Dear Catalog CEOs:
Maybe you've read those Power Rankings on ESPN or elsewhere ... wins and losses don't actually matter, what matters is how a group of sportswriters ranks teams! Well, at least it's a good way to generate page views.
We'll do that here, from ten to one. Let's not take the actual rankings too seriously, ok?! I mean, it's probably not worth debating whether Social Media should move up or down a notch!
#10 = Multichannel: A Woodside Research analyst recently stated that "Multichannel is Dead". This was fun, of course, because for a decade prior, Woodside Research told marketers that they "had" to be Multichannel or they'd be ... wait for it ... Dead!!!! Multichannel never truly existed. Multichannel was a concept created by vendors, bloggers, research organizations, and trade journals to tie the online future to the offline past. Sales did not increase if you linked everything together in a delicious blend of integrated goodness ... if sales did increase because of it, Circuit City's industry leading "buy online, pickup in stores" would have guaranteed their future, right?
#9 = Omnichannel: It's hard to believe that you can have an Omnichannel Power Ranking and Omnichannel only ranks at #9, but that's the case. Have you heard all this blather about "Omnichannel" coming out of Woodside Research and other pundits? Tell me if this sounds familiar to you. Online is being overtaken by mobile/social/local, so instead of moving to the future, you have to be "Omnichannel" ... you have to do offline and online and mobile and social and local. Oh boy!!! It's the e-commerce folks demanding a seat at the table of the future, trying to link the past (e-commerce) to the future. We've been there, before (see #10 above). It doesn't work. The more you integrate, the harder it is to execute ... and the harder it is to execute, the easier it is for single-channel newbie organizations to own the future.
#8 = Catalogs: Yes, I know, you're offended that catalogs only come in at number eight. But have you had a chance to read this little ditty from the DMA via Multichannel Merchant (click here)? The authors conclude that even though response rates are down 25% over the past decade, direct mail still rocks!! The author cites that, even with lowered response rates, direct mail will still have an important role well into the future. Really? Really? What happens when response rates drop another 25% this decade? What happens when costs increase but response drops another 25%? What happens when direct mail users (55+, rural) become 65+, rural users? How we can conclude anything other than an unprecedented transformation of an industry is beyond me?!
#7 = Social Media: Has there ever been a technology that is more hyped than social media? If you cater to an under-35 audience, social media is built into the fabric of the brand, much like a call center is critical to a catalog brand. If you cater to customers over the age of 45, social media hype borders on being fraudulent! If you cater to a customer over the age of 45, you're told you "must" embrace social media or "tempt obsolescence at your own risk". We have social media all wrong ... we attribute word-of-mouth, an amazing marketing strategy that has been around since Adam and Eve, to social media. Separate the two, and social media is much less influential.
#6 = Search: Pundits say that search is dead, lamenting Google's theoretical demise. Here's the deal with all of this fluff. I don't know why we assume that every individual in the United States will use every technology at the same rate. Each channel has unique advantages to specific demographic profiles. Search matters to Jennifer, it's how she hunts for information. It's irrelevant that Jasmine trusts friends more than she trusts Google, fine, let her go! Search is the tool that Gen-X uses to make sense of the internet, just like Facebook is the tool that Jasmine used to make sense of the web. You don't integrate search into everything, you capitalize on search within the demographic profile that uses it. Search is just fine with Jennifer's generation. Figure something else out for Jasmine and Judy.
#5 = Showrooming: This is the concept that an army of price-sensitive mobile advocates are driving sixteen miles to go to a Best Buy store to research products in-person, then instead of buying the item at Best Buy along with 8% sales tax, the customer either gets in her car and drives another sixteen miles home to buy the item online, or buys the item online, right there in the Best Buy store, while blue-shirted Twelpforce-infused employees offer extended warranties as a competitive advantage. This is great in theory, except it doesn't pass the smell test in three important ways. First, if this was truly happening at scale, then we'd see mobile (don't count tablets in mobile, folks, nobody is standing there in a Best Buy store holding a tablet) transactions at more than one or two percent of total e-commerce transactions. Second, if this was truly happening at scale, Best Buy would be posting -15% or -20% comps, causing a collapse of the entire retail model (the collapse of the entire retail model may well be happening anyway, but that's a discussion for another day). Third, if this was truly happening at scale, then Best Buy would benefit from "reverse effects" ... meaning that customers would be using Wal-Mart and Target and Frye's and just about any other retailer to showroom for Best Buy, right? The reality is that we are in the top of the first inning when it comes to figuring out how customers will integrate mobile with retail, but the trend is very important, and will turn out differently than the pundits tell us it will turn out. Remember, e-commerce pundits told us that retail was destined for the scrapheap ... fifteen years later, retail may be destined for the scrapheap, but e-commerce didn't cause it to happen. Showrooming won't kill retail, either. By the way, if you think that showrooming is so darn important, go spend three hours at a Best Buy store, and count how many customers, out of 100, are actually engaged in the process of showrooming. Seriously, go do it. Record a video. The numbers (and behavior) are self-evident.
