November 08, 2009

Dear Catalog CEOs: Our Multichannel Mess

Dear Catalog CEOs:

Want to have some fun? Go back to 2002, and read this roundtable interview with numerous catalog CEOs, facilitated by Catalog Age magazine.

Remember Catalog Age? A publication dedicated to catalog marketers? Well, they changed. The rebranded themselves as Multichannel Merchant, and when the world changed again, a portion of their empire evolved into The Big Fat Marketing Blog. What comes after that? But they did change with the times.

After reading the article from 2002, I don't find thinking that is significantly different than the thinking that pervades our industry in 2009. We grumble about postage. We say it is getting harder to prospect. We say that online marketers are raising the customer service expectation bar. We say that banner advertising doesn't work.

For many in the catalog industry, the phrase "multichannel" means nothing more than a bunch of channels and tactics that are there to support the continued production of catalogs.

Our industry invented the "matchback", a methodology that allows us to over-inflate catalog importance and deflate the credit we give to all other channels. At a time when all other marketers were increasing their investment in online marketing, we were allocating our investment back to the old stalwart, the catalog.

At a time when all other marketers were figuring out how to optimize landing pages, we were figuring out how to optimize printed pages.

At a time when all other marketers were using java script to dynamically generate online content based on consumer preferences, we were drinking java while dynamically figuring out how many pages had to be sent to cause an online order to happen.

At a time when all other marketers were optimizing their search marketing activities, we were searching for the best co-op to find names to send our marketing activities to.

At a time when all other marketers were learning all of the ways that customers integrated themselves with websites and social media, we integrated our websites with our retail and catalog channels, largely because our vendor partners encouraged us to do so.

We took the road less traveled by. And that has made all of the difference.

Last week, a person commenting on a blog suggested that I don't offer solutions, I just point out the obvious.

I feel like I've offered more solutions on this blog, for free, than any person in the catalog industry. Go back over the past 3-4 years and read the content, then compare it with the content from the vendors in the catalog industry. I'm trying to communicate how we can stay in business. It seems that unless the solution includes mailing a catalog, the industry doesn't perceive the solution as being viable.

Here is a laundry list of tactics, strategies, and potential solutions. Why not give a few of these a try?
  1. Immediately test reduced frequency to best customers, and measure the incremental profit you achieve when reducing contact frequency.
  2. Immediately test reduced pages per contact to all customers, and measure the incremental profit you achieve when reducing pages per contact.
  3. Immediately calculate the "organic percentage", the percentage of demand that you will generate if you stop all catalog marketing. Calculate the profitability of your business sans catalog marketing.
  4. Do not mail any catalogs next July. Instead, take your catalog investment, and allocate it across all online marketing channels. Carefully measure how customer behavior changes next July.
  5. Execute mail and holdout tests in EVERY catalog, across EVERY customer segment. DO THIS NOW! Have your matchback vendor match online orders to the control group --- this quantifies how much damage your matchback vendor has done to your business by over-stating your catalog results. I cannot stress how important this is.
  6. Set up a holdout group for at least six months, if not one year, and do not mail catalogs to this holdout group during this time. Within this audience, test halving your e-mail contact strategy, and test doubling your e-mail contact strategy.
  7. Invest as much time on your online landing pages as you invest in catalog landing pages. Put your online landing pages up on the hallway walls of your office, just like you do with your catalog spreads, and measure the resultant profitability of every single action a customer can take on your landing pages.
  8. In every meeting you have, you must spend equal time talking about catalogs and about your website. Yes, EQUAL TIME!
  9. In every catalog marketing meeting you have, invite your online marketing experts in, and have them critique your catalog marketing activities. You've spent ten years having your catalog marketing experts integrate your website into your catalog business, now try doing the opposite, and see what happens.
  10. Test your catalog creative, to find the style of creative that is most effective at driving customers online.
  11. Test offering only best selling products in catalogs to prospects.
  12. Test offering only new products in catalogs to existing customers.
  13. Immediately change strategy and diversify your marketing activities if 50% or more of your online business is sourced from catalog marketing.
  14. Use Multichannel Forensics to quantify if customers are likely to continue shifting online, or have finished their channel shift.
  15. Optimize your catalog business for rural, 55+ year old customers who shop via the telephone.
  16. Optimize your online business for EVERYBODY else.
  17. Have your team create a marketing plan for a situation where you are not allowed to rent or exchange name and address without prior customer permission. More than anything else, this exercise will prepare you for the future.
  18. Have your team create a marketing plan for a situation where every single catalog cost 50% more than it costs today. This exercise will prepare you for the future.
  19. Develop a five year sales plan by advertising channel, if you don't already have one in place. It is irresponsible to not be prepared for the future.
  20. Visit a non-competitive online e-commerce brand, and facilitate four days of knowledge exchange. On Day 1, the e-commerce brand tells you how they acquire customers. On Day 2, you explain to them how you acquire customers. On Day 3, the e-commerce brand tells you how they optimize online conversion. On Day 4, you tell them how you optimize offline conversion. Tell me you aren't going to learn something from this exercise.
  21. Stop laying off your call center staff, and instead, unleash a fraction of these individuals in the social media ecosystem, sort of like how Zappos does.
  22. Stop treating online customers from online advertising sources like catalog customers. Enjoy making additional profit after employing this strategy.
  23. Spend more time optimizing fulfillment rates, return rates, and distribution center expenses than you spend managing social media.
  24. Ask every one of your contact center and distribution center employees why they would shop from your catalog if they can find a similar product at the same price via an online brand that offers free shipping. Carefully record their responses. Change your strategy, based on their responses.
  25. Spend more time with your search vendor than you spend with your co-op vendor.
  26. Spend more time with your e-mail vendor than you spend with your co-op vendor.

I could go on and on, forever.

Maybe the economy will improve in 2010. Maybe customers will re-embrace catalog marketing. And maybe the old business model will thrive once again.

If those things don't happen, isn't it time to pull ourselves out of the multichannel view of the world that was so popular in 2002? If the multichannel view of the world yielded success, would so many companies be struggling, struggling long before the economy imploded or before postage increased?

As always, I am here to help you!

Thanks,
Kevin