November 02, 2016

New Merchandise, New Customers

You've heard me talk about this topic about a thousand times.

I gave a presentation earlier this year to a catalog audience, hoping to get the attendees to see the importance in having a low-cost customer acquisition program. I bring this up, of course, because so many of my e-commerce non-catalog clients have low-cost customer acquisition programs in place.

But catalogers don't seem to want to move in this direction. Catalogers love renting names from co-ops (better known as a high-cost customer acquisition program). You cannot ask a professional to do something different when doing something different may mean doing less of what somebody loves to do. So I stopped pushing in this direction.

Catalogers have generally agreed with the new merchandise thesis ... no pushback here. The problem, of course, is the catalog. This is the vehicle to promote new items for catalog brands - and the vehicle is TOO DARN EXPENSIVE to promote new items that are not ready to pay the bills.

Can I tell you a secret?

I spoke with an e-commerce Executive last week. This individual told me that he is responsible for executing more than a thousand A/B tests on the website EACH WEEK.

Yes, I said A THOUSAND A/B tests per week.

That's how you find out how new merchandise performs. And there's almost no cost associated with the testing.

E-commerce brands executing a thousand tests per week.

Catalogers planning months in advance to put paper in the mail, no personalization, no testing.

Something needs to change.

Going forward, the catalog must be small, nimble, and only feature winning merchandise. That's where things are headed ... only merchandise that pays the bills gets featured. But the website ... well, that's where catalogers need to be executing a THOUSAND TESTS per week ... testing how customers respond to new merchandise, quickly iterating toward the best presentation strategies for new merchandise.

I work with companies that experiment heavily with personalization via A/B tests ... these companies tell me that their conversion rates are 15% to 50% better than when they go with a sterile/standard presentation to every customer.

Let's review cataloger status on key initiatives.
  • Low-Cost New Customer Acquisition Programs ... catalogers would prefer to work with expensive programs hosted by the co-ops. Tons of money to be had, few folks willing to pick the money up off the ground.
  • New Merchandise Programs ... catalogers agree this is critical.
  • A/B Testing Required To Drive New Merchandise Programs ... catalogers are generally not interested.
  • Personalization That Drives New Merchandise Programs ... catalogers are generally not interested in spite of 15% to 50% conversion rate gains.
  • Catalog Structure ... catalogers want to plan months in advance to offer new merchandise in catalogs, whereas e-commerce brands leverage cheap digital activities to promote new items. This structure is not sustainable.
There's profit lying on the ground, just waiting to be picked up, either through low-cost customer acquisition programs, through new merchandise programs via an assist from the marketing team, or both. Merchandising Teams must do their part, and increasingly, I am seeing progress. Catalog Marketing Teams are generally not doing their part.

But the opportunity exists. How 'bout picking up all the profit that litters the ground? You are more than capable, my friends. You can do this!!!! Now let's get busy.