March 23, 2009

Modern Catalog Marketing: Customer Acquisition

The most important topic in catalog marketing these days is the death of catalog customer acquisition.

For so many folks, catalog customer acquisition productivity (after matchback) declined by an average of 5% to 10% a year, every year, since 2003. Couple that with the dire increases in the cost to mail a catalog (back in 2007), and a huge drop in Fall 2008, and you have a recipe for a death spiral.

Catalog customer acquisition has held up when 55+, exurban/rural customers who like shopping via the telephone are targeted. Unfortunately, this audience is in decline, and will not be replaced by younger customers who crave catalog marketing.

Modern catalog marketers will be required to diversify.

The modern catalog customer acquisition department hosts individuals who specialize in different disciplines. These can be folks hired internally, or may represent folks that work in the vendor community.
  • Traditional catalog customer acquisition managers, the folks who work with Millard or Merit Direct or Abacus.
  • Digital customer acquisition managers, the "Web 1.0" staffers who focus on SEO / SEM / Affiliates / Display Ads / Shopping Comparison Sites, all the stuff we've grown to know and love.
  • Offline customer acquisition managers. The most successful catalog businesses I've worked with have offline programs that do not include catalog marketing. These businesses acquire customers via innovative offline programs --- the customers often have marginal long-term value, but the customers do offset the declines in catalog customer acquisition.
  • Social media managers. I would find your most passionate half-dozen or dozen customer service representatives --- usually found in your call center, and I would unleash them on the social media world --- blogs, Twitter, Facebook, you name it --- have them solve problems and interact with customers and prospects.
The catalog companies that have the most robust customer acquisition programs tend to execute two or maybe three of these four areas really well. Average catalogers execute catalog customer acquisition well.

I would create a report or dashboard, whatever you want to call it, that tallies the customers acquired via each of these four key areas --- drawing comparisons vs. last month, ytd vs. ly ytd, rolling twelve month periods, etc.

The important part of this whole process is diversification. We're going to have to accept a world where we willingly acquire ten customers with $5 LTV, as opposed to prior strategies of focusing on acquiring one customer with $50 LTV.

And you folks in the Web Analytics community --- we need your help. The future of customer acquisition requires measurement of a series of activities, all linked together, resulting in an outcome. We'll need to know that a prospect visited the site five times before purchasing --- a process today that is largely measured as a series of failures, but is truly a success.