Fetzer's Footwear: Fed Up

Today, I am meeting Lauren Fetzer, CEO of Fetzer's Footwear, for a picnic at Bacteria Bay, located on the west side of Madrona Island.

Bacteria Bay is named after a mysterious illness befell the early settlers of Madrona Island, causing them to scratch uncontrollably and, in many cases, to run into the bay in a desperate attempt to alleviate their misery.

Kevin: "What are you listening to?"

Lauren: "But It's Alright by Huey Lewis, now that's a classic."

Kevin: "Alright."

Lauren: "You work with a lot of companies, don't you?"

Kevin: "True."

Lauren: "So let me ask you a question. Do the Executives at other companies always do what the CEO tells them to do?"

Kevin: "That's a loaded question. I think most Executives execute the spirit of what the CEO asks them to do."

Lauren: "I want for my team to execute exactly what I ask them to do."

Kevin: "Sort of like the robotics in your distribution center, right?"

Lauren: "In some ways. They're really loyal ... lifeless, but loyal. These folks, I'm asking them to be strategic, and they just keep focusing on tactics and in-fighting. Is it like that at other places?"

Kevin: "Why would you expect Bart Cox to be strategic when you blitz him with a weekly verbal assault because the Alderwood store fails to deliver positive comps?"

Lauren: "It's his job to get that store to perform."

Kevin: "So do you want him to focus on the tactics associated with getting one store to perform, or do you want for him to focus on a five year strategic plan?"

Lauren: "Both, that's the life of the multi-tasker."

Kevin: "But he gets fired if he doesn't get Alderwood to perform this year, right?"

Lauren: "Possibly."

Kevin: "Then that's what he's going to focus on."

Lauren: "And Penny keeps focusing on campaigns. I want to know what our marketing strategy is going to be to compete with Zappos in 2015."

Kevin: "Everybody keeps asking her how the campaigns are working, what would you like for her to do?"

Lauren: "I need a strategic plan from Penny, now. I'm fed up."

Kevin: "Fed up?"

Lauren: "Absolutely. I'm thinking of buying a business. I've been talking with the CEO of Buckley Boots. He's got a five million dollar business that can't get to breakeven, but he's got a social component to his business that is second to none, and he even sends catalogs to his loyal customers. I'm thinking we can fold his business into our business, and then leverage his expertise to develop a marketing plan that takes us to 2015 and beyond. What do you think?"

Kevin: "That's one way to get the job done."

Lauren: "Sure is. Would you be willing to evaluate their customer file so that I can understand the five year potential of their business?"

Kevin: "Absolutely! That's what I do best."

Lauren: "Good! I'll send the data tomorrow, have your review completed by next week."

Kevin: "Alright."

Summer Segmentation: Cyber Monday

If you've followed my blog over the past four and a half years, you know all about my long-standing detest of Cyber Monday, a online retailing event contrived by a leading trade organization to encourage shoppers to take advantage of margin-eroding discounts and promotions that benefit promotion of the trade organization that invented the holiday.

Without evidence to the contrary, I assumed that customers who purchased via discounts and promotions on this contrived holiday would not repurchase in the future.

So, I created a segmentation variable for a client called "Cyber Monday". Any customer purchasing on Cyber Monday received a "1", all other customers received a "0" for Cyber Monday purchasing history.

I plugged this variable into a statistical model ... and after controlling for recency and frequency/monetary-value and a host of other variables ... I learned that past purchases on Cyber Monday were not detrimental to subsequent customer value, no positive or negative influence was detected (the variable had a small, negative coefficient, but it was not statistically significant).

So do some due diligence ... create your own Cyber Monday variable, and see if it has a positive, neutral, or negative influence on the long-term value of customers. Don't read opinions and assume that the opinions are truthful, prove a hypothesis for yourself, for your business!

Summer Segmentation: Bribe Rate

The "bribe rate" is one of the most important metrics you can track.

The "bribe rate", of course, is the percentage of orders during any period of time that include a discount, a promotion, or at least one sale item. The bribe rate is often inversely correlated with brand loyalty.

If you think this metric needs to be on every single performance dashboard, you are right.

If you think this metric makes for a perfect segmentation variable, you are right!

Segment your customer base into high, average, and low bribe rates. It matters!

Dear Catalog CEOs: A Methodology Hint

Dear Catalog CEOs:

Now that folks are terrified of the looming postage rate increase, you're probably going to turn to the Multichannel Forensics methodology to save mailing expense.

Wise decision!

As you already know, I score every customer in your file. Every customer is evaluated on the basis of their spending potential over the next twelve months. It looks something like this:

• Probability of Buying, Next 12 Months = 40%.
• Amount Spent, Next 12 Months, if Customer Purchases = $150.
• 12 Month Value = 0.40 * $150 = $60.00.

Of course, this $60.00 figure isn't important. What is important is how much the customer will spend if you stop mailing catalogs altogether.

The methodology predicts the percentage of demand generated without catalog mailings. This means that customers are evaluated only on their ability to spend money because of catalog marketing. This methodology is different than the matchback analytics that you've all used.

Here are two customers who my methodology considers to be identical in value.

• Customer #1 is worth $100 next year, with 10% coming from catalog marketing, 90% organic. Catalog Value = $100 * 0.10 = $10.00.

• Customer #2 is worth $15 next year, with 66.7% coming form catalog marketing, 33.3% organic. Catalog Value = $15.00 * 0.667 = $10.00.

Odds are that your statistical modeler or database provider demands that you mail customer #1, ranking that customer as being really, REALLY good.

My methodology views the two customers as being equal. Brand loyalty drives Customer #1, catalog marketing drives Customer #2. Both are equally valuable, when viewed via catalog marketing.

As mentioned last week, spots for Fall are starting to fill up, as smart Catalog Executives ask to have their Multichannel Forensics projects completed before the postage increase hits. Contact me now to reserve your project date!

American Eagle Website is Down

Here's a link to the story in the Wall St. Journal.

Here's a big hint. When your website is down for several days, you have a GOLDEN opportunity to analyze the impact of your e-commerce business on your total business.

• Did comp store sales increase, or did they decrease?
• Did customers try to order merchandise over the telephone?
  
• In the seven days after the website was down, did website sales increase vs. plan (i.e. recapturing sales) or did sales stay flat vs. plan (i.e. you lost all sales during the outage)?

If your comp store sales didn't change while the website was down, then what does that say about how your website drives sales to your stores?

These are magical moments for an analytics individual, or for a marketer. When your website is down, you have the most fertile analysis environment you're ever going to have!

