January 18, 2009

The End Of An Era In Catalog Marketing

It is nice not to be the only person out there (thanks Mr. Rimm-Kaufman) willing to publicly state the obvious ... that catalog customer acquisition is nearing the end of an era.

Even the best conferences aren't covering this important topic. The Spring 2009 NEMOA Conference. features a talk from REI guru Mike Bowcut on "Why Catalogs Still Belong In The Toolbox". Certainly, you'll learn something valuable from this talk. Mike is brilliant, his discussion won't lead you astray.

Our industry also has an opportunity to allocate time to talk about one of the two biggest issues our industry ever faced:
  1. Catalog Customer Acquisition is dying.
  2. Catalog brands with strong retail channels have loyal multichannel buyers who no longer generate any incremental volume when a plethora of catalogs are mailed to them --- the "organic demand" concept we observed at Nordstrom back in the first half of this decade.
Combined, these two trends represent the giant red blinking lights we see as we approach a railroad crossing. We are being given unmistakable warning signs that change is coming. Why won't our best and brightest talk publicly about these issues?

Analyze your data from fourth quarter, for the past ten years. Take a look at customer acquisition productivity, using your matchback analytics, combining data across all channels. You're going to see productivity declines of between twenty and seventy percent over the past ten years. Heck, when Google generates 32 billion searches a month compared with 2 billion searches a month just four years ago (and zero more than a decade ago), we know the world is changing ... dramatically changing!

Why aren't we asking strategic questions?
  1. If catalog customer acquisition is dying, and the majority of our new customers come from catalog customer acquisition, how will we acquire new customers in five years?
  2. If the soul of our organization is built around catalog marketing, what does this mean for the soul of our organization?
  3. What kind of talent do we need to meet the future marketing needs of our business?
  4. How are online pureplays acquiring new customers --- how does Zappos do it? How does Amazon do it? How does the $10 million dollar online business down the street do it? What can we learn from others? When can we schedule a field trip to visit the online pureplay?
  5. If we have a retail channel, and customers are not spending incremental revenue in spite of catalog marketing, why do we have a catalog marketing channel?
  6. If rural customers still require catalog marketing, but urban/suburban catalogs no longer need catalog marketing, how do we configure a contact strategy that meets the needs of a significantly smaller universe of shoppers? And how does this new catalog contact strategy impact merchandising, creative, and inventory staffers?
  7. What is the future of the co-op brand, brands that ran list rental organizations out of business on the basis of cheap, targeted customer acquisition names? These brands will undoubtedly provide significant future value to your business, right? But how? Are we working with them to map out our future?
Since a portion of our country is embracing "change", it might be helpful for all of us in the multichannel retailing industry to embrace change as well.