December 04, 2011

Dear Catalog CEOs: Bolt It On

Dear Catalog CEOs:

It's pretty obvious that we have the corner on the 55+ rural audience.  We made certain this would be the outcome, by bolting every new channel on to our existing catalog channel.

Take search.  We never did a great job of maximizing search ... instead, we mailed catalogs, then paid extra for orders when our catalog recipients searched Google for competing products.

Or email marketing.  We never did anything viral here, instead, we captured email addresses when customers ordered from the catalog.

Or QR codes. We print a QR code in a catalog as a way to encourage the customer to visit our website, leveraging one new technology with two existing technologies.

In other words, we "bolt" new technologies on to existing channels.

This leads us to four outcomes.

  1. Any new technology will be utilized by existing customers, because the new technology has been bolted on to existing technologies preferred by existing customers.
  2. New technology performance is sub-optimized.  Any condition under which the new technology may thrive is ignored in an effort to bolt new technology to existing channels.  This is why we frequently hear that new technologies "don't work", even though they work perfectly well in other industries.
  3. In an effort to improve the performance of new technology, we offer discounts and promotions to encourage a customer to purchase.  This causes an unintended consequence ... existing customers who like discounts are attracted to the new technology, not simply customers who are attracted to the new technology.
  4. Customer age is accelerated.  By trimming the audiences that might respond to new technology and by focusing on synergy between existing channels and new technology, we achieve acceptable brand performance coupled with an aging customer base ... promising that we'll have marginal performance in the future.
When we bolt new technology on to existing technology, we improve the chances of short-term return on investment.

We could set up shop across the street, giving new technology a chance to thrive on the merits of the technology.  In other words, we could literally spin off new "brands".  If the new technology/channel succeeds, we can move our offices across the street as existing technologies begins to fail.

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