August 25, 2009

Gliebers Dresses: CMO Candidate #3

We're about to sit in on the final Executive Meeting group interview. Today, the interview candidate is Stan Klepsky, who was previously the Executive Vice President of Marketing for the Bentley catalog.

Glenn Glieber (Owner): "... and Candi, you can tell Anderson Cooper that we are NOT using Twitter and the Save Gertie campaign to artificially drive up our follower numbers to compete with CNN."

Meredith Thompson (Chief Merchandising Officer): "Kevin, is that you?"

Kevin: "Yup, it's me."

Candi Layton (HR and Chief Customer Officer): "We continue our fine tradition of group interviews at Gliebers Dresses with the final CMO interview, featuring Stan Klepsky, the former EVP of Marketing for the Bentley Jewelry catalog."

Stan Klepsky: "Thanks for having me today, everybody, I REALLY appreciate it. I requested a catalog of yours a couple of weeks ago, and spent considerable time thumbing through it over the last week. What a beautiful piece of creative imagery! You don't go too far, you know? Sometimes these fashion people reduce density and show one image per page and somehow expect the catalog to sell stuff. This catalog is a perfect blend of merchandising and creative. You have these wonderful callouts, too. Here, look at page 49, you illustrate eight lovely dinner dresses, and then direct the customer to the web for your extended assortment. Beautiful! I imagine that works really well, and drives considerable online volume. Your web analytics team must salivate when they think of the 20% conversion rates they get from that kind of qualified traffic. And you've even kept the order form in the catalog. That's a great, low-cost way to not alienate your older customer. All of the details of cataloging are in place. You call out your new loyalty program via a dot whack on the cover, hey, how's that going, huh? Buy four dresses, get free shipping for the rest of the year, that's an amazing value! I think this catalog is easy to shop, I mean, look at the copy in this thing. The copy creates a sense of warmth, yet, there's a personality to the copy that makes the catalog human. You know how all of those e-commerce websites are so cold, so sterile, same layout and same fonts and same colors and same links and same guarantee of secure shopping, all optimized for performance in the exact same way using the same web analytics software and same industry consultants. I can just picture the woman, I imagine her name is Nancy, sitting on the couch, 9:35pm at night, glass of wine in her hand and a Jim Brickman CD playing in her Bose Wave Radio, thumbing through this classic marketing vehicle. Oh, I tell you, this thing ..."

Meredith Thomspon: "YES! That's what I'm talking' about! We need to think about the target customer, and market to that target customer the way she wants to be marketed to."

Lois Gladstone (Chief Financial Officer): "Let me ask you a question. We're not made of gold bullion around here. How would you minimize catalog expenses yet drive sales increases in all channels?"

Stan Klepsky: "Oh that's an easy one, friends ... REMAILS! You take this beautiful catalog sitting here in front of us, and you just swap out the cover and back page with new images, change the item numbers for tracking purposes, and then mail the same catalog to the same customer. In fact, do this three or four times with the same catalog. You save a ton of money on catalog expense, and you only experience a dropoff in performance of maybe 20% or 25% per remail. I'm sure you're already maximizing your remail strategy, but if you aren't, that's the place where I'd start. And those remails drive web volume, too. Heck, I'm sure you're just like every other catalog brand, generating 70% or 80% of your online volume from the catalog. All of those online pundits, talking about PPC, they don't know their PPC from an SCF, do they? It's the paper catalog that makes the online thing go, folks! Ask an online marketer to drive business without paper, and they'll just stare at you, wondering how they will ever get traffic that converts at a 12% rate."

Pepper Morgan (Interim Chief Marketing Officer): "What do you think of a different strategy, one where you alternate large page counts with small page counts --- mailing the small page counts to a deep audience?"

Stan Klepsky: "Geez Pepper, that sounds risky. I like the tried and true remail formula. It's been used for decades. It's an established best practice. I'd have to see a few years of performance on the strategy, and I'd have to see a half-dozen companies utilize that strategy effectively before I'd climb on board that train. You know, I don't think anybody at ResponseShop has told me that anybody is employing that kind of strategy. I'd want to see the folks at ResponseShop issue a white paper, telling us that the strategy is a newly established best practice before I'd sign up for it, you know what I mean? Cataloging is not a place for reckless experimentation, Pepper. There's a reason cataloging is a one-hundred year craft and e-commerce is a decade-long experiement."

Meredith Thompson: "A lot of folks are telling us we cannot grow a catalog business in the modern world of e-commerce. Can we grow the catalog portion of our business?"

