November 07, 2006

Do You Want To Be The Vice President Of Marketing At This Online/Catalog Company?

I spoke with a leader today who is trying to hire a Vice President of Marketing at a large catalog/online business. When discussing the qualifications of the individual, I was told "We have already turned down a great candidate with outstanding online credentials. What we need is somebody who can fix the catalog business, and keep it growing and thriving."

I asked this individual several questions. Among the things I learned:
  • The catalog business continues to decline, and in response, catalog circulation has been cut over the past few years.
  • The online business is growing and thriving.
  • The catalog business must be grown, because it is the "heritage of the company".
The latter comment is telling. Would you take this job, knowing the power of the online channel, shifting consumer behavior, and the desires of the President/CEO?

Having accurate multichannel forensics is the first step in answering the question. The table below shows a hypothetical relationship between catalog and online channels.

Multichannel Forensics Catalog Online

Metrics Metrics



Corporate Repurchase Rate 55% 48%
Catalog Repurchase Rate 40% 5%
Online Repurchase Rate 30% 45%
Total Catalog Buyers per Year 500,000
Total Online Buyers per Year
200,000
New Catalog Buyers per Year 100,000
New Online Buyers per Year
75,000


In this hypothetical example, the catalog channel is "transferring" customers to the online channel. However, the online channel is in "isolation". It receives customers from catalog, but does not send customers back to the catalog channel.

The catalog channel is losing 60% of its customers, meaning it has to replace 300,000 customers to keep the business chugging along. As you can see, the channel is only getting 100,000 new customers. As a result, the catalog is in a death-spiral. You do not want to become the Vice President of Marketing at a company with these dynamics, given that the President/CEO wants to grow the catalog business.

In this example, catalog has a fighting chance:

Multichannel Forensics Catalog Online

Metrics Metrics



Corporate Repurchase Rate 65% 48%
Catalog Repurchase Rate 60% 5%
Online Repurchase Rate 20% 45%
Total Catalog Buyers per Year 500,000
Total Online Buyers per Year
200,000
New Catalog Buyers per Year 250,000
New Online Buyers per Year
75,000


In this case, catalog retains 300,000 of the 500,000 customers it had. It also gets 250,000 new customers to replace those lost. As long as catalog customers can be acquired in a cost-effective manner, there is a chance of being successful as the Vice President of Marketing at this company.

It is very important to understand the multichannel forensics at any company. It is even more important to understand them before you become the Vice President of Marketing.

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