October 09, 2007

Goin' Green

I'm aware of a few companies that are suggesting they will dump the majority of their catalog marketing efforts. By doing so, they make the play that they are 'going green', protecting the environment. They're also frightened by future postage increases.

Unless your livelihood depends upon printed catalogs, this sounds like a great idea, especially when packaged with e-mail and online marketing "gift wrap". In other words, we'll use e-mail and online marketing to "make up the difference". We protect the environment (a wonderful PR message), we market digitally. Woo-hoo!

There will be a day when, if you're a multichannel cataloger, your CFO will ask you to evaluate whether paper should be a part of your marketing mix.

Having survived the implosion of a catalog program at Nordstrom, I'm aware of what happens to total sales (and total profit, even more interesting) when paper is pulled from the mail stream.

So when that day comes, you'll want to have answers to these questions (and if you don't have answers, challenge your online and e-mail marketing partners to have the answers).

Question: One of the best aspects of catalog marketing is that you entirely control customer acquisition activities. You ask your compiled list or list rental vendor for "x" names that have never purchased from your brand before, and a one percent response rate later, you have new customers. How will you actively target customers who have never purchased from you if all you have is e-mail marketing, search marketing, portal marketing, shopping comparison marketing, and social media?

Question: Based on your test/control analyses, how much volume do you lose when you dump a $2.00 per book catalog for a $0.20 per delivered e-mail? Based on your test results, do you make up any volume when you don't mail a catalog, coupled with an increase in e-mail frequency? Will your CFO allow you to drive top-line sales into the ground without paper there to support your online channel?

Question: Can you accurately forecast sales at a style or a sku level if you don't have a catalog marketing program? If you can't accurately forecast sales at a style or sku level without a catalog marketing program, what contingency plan do you believe you'll implement to protect fulfillment rates?

Question: When you mail a catalog, do you sell the same items online, in the same proportion, as you do over the telephone? This question is related to the prior question.

Question: What do you do with your call center, and all the folks who take calls today?

Question: What do you do with a fulfillment center that is likely to experience a significant sales drop for a period of "x" months to "y" years? Do you downsize? Do you go to a smaller facility, only to have to ramp-up again later?

Question: What is the career transition plan for employees heavily focused on the catalog side of your business? Do your online marketing folks have the experience necessary to take a beating in the "C-Level Suite", to use the parlance of the day?

Question: How does the curve of diminishing returns look for online marketing? In other words, if your CFO asked you to spend all of your catalog marketing dollars online to recoup all of the sales you lose by going green, can you even spend that much money online, and will you recoup your sales?

Question: Online customers are typically less loyal than telephone shoppers. Without paper available to increase customer retention, what strategies will you implement to keep your customer base loyal?

Question: When you aren't sending catalogs to customers, how much will you have to spend on information technology, in order to make sure your website is competitive with online pureplays?

Question: Being a cataloger, you're intimately familiar with the relationship between creative presentation and selling. How is the relationship different online, and, are you ready to make the necessary changes to drive sales (hint, this question is related to the prior question).

Question: Cataloging is all about telling a compelling story. You merchandise the first twenty pages of the catalog with winners, intoxicating new products, high-volume items, order starters. You use copy to walk a customer through a narrative, page after page. How do you translate this strategy to an online environment, where the customer decides where she wants to go? Who is good at doing this today?

Question: Cataloging allows you to showcase your merchandise over the course of an eighty page story --- maybe 480 styles are presented. Using e-mail, how will you showcase 480 styles to a customer at one time?

Question: What is your plan for customers who are, say, over the age of 70, and like to mail orders to you, customers who don't even have a good broadband internet connection? Do you want to keep these individuals as loyal customers?

Question: What is your social marketing plan? In other words, without a catalog to stimulate conversation, how will you interact with your customers in environments like Facebook, MySpace, Twitter, Blogs, Second Life, and any other to-be-imagined place for people to share thoughts and ideas?

Question: In catalog, inventory managers get "bonus" information, because sold-outs cannot be "pulled out of the mail stream". This provides a significant advantage when forecasting sales next year. How will you compensate for this in an online environment?

Question: How do feel about low prices and free shipping, a couple staples of the online pureplay world? Can you compete? Should you compete?

I could go on and on and on ... I lived this for three years.

What questions would you ask, and would you have the answers necessary to make a transition of this nature?

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