Fetzer's Footwear: You Can't Share That!

Once again, I enter Lauren Fetzer's office, as we prepare for her weekly Executive meeting.

Kevin: "What are you listening to?"

Lauren Fetzer (CEO): "'I Got A Man' by Positive K. It doesn't get much better than that, does it? Memories of college.

Kevin: "Alright".

Lauren Fetzer: "Here's what we're dealing with today. Penny Parker has her own Twitter account, and I pretty much let her run with it, I mean, what damage can a Twitter account do with 37,000 followers, of which only 27 really pay attention to anything that Penny says? Well, the rest of my team seems to think that Penny is a few french fries short of a happy meal, they hate what she tells her followers."

Kevin: "Didn't you hire me to help you provide a data-driven roadmap to 2015?"

Lauren Fetzer: "Yup, and we get there by resolving small issues that folks perceive to be big problems. Even Patton had to figure out where latrines should be stationed."

Kevin: "Alright".

We enter the Executive boardroom.

Lauren Fetzer: "Ok team, let's get down to business. Penny, how was business yesterday?"

Penny Parker (VP Marketing): "The website was 8% behind last year, our suite of mobile apps were 200% over plan, so in total, the direct channel was 5% ahead of last year. Retail comps were +4%, with Downtown Seattle leading the way at +11% and Alderwood bringing up the rear at -9%"

Bart Cox (VP Stores): "That's the best Alderwood has done in two months, folks. And Penny, while we're at it, why exactly did you tell everybody on Twitter that Alderwood is running double-digit negative comps. That's proprietary information, you can't share that!"

Ashley Zimmerman (VP Merchandise): "Yeah, and last week you told your followers that our Fall assortment delivery is delayed by a week due to problems at the Port of Tacoma. That's proprietary information, you can't share that!"

Connie Simpson (VP Finance): "Yeah, and what was up with your comment about us taking a bath on Streamline Yukon Hiker gross margins? That's proprietary information, you can't share that!"

Bill Bledsoe (VP Logistics): "Yeah, and you told your followers that you were giving a full refund to @butterbean411 because his shipment took nine days to be delivered. Now everybody who has a late shipment will want a refund, you can't share that!"

Penny Parker: "Kevin, help me out here. You analyze our comp customer segment. Those customer spent $82 last year, year-to-date, what are they spending this year, year-to-date?"

Kevin: "Your comp customer segment is spending $91 this year, year-to-date".

Penny Parker: "Customers are spending more this year than last year, hmmmmmm. Kevin, help me out here. What is the conversion rate for our average customer, and what is the conversion rate for customers who we know have a Twitter account?"

Kevin: "Your conversion rate last week was 8.2%, the conversion rate last week for customers with a Twitter account was 18.4%."

Penny Parker: "Where's the damage to the business, folks?"

Bart Cox: "Those are psuedo-metrics. Comp customer spend might have been $93 this year, year-to-date, had you not been out there blathering about company secrets."

Connie Simpson: "And you can't compare conversion rates between those two audiences, because the Twitter audience self-selects itself --- those are already our better customers. And why is it acceptable to share the fact we're taking a bloodbath on the Streamline Yukon Hiker? That gives our competition an advantage?"

Penny Parker: "What advantage? They browse our website every day, they knew the item was $129 and then was marked down to $99 and was marked down again to $79. Are you telling me that our competition is so stupid that they can't figure out that a 39% price reduction isn't damaging to the gross margin of that item?"

Bart Cox: "Maybe."

Ashley Zimmerman: "You just can't announce that we're having problems with product delivery. Aren't we supposed to be a multi-channel brand? We should do all things across all channels at the same time. We'll tell customers via e-mail and the website and stores on August 15 that the fall assortment is ready. The customer doesn't have to know that we were supposed to have the fall assortment ready on August 8."

Penny Parker: "Remember last February, I told our audience how awesome the spring assortment was, I featured key items in e-mail before they were available, we advertised key items online weeks before they were available. When the assortment was available, we had website comps of +80% for three consecutive days. Nobody complained about that."

Ashley Zimmerman: "Those comps happened because customers loved my merchandise."

Penny Parker: "Those comps happened because I told my customers that they had to love your merchandise."

Ashley Zimmerman: "Those aren't your customers, Penny. Without merchandise, you don't have anything to market."

Penny Parker: "And without my marketing efforts, how would anybody ever know you were even selling merchandise?"

Bill Bledsoe: "Don't we have guidelines for what employees can share with the public?"

Penny Parker: "Of course we do. But what I am doing is different. I'm not tweeting about how great my Crab Benedict was at the Rocky Shore Cafe this morning. And I'm not tweeting that we made $1.7 million of pre-tax profit last quarter. I'm tweeting the Fetzer's Footwear lifestyle. I am giving our customer an insider's view of our company, helping our customer feel a bit closer to us. I don't sell shoes on the same web page that I sell Ad Words on like Target does. I sell Fetzer's Footwear, good, bad, or indifferent. Customers don't trust tweets that are like '... another great meeting, we have the best employees'. Customers follow us because we sell a realistic life experience congruent with their life experience. Heck, we have 37,000 followers on Twitter, Nordstrom only has 31,000 followers, and they sell, what, a billion dollars of shoes each year or more? Come on, something is working here."

Connie Simpson: "Is it working? What is the ROI of your Twitter antics? Why don't you prove to us that you drove a million in sales last quarter because of your comments? Heck, we have a morning dashboard that proves that Bart Cox is failing in his efforts to revive Alderbrook, he gets nailed for that every morning. Who holds you accountable for your comments? Show me the ROI of your Twitter activities."

Bill Bledsoe: "That's a good point, Connie. I get hammered each time our call center and distribution center expenses exceed 10% of sales ... it's a simple, easy-to-understand metric. Kevin, what is the simple, easy-to-understand metric that proves that Social Media is paying the freight?"

Ashley Zimmerman: "That IS a good point, Connie. My merchandise sales are tallied at a divisional level. If a division is failing, I know it first thing every morning. Lauren, you look at me and you ask why sandals were down 4% vs. last year, and I have to explain myself. We are all held to certain levels of accountability. So yes, Kevin, what is the metric that proves that Penny is contributing to the bottom line?"

