January 04, 2016

Naming The Paths

Ok, let's dress the thesis up a bit.

Remember when we had Judy / Jennifer / Jasmine (and now Jadyn)?

The names of the personas helped readers understand who the target customer was/is, and helped readers then relate to how customer behavior was changing.

We need to do the same thing with our catalog thesis paths. The paths need to be named, so that we can remember what the paths mean to us. Let's give this a try.

Path #1 = Golden Gate Bridge. Have you ever driven down the coast in Northern California? Crescent City & Eureka? Mendocino? Point Reyes National Seashore (click here)? Rural, beautiful, peaceful. Sort of like cataloging. But as you get closer to San Francisco, things change. You're no longer on Highway 1, you are on a freeway, US-101, and you are near cities. Petaluma and Mill Valley and Sausalito. Finally, you cross the bridge ... the Golden Gate Bridge. The marine layer blows through, obscuring your visibility. Seconds later, you are in San Francisco, a major urban environment. You keep driving south, out of the city, into Silicon Valley. Now you're in a desert, with your GPS pointing you toward Cupertino or wherever.

There's many a person who, after crossing the bridge, don't like what they see. 900 square foot apartments that cost $3,900 a month? Traffic? Nah, not interested. So they turn back, they head back to Wine Country and they sit on the Napa Valley Wine Train and they decide they're not headed into the madness south of them.

But for others, especially those with a younger customer base, it isn't hard to cross the bridge, is it? It's fun. It's where the action is. It's where you see Beach Blanket Babylon.

You have to make a choice ... do you cross the bridge ... or do you not cross the bridge? For nearly twenty years, most catalogers stood at the north end of the Golden Gate Bridge. We can see San Francisco, in the distance. But we like the view to the north. It calls us. Consequently, most of us do not cross the Golden Gate Bridge.

Path #2 = Catalog Cul-de-sac. Have you ever taken a ride on an idle Saturday afternoon? No, not in one of those driverless cars Google is promoting when you cross the bridge in path #1, but a real car. You turn off the highway, and into a planned community ... be it Wayward Pines or something you'd see when watching The Joneses. None of the roads participate in a classic grid system ... they curve and wind left and right, up and down. Eventually, you turn left, and you end up in a Dead End, though there is no sign telling you it is a Dead End (if you are lucky, there is a No Outlet sign, which doesn't sound all that threatening). You have been marooned in a Cul-de-sac.

But people love living in a Cul-de-sac, or they wouldn't build all of these suburban and exurban communities with them.

Now, people love to drive up a Cul-de-sac, don't they? And they love to live in a Cul-de-sac, as long as the homes in the Cul-de-sac are beautiful. The lawns have to be perfect (no moles or voles digging up the lawns), cut exactly to the height of fairway grass. An SUV and a Mini-Van need to be in the driveway. 4,189 square feet and six bathrooms don't hurt, either.

If you are going to cut yourself off from civilization, in a Cul-de-sac, then your Cul-de-sac has to be perfect. Kept up. Modern. Not everybody wants to drive up a Cul-de-sac and see burnt-out homes or homes from the sixties with cedar siding and roofs that need to be replaced.

The Catalog Cul-de-sac is a perfectly acceptable place to be, as long as the catalog brand continually drives merchandise productivity. When merchandise productivity fails, it's comparable to not maintaining the homes in the Cul-de-sac ... suddenly, nobody wants to be there. There's no need to cross the Golden Gate Bridge as long as the Catalog Cul-de-sac is beautiful, and as long as people know how to get to the Catalog Cul-de-sac (see my Customer Acquisition presentation).

Path #3 = Ranch-Style Remodel. When you drive through portions of Redmond, WA, portions that were built before Microsoft was conceived, you see sprawling neighborhoods of ranch-style homes (sometimes called "Ramblers"). These are not the modern Cul-de-sac homes described above. Nope. These are the homes that Mike Brady would have designed. These homes are old and tired. When somebody purchases an old and tired home, what do they do? Well, they remodel! They invest in their home, they don't just sit in it and hope it appreciates. They use elbow grease. They rip the roofing off themselves, they rip the siding off on their own. They pull wallpaper off the walls. They throw out disgusting shag carpeting from the late 1970s. They tear a wall out and make a 1,400 square foot kitchen / living room combo. They turn a bedroom into a home theater.

