March 27, 2007

Credit For Channel Growth

You worked your tail off to acquire a customer via catalog advertising, in the telephone channel, back in 2002.

Today, your job as it existed back in 2002 no longer exists. You do the work of two or three catalog folks from 2002. Your former catalog positions are now leadership-level positions in the online marketing department.

Remember the customer you acquired, via catalog, in 2002? This customer now purchases merchandise exclusively via the online channel. She may or may not purchase online because of the catalogs she receives. But she certainly clicks on paid search via Google.

Last week, an individual told me "I deserve credit for acquiring this customer. The website folks get all the credit for customers I worked so hard to acquire."


One of the challenges of multichannel marketing involves rewarding individuals for exemplary performance.

If there's one thing I observed last week, in speaking with folks, it is that employees really want to do what is right for the customer. If the customer wants to purchase merchandise via any channel, at any time, and have merchandise/pricing transparency in any channel, employees want to provide this for the customer.

And yet, within companies, there is tension. Finance folks want to see sales reporting based on the channel that records the sale. As long as this happens, employees that work in growing channels will be rewarded. Conversely, employees that work in shrinking channels are not as likely to be rewarded.

It will be really interesting to see what happens when the online channel stops growing at twenty-five percent per year. When this channel grows at five percent a year, and Google fails to drive significant increases, a generation of online marketers raised in an era of constant growth will be challenged like never before, will feel pressure like never before. Many of these folks will have never experienced a true, non-bubble-based downturn. What will they fall back on for experience, when the sales increases stop happening?


Multichannel CEOs and CMOs: This is a very good time to start thinking about how you would dramatically grow the online channel, if asked to. Online executives benefited from the transfer of catalog and retail customers to the online channel. Here's a great drill --- run a simulation. Have your folks tell you what it would take to grow online sales by an additional twenty-five percent TOMORROW. How much would you have to spend? How profitable would it be? Could you do it via online marketing, or would you need paper/catalogs to help you? And if you needed paper/catalogs, who would you give credit for the online sales to?

4 comments:

  1. Hey Kevin - I agree this exercise would be worthwhile. One of your options - "would you need paper/catalogs to help" - intrigued me.

    In your experience, has the catalog been an effective tool in driving web sales? We've found that the catalog is rather effective in driving incremental phone sales, but not web sales($0). As web grows and phone shrinks, this is obviously a concern. It appears that the catalog is better at driving incremental retail dollars than web, a surprising result from my perspective.

    In your experience, have you found that web customers are so different? Have you seen organizations shift away from a web order matchback process in such situations?

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  2. I think different types of companies are seeing different things, when looking at online sales growth.

    Smaller companies, especially those with a catalog heritage, find that the online channel is fueled by catalogs. In other words, catalogs are the only form of advertising that helps small businesses break through the clutter. The catalog is important to these businesses.

    Bigger companies, especially those with a retail presence, drive web traffic via their "brand name". For these businesses, catalog marketing will play a different role, as it is not a primary driver of web traffic (though every company is different).

    Measurement is also important. Some companies look at the source of the name, and then credit all future web sales to the channel that acquired the customer. This causes companies to attribute a ton of business to the catalog channel.

    Web customers can be different, depending upon how each company merchandises the website. If a company has off-price merchandise online, and not in print, you'll see a different customer online.

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  3. It has been interesting to see the relationship between online and print catalog shopping. As our company (Catalogs.com) has been helping both brand name and niche companies to market via both channels, the vast majority of our catalog merchants find that their online sales are hugely due to the catalogs they mail out. In fact, of those companies that mail out catalogs to prospective customers who requested their catalog, that between 60% to 80% of the customers that order products from the catalog do so via online. That's astounding and really shows a strong relationship between printed catalogs and online sales. If you then add on a consistent email correspondence with these prospects and customers, then you have an even better chance of adding new and continued sales to the equation. I guess what we have truly learned over 10 years in this crazy business is that if you are able to integrate your contact with a prospect using: print catalogs, links to your online store (your site MUST have easy navigation and a simple shopping cart) and a consistent email campaign, you are going to have the most success. The key is "integrating" all of these tools in a well managed approach.

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  4. Hi Richard, thanks for hopping on and leaving a comment. Do that more often!

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