Kevin: "Don't let anybody tell you that there is a metric that proves that Penny is contributing to the bottom line via Social Media. Social Media is, by definition, not measurable. Oh sure, you can measure followers or click-through rates or coupon redemptions, that's all measurable. Say a customer purchased via a coupon from Twitter. How do you prove that the customer wouldn't have ordered anyway? The majority of Social Media metrics are faux metrics, providing the illusion of accountability. The metrics are not of the family of metrics that the rest of you are measured by, and that's just a reality of life, sorry to say."

Bart Cox: "Then Penny should stop tweeting company secrets, because we can't prove that her comments generate ROI."

Penny Parker: "No, I should tweet more, because my tweets may be responsible for a two or three percent increase in sales."

Lauren Fetzer: "Ok, I've listened to enough of this garbage. Bill, did I ever ask you to prove to me that warehouse robotics would generate a positive return on investment? You know you can't prove that our customer retention rates are better because of robotics. And yet, you lobbied for them and I gave you a ton of capital to get that done, right? How much capital does it cost Penny to tweet her comments to our customers? And Connie, you wanted a new ERP system installed last year. Did I ever once ask you to prove how much more customers would spend because we linked our Human Resources system to our Finance systems? Do you honestly believe that because HR can talk digitally to Finance that a customer in Spokane says 'oh goodness, that's neat, I'll buy an extra pair of shoes because of their neat back-end systems integration process'? Bart, you ordered 275 mannequins last week, did I ask you to prove to me that the ROI on the mannequins would offset the cost? Did you ever think that Penny might view your purchase as being stupid, that your purchase won't possibly sell another pair of shoes? And Ashley, come on girlfriend. If you think our customers cannot live without your merchandise, go work for somebody else, and we'll be able to prove your value in comparison to the merchant we hire to replace you."

Ashley Zimmerman: "Why are you siding with Penny?"

Lauren Fetzer: "I'm not siding with any employee, I am siding with the customer. I always take the side of the customer. If we have 37,000 customers who are riveted with what Penny has to say, she must be doing something right, and I'm willing to take a leap of faith that her low-cost method for engaging with customers is a risk worth taking. Most of you weren't here in 1995 when I told a store-based brand that we had to move online. Bart, you remember those days. You used to mock me, you'd ask if I sold 9 or 10 pair of shoes a day, then you'd laugh and walk down the hall and tell me to enjoy 'fun time'. Now the website is four times as big as our stores are, and you don't mock me anymore, do you? We can all see the future. The future clearly isn't about our website. The future is some fusion of social, mobile, our website, and our stores. And we can't predict what that will look like, can we? So we have no choice but to let Penny experiment. We're not going to legislate her comments by committee. If I think she is out of line, I'll whop her upside the head and get her in line. Otherwise, give Penny room to innovate. We just wasted a perfectly good hour of time, and we are no closer to having a plan for what our business will look like in 2015, are we? Go get bus, go invent the future. This meeting is adjourned."

Ashley Zimmerman (to Connie Simpson): "I think Lauren got up on the wrong side of the bed this morning. Take her out to drop off some crab pots and calm her down!"

A/B Testing Gone Bad

For many of us, testing website strategies is a matter of running simple "A/B" tests.

This process seems easy enough. There are automated algorithms that compute how many conversions are required before one strategy can be labeled as the "winner" against another strategy.

Most of the time, this process is done on the basis of "conversions" ... did a customer buy something, did a customer subscribe to something ... you get the picture.

And most of the time, this strategy yields an outcome that is wrong.

Yup, you heard it here first. Your conversion-based A/B tests, while yielding a statistically significant outcome from a conversion rate standpoint, are yielding an "incorrect" outcome when evaluating what matters ... spend per visitor.

Here's why ... for those of us in e-commerce, we are measuring "conversion", when we should be measuring "dollars per visitor". And "dollars per visitor" is the component of two metrics.

• Conversion Rate.
• Dollars per Conversion.

When you multiply variability (conversion rate) by variability (dollars per conversion), you get ... VARIABILITY! Lots of variability!

Take a look at this example. This is a test, eleven customers in each group (for illustrative purposes only).



The test group clearly outperforms the control group (7/11 conversions vs. 2/11 conversions).

Also notice that the average amount spent per conversion is $100 per conversion, the same across each group.

However, the variability associated with spending amounts (they vary between $30 and $170 per order in both the test group and the control group) causes the t-test to yield a result that is not nearly as statistically significant as when measuring conversion rate alone.

Well guess what? This happens ... all of the time! Every time you run one of those software-based automated conversion rate A/B tests that measures responses until one outcome is statistically significant, you guarantee that measurement based on dollars per visitor is not going to be significant ... in other words, every test you are running gives you a statistically insignificant outcome!!

So do me a favor ... please, I beseech thee ... please run your A/B conversion rate tests against the statistical significance of dollars per visitor, not on the basis of conversion rate.

You will learn that you have to have 2x - 4x as many customers in your test, but your results will be valid. As being executed now, so many of the tests being executed out there are yielding garbage for results ... and this partially explains why a decade of conversion rate optimization has yielded websites that, by and large, convert fewer customers than in the past.

Summer Segmentation: New Items

One of the easiest segmentation strategies you can employ relates to new items.

See, it turns out that you have customers in your database that love buying new merchandise ... these customers hate boring companies, they crave something interesting and exciting.

Conversely, you have customers who love the same-old-same-old. When it comes to e-mail marketing, for instance, these customers want something they can trust. Why not serve them up what they want?

Segment your customer base by merchandise preference ... create a variable that divides customers into those who love new items, those who buy a mix of product, and those who buy tried-and-true favorites. Use the segmentation variable to serve up home pages and landing pages that are congruent with customer interests. Use the segmentation variable to deliver e-mail campaigns that have merchandise aligned with customer interests!

Web Analytics Demystified

Stop over at the Web Analytics Demystified blog, where Eric T. Peterson was kind enough to publish my essay about five opportunities for Web Analytics professionals to expand our "analytical worldview". Thank you, Eric!!

And if you have a need for some Web Analytics consulting, give 'em a holler!

Dear Catalog CEOs: Postage Increase, Again

Dear Catalog CEOs:

Another week, another article about a looming postage increase, courtesy of DMNews.

Regardless of your angst, you're going to cut circulation, aren't you? And you need to figure out who should receive fewer catalogs in the future. One population that makes sense are the customers who so love your brand that they will shop online without being prompted with catalog mailings.

I usually execute two Multichannel Forensics projects per month ... in those projects, I grade all customers in your database ... "A", "B", "C", "D", and "F". You cut back, cut way back, on the Cs, Ds, and Fs ... with little impact on demand and a nice boost to your p&l.

