To refresh your memory, here's the "lost generation" for catalog marketers. Her name is "Jennifer".
She's somewhere between 36-50 years old, with an average of 43 years old.
The data I analyze show that this customer is online-focused. Catalogs, at best, influence her behavior.
Jennifer doesn't trust us. When she sees that we're offering her free shipping on orders over $100, she goes online and finds out that last week the business she wants to order from offered customers 20% off, and she finds out that other customers were offered 10% off plus free shipping. Left with no alternative but to find the best price, she has to use all online resources to facilitate her hunt.
Take a look at this graph ... shared earlier this week in one of the least embraced posts I've written in the past year (click here). This graph shows the age distribution of our country, and also illustrates the age distribution of many non-kids based catalog brands.
Look at the 30-39 and 40-49 bands ... Jennifer is not buying from catalog brands at the rate that Judy is buying from catalog brands.
This is a reality that is causing silence. Nobody wants to talk about the demographic mis-match between catalogers and the general population.
Granted, if you have always catered to a 60 year old customer, then this is meaningless.
But if you catered to a 25-54 year old in 1990, then a 35-64 year old in 2000, and a 45-74 year old today, well, you're just following a generational cohort who will be 55-84 years old soon, and after that ...... ?
Our strategy of fully integrating all channels failed ... it caused our customer base to age significantly, as we only appealed to customers (core customers, as the experts say) who liked a strategy that placed the catalog at the center of the ecosystem.
Granted, if you have always catered to a 60 year old customer, then this is meaningless.
But if you catered to a 25-54 year old in 1990, then a 35-64 year old in 2000, and a 45-74 year old today, well, you're just following a generational cohort who will be 55-84 years old soon, and after that ...... ?
Our strategy of fully integrating all channels failed ... it caused our customer base to age significantly, as we only appealed to customers (core customers, as the experts say) who liked a strategy that placed the catalog at the center of the ecosystem.
Now, it is time for us to start rebuilding the business ... protecting the sales and profit from the 55+ audience while searching for a path to the future.
And a path exists!
- Competition: We can offer free shipping, especially with a hurdle, by reducing catalogs to Jennifer / Jasmine, using those funds to pay for free shipping. This is why you hire me, to save money, money you can reallocate. Contact me here for details!
- Stop Tethering Online Channels To The Catalog. Grow these channels ... allow the customers who shop here to use the channel as more than a glorified catalog order form. I know, easier said than done, but go take a look at the websites of businesses that are not tethered to catalog marketing --- big difference, right?
- Diversify New Customer Acquisition: The co-ops have become really, REALLY good at feeding you 55+, rural customers. Wow. Sure, these names are responsive, but these names protect your business today, they don't guarantee your future. We've got five years, plus/minus, to chart a path to the future. That path begins with the process of acquiring customers like Jennifer / Jasmine. Do we have the chops to do this? And yes, I know, you're going to tell me that Jennifer / Jasmine don't have long-term value. Who's fault is that?
- Carefully Analyze Merchandise: This is going to be a theme with me, through the summer and the fall. Our merchandise planning process is broken, and our ability to analyze "who buys what" is more broken. Quick --- tell me what sales look like, by merchandise divisions, among paid search customers? Out of 100 catalog brands, I'd be willing to bet fewer than ten can produce this table. How else do we learn how non-catalog loyal customers behave? And, yes
- Be Nimble: I know, harder said than done. The entire catalog planning process is a 7-9 month marathon ... and while catalogers are predicting in June what a customer might purchase next March, online competitors are planning 16 unique sales events for next week alone. There are online brands that are able to imagine new products, design them, source them, and make them available for sale in two weeks. Two weeks! Can catalogers compete with that? Well, yes, absolutely ... if you step outside of a 7-9 month catalog planning process.
Time for your thoughts ... why are you so quiet, when it comes to this topic?
Translating this from a concept that makes a lot of sense reading it into a practical, applied model is a tall order. We're moving that direction, but part of the challenge is that catalog companies are known for moving at a steady pace, since that's been the conditioned response for decades. To try to adjust rapidly equates to a painful rethinking of basically every back-end process implemented during the "multi-channel" era. At least a few others out there have to be totally overwhelmed at this prospect... The mechanics of which are still a new frontier that can be equally as rewarding as destructive to the company's profitability/survival.
ReplyDeleteMost folks are totally overwhelmed at the prospect, when I describe it to them. To some extent, you almost have to set up a shop across the street, charging them with building a business without a catalog, without the heritage and planning and rigor associated with creating catalogs. Sure, those folks will fail. But they just might succeed, too, charting a path to the future.
DeleteDoing nothing will help us get to a point where the customer is 65-94 years old, and then 75-104 years old, etc.
I cut my teeth on direct mail response rates. Easy to understand, easy to explain, easy to test. What you are desribing is an alternate universe to me. I can see a cloud of uncertainty descending - how on earth will I measure what works when I don't comprehend the stimulus-response path?
ReplyDeleteEye opening stuff Kevin - thanks
I'm not sure most people understand the stimulus-response path, or we wouldn't have gotten here in the first place. Our measurement tools/techniques are poorly calibrated to identify the feedback loop that resulted in a customer base age 50-79.
DeleteI only figured this stuff out by analyzing annual customer behavior, not campaign-based data ... and by analyzing an awful lot of demographic overlays across time. We can all overlay demographic data as a starting point.