February 28, 2011

Dear Catalog CEOs: Chicos And Three Key Customer Trends

Dear Catalog CEOs:

By now, you've already read the comment from Chicos about catalog circulation.  If you haven't, here's a link to the article, and here is an important quote:
  • "Our CRM group [has] done a lot of very good work.  As a result, we were able to mail more efficiently.  We were able to increase business with less circulation."
This is the great mystery of our time, isn't it?  One set of experts tell you that catalog marketing is "dead".  And then you have the catalog vendor community demanding that you mail MORE catalogs, telling you that 85% or more of your online orders are caused by catalog marketing, suggesting that you must mail catalogs or you'll be out of business ... pointing to flawed matchback analytics to make their case. 

The reality is that there is a BOATLOAD of profit to be had by taking an average of each position offered by the experts.

In the past sixteen months, customer behavior seems to have shifted at an accelerated rate.  There are three key customer trends for catalogers to pay attention to.
  1. Frequency and Pages.  Two 64 page catalogs is better than one 128 page catalog.  The amount of profit to be made here is HUGE ... smaller books can be mailed far deeper than larger books, and the incremental contact generates more demand than one contact.
  2. Best "catalog" buyers (those who live in rural areas and shop via the telephone) are frequently UNDER-CONTACTED (from a frequency standpoint), if you can believe that.  There is a lot of profit to be had by optimizing the contact strategy among best catalog buyers who shop via the telephone in rural areas.
  3. Online buyers ... even those who buy online after being matched-back to a catalog, are most often being significantly OVER-CONTACTED.  There is a ton of profit to be had by greatly reducing the number of contacts to this audience.
By capitalizing on each of the three key customer trends (the trends are now accelerating, though they've been around for a decade), catalogers can become SIGNIFICANTLY more profitable.  In my projects, the average amount of profit is about a million dollars per year for a $100,000,000 demand-per-year (across all channels) business.

The Catalog PhD methodology capitalizes on the three key customer trends ... the methodology enables one to grow catalog sales while reducing catalog marketing expense.  Yes, it is possible!

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