The typical project yields between a 0.5% and 1.0% profit to demand ratio. In other words, if you are a $50,000,000 business, I'll find you between $250,000 and $500,000 in profit opportunity. Some projects go way beyond that ... I found $1,500,000 for a $75,000,000 business by simply adjusting the contact frequency to average housefile buyers.

I'm taking project reservations now for September and October ... with the postage increase looming on the horizon, you want to have the analysis done this fall, so you are ready to react in 2011, correct? So contact me now to get your project into the queue.

Mobile Visitors

A year ago, this blog essentially had no mobile visitors.

Three months ago, 3% of visitors came from mobile devices.

Today, 5% of the visitors come from mobile devices.

• #1 = iPhone
• #2 = iPad
• #3 = Android
• #4 = iPod
• #5 = Blackberry

69% of the visitors are new (vs. the site-wide average of 60%).

All "engagement" metrics trend worse than the site-wide average (a 'duh', given that the site isn't optimized for a mobile experience).

RSS subscribers, of course, must be using mobile devices at a far greater rate than the average blog visitor via the website.

The world is changin', folks.

Fetzer's Footwear: Knockoff

Today, I am joining Lauren Fetzer, CEO of Fetzer's Footwear, at her Executive Team meeting. As always, I enter Lauren's office, where she is listening to her iPod Touch.

Kevin: "What are you listening to?"

Lauren Fetzer: "The Boy Is Mine ... it was that Brandy / Monica song from the late 1990s, don't ask. I got this song from Napster back in 2000. You might say I stole the song, lawyers would certainly feel that way. And that's our topic at our Executive meeting today."

Kevin: "Illegal file sharing?"

Lauren Fetzer: "Close. How do you deal with competitors that knock off your product."

Kevin: "Alright."

We walk into the Boardroom.

Lauren Fetzer: "Ok Penny, what did sales look like yesterday?"

Penny Parker (VP Marketing): "E-Commerce was up 3% vs. plan and up 4% vs. last year. The website was down 11%, mobile apps continue their meteoric growth. Retail comps were +5%, led by Redmond at +16. Alderwood trailed the field, at -14%."

Lauren Fetzer: "Bart, what in the name of S.S. Kresge is going on with Alderwood?"

Bart Cox (VP Stores): "Why don't you ask Penny what is going on with the website?"

Penny Parker: "We already know the answer to that one, crankasaurus, the mobile app is cannibalizing the living daylights out of the website. You know that nobody is cannibalizing the living daylights out of Alderwood."

Bart Cox: "So how, Penny, are you going to drive increased website sales? And Lauren, why don't you ride Penny like you ride the Alderwood store? And when are we going to renovate Alderwood? That store hasn't been renovated since 1998? Maybe the reason that store performs so bad is that it looks like it is preparing for Y2K."

Lauren Fetzer: "Ok Bart, you made your point."

Connie Simpson (VP Finance): "Bart, you already know that Alderwood isn't on the renovation schedule until 2012."

Bart Cox: "By then, the store will have lost 25% market share. Smart. Retail is like a zit to you folks, e-commerce is all that matters around here."

Ashley Zimmerman (VP Merchandising): "No, merchandise is what matters around here, we all know that. Here's the problem of the day. Did you see that Zappos is selling the Hi-Tec Women's V-Lite Altitude Ultra? One-hundred and twenty-four bucks. And Fred Meyer has a knockoff of that item, a store brand selling for $49.99. We invented that shoe last year, remember? It is our Womens Q-Max Mountain Climber, and we sell it for $199. It's the same shoe. We have a fully gusseted leather tongue, moisture wicking textile lining, rustproof hardware, ours is 16oz, I mean, it's a complete knock-off by Hi-Tec, and I heard that Zappos is selling a ton of the things.

Connie Simpson: "What happened to sales of our Q-Max Mountain Climber since Zappos began to sell the Hi-Tec knockoff?"

Ashley Zimmerman: "Sales are down 39% to last year."

Bart Cox: "Lauren, what are you going to do about the sales decreases in the Q-Max line of shoes?"

Bill Bledsoe (VP Logistics): "We probably need to price match here, right? Maybe we can make up margin dollars by selling more."

Ashley Zimmerman: "That's a hard one. We'll sell 500 units at $199 and our cost of goods is $85, so we make $57,000 of gross margin. Say we lower the price to $119 and we sell 50% more units. That's only $25,500 of gross margin. Say we sell 100% more units, that's only $34,000 of gross margin. In fact, let me run the numbers here ... ... ... ... ... we'd have to sell 3.4 times as many shoes in order to break-even on the gross margin line. That won't happen."

Bill Bledsoe: "But you'd have more market share, and that counts for something, right?"

Ashley Zimmerman: "Sure, it counts for a reduction in profit of $23,000."

Bill Bledsoe: "Can't we sue them? I mean, we have a patent on the Q-Max line of Mountain Climbers, right?"

Ashley Zimmerman: "No, their shoe is just different enough to make it a unique line. It's a 16oz shoe, ours is 15oz. They have the exclusive Vibram hiking outsole, too."

Connie Simpson: "Penny, what is a viable marketing strategy here? I mean, how do we communicate to the customer that this shoe at $199 is fundamentally better than the shoe they can get at Zappos for $124?"

Penny Parker: "We can do an e-mail blast with a customer testimonial. Let's see ... we have an e-mail list of 100,000, and we'd get a 20% open rate, and 35% of those would click-through to the website, and 5% of those customers would buy the shoes, so that's ... what ... maybe 100,000 * 0.20 * 0.35 * 0.05 = 350 customers purchasing the shoes, so that's something."

Bart Cox: "Are you telling me that we have an e-mail list of 100,000 names and only 350 would buy something if we send an e-mail marketing message? 350? I thought e-mail marketing had the best ROI of any marketing channel? 350? I mean, why bother?"

Ashley Zimmerman: "350 units will translate to 250 units after accounting for returns, so we'll increase sales of the item by 50% over the 500 we'll sell without e-mail marketing support."

Bart Cox: "But that's a one-time fix. We send out something like 100 e-mail campaigns a year, so we have to advertise other products as well, right? So this e-mail campaign doesn't solve the core problem, here. The core problem is that Fred Meyer stores can sell a knockoff at $50 and Zappos can sell a knockoff from Hi-Tec at $124, and both win while we lose. So, what is our strategy? How do we deal with this?"

Connie Simpson: "Locally at least, we have a multi-channel advantage, don't we? I mean, nobody shops the Fred Meyer website, and Zappos doesn't have stores, so we should be well-positioned locally. Kevin, that should work to our advantage, right?"

