March 22, 2009

Modern Catalog Marketing

Over the course of the next week, we're going to look at what I call "Modern Catalog Marketing".

Last week, I offended the social media community. This week, my loyal catalog readers might not agree with everything (or anything) I have to say. There are so many of us in the catalog industry who strongly believe that the economy will improve, and customers will revert back to a love of shopping via printed images.

There are other voices that are worth listening to, traditional voices like Jim Gilbert. And too few of us are supporting the efforts of the American Catalog Mailers Association. We work in a fascinating industry, one where we willingly step all over the rights of our most loyal customers, willingly sharing their name/address with co-ops so that competitors can offer our best customers their merchandise, but we won't share $5,000 to help this organization mitigate future USPS cost increases. We sure like it, however, when they succeed and we save money.

I am going to take a different approach than most folks. The traditional catalog folks will work hard to help you maximize your traditional catalog efforts, and that's all good and is needed. I am going to present you with one man's version of "the future", and how we'll navigate our way to this version of the future.

Here's my central thesis:
  • Long-term, the USPS is going to offer us less service at a greater cost.
  • Long-term, younger customers in urban/suburban areas will continue to abandon catalog marketing in favor of "shiny new technologies".
  • These two trends will make it prohibitively expensive to acquire new customers via catalog marketing. In many ways, we're almost there.
  • The death of catalog customer acquisition will not be fatal to catalogers. The death of catalog customer acquisition will be very damaging, however, to the catalog vendor community.
  • Housefile direct marketing, as we know it, is evolving. The customer of the future will demand to be contacted on her terms. She will dictate catalog and e-mail marketing frequency. And we'll be fine with that, we'll evolve and change.
  • Traditional catalog marketing, as we've always known it, is trending toward a 55+ aged exurban/rural customer that prefers romance over technology.
  • Housefile direct marketers will expend tremendous energy segmenting customers after a first purchase into a "traditional" path, a "digital" path, or a "social" path. Traditional customers will be marketed to in a traditional sense. Digital customers are the classic "Web 1.0" customer (e-mail, search, display adds, affiliates, shopping comparison sites). Social customers are the emerging "Web 2.0" customer, becoming less and less responsive to marketing. This segmentation strategy will be essential to minimizing expense.
  • Given these trends, every cataloger will be forced to answer a question: Are we in business because we love selling merchandise, or are we in business because we love producing catalogs? It is my belief that those who will survive love selling merchandise. It is my belief that most catalogers love producing catalogs.
  • The businesses that are well-positioned for the future are those that diversify sources of new customers and simulate the long-term impact of all 1-5 year decisions.
This week, we'll explore these topics. Your thoughts are welcome, in fact, they're needed.

3 comments:

  1. You know Kevin, characterizing me as a "traditional" cataloger is defamation of character!

    Seriously, even an old school mind like mine has to agree with your theories about the future of cataloging. I agree 100%. Especially your question "Are we in business because we love selling merchandise, or are we in business because we love producing catalogs?"

    Lots of folks love the design and creative process. Many don't follow the 40/40/20 rule and concentrate their time on lists and merchandise (the 40% and 40%) and spend too much time on their beautifully branded, cocktail masterpiece catalog, which should only get 20% of the effort.

    In the future, we'll get down to much more 1:1 granularity and personalization. We're behind the rest of the DM industry on that!

    Well, thanks for calling me out in your column and linking to my blog.

    Regards,
    Jim Gilbert
    jimdirect@aol.com
    http://gilbertdirectmarketing.wordpress.com/

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  2. Good post. I would argue that in most industries catalog prospecting for new customers is already dead. That doesn't mean all companies have realized this, but the costs are obscene.

    Most companies still doing it are using a matchback technique that essentially co-opts web and retail dollars to justify the catalog (or organic dollars per your argument). Catalogs essentially become (where needed) a more expensive version of email that only works for a certain customer (just like email, but a different customer).

    This is the first time I've heard your point: "Are we in business because we love selling merchandise, or are we in business because we love producing catalogs?" This is dead-on. And this is the problem that many, many companies are facing.

    My two cents,
    Jay

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  3. I wouldn't link to your stuff, Mr. Gilbert, unless you offered good advice with a very kind and helpful tone. Well done!

    Jay --- thanks for your two cents, feel free to toss in a dollar from time to time!

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