September 19, 2010

Dear Catalog CEOs: Fractured Audience

Dear Catalog CEOs:

Have you ever studied the actual customers who purchase from your business?

No, not a focus group of nine customers lured by $60 and free pastries. I'm talking about, at minimum, a demographic / psychographic overlay of data, or an even more comprehensive study where you actually, personally speak with a thousand customers.

It is in this type of study that you actually learn what the past five years of catalog marketing have delivered.

Increasingly, I see that we've delivered an audience that is fracturing away from the mainstream.

The mainstream audience is firmly anchored in e-commerce. And e-commerce is rapidly fracturing into mobile (the pundits will tell you that mobile IS e-commerce ... just like catalog vendors told us in 2003 that e-commerce was the same as catalog marketing). Catalog marketing now happens among a fractured audience ... among the folks who chose not to embrace the internet at the same rate as the mainstream public.

Fractured audiences are interesting to analyze.

For most of my catalog analytics projects, I am seeing the fruits of a fractured audience. This may sound backward, but bear with me.

Eight years ago, a catalog customer base might be comprised of, say, five-hundred customers.
  • 100 Customers = A.
  • 100 Customers = B.
  • 100 Customers = C.
  • 100 Customers = D.
  • 100 Customers = F.
The best customers had a grade of "A", the most marginal customers had a grade of "F".

Today, after adjusting for the impact of the Great Recession, the customer file of a typical catalog brand looks something like this (and I see this over and over and over and over again).
  • 100 Customers = A.
  • 50 Customers = B.
  • 50 Customers = C.
  • 150 Customers = D.
  • 150 Customers = F.
In other words, there are just as many good customers as there were years before ... those are the classic catalog shoppers of years gone by (Hint, they are increasingly 55+ year old shoppers).

The middle of the file is shrinking, as those customers abandon classic catalog marketing on a macro level.

The bottom of the file is growing ... a plethora of one-time shoppers seeking to get a need met at a low price. They are not brand loyal shoppers, and often, they are online shoppers.

Strategically, this is a problem, because it is awfully hard to run a business on a small audience of loyal shoppers.

Mechanically, this is a blessing, because you can save a boatload of expense by identifying the audience that has now fractured from the catalog core audience.

Instead, we keep trying to figure out how we are going to get the Ds and Fs to "love catalogs". Those days are gone. We need to move on.

Call me or e-mail me to schedule your Multichannel Forensics project for this November/December, and get your results in plenty of time to impact the profitability of your business when postage increases next year.

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