Kevin: "On a local level, it could help you. All of your stores are here in the Pacific Northwest, so I can take a look at customers in Northwest Washington to see if they behave differently than in the rest of the country because of the Fetzer's Footwear multi-channel presence."

Penny Parker: "And Woodside Research said that by 2015 they expect multi-channel brands to see a 4% increase in market share over online brands".

Lauren Fetzer: "Ok, team, that's wonderful, but all you discussed were tactics and analytics. That makes it sound like you are busy or strategic, but not one person mentioned a solution to our problem, not one person even offered a suggestion. Allow me to restate the problem for you. What is our response when a big brand offers a knockoff item at only 25% of the cost? What is our response when an online brand offers a branded knockoff item at 37% off? Be honest, team. What is the reason that you would buy our item at $199 instead of buying the knockoff item for $125 at Zappos? It can't be customer service, because Zappos will get it to you tomorrow while we'll take 5 days to deliver it to the customer, and we'll charge the customer $5 to ship it to her. It can't be quality, because the customer realizes that for a 37% price decrease she'll accept lower quality. And we can't price-match big brands because that will just drive us out of business. So, again, I ask all of you, what is the reason that a customer would buy our shoe for $199 over the same shoe for $125 at Zappos or $50 at Fred Meyer?"

Bill Bledsoe: "We can't ever win that battle, can we?"

Lauren Fetzer: "I guess we can't. Oh well, let's just shut down operations today and go out of business. I'm sure Nordstrom is hiring in their shoe department, so we'll all enjoy selling the Hi-Tec Women's V-Lite Altitude at $125 a pop, earning a 7% commission on every single unit we sell. Sounds good to me."

Connie Simpson: "Can't we talk up our history? I mean, Zappos is a decade old business."

Lauren Fetzer: "Customers don't care about history. If they did, we'd all be shopping in Montgomery Wards stores, and the downtown corridor of any mid-sized city would have a vibrant collection of Gimbels department stores. No, we need to offer the customer a compelling reason to shop us over our competition. What is the compelling reason for a customer to shop us and not shop the competition? I need a compelling marketing answer to this question. I need a merchandising answer to this question. I need a logistics answer to this question. I need a store answer to this question. And I need the financials to work to our advantage. I don't need one-off e-mail campaigns, I don't need product development cycles that are too long to please the modern customer, I don't need it to take 5 days to deliver a pair of shoes to a customer, I don't need multi-channel bricks 'n clicks marketing theory that only benefits consultants and bankers, no offense Kevin, and I don't need to keep seeing the Alderwood store pulling -14% comps. I'm paying all of you $200,000 a year plus a 60% bonus to provide real solutions. So let's get to work on providing real solutions."

A Quick Quiz For Catalogers

If business is not performing to expectations, where do you invest the most attention, and why? Prioritize these areas in order from most important to least important.

• Catalog performance.
• Website performance.
• Merchandise performance.

Discuss.

Summer Segmentation: Tender Type

You've probably already broached this subject, right? I mean, you've used your web analytics package to thoroughly analyze the future value of customers, right?

AMEX buyers are different than Visa buyers ... Visa buyers are different than Master Card buyers ... Master Card buyers are different than Discover Card buyers (pay attention to the Discover Card buyer), and Discover Card buyers are different than PayPal buyers.

And then, if you have proprietary credit, you've got a whole 'nother set of exciting challenges.

It turns out that the method you choose to pay for your merchandise plays a role in determining the future value of a customer. And this is such an easy thing to analyze, isn't it?

So just do it!

Dear Catalog CEOs: Merit Direct Co-Op

Dear Catalog CEOs:

If you are in the B2B world, then you are probably attending the Merit Direct Co-Op this week. This is a wonderful forum for B2B leaders to discuss various topics and issues.

True catalog brands are really not competing with each other anymore. Heck, there's enough trouble out there on the horizon from low-price online brands and retail big-box monsters, all of whom are eroding your market share! There's never been a better time to be collaborative, to work with fellow catalogers and to learn from each other.

It's time for a shift in thought ... work with your fellow catalogers, and learn from each other. There are too many forces out there looking to take business from catalogers via other channels, so use forums like the co-op this week to foster relationships with like-minded individuals.

Blockbuster: A Multichannel Business

For the past decade, we've been taught how critically important it is to be "multi-channel".

Intuitively, the concept makes perfect sense. Maybe I want to rent a movie. Theoretically, it makes logical sense that I'd drive four minutes to my local Blockbuster store to pick up a copy of, say, "Idiocracy", because I want to see the movie now, not in two days when Netflix delivers it to my home.

Go visit the Multichannel Merchant website, and browse the hundreds of articles that have been written about Blockbuster multichannel strategy over the past decade. You'll be riveted by the strategic choices that Blockbuster made, choices that any pundit would laud:

• Blockbuster makes a bid for Circuit City.
• Blockbuster Canada launches a loyalty program.
• Rent a movie online, return in stores.
• Integration and Segmentation, a Blockbuster concept.
• Blockbuster Incents Netflix Customers With Free Rentals.
• Blockbuster Offers Free Rentals Via Expanded Rental Program.
• Blockbuster Lends Marketing Muscle For The Happy Feet Film.
• Blockbuster Combines Movie Cards With Meal Card Promotion.
• Blockbuster E-Zines Get People In The Store.
• Blockbuster Plays Ball With MLB In-Store.
• Blockbuster Settles With 48 State Attorney Generals Over "No Late Fees" Policy.
• Blockbuster And MasterCard Team Up For Movie Pass Program.
• Blockbuster UK Chooses MicroStrategy to Provide CRM Functions.

That's a lot of multi-channel strategy ... bricks 'n clicks and promos and CRM and co-branding and channels and freebies and segmentation and even loyalty programs. And yet, last week, Blockbuster was delisted, as the brand struggles to make interest payments on more than $900,000,000 in crippling debt.

Be honest with yourself, especially if you promote multichannel strategies:

• Why do you choose Netflix over Blockbuster?
• Why do you choose Amazon over Barnes & Noble or Borders?
• Why do you choose Zappos over Nordstrom?

If you can answer those questions, you've solved a marketing riddle that escaped the multichannel generation of business leaders.

(Hint #1: A good part of answering the riddle involves prudent financial management of a business. It doesn't matter if a customer can order a movie and return it in a store if a business chews up half of all profit dollars or more on interest payments, does it?).

