September 22, 2009

Gliebers Dresses: Hyper-Targeting Via Print

Welcome to another Executive Meeting.

Glenn Glieber (Owner): "So I just got off the phone with Chip Cayman, and he extends his sincere and heartfelt apologies to all of us. I don't think he expected us to send anybody to Shop.org, and he sure didn't expect Pepper to record his presentation on her phone, and he really didn't expect Pepper to post it up on YouTube. It will be fun to chat with Pepper when she returns next week."

Meredith Thompson: "Kevin, is that you?"

Kevin: "Yup, it's me."

Roger Morgan (Chief Operations Officer): "Kevin, we have a question for you today. Pepper re-calibrated the catalog marketing strategy for 2010 several months ago. I've read an awful lot of white papers from the printing industry on the concept of variable printing and micro-targeting. We'd like to understand your thoughts."

Lois Gladstone (Chief Financial Officer): "I'm on Roger's side on this one. We need to re-think the concept of catalog marketing, don't we?"

Kevin: "Well, describe your vision?"

Roger Morgan: "These white papers tell us that printers can basically plug and play whatever pages they want to into a catalog. So why wouldn't we do that? Why wouldn't we have two hundred versions of a catalog, each with different page combinations, personalized to customers with personalized landing pages for each customer?"

Meredith Thompson: "Is there a reason you're having this discussion while Pepper is away on a business trip?"

Roger Morgan: "These white papers seem to suggest that there is significant sales and profit upside to executing an industry-leading strategy like this."

Meredith Thompson: "Show me a company that executes a strategy like this and experiences a significant sales and profit upside?"

Roger Morgan: "I'm just saying, this is what industry leaders are talking about."

Meredith Thompson: "How would I forecast inventory at a sku level if I don't know how many customers are getting each page in a catalog? I'll end up with huge soldouts and huge overstock issues, and I won't be able to achieve minimums on certain items, costing us a fortune in gross margin."

Roger Morgan: "I think you're missing the point. We're exploiting the long-tail of inventory management by sending only the pages that the customer wants to see. That has to be more profitable, right? Look at all of the inefficient paper that we'd take out of the mail."

Meredith Thompson: "Can't the customer see only what she wants to see online? Why not make the online experience the personalized experience, and use print to create the desire necessary to create online demand? And again, show me how I'm going to forecast inventory without putting our profitability at risk?"

Roger Morgan: "Think how neat this idea is. You unleash Bow-Tie Guy on this problem, have him develop algorithms that decide which of maybe 300 pages a customer can receive in an 84 page catalog, and then you improve the productivity of the catalog because you are only sending pages that the customer wants to receive."

Meredith Thompson: "How do you know what the pages are that the customer wants to receive? We send new product to the customer all the time, product that didn't previously exist, product that the customer has to be told to like. Do you think you know, in advance, what the customer likes, and can make those decisions? And how do you tell a compelling story across a catalog when customers are all getting different pages? You ruin the ability to tell a good story."

Lois Gladstone (Chief Financial Officer): "Is this technology expensive?"

Roger Morgan: "White papers really don't address cost considerations. And your ability to tell a compelling story online is seriously compromised by customers looking at whatever pages she wants to look at. Anyway, we could easily incorporate clickstream data, we'll just figure it out. I think we have to move to a modern version of CRM. The promise of CRM was to enable personalized, one-to-one conversations, right? Well, we can use technology to do that."

Meredith Thompson: "Why not use e-mail to do that? Or why not have a conversation via social media, where it is an actual, two-way, human conversation? You are confusing the concept of a one-to-one conversation. Does the customer want to have personalized print message pushed to her, or does she want to be so inspired that she goes online and makes her own decisions?"

Kevin: "Clearly, both of you are passionate about this topic. And it is probably best to have this discussion when the Chief Marketing Officer is in the room. That being said, right now, this team is very focused on tactics. Can social media drive sales increases? How do we construct a catalog to generate the most sales? It is easier to think that if somebody simply corrects a poorly executed tactic, then the business will be much more profitable. There's a deeper question at play, here, however. Who is the target audience that Gliebers Dresses is trying to have a relationship with? Is it the 50+ year old female shopper? If so, Roger's strategy might make perfect sense. Is it the 30 - 49 year old female shopper? If so, there's no amount of catalog configuration tricks that can make a difference, because this customer is not inspired by traditional catalog marketing activities. Is it the 15 - 29 year old female shopper? If so, don't even bother sending any catalogs, the conversations are completely misplaced. I think Gliebers Dresses is better served by considering the answers to these questions than to think about how to manufacture demand by using variable print technology."

Glenn Glieber: "Great discussion, folks, it truly is food for thought. And we cannot answer the question by the end of this meeting, so we'll table it for now. Ok, on to other issues that have to be resolved right now. We need to decide which employee will appear on the cover of the January catalog. We'll meet at 4:00pm today to go over the photos and see which employee will grace the cover of the January catalog."

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