The Failure Of The Catalog/Multichannel Marketing Model

"The internet is the wild west. I keep advertising, only to send my customers out into the wild west. And they never return." Catalog Merchandising Executive, 2007.

When we conduct the post mortem on the failed experiment known as multichannel marketing, we'll look at this quote as being a key piece of the puzzle.

Back in 2001, it was a good idea to be "multichannel". We sent catalogs to customers, like we always have. Our analytics suggested that customers used our catalogs to shop on our e-commerce enabled websites. Woo-hoo!

And then Google took command of e-commerce. Ever since then, we've been leaking customers and prospects.

This manifests itself in the phrase I hear nearly every day ... "catalog customer acquisition performance continues to get worse".

Many smart people correctly point out that catalog marketing "creates demand". In other words, many customers do not intend to buy anything, but will buy something if advertised to. The catalog creates demand for an item. Paid search, in general, does not create demand --- it simply intercepts demand that is looking for a home.

Our industry mistakenly went down the multichannel path, believing that this form of demand creation was good. And in a pre-Google world, it was really good!

Today, demand creation is usurped by demand interception.

Go to Quantcast, and view the profile for Orvis. Notice that customers who interact with Orvis also interact with companies like RiverBum. To my knowledge, RiverBum does not have a catalog or stores.

So here you have the good folks at Orvis, doing the multichannel thing, sending paper out into the catalog ecosystem. They do a good job of creating demand for dry attractors.

But the customer isn't 100% sold on buying dry attractors on the Orvis website. He goes to Google and conducts the following search: Dry Attractors. Lo and behold, look who comes up #1 ... RiverBum!

Orvis creates demand for dry attractors. Google intercepts the demand, and funnels it to RiverBum. The customer places the order at RiverBum. The circulation manager at Orvis looks at the metrics, noticing that response continues to decrease.

Catalog marketing still works ... especially for the folks at RiverBum, folks who are not executing multichannel marketing the way the pundits told Orvis to execute it.

Sure, you can criticize Orvis for failing to capitalize on an obvious search opportunity (they don't appear in the top ten for the term dry attractors and did not appear in paid results either). But that criticism misses the point entirely.

The point is that traditional multichannel marketing, executed via catalogs and stores and websites, is a leaky bucket that can never be fixed in a world dominated by Google. No matter how effective you are at catalog marketing, no matter how hard you work to optimize page counts and stimulate demand via enticing copy and manage trim size and use recycled paper and send remails and remails of remails, you will constantly send customers to Google. And Google will send customers to your competition.

E-mail marketers ... you're in the same boat.

This is the grand failure of the catalog/multichannel marketing model, a failure nobody in our industry wants to talk about. When we get away from over-thinking catalog productivity, when we focus on executing the nuts and bolts of online marketing, we begin to view the world differently. And maybe, we can stabilize the leaky bucket problem we face.

Multichannel Forensics A to Z: Database Marketing

In many ways, Multichannel Forensics (book, study) is a logical extension of popular techniques that fall under the title of "Database Marketing".

The goal of Database Marketing is to store information about the behavior of customers or users, then combine the information in an actionable way to either increase sales, or increase profit.

Unfortunately, the easiest way to increase sales or profit is to impact marketing campaigns. As a consequence, Database Marketing (as well as Web Analytics and Business Intelligence, both logical extensions of Database Marketing) became campaign-focused, looking to optimize short-term sales and profit. And by doing so, Database Marketing lost relevance among the mythical folks that occupy the coveted wing of the corporate office known as the "C-Suite".

Multichannel Forensics move beyond campaigns, looking instead to quantify the long-term health of a business, as a function of prior customer behavior and anticipated future trends.

If you want to capture the imagination of an executive, hold a crystal ball that tells the executive what the future looks like. Multichannel Forensics make for a good crystal ball.

Steve & Barry's. Oh oh.

A few months ago, I challenged all of us to think about the success of Steve & Barry's, driving sales with just one channel and no advertising.

Dry up sources of cheap cash, and Chapter 11 is upon Steve & Barry's.

In other news, Charming Shoppes is looking for a new CEO.

We can focus on the gloom and doom in the economy. Conversely, a myriad of opportunities are being created by this downturn. I know of too many people that have been downsized, rightsized, fired, forced into resignation, you name it, all in the past few months. Hopefully, we can view this as an opportunity to thrive in a new role with a new organization.

Multichannel Forensics A to Z: Cannibalization

Almost all of my Multichannel Forensics projects (book, study) are meant to, in some way, demonstrate whether cannibalization is a problem across merchandise divisions or physical channels.

Cannibalization is a vexing problem in business. Many online marketers and web analytics experts were not raised in the era of paper-based direct marketing, and therefore, were never made aware of the ills of cannibalization.