(Hint #2: Focus on merchandise and service and product delivery before you focus on channels and CRM and loyalty programs and promotions and co-branding ... maybe that is the true answer to the marketing riddle of why multichannel marketing doesn't work).

Fetzer's Footwear: Dependence Day

It is July 4 on Madrona Island, so it is time for the big Coho Bay Independence Day Parade. This year, 67 local merchants, politicians, and non-profit groups are scheduled to parade through the three-block downtown corridor. The Fetzer Footwear float is #1 in the pecking order, so the picture illustrates the view that Lauren and I have as we lead the parade. Not surprisingly, Lauren is wearing a beanie cap on this 57 degree morning, but does not have her iPod Touch with her today. Lauren is munching on a hot dog she purchased at a stand hosted by the Lion's Club ($4), stationed at Madrona Bank (a bank that did not receive TARP money).

We begin the 1mph drive through the three-block business district in Coho Bay.

Lauren: "Can you believe the crowd? This might be the biggest turnout we've had in the fifteen years I've been doing this."

Kevin: "I'm freezing. Does it ever get warm here?"

Lauren: "July 5 is the unofficial start of summer here on Madrona Island. June is often called 'Juneuary' because the temperatures are in the low 60s and there is plenty of drizzle to go around. We'll be in the 70s and sunny in just a few days. Now be honest, would you prefer that it be 98 degrees with a dew point in the mid 70s, like it is in Philadelphia today, or would you prefer this?"

(Lauren adjusts her driving gloves, gloves she's wearing because it is cold out, not because she is having trouble driving the giant hiking boot that is the Fetzer's Footwear entry in the parade).

Lauren: "Here, take a handful of Tootsie Rolls and toss them to the kids. Make sure you don't throw them at the dogs, dogs can die if they eat chocolate."

Kevin: "Alright."

(I toss a handful of Tootsie Rolls at a throng of enthusiastic children. Many of the Tootsie Rolls bounce off of the skulls of the children, prompting disapproving looks on the faces of the adults lining the business district here in Coho Bay).

Kevin: "Why exactly are you paying me to ride a float in the Coho Bay July 4 Parade?"

Lauren: "What do you think the ROI is of paying $150 to have this float in the Independence Day Parade, Kevin?"

Kevin: "Probably zero."

Lauren: "That's right. I doubt that a customer in Charlotte cares that we are in this parade. This community depends upon us, Kevin. We spend $150 to be in the parade, five dozen other organizations pay $150 to be in the parade, and all of a sudden you reach critical mass. Now the parade is big enough to draw a big crowd. The crowd is big enough that you can't be a resident of Coho Bay and miss the parade, it's what everybody will talk about. These people could spend this cold morning at home watching a hot dog eating contest on ESPN, or they could be out here being part of their own community."

Kevin: "Even if it is 57 degrees with a wind chill in the low 40s in early July."

Lauren: "That's exactly why you are out here. You'll be able to tell the story of how you needed to buy a hot chocolate from the Booster Club. And not surprisingly, the Booster Club benefits as well."

Kevin: "So everybody is dependent upon each other in a way, right?"

Lauren: "Exactly. Everybody played a role in making this parade a success. Did you see entry #27 ... that guy is riding a unicycle while carrying an America flag ... that's it ... but he paid his $150 and he's participating. Now let me ask you a question, Kevin, how do you separate out his impact in making this parade a success from the impact our float is having, and how do you separate out the impact of the Booster Club selling hot chocolate and the Lion's Club selling hot dogs for $4?"

Kevin: "You couldn't. They all contribute to the success in an undefined but dependent manner."

Lauren: "This is where you fail, Kevin. You always want to parse our business into tidy little components. You want to demonstrate that the Tacoma Mall store drives 3,000 visitors to the website, you want to prove that search drives customers to a landing page the yields a 9% conversion rate."

Kevin: "I don't think I'm the only person who wants to do that. My entire industry works hard to allocate success to the marketing components that created success."

Lauren: "Will you please wave at the folks, Kevin? And smile, too."

Kevin (waving): "Alright."

Lauren: "But how do you truly know which marketing component created the success? You've done this work with my business, you'll tell us that 32% of an order came from paid search, 22% from affiliate marketing, 8% from our blog, 12% from our Facebook presence, 9% from YouTube, 4% from having a regional store presence, and 23% was organic in nature. Well guess what? We hired a consultant before you, and gave her the same task. She told us that 23% of an order came from paid search, 9% from affiliate marketing, 13% from our blog, 17% from our Facebook presence, 10% from YouTube, 0% from having a regional store presence, and 28% was organic in nature. Who is right, Kevin, you, or the consultant we fired three months ago?"

Kevin: "Well, obviously, there is a level of confidence associated with each number, each number could vary by a certain percentage. It's possible we both are right."

Lauren: "Exactly. And if both of you are right, and your numbers differ that much, then why bother going through the exercise? I mean, honestly, your paid search budget will vary dramatically if you trust your number over her number. Pay attention to your vendor partners, Kevin. The really good ones willingly acknowledge that the percentages vary, and that there isn't a right or wrong answer."

Kevin: "Must be fun to be a person in the marketing department who reports to you, huh?"

Lauren: "Why, because I challenge assumptions? I mean, honestly, the numbers are garbage, Kevin. It's fool's gold. Here's what you do. You have a marketing budget, and you trust your marketing staff to spend it in the most efficient way possible. Their job is to deliver a 15% ad-to-sales ratio. They can spend the money anyway they see fit, they can experiment, they can try new things. But at the end of the year, the ad-to-sales ratio had better be 15%, or their budget will be cut."

Kevin: "A lot of folks would say that you have dramatically oversimplified a process that is inherently complex, a process that requires complex mathematical algorithms."

Lauren: "Look at this parade, Kevin. This isn't Independence Day, this is 'Dependence Day'. Every person in the community, the businesses, the hot chocolate, the police who make sure this goes off without a hitch, the street cleaner who scoops up the Tootsie Rolls that you errantly tossed at innocent children, they all depend upon each other. This event only works if everybody plays a role. Who would ever go through the process of allocating credit to each person, then prioritize next year's parade based on who contributed the most credit to making this a success?"

Kevin: "So you're saying that all marketing activities ultimately depend on each other in some way. Does that mean that you have to execute all marketing activities, do you have to be multichannel as the pundits would say?"