#4 = Apple: At some point, we have to classify Apple as a channel of it's own. They are responsible for tablets. They are responsible for the iPhone and ultimately for the competition that was caused by the creation of the iPhone, which came from the iPod which transformed the music industry. An entire industry around apps was created because of Apple. They integrate across devices, but are self-contained within their own ecosystem ... devices literally speaking to each other ... and you'll soon be controlling you Mac with gestures. What company, other than maybe Amazon, influences your day-to-day life as much as Apple?
#3 = Mobile: Though one can make the argument that mobile, as a channel, is no different than Apple ... mobile / Apple are fundamentally one and the same ... with Android/Google providing mild and directionally similar competition. If you care about Jasmine, you care about mobile, so you care about Apple. If you care about Judy, mobile is irrelevant. And honestly, it's time to toss tablets out of the mobile discussion. Throw 'em out, folks! Tablets are a whole 'nuther genre of technology, used differently by people. When you're walking out in public, maybe at a farmer's market, count how many people are thumbing information into a smartphone vs. a tablet.
#2 = Email: Sure, email is dead, as the pundits say. Except, have you noticed that email is the only channel that spans all generations of commerce? Brands that cater to Judy use email marketing. Brands that cater to Jennifer thrive on email marketing. Brands that speak to Jasmine have email as one of the few channels that allows them to push a message to Jasmine. Sure, you only generate $0.10 per email sent to a customer ... but you also send 150 messages a year, so that's $15.00 of incremental demand and $6.00 of incremental profit, per customer, that you wouldn't otherwise generate. If the channel is dead, go ahead, ignore the volume. I know of classic direct marketers that generate $10,000,000 of annual profit, but lose sight of the fact that they generate $0.10 of demand per email delivered across a list of 1,000,000 names and 100 campaigns, yielding $10,000,000 of annual demand and $4,000,000 of annual profit ... 40% of total company profit from email!!! It happens all of the time. Nobody looks at the data the right way to make the connection. Those that do look at the data that way have a huge competitive advantage.
#1 = Word of Mouth: We mistake all channels for the activity that fuels the channel. Word of mouth matters. Pinterest, in and of itself, is not new or interesting. For whatever reason, however, it benefited from word of mouth. When people talk about things going "viral", they're really talking about word of mouth. Word of mouth fuels modern online activity, especially among Jasmine's generation. That being said, word of mouth has always been there. Catalogers, do you remember when you used to send out two million catalog requests a month? That happened because of old-school world of mouth! We spend so much time trying to astroturf "viral" activities, without ever thinking about what causes word of mouth to happen. Great products with great and sharable stories ... that seems to fuel word of mouth. Among Jasmine's generation, there seems to be a resurgence in word of mouth.
Terms that did not make the top ten list: CRM ... Social CRM ... Net Promoter Score ... Optimization ... Purchase Funnels ... Local ... Personalization ... Relevancy ... Engagement ... Social Search ... Branding ... Infographics ... Big Data ... The Cloud ... Big Data Meets The Cloud ... Private Clouds within The Cloud ... Infographics about Big Data Meeting Private Clouds in The Cloud ... Disruption ... Facebook ... Twitter ... Amazon ... Kindle ... Nook ... Viewthroughs ... Viewable Impressions ... Open-Source ... Virtual Anything ... Pinterest ... Blackberry ... Microsoft ... Yammer ... Content Marketing ... Yahoo ... Digital Analytics, Digital Marketers, and anything else Digital ... Square ... Video on Demand ... Co-Ops ... Social Commerce ... Facebook Commerce ... Instagram ... and an infinite number of topics that render anything that currently exists "dead".
RFM is great for targeting one catalog to one customer. However, RFM is tough to manage in a multichannel environment. This becomes clear ...
If you don't like geeky math, please skip this post, because I am about to show you how the sausage is made! I have eight variables in...
Remember our e-commerce customer from yesterday ... 50% organic, 50% catalog driven? We mail a catalog, and the $3.00 matchback outcome is ...