Catalog Vendors are going to love the Ranch-Style Remodel, much in the same way Home Depot and Lowes and Empire Flooring love the Ranch-Style Remodel. Catalog Vendors will help catalogers remodel the catalog business by constantly optimizing page counts and merchandising assortments, continually remodeling the business until the merchandise assortment is fully personalized for individual customers. Homeowners are thrilled when the Ranch-Style Remodel is complete, aren't they? Well, catalogers who take this path will be thrilled with improved marketing productivity, improvements that allow the catalog to continue to do what the cataloger loves to do ... mail catalogs! Page counts will drop, with the catalogs featuring only the most productive merchandise. As page counts drop, circulation will increase and productivity will increase, allowing the catalog to partner even more with co-ops and paper reps and printers and database providers and big data solutions experts. Then, targeting will improve, allowing for smaller catalogs with personalized merchandise assortments. Everybody in the catalog ecosystem benefits from a Ranch-Style Remodel!

Path #4 = Abandoned Warehouse. This is the analogy for a catalog holding company (CHC - think Potpourri Group without a soul). We all know where all the abandoned warehouses are. Nobody spends time at an abandoned warehouse.

This is the place where unloved catalog brands will go to die. Owners who don't want to cross the Golden Gate Bridge, who don't want to be in a Catalog Cul-de-sac where the merchandise must be perfect, and who don't want to perform a Ranch-Style Remodel where advanced targeting lives, those folks will give up. They will sell to a CHC (catalog holding company), a lifeless borg that looks to squeeze every single penny of profit out of what is left of the catalog brand they recently acquired. Each catalog brand loses identity, becoming simply a product category that must encourage customers to cross-shop within another former catalog / current product category. The goal, of course, is for each former catalog / current product category to help the CHC to get to the "Magic 8,000,000" ... the 8,000,000 catalog shoppers that allow the CHC to bypass the co-ops and achieve cost savings.

Another reason I call this path the "Abandoned Warehouse" path ... you're going to see consolidation of functions. There's no reason to have 37 email marketing teams across 37 companies when you can have one centralized team that executes for everybody ... a half-dozen professionals who achieve cost savings by consolidating vendors and minimizing human costs where possible. Same thing with Human Resources, your Information Technology department, your Merchandising Team, your Creative Team ... there's no need for 37 Circulation Directors when you can have 1 Circulation VP and a half-dozen analysts executing catalog campaigns across 37 former catalogers that are now 37 product categories that encourage population of the Magic 8,000,000. All the office space that used to house 37 teams of professionals across the country? Abandoned. Distribution Centers? Abandoned Warehouses closed (or sold to Amazon) so that the CHC can leverage fixed costs with just one, two, or three geographically desirable locations. 

In fact, it isn't inconceivable to imagine the CHC outsourcing everything, leaving management of the business to a handful of professionals sitting behind a keyboard, keeping the wheels on the bus. No strategy. No need for strategy. Just a constant re-population of the Magic 8,000,000, cross-shopping algorithms, and optimization of the contact strategy. Clario heaven. But a true Abandoned Warehouse.

The thesis is complete ... there are four paths for catalogers to take:

  • Golden Gate Bridge ... crossing over into pure, true e-commerce.
  • Catalog Cul-de-sac ... a catalog dead end that can yield a perfectly acceptable outcome if merchandise productivity is maintained and, more importantly, increased.
  • Ranch-Style Remodel ... where the catalog business is represented as a ranch-style house that is remodeled for modern times, complete with smaller page counts and personalized merchandise assortments that drive marketing productivity increases.
  • Abandoned Warehouse ... this is the place where catalog brands go to die. The CHC (catalog holding company) strips all expenses in a lust for the Magic 8,000,000 who will buy from former brands that simply become a portfolio of product categories.
Where is your business headed? Be honest. And where do you want your business to head? If different from where your business is headed, start making changes!

That's my thesis.

It is time for your thoughts. You followed along for nearly two weeks. Undoubtedly, you agree with elements of my thesis, and you disagree with elements of my thesis. Send me an email (kevinh@minethatdata.com), contact me on Twitter (@minethatdata), or leave a comment ... share your thoughts. What needs to be modified and/or changed here, to suit your needs or understanding of modern catalog marketing?

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