Lauren: "Heck no! That guy on the unicycle probably won't be here next year. That doesn't mean that the parade will be a failure next year, somebody will enter and will juggle bowling pins with mini-flags on them and that will capture the fancy of the crowd. Every channel and every marketing activity has a season, if you will. Seasons change. I'm looking for my marketing team to adapt and change, while keeping the ad-to-sales ratio under 15%. As long as it is under 15%, they can spend more. When they go over 15%, I throw the hammer down on them. And I know your next question. Yes, I trust that my marketing folks are actively measuring the ROI of everything they do. This isn't like they are throwing darts and making guesses, Kevin."

Kevin: "And yet, people love tradition. They come to this parade because they know that the Fetzer's Footwear boot float will lead the pack through the business district."

Lauren: "People are odd, Kevin. They say they like tradition. But go watch the video of this parade from 1992 on YouTube. You had the baggy pants bunch dancing to MC Hammer songs, they aren't here today and nobody misses them. You had an entry from the local organic farmers who were upset with President Bush for saying he hated broccoli. Heck, there were a bunch of kids out there walking around with pumpkins on their heads, they literally carved out pumpkins and wore them during the parade, they called themselves the 'Pumpkinheads'. Who knows what that was about? And they haven't been seen since ... imagine if they did that today and it got on Facebook and they couldn't get a job because they were the 'Pumpkinheads'? Anyway, I digress. All I can say is that all of that stuff is gone. What people care about, Kevin, is that the 4th of July parade still happens every year."

Kevin: "So in the case of Fetzer's Footwear, nobody cares about the marketing tactics you use. All people care about is that you have quality, stylish merchandise at a fair price. Your merchandise is like the parade. The styles you offer and the marketing you use to offer the merchandise to the customer, all of that can change."

Lauren: "Exactly, you get it! Now get off the float, it is time for us to talk with the press."

Kevin: "The press? What press?"

Lauren: "The Madrona Monitor, it's been the voice of the islands for more than eighty years."

Kevin: "I thought people were odd, that they didn't care about tradition?"

16 Reasons To Be Optimistic About Multichannel Marketing

Last week, we explored 16 Multichannel Myths. We probably could have explored 216 Multichannel Myths if we wanted to. This week, we flip the coin ... we look at 16 reasons why we should be optimistic.

Reason For Optimism #1: E-Mail Is Free

• Contrary to what the experts say, e-mail is, for all intents and purposes, free. And that's a big deal. E-mail is a craft that is fundamentally broken, built on the hopes of free shipping and 20% off of your order, built on the myth that great subject line content equals customer engagement. Almost nobody I speak with does any type of segmentation or personalization or customization. Free money is laying all over the floor, folks, just go pick it up!

Reason For Optimism #2: Social Media Is Free

• Contrary to what the experts say, social media is, for all intents and purposes, free. And that means that there is an endless world of experimentation here. Unfortunately, few people are doing any real experimentation. It's really easy to tweet the following message ... "dresses on sale, 20% off, they're cool on a 100 degree summer day". Be honest, nobody cares, and the 10% of your file that does care only care about you when you give them a promotion. You want a full price, loyal customer, right? This is a fertile place for experimentation. Try something new, different, innovative, it is free!

Reason For Optimism #3: Mobile Mobile Mobile

• We'll look at marketing in 2020 and we'll be floored by all of the ways that mobile changed things. Here's a hint: We create the future. Test, test, test, test, test. Try things. An Executive told me this spring that ... "It is too expensive to be on the bleeding edge and to fail, it's better to sit back and wait to see how the marketplace shakes out, then, you join in." Alright. It's not like you have to spend $2.4 million dollars a month on bleeding edge stuff, just try something, learn, and adapt!
  

Reason For Optimism #4: Third Party Opt-Out Services

• Notice how their growth stalled? I was wrong. It turns out that there aren't 200,000,000 people sitting around waiting to beat catalogers over the head with a 500 page mailer. Let 1.4 million people opt-out, use your website and marketing tools to attempt to have a relationship with the 299,000,000 folks who are left. Just because some folks express displeasure in a loud manner doesn't mean that there are a lot of folks who feel the same way.
  

Reason For Optimism #5: Search

• Search is almost universally under-leveraged. The fusion of social/mobile/search will yield infinite ways for the customer to pull you into their world. And it turns out that, in today's world, for many of us, search is an important leg in the offline/online/offline conversion process. See, many folks still watch television or listen to the radio or read newspapers ... and then they go to Google to do research before placing an offline purchase. Search plays an important role in this offline/online/offline conversion process.

Reason For Optimism #6: Website Conversion

• Sure, I poo-poo the evanescent "big green button above the fold vs. small blue button below the fold" testing that folks like to do. That being said, every one of us multichannel folk are leaving a 10% sales increase on the floor by not doing the hard work necessary to make sure our websites matter to the customer/prospect. Assign a team of folks to dive into website analytics and fix the darn thing. And here's another hint: Website conversion is more important than 'branding'.

Reason For Optimism #7: A Postage Increase Is Looming

• This is great news! Stick it to those who try to trap you in the past by encouraging you to market to customers using old-school techniques that are becoming more expensive and less responsive. Work your butt off to figure out how to be relevant through other marketing programs, print ads, online marketing, television, local radio, innovate, try something new. Stop being a victim! And if you want the USPS to see what the future looks like when you keep raising prices, ask them to look no further than the music industry ... a $30 concert ticket became a $60 concert ticket and then a $90 ticket and then a $150 ticket and then nobody bought tickets and now concerts are being canceled right and left because of poor attendance.
  

Reason For Optimism #8: Humans

• I've said it a million times ... in 90% of my projects, contact with a human being increases customer lifetime value. Instead of paying a co-op six cents for the right to force paper into the mailbox of a customer who has never purchased from you, why not earn the right to call your customer and ask what you can do to make life easier for your customer?

Reason For Optimism #9: Talent

• Back in the early 1990s, it was common for a company hiring a garden-variety manager or director to make mortgage payments or even to outright purchase the home of a new employee, as a perk to get the employee to work at a new company. Imagine if you did that today, imagine if you made it clear that you cared so much about talent that you were willing to get talented people out of a housing mess? You think you couldn't find talent that way? There are countless talented people who are trapped in dead-end jobs that they can't escape due to their housing situation. This is a rare time in history to pluck talent from the competition by making a life transition easier. Oh, I know, I can hear the complaints now, the HR folks saying that this isn't fair to existing employees or that it is just too expensive. Fine. Stick to your current process, and keep lamenting the fact that you can't find talent.