Stan Klepsky: "Geez Meredith, who's been painting that kind of graffiti on your wall? Cataloging is a simple business model, really. It's all about segmentation. See, you segment your customers by recency, you know, 0-6 month, 7-12 month, 13-18 month, you get the picture. Then you segment by frequency, you know, one time buyers, and those multi-buyers. Now that you've got your segmentation strategy, you surgically determine a promotional strategy. Your current customers, those 0-6 month folks, they get a free shipping offer, well, wait, you already have that loyalty program, so why not just promote the loyalty program, right? And then you've got those 37-42 month buyers, well, you simply stimulate them with a compelling offer, like 20% off your next order of $50 or more, and you make sure you put that $50 hurdle in there to protect your profit and loss statement, right? You run a whole bunch of tests at different hurdle levels, too, trying to find the optimal hurdle level. I'd be happy to run the profit and loss scenarios for you, And then you've got outside lists. Aren't those folks at ResponseShop something else? You just get on the phone with your account rep, I personally like working with Eldon Mayer, and you just say something like 'I need 6,375,000 names for our next catalog', and they apply that harmony model and then you plop those names in the merge and coordinate with your printer to maybe put a personalized inkjet message on the back cover, because customers really like that personalization stuff ... heck, maybe you even inkjet a personalized URL on the back cover, and then use your web analytics tool to track the performance of the inkjet messaging, that should make those Web Analytics folks just salivate, right?. Anyway, ResponseShop can integrate all of that for you along with their own measurement system that matches back online purchases to the catalog that drove the online purchase, you just tell Eldon Mayer how you want the analysis to look and I tell you what, it's as if he can make the analysis look the way you want it to look! And my goodness, at last year's catalog conference, ResponseShop had the best party of the whole lot, I mean, did you get a load of the prawn pyramid they wheeled out at 9:00pm? And how the heck did they get Christopher Cross to perform at the party? Wow, he really brought down the house with that acoustic version of 'Sailing'. So yes, you can grow a catalog business, you just have to follow established best practices. I think too many people have forgotten about best practices, they're just out there winging it, writing manifestos telling us that the world changed, that you cannot do things the way you used to do them. I'm here to tell you that if you follow the rules, you'll follow a prescription for success!"

Roger Morgan (IT and Operations): "Stan, can you explain the climatological conditions that cause Oklahoma to be called 'tornado alley'?"

Stan Klepsky: "That's an odd question, Roger, but thanks for volunteering it. I think it has something to do with the Gulf of Mexico, right? I think the Weather Channel had an episode of 'Storm Stories' about that topic, right? You know, one of those stories about a tornado that blew through Norman, OK, and some school teacher told her kids to get in the basement but little Timmy decided to go outside and then the teacher had to rescue him just as the tornado leveled the school, and just as you're caught up in the human drama of the storm, they cut away to a commercial with that goofy insurance duck riding in a racecar and then they have your local forecast on the 8s and you're wondering why your picnic is going to be ruined by a 40% chance of thundershowers, some containing high winds and hail."

Candi Layton: "You have a real passion for cataloging. Is passion missing from commerce?"

Stan Klepsky: "Oh Candi, it's so true, the passion is gone. There's nothing like the in-home week of a catalog. You get in to work on a Monday morning, and you look at your flash sales reporting on an hourly basis, don't you? You compare sales by hour vs. your plan, and then you see deviations, like sales are up 120% vs. forecast and you ask yourself if the plan is wrong or if the catalog is being delivered too soon by the post office or if the catalog is really going gangbusters, right? And then you dig into the zip code reporting and you realize that the catalog is only generating sales in Louisiana, Alabama, Georgia, and South Carolina, so you get on the horn with your printer and you ask them why the heck they transported the catalogs to the BMCs and SCFs too fast, and your printer says they did everything like you told them to do it, so then this is becoming a big puzzle that you have to solve because maybe this catalog is actually below plan and you just don't know it, so you start studying the merchandise trends and you have to study those trends via telephone sales because the e-commerce sales are clouded with activity like some banner ad on MSN that has a 0.00004% click-through rate and then you realize that it is noon and it is time for lunch, but you skip lunch because now your reports, your 'KPIs' as the kids say, are showing you that you're getting sales from Arizona and California too and the catalog is merely 20% above plan so maybe your forecast is wrong. All of that happens before 1pm on the Monday of an in-home week. It's so much fun! And by Tuesday at 1pm the whole company wants to 'call the catalog', right? Everybody wants to say, based on 36 hours of sales performance, if the catalog is above plan or below plan, heck, you have those inventory hounds all over you about placing reorders or about creating a 48 page clearance catalog that could also potentially be a package insert or even be selectronically bound into an upcoming catalog, so you're problem solving those issues prior to your Tuesday 1pm forecast meeting with the inventory team. And then everybody questions your forecast, and why they do that I don't know, because they couldn't forecast the sunrise if they had a newspaper in front of them that printed the time the sun was going to rise in the morning."

Lois Gladstone: "What is the role of the e-commerce channel for a catalog brand?"

