the same way today – you think you are in the catalog business, and you fail to see you are in the “selling stuff” business. Going back to that original question about how you change the mind of the old school marketers – I don’t believe you can bring about that change in every instance. Some people/ companies will hang on to their “print is not dead” and “our customers are loyal” beliefs right up until the day of the liquidation auction of the company’s assets.

Consultants who work with many companies can sense which ones want to change and which don’t. We know which ones we can help, and which ones just want to argue with us (as the lifeboats are being lowered), and tell us we are wrong, and that we don’t understand their business. If you take away anything from last week’s seminar, I hope it is a foreboding sense that you must change. The exact route of that change has yet to be plotted, but start making the change.

What Have You Done With Bill?

About a month ago, I emailed Amy, asking a simple question.  “I want to make the seminar memorable. I want people to come back next year, but I don’t want to do anything corny. Do you have any ideas? I was thinking that maybe the three speakers could all wear matching sweatshirts”. Amy knows me pretty well. We have been friendly antagonists for 25+ years. She knows I’m pretty conservative. She remembers how I rolled my eyes one year when she had Don Libey introduced at the VT/NH Marking Group’s conference by a marching trombone player.   So her response to my matching sweatshirt idea was classic: “Who are you, and what have you done with Bill?”

Amy's-Co-op-T-Shirt

At the start of her session, Amy presented me with the t-shirt above (which I love!) But in the end, it was the content of our collective presentations, the unbiased nature of our message of change, and the ideas for growth that we presented that made the seminar memorable. We’ll see you again next year.

(In case you are wondering where the snow came from in the picture above, we had 3 inches of snow on Saturday night).

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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We Want You To Think About Your Future

Oh, what a difference a year makes.  Last year, the week of Datamann’s seminar for the VT/NH Marketing Group, the temperature went down below 0°F several times, we received almost two feet of snow, and there were 10 foot (literally) snow drifts in the parking lot of the conference center.   This year, Concord NH (where the state’s official weather is measured) has the lowest snow total ever (at least since 1870) through the end of March, and the temperature on Thursday is supposed to be in the 60s.

Having sold out this coming week’s seminar on Customer Acquisition five full weeks ago has not diminished interest in our event. We probably could have accepted another 100 registrations on top of the 220 we have, but because of venue limitations, we sold out early. That’s why we will be at a bigger conference center next year.

If you are one of the 220 attendees that are trekking to Concord this week, Amy, Kevin and I want you to remember one thing.  We will not be presenting you with a long list of tactical solutions to transform your catalog or website. Instead, this is a day for you to think about your future; think about what you are doing, why it is not leading to growth, and the changes you must make to be in a growth mode.

Amy, Kevin and I are ready to present you with our best take on what you need to do to acquire new customers and survive. Don’t expect us to agree on everything – or even anything. I gave Amy and Kevin no guidelines on what to discuss or what to present other than to focus on customer acquisition. We are not going to gloss over any issues, but will offer you concrete help on how to look for new customers in new ways.

When I begin  work on a presentation, I add a slide to my PowerPoint every time I think of a new idea, or find a catalog or website doing something really well, or doing something really dumb. Over the past few weeks as I have been pruning my 2016 assortment of ideas and slides down to my one hour time slot, I realized I had enough material to cover 3 hours. Over the next few weeks, I will be sharing with you some of the ideas for new customer acquisition that I had to leave out, as well as some of the ones I left in.

Finally, I have already received over a dozen questions from attendees that they want asked during the final Q&A hour on Thursday. If you have a question that you would like Amy, Kevin or me to address, send it to me on Monday or Tuesday, and I will see that it gets added to our list. We will be taking questions from the floor too, but will start with the ones already submitted.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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