Reason For Optimism #10: Feedback

• The secret, of course, is to filter out the fanboy feedback and focus on what the average customer is saying. And when the average customer isn't saying anything, there's a problem, because what you're doing is so irrelevant to the average customer that there is nothing to talk about. But there's gold in the comments from average customers. On Twitter, I don't get too excited when the Twitterati re-tweet something I say, but I do pay really close attention to anything that the average follower re-tweets ... that's when you are making a difference (good or bad). It's free feedback, you don't need to conduct a focus group in order to obtain intelligence. So mine this stuff, folks!

Reason For Optimism #11: Smaller Is Better

• If you are an old-school cataloger, there has never been a better time to try small page counts with targeted merchandise to various segments of your housefile. Get past the efficiencies that the printers and post office provide to keep you focused on big page counts. Run the tests yourself, you, too, may find that you can get 88% of the demand on 27% of the pages.

Reason For Optimism #12: Needs

• Take the implosion of the economy and a shredded 401k statement and loss of jobs and a 40% drop in home value and you have customers who have real, significant needs. Why not try to solve problems instead of offering discounts and promotions? Why not test same-day delivery of merchandise in a small town? If your warehouse is in Omaha, why not truck merchandise by van from Omaha to Lincoln, and use Lincoln as a test market to show what could happen if you fill a customer need within 6-12 hours? Imagine the stunned look on the face of the customer as the "Widgets America" van pulls up in front of the home at 6:25pm to deliver product that was ordered at 9:15am? Figure out a way to solve a need, and test a unique strategy to fill a need, then measure whether customer retention rates actually change. What do you think is going to be more effective, moving the medium-sized blue button above-the-fold, or stunning the customer with same-day delivery via the "Widgets America" van?

Reason For Optimism #13: Old-School Still Has Staying Power

• Did you know that more hours of television are consumed today than at anytime in history? Sure, there are folks out there who are watching cats get stuck in cotton candy on YouTube, and yes, that tends to get all of the hype. Might the old-school advertising methods offer a way to get your message out to folks, given that the old-school medium still matters to just about everybody but the 1,294 pundits who make a living by promoting new technology?
  

Reason For Optimism #14: Merchandise

• This may come to you as a surprise. Customers don't buy from you because you have an affiliate marketing program, or a brilliant online retargeting program, or because @gumby49 tweeted something about your brand. Customers buy from you because of the merchandise you sell. And in the past ten years, as technology became the focus, we lost our desire to sell merchandise. Now, we think that the standard phillips screwdriver will sell better if we just get the message out there on Facebook. Come on!! Merchandise is ultimately all that matters. Customers will create buzz about great products on social media. Social media can't do a thing with mediocre merchandise. Create something truly innovative or fashionable or something so needed by the customer that the customer can't possibly do anything but speak kindly of your merchandise. We've lost our way, we don't have a passion for merchandise. Honestly, take a look at the image below ... this is what was presented to me above the fold. Show me where the passion is? Show me that this merchant cares about this item. This merchant cares more about selling clicks via Google than they care about explaining to me why this item is better than the items I can find at any of 1,500 competitors. I'm telling you, there is more fertile ground to be found in having passion for merchandise than there is in social media and website optimization put together.
  

Reason For Optimism #15: Best Practices Are Just Waiting To Be Violated

• When I arrived at Eddie Bauer in 1995, the best practice for selecting names for catalog mailings was via RFM. You used recency, frequency, and monetary value to decide who to mail ... nobody even questioned the methodology. I implemented statistical models, and boom, another million in profit dropped to the bottom line. I recall employees who said "I thought this was just a one-time thing, you mean we're going to continue to do this?" Yes, we're going to continue to do this ... you see, a best practice had just been proven to not be a best practice. Instead of being one of the sheep, blindly following best practices off the cliff of relevance, why not innovate, or even better, why not just do something goofy, just to see what might happen? Anytime something is a best practice, it means that the best practice is ready to be challenged. Your job is to challenge the best practice, not to blindly follow it.

Reason For Optimism #16: Hard Work

• If you are in the music industry, do you think it is fun to not be able to sell music via any semblance of tonnage anymore? Absolutely not. This is where the musician hits the road, and starts doing the hard work necessary to make a living. This is where we are in the multichannel marketing world. We were sold a lie. We were told that if we simply adhered to a multichannel marketing approach, everything would be fine. Well, nearly every pundit was wrong, weren't they? Our businesses are, by and large, less healthy today than a decade ago. In fact, many of us have sales declines of 10% to 30% over the past three years ... how did multichannel marketing work for you? Now is the time to do the hard work necessary to dig out from the rhetoric of the past decade.

Ok, it is time for your feedback. What makes you feel optimistic about the future?

Summer Segmentation: Price Points

We like to analyze customers on the basis of new/existing behavior, or the channel that the customer prefers.

Often, an analysis by price point purchased is important.

I like to pull every single purchase transaction for the past twelve months, and then divide the items into five equal groups.

• Items of $0.01 to $4.99.
• Items of $5.00 to $12.99.
• Items of $13.00 to $19.99.
• Items of $20.00 to $39.99.
• Items costing $40.00 or more.

Next, pick the categorization out of the five listed above that the customer buys the most items from.

Finally, analyze conversion rates for customers by prior price preference. Or analyze the performance of various items on your website based on prior price preference. You're going to learn interesting facts about your customers!

Dear Catalog CEOs: Urgency

Dear Catalog CEOs:

One CEO told me how he responded to a trend in his market by designing and sourcing and delivering product to his customer in just two weeks.

Another CEO tells the merchandising team to invest energy in the assortment for Fall 2011.

Which business leader has a sense of urgency?

There are two components of modern catalog marketing.

The first component requires merchandising of the catalog. This process requires long lead times, thorough planning, and integration with the remainder of the business.

The second component is very different. The second component of a modern catalog business requires urgency. It is a process where the Merchandising and Marketing teams respond to trends and behaviors in real time. There is nothing wrong with the development of a product that debuts online, with support from e-mail marketing.

If you visit a media website, you'll notice "Breaking News" ... whatever content was scheduled to run is bumped for something that is happening at this moment.

Similarly, every modern catalog brand can respond to "what is happening right now". Not everything needs to be fully integrated with the catalog. Cultivate a web-based sub-business based on urgency, based on reaction to the marketplace.

When I hear that 80% of online sales are attributed back to the catalog in a matchback, I know that the business is not focusing on building an online business, instead, the business uses the online business as an order taker.

Urgency is a differentiator, it is a form of customer service that is not practiced often enough.