Cannibalization creeps into every aspect of our lives, we're just not good at measuring it. At the dinner table, cannibalization happens when your child would eat an apple, but chooses instead to eat Cheetos if offered next to the apple. In Web Analytics, cannibalization happens when you add six new products to the six existing products featured on a landing page --- sales almost never double, they grow incrementally, at maybe fifteen or twenty percent. The six new products increase sales, but also reduce sales that would have been recorded among the six existing products.

Multichannel Forensics help demonstrate the long-term impact of short-term cannibalization issues. If we cause a customer to switch product lines, and as a consequence, the customer is more valuable, then we've done a good thing. But if we cause the customer to switch product lines, causing the customer to spend the same amount of volume, we're simply dealing with sku proliferation, an issue that is seldom positive for anybody other than Amazon.com.

Multichannel Forensics projects use merchandise divisions as micro-channels, evaluating the way customers move in and out of merchandise divisions over the course of the customer life cycle.

Are You Happy With Your Web Analytics Software Solution?

Here are the results of the most recent survey question ... "What Is Most Important In Web Analytics?"

1. 42% = Sr. Management Uses The Findings.
2. 27% = Great Analysts.
3. 15% = Great Database Integration With Other Channels.
4. 12% = Best Practices.
5. 4% = Great Software.

Only 4% of you thought software was most important of the five topics.

Are you happy with your web analytics software solution? If you are not happy, tell us why.

Another interesting tidbit --- only 12% ranked Best Practices as being high in importance. Why? Do you not believe in the best practices preached by others, or do you simply think other issues are more important?

Multichannel Forensics A to Z: Backorders

In Multichannel Forensics (book, study), channels are typically viewed at a physical channel level, classifying customers by retail purchases, online purchases, or telephone purchases (among others).

However, most projects these days go deeper, exploring the concept of micro-channels. Backorders fall into the micro-channel category.

You're likely to learn that customers who are willing to wait for an item that is not available are more valuable than customers who purchase merchandise that is always available.

You're likely to learn that each item that is backordered lowers long-term value (lifetime value, LTV, long-term ROI).

And you're likely to learn that if every item the customer wanted to order is not available, long-term value significantly decreases.

Multichannel Forensics add value because one can demonstrate the long-term impact of short-term customer service issues. For the first time, you'll be able to demonstrate to your inventory management team the role they play in the long-term health of your business.

For the Web Analytics community, Multichannel Forensics significantly complement your activities. You can see if customers look at various items that sell out, and you can see if the customer looks at complementary items if the item the customer wants is sold out. Combine that information with long-term value, and you really have something!!

MeritDirect Co-Op Wrap-Up

Few things I've done have generated as much interest and feedback as the talk on Non-Traditional Online Customer Acquisition at the MeritDirect Co-Op. Thanks to Ralph Drybrough for putting on a unique conference, a conference that is about delivering value for the attendee, not about creating value for the folks putting on the show.

Much of the chatter surrounds the story I told about selling our home in forty-eight hours. Here is a link to The Cascade Team, the real estate agency that uses online marketing, business intelligence, and a huge discount on fees to gobble up market share and move homes in a sluggish economy.

We spoke with the owner on Saturday. He simply cannot keep up with the need to hire new staffers. When new employees see how he uses data to make decisions, he tells me the employees are floored. You'll probably think that their website isn't beautiful, and that's fine. We spend too much time working on beautiful sites. They work on moving homes using business intelligence.


Many of you expressed interest in the concept of using copy as a customer acquisition tool. Few folks ever talk about copy as an important element of the conversion process. It is important!

If you don't use copy to increase conversion rates, you may as well use copy to gain intelligence.

For instance, take a look at the article from Friday. Look closely at the two links that I used to allow you to download the presentation.

Notice anything odd?

Each link points to the same presentation.

The link that says "if you weren't in attendance, download this version instead' has been clicked five times as often as the link for folks who attended the session. In other words, folks who did not attend the session want to learn what was presented.

Many online marketers thoroughly understand this stuff --- but for most of us who aren't thoroughly immersed in using copy as a conversion tool, we have opportunities.

Online copy marketing (here's a new acronym for you --- OCM) is different from blogging, different from SEO. Blogging is all about the writer, or all about the community --- no wonder it doesn't drive sales increases for most brands employing the strategy. SEO is often a niche led by technical experts and web analytics gurus, audiences that are critically important, but not audiences that capture the fancy of the "C-Suite" leader.

Online copy marketing is different. We identify the topics that drive audience engagement, then we modify our message to be even more relevant to the audience. The process takes A LONG TIME, no quick fixes here. The process allows us to acquire customers the old fashioned way, via a relevant relationship that benefits the customer.

We'll explore the topic in more detail in upcoming posts.