December 05, 2016

An Open Letter To My Catalog Friends

Dear Catalog Friends:

You read what Bill wrote on Sunday - click here if you didn't. That's not me saying it, that's somebody you know and trust.

Do you remember what I wrote about, close to a year ago? If not, click here. In fact, for the past decade, I've literally been begging you to diversify your customer acquisition portfolio. Last year, I gave this presentation with more than a hundred customer acquisition ideas - the presentation was viewed more than 18,000 times (click here). After the presentation, many catalogers told me that the ideas "would not work" for them - because in part catalogers are "unique" and "special".

So if having a Unique Point of View coupled with a Low Cost Customer Acquisition Program won't work for you ... and the co-ops are no longer working for you ... well ... you've got a problem, don't you?

Catalog Holding Companies (Potpourri Group / Colony Brands / Plow & Hearth / Bluestem Brands / Universal Screen Arts / Many, Many Others) have a minor advantage - they can prospect off of sister file lists. You're going to see a lot more of this, going forward. Why pay somebody $0.06 a name a dozen times a year when a comparable name is available on a sister file list?

Their strategy solves a short-term problem while weakening the non-Catalog-Holding-Company position. But again, this is a short-term solution.

Do you remember 2000 - 2005? As failed "multi-channel" initiatives dominated, a story slowly gained momentum, a story not covered by anybody. List brands - the folks you'd pay to help you horse trade names with competing brands - were being decimated by the co-ops. All of a sudden, you looked up, and Millard & Mokrynski and others were gone ... just like that. Ironically, that was it for cataloger health (as an industry). The brains all walked out the door, and algorithms rapidly aged cataloger customer files, which in turn rapidly aged cataloger merchandise offerings, which in turn alienated online conversion among customers < age 50.

That was the transition from lists to algorithms (co-ops). It began in the early 90s, and it took just shy of fifteen years for the revolution to occur.

The same transition is happening today, and it is happening in plain sight but few see it. We are transitioning from algorithms (co-ops) to artificial intelligence (Google + Facebook + Amazon). Google and Facebook have been around for shy of fifteen years (Amazon longer), and the revolution has happened.

AI (artificial intelligence) is smarter than the algorithms the co-ops use. AI technology gobbled up data on all individuals, just like the co-ops had all households in their algorithm. Co-ops accept transactions from brands on an as-needed basis. Google and Facebook infer interest in real-time.

When we transitioned from lists to algorithms, many catalogers suffered ... many were slow to respond to the kind of customers offered by the co-ops ... those brands were gobbled up by Catalog Holding Companies.

Now we are transitioning from algorithms to artificial intelligence.

I've been begging you to craft a Unique Point of View coupled with a Low Cost Customer Acquisition Program. Think Duluth Trading Company (and I get it, you hate thinking about them, you hate their "humor", and they're not located in New England so they "don't count"). Why do you think I'm begging you to craft a Unique Point of View coupled with a Low Cost Customer Acquisition Program?
  • A Unique Point of View allows you to use Artificial Intelligence to your advantage. Google + Social work in your favor, rather than you paying AI to get access to customers who have no interest in your merchandise assortment.
I've worked with more than 200 brands since founding MineThatData nearly a decade ago. I get to see what works and what doesn't work. This is the reason I'm begging you to craft a Unique Point of View coupled with a Low Cost Customer Acquisition Program.

A cataloger cannot win the transition from algorithms to artificial intelligence without a Unique Point of View coupled with a Low Cost Customer Acquisition Program. Within the confines of a Catalog Holding Company, the cataloger can stave off the transition for awhile. Please don't be caught off guard by the transition from algorithms to artificial intelligence - like so many catalogers were caught off guard by the transition from lists to algorithms.

P.S.: Some of you are going to tell me that Google + Social + Mobile + Amazon "don't work" or "don't scale", and you will be right. That's how you will know that you are not prepared to deal with the shift from algorithms to artificial intelligence. That's how you will know that you need a Unique Point of View coupled with a Low Cost Customer Acquisition Program.

P.P.S:  To my catalog friends - I believe in you. You have every tool at your disposal to move your business forward. Some of you have successfully managed 40+ years of change. This is just another step in a long evolutionary process.

P.P.P.S:  Agree or disagree? Send me your thoughts (kevinh@minethatdata.com) and I will publish your comments later this week.