February 13, 2008

The Multichannel Customer Merch Curse

It is always interesting to hear different catalogers tell me different things.
  • "If we didn't mail a catalog, our online business would not exist".
  • "Our catalogs don't drive a lot of sales to our online channel".
Similar brands sometimes say contradictory things.

Here's a query that your business intelligence team should run for you.
  • Identify anybody who purchased during 2007.
  • Group them into telephone-only, phone + website, and website-only customers based on 2007 activity (if you're a retail multichannel brand, use retail-only, retail + website, website-only).
  • For each of your three segments, calculate the percentage of 2007 sales spent on classic products (those introduced to the customer a long time ago), and the percentage spent on new products (those introduced to the customer recently --- you decide on the timeframes based on your product cycles).
Sometimes you'll see this:
  • Phone-Only = 63% spent on classic product.
  • Phone + Website = 45% spent on classic product.
  • Website-Only = 43% spent on classic product.
When this happens, it is very possible that your catalog is not effective at driving sales online.

Sometimes you'll see this:
  • Phone-Only = 63% spent on classic product.
  • Phone + Website = 53% spent on classic product.
  • Website-Only = 43% spent on classic product.
When this happens, you catalog drives customers online, but the customer finds something else to purchase.

Then you might find this relationship:
  • Phone-Only = 63% spent on classic product.
  • Phone + Website = 61% spent on classic product.
  • Website-Only = 43% spent on classic product.
In this situation, you'll probably find that your catalog drives a ton of volume online.

The reason your business intelligence team runs this query for you is to better understand how to merchandise your catalog. If multichannel customers buy product that is somewhat different than what is offered in your catalog, you will want to test different creative strategies in your catalog, from repaginating the merchandise to creating an entirely different catalog for multichannel customers.

Your turn ... what have you observed when running this type of query, and how did you change your marketing practices as a result of learning this information?