April 12, 2007

The Catalog Quiz: Should You Market Via Catalogs?

I enjoyed a great discussion with a friend today, regarding my punditry about the demise of catalog marketing.

I am wrong to say that catalog marketing is dying ... as wrong as the punditry I talk about on this site. Catalogs are appropriate if your customers buy from them at rates that yield a positive short and long-term return on investment, preferably an ROI that is increasing over time ... regardless whether they buy over the phone, online, or in stores. End of story.

The issue becomes, "Is catalog marketing appropriate for your customer base?"

Let's take a quiz, and see if catalog marketing is appropriate for your business. Of course, this is largely done to prove a point, it isn't designed as an advertising filter to be used for strategic purposes.

Question #1: How old is your average customer?
*** Age 50 or Older (3 points).
*** Age 40 to 50 (1 point).
*** Age 0 to 40 (0 points).

Question #2: What are the annual sales of your direct division (telephone + online)?
*** $0 to $30,000,000 (3 points).
*** $30,000,000 to $100,000,000 (1 point).
*** $100,000,000 or more (0 points).

Question #3: Where, on average, do your customers live?
*** Upper Midwest, Great Plains, New England (3 points).
*** East Coast, Southeast (1 point).
*** Rockies & West Coast (0 points).

Question #4: What is the average annual income of your average customer?
*** $0 to $55,000 a year (2 points).
*** $55,000 to $100,000 a year (3 points).
*** $100,000 or more per year (0 points).

Question #5: How urbanized is your average customer?
*** Urban Customer (0 points).
*** Suburban Customer (1 point).
*** Rural Customer (3 points).

Question #6: What do you believe is the purpose of your catalog?
*** To sell merchandise today (3 points).
*** To sell merchandise via any channel, telephone, online, retail (1 point).
*** To "represent the brand" (0 points).

Question #7: What is the heritage of your business?
*** Originated as a catalog business (3 points).
*** Originated as a retail business (1 point).
*** Originated as an online pureplay (0 points).

Question #8: Do you believe that catalog marketing is .... ?
*** Art and Science (3 points).
*** Science (1 point).
*** Art (0 points).

Question #9: Are you willing to share your customer base with your competitors? In other words, is it ok for your competitors to rent or exchange customers for mailings with you?
*** Yes, absolutely (3 points).
*** Something about this makes me uncomfortable (1 point).
*** Never. I will never share my customers with my competitors (0 points).

Question #10: Are you willing to hire catalog talent, folks who may require that, in order for the catalog to be most effective at driving sales, that it looks/feels/is-merchandised different than the way the Chief Marketing Officer perceives the brand to look/feel/be-merchandised?
*** Yes, absolutely (3 points).
*** There should be a discussion, and compromises on both sides (1 point).
*** No, the CMO owns the look/feel/merchandising of the brand (0 points).

Add up the points from each question in your quiz. How did you do?

24 to 30 Points: Your business will be well-served by a catalog for years to come.

16 to 23 Points: Your business should continue using catalogs as part of your marketing mix, though productivity of the mailings may not be optimal.

8 to 15 Points: Catalogs may be a vehicle that is used to promote your brand.

0 to 7 Points: You are better served allocating advertising dollars to other advertising channels.

Let's review the quiz.

Question #1: Individuals who enjoy shopping catalogs are frequently in the baby-boomer generation. Of course, this is a generalization. Work with your list processing vendor, do a demographic overlay, and answer this question for yourself.

Question #2: Small business seldom have a vehicle that is as powerful at promoting the business as a selling catalog. Large businesses have name recognition that alone drives traffic to a website or a retail store. Small businesses can thrive by using catalog marketing.

Question #3: Catalog customers frequently live in the Upper Midwest and New England. Graph your sales by zip code, and see what the story tells you.

Question #4: As customers become more and more wealthy, behavior changes. The retail shopping experience, and luxury, frequently begin to overwhelm the habit of causal shopping via catalogs.

Question #5: If your business is direct-to-consumer only (no retail channel), your best customers are likely to be suburban, or rural. Sears and Wards thrived on rural customers a hundred years ago. Multichannel retailers with stores occasionally leverage catalogs to drive store traffic in urban areas.

Question #6: If you want a successful catalog business, you need to close sales today. Branding can be done for a lot less money if catalogs are not part of the mix. If you are going to invest a dollar to put a catalog in someone's home, you need to get $6 of sales in return for your hard work.

Question #7: Heritage makes a big difference. Traditional catalogers, those who have built their business via cataloging for decades, need to continue to leverage this advertising medium. These folks need to be advised that the world is changing --- and at some point, their customers are likely to use other advertising channels to purchase goods.

Question #8: Catalog marketing is both art and science. Those who beautifully balance both have success and longevity. But if you have to choose between art and science, and you care about a good return on investment, pick science. Choose the merchandise and creative execution your customers demand from you. This isn't a place for willy-nilly experimentation.

Question #9: We've all purchased from a catalog company, only to see your mailbox flooded with catalogs from a myriad of companies within twelve weeks. The catalog industry is built on a steady stream of new customers. Those customers come from list rental and exchange relationships with competitors. If you don't want to put your customers through this, then you better have a clever way to acquire new names, or a catalog isn't right for you.

Question #10: In spite of what pundits tell you (same look and feel of all marketing across all marketing channels --- seamless, integrated), making catalogs perform really well may require a different creative and merchandising strategy. Customers who respond to catalogs may not be the same as your core customer (the customer who shops online or in stores). You can choose to market to this unique individual, or you can choose to reduce your productivity in an effort to market the same across all marketing channels.

Ok, your turn, what questions did I fail to ask, and where are my comments/assumptions incorrect? Speak up!!

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