Stan Klepsky: "It's the gold standard of direct-to-consumer shopping these days, isn't it? I just purchased an MP3 player from an online electronics retailer, free shipping and two day delivery, how do you beat that? The whole e-commerce world has just exploded, and it's a darn good thing that there are catalogs and retail stores to fuel the whole thing. I honestly think that without stores or catalogs, e-commerce wouldn't exist. Heck, I purchased my MP3 player from an online pureplay because another electronics cataloger sent me a catalog. The catalog created demand, then I went online and found the best price, cheapest and fastest shipping, and bodda-bing, I've got my MP3 player. The catalog created the demand for a competing online pureplay. Catalogs and Stores are always creating demand. If I weren't speaking to like-minded individuals, and I were interviewing at an online brand, I'd probably ask them one question --- 'after you strip out all of the traffic that your offline competitors drive to your site, after you strip out all of the traffic that is associated with Google, after you stop adoring the 0.000004% click-through rate on MSN, how the heck are you going to get customers and prospects to visit your site?' Wouldn't you ask them that question?"

Kevin: "Stan, I have a question for you. Where you think the catalog industry is heading?"

Stan: "Kevin, good question. Do I look like Carnac? Ha! Remember when websites were created back in the 1990s? We were all intoxicated by Amazon.com, and Pets.com, right? But the whole thing was a big gold rush, and the winners were a small number of online brands and then all of the established brands that simply added e-commerce functionality to their existing business and crushed the online brands. Honestly, most of us didn't fundamentally change how we did business, and we did just fine, didn't we? Our catalogs drove e-commerce sales, allowing us to basically conduct business the way we did back in 1994. Now, all of these social media experts are telling us with their manifestos and tweets that e-commerce and old-school cataloging is dead, that it is all about community and online relationships. And honestly, how do you become a social media expert? Is there a form I have to fill out? There's like 12,000 social media experts, and they seem really good at pointing out everybody else's faults, right? If that's all it takes to be a social media expert, sign me up, I can point out faults, too. Anyway, once again, we're going to be proven right. Time will tell us that, in the case of Gliebers Dresses, we're just selling dresses ... that's all that Gliebers Dresses has ever done, with the catalog at the core of the experience, creating all of the romance while tweets are orbiting the brand like moons orbiting Jupiter, if you know what I mean. There's always going to be a woman, in bed at 9:30pm, nightstand light on, thumbing through her Gliebers Dresses catalog. Sure, she might tweet about a hoodie dress she saw for her daughter, and maybe in the future she's looking at her catalog on the Kindle. Sure, she might click through an e-mail campaign and buy online. But the core experience begins with the woman in her bed at 9:30pm thumbing through a catalog."

Kevin: "Stan, have you personally experimented with Social Media, and if so, what role does social media play at a modern catalog brand?"

Stan: "Social Media, schmoshial media. What a pile of dog doo. I started my own Twitter account a few months ago. I put absolute nuggets of gold out there, too, not the standard pap that the social media consultants throw out there. Have you read some of this stuff? You'll read that "brands need to communciate with an authentic voice", or "unless you join the conversation, you're destined for the scrap heap." How do you have an authentic voice 140 characters at a time? I put good stuff out there, real facts, stuff like "personalized ink jet messages increase response rates by an average of 1.2%." or "work with ResponseShop to identify highly responsive multi-buyers.", or "selectronically bind four pages of winners in the middle of your saddle-stitched catalog to improve profitability", you know, the kind of stuff that actually makes companies money. Nobody followed. Nobody. And yet, you go read the pap that those social media folks write, and they've got 27,483 followers, apparently all of them are craving to have authentic conversations with brands. Nobody has a conversation with a brand. Brands sell you stuff, you buy stuff, that's all there is to it. When have you ever had a real relationship with a brand? Who'd want one? Would you rather have dinner with your friend, Perry, or would you rather have dinner with a brand? That's why I love cataloging. I keep going back to the woman sipping from a glass of Syrah in her pajamas, thumbing through the pages of a well-done catalog selling vehicle, with George Winston playing on her Bose Wave Radio. Would you rather have your brand represent that image, or would you rather have your brand have an authentic voice that gets re-tweeted, 140 characters at a time, to 27,483 followers?"

Glenn Glieber: "Well, we're basically out of time. Stan, thanks for being so generous with your thoughts. On to the next topic, Pepper, I'm feeling a bit uncomfortable with the May 2010 catalog, I really think we need more pages. Could you work up a scenario for the May catalog, seeing what kind of sales increase we get if we go from 108 pages to 116 pages? Thanks!"

Stan: "Ohhh, I can do that. I like to add in demand at half the rate of pages added. So if your catalog was scheduled to generate $3,000,000 in demand, and you go from 108 to 116 pages, I'd estimate a 3.5% increase in demand based on a 7% increase in pages. Just add in $110,000 of demand, and see what the profit and loss statement looks like."

Glenn Glieber: "Pepper, why can't you calculate that information on the fly like Stan just did?"

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