February 09, 2014

Monday Mailbag

As is now our tradition, your questions, real and simulated, are answered every Monday. Email your question to kevinh@minethatdata.com.

Our question comes from Ruth: You are focused on catalogs too much the past two weeks. Why? And honestly, the stuff you are talking about is ten years down the road, we need help now. Why not provide us with free tactics that help us today?
  • There are three reasons I'm trying to focus the majority of my audience on what matters.
  • First, read this press release from Harte Hanks (click here please). Here's the important quote ... "The decline in revenue was primarily driven by a 13.6% decline in our Retail verticals due to clients making mail format changes."
  • Here's the second reason - this article (click here), which outlines that jobs in the print industry have shrunk by one million (yes, one whopping million) in the past seven years. UPDATE - The DMA pulled this article down from their site the morning of 2/10/2014.
  • And the third reason - this article (click here) showing that the number of catalogs mailed is down 40% in the past seven years. Yes, 40%.
Sometimes, we need overwhelming evidence before we bother to think about what is happening. What is happening is that you can mail catalogs - you'll be able to do so for decades at ever decreasing levels of circulation. More important, what is happening is that the catalog business model is ending. These are two very, very different concepts, concepts that folks have a very difficult time grasping simultaneously.

Now, I get it. There are a ton of folks out there, about 55 years old. They made it to the Executive level, and they enjoying pulling down $200,000 or $300,000 per year. They're thinking about how to get to age 62, not how to protect a business long-term. If you are in that camp, then yes, by all means, milk your quarterly results for all they are worth, you aren't an audience that thinks strategically, you aren't thinking about protecting the future for the employees you supervise. Go enjoy a healthy dose of omnichannel strategy.

There's another large faction of readership - the vendor community, consultants, and trade journalist. These folks have good intentions, no doubt. But their loyalties lie with their bottom line, not with your bottom line. Pretend you are Harte Hanks - your print-focused business plummeted by more than 13% last quarter. You look at the numbers, you know that the core of your business (print support) is dying. Strategically, you're going to attack your clients on two fronts. First, you're going to convince your clients that "print is in the mix". You'll convince your clients that catalogs are a vibrant part of an "omnichannel" strategy. You say this, of course, to keep the dollars flowing today, so that you can stay in business. Second, and more importantly, behind the scenes, you're looking for a path to the future. You are using client revenue today to fund your quest to find a path to the future. That path to the future, folks, does not include print. Go ask the co-ops who are linking social/mobile data to catalog purchases, go ask your printer who invests in iPad apps that enable catalog shopping at the swipe of a finger. These are not print-based solutions. Your vendor partners are investing the money you give them today (money earned from print-centric solutions) for future solutions that are not print-centric.

This brings me to you.

You care.

You can see the writing on the wall.

You don't believe in omnichannel nonsense (for if omnichannel worked, omnichannel businesses would be growing by 5% or 10% a year, across the board - and print-based businesses would have crushed Amazon, driving Amazon into bankruptcy). You realize that social is 0.8% of your sales total, and it isn't your fault that the percentage isn't higher. You realize that mobile is the future, that mobile will eat e-commerce, and that your customer is likely too old to embrace mobile. You realize the dilly of a pickle your business is in.

You are the person I am writing for. You might be 26 years old, you might be 62 years old, it doesn't matter.

You get it.

I'm asking you to put your business on a long-term path to success.

I'm asking you to focus on the future.

The future is proprietary merchandise that customers love, sold at a fair price with amazing customer service and a compelling story, yielding healthy gross margins that enable enough profit to pay employees well and allow the business to invest in the future.

Notice what I just said. Notice that channels are not part of that. Our focus on channels takes us away from focusing on the paragraph above. I speak with marketers who can't even identify the best selling items. Come on!!

It's going to get harder and harder to listen to your vendor partners. They have to promote an omnichannel message that includes print, because it guarantees their short-term success. You will slowly remove contacts from your strategy, you will slowly cut circulation depth, and you will slowly reduce page counts. All of this goes against the messages you will hear from your vendor partners.

I'm on your side. I'm "pro you".

If I wasn't on your side, I wouldn't sell the very methodology that allows me to make a living for just $29 (click here - Hillstrom's Contact Strategy). I'm literally giving away my way of making a living. Do your vendor partners do that?

If I wasn't on your side, I wouldn't sell the very methodology that allows me to identify why a business is struggling (click here - Hillstrom's Merchandise Forensics). Do your vendors give away all their secrets for $11.95, or do they keep finding ways to force you to mail expensive catalogs?

This is the end of my two-week catalog rant. I hope you give some thought to the future of your business. The catalog business model is coming to an end, even though you'll be able to mail catalogs (at ever-decreasing levels of circulation) for another one or two decades. The sooner we accept our reality, the sooner we get down to the basics of building a sustainable, healthy business for the long term.