Dear Catalog CEOs: 10 Non-Problems

Dear Catalog CEOs:

Last week, we talked about ten problem that will make life difficult for catalog brands.  Today, we talk about what people talk about ... perceived problems that aren't really that important.

Number 10 = Privacy:  E-commerce wonks are bent out of shape about "do not track", as if the worst thing that could happen to the world was a law that prevented two-hundred companies from dumping cookies onto your computer when you decide to visit a dictionary website to look up the meaning of the word "delitescent".  Just because you cannot track a customer doesn't mean the customer will not purchase from you.  Ever been to a Dunkin Donuts and paid cash for a cruller?  Dunkin Donuts can't track that purchase back to you without face recognition software (oh boy), and yet, you shopped at Dunkin Donuts and Dunkin Donuts generated profit from your transaction.  Privacy is a non-issue.  Do what is right for the customer.  If the customer doesn't want to be tracked, don't track the customer.  Focus efforts on generating sales and profit though merchandise excellence.

Number 9 = Multi-Channel:  You're told you have to be in all channels and that you have to be all things to all people.  Nonsense.  Now, be honest.  Have your sales increased at a rate that is greater than inflation since 2000, when the multi-channel mantra was beaten into us by vendors who benefit from multi-channel strategies?  Remember, you were told that multi-channel customers were the best customers, you were told you would "reap the rewards" of a loyal customer base if you were all things to all people.  Did you "reap the rewards"?  Not many did.  Going forward, focus your efforts on "anything that works"!  If you cater to a 26 year old customer, then, by all means, dive into social and mobile like your hair was on fire.  If you cater to a 62 year old customer, might it make sense to identify merchandise that a customer nearing retirement without the funds to support a modest lifestyle might appreciate?

Number 8 = Integration:  You are told to integrate all of your campaigns.  Horsefeathers!!  Again, do what is right for your customer.  There are a million failed integration-based campaigns that nobody ever talks about.  There are fifteen successful campaigns that are publicized constantly.  You are being misinformed.  It is really hard to leverage the benefits of each channel if you are required to homogenize each channel.  Use each channel based on the strengths of each channel.

Number 7 = Retail:  Retail destroys catalog brands.  You do not need to open a store.  When you open a store, you load up debt, and you require store traffic to cover your debt load.  Eventually, you'll gut your catalog circulation, or you'll marginalize your creative in order to appeal to a retail customer, destroying catalog/online productivity.  You'll acquire a ton of retail customers who have no intent to ever buy from your website or catalog.  In other words, you're "hooped", you become something other than a cataloger, you become a slave to comp store sales, and you become a slave to debt.

Number 6 = Youth:  So many brands are told that they have to attract a younger customer.  This is a mistake, a non-problem.  If your catalog brand attracts a 67 year old customer, well, you've got a veritable plethora of Baby Boomers about to enter your sweet spot.  There is nothing wrong with cashing out on the Baby Boomer population, then retiring your brand.  You are not going to attract a mass of 26 year old customers to a catalog brand.  If you truly care about catering to the youth market, create a separate, vibrant, youth-oriented brand ... profit from your 67 year old audience via catalogs, craft a separate brand to attract a different audience.  Do not try to make your current catalog brand relevant to a younger market, it's a strategy that is not likely to work.

Number 5 = Mobile:  You are not going to be out of business in six months without a vibrant mobile presence.  I read a quote from a technology expert in November 2010, he mentioned that retailers will be out of business in six months if they don't get on the mobile bandwagon.  Is anybody holding that person accountable?  I don't see companies shutting their doors in May 2011 because they failed to capitalize on mobile, do you?  Mobile is a "needs based channel".  This means that there's a subset of the population that "needs" information immediately.  If you're in a retail store, and an item is sold out, you have a "need" that can be met by a mobile solution.  If you are bidding on an item on eBay, you have a "need" to see if you won the auction, mobile is perfect for that.  If you are Newport News and you are selling a dress, well, does the customer need to know anything about that dress at one specific moment in time while sitting in traffic on I-494 outside of Minneapolis?  What is the need that mobile solves for your business?  If you cannot answer that question, then it is unlikely that mobile is terribly important to your brand, in the short-term.

Number 4 = Integrated Databases:  Now, I'm the exact kind of person who benefits from analyzing integrated databases, chocked full of data across all channels.  But be honest.  Where do you make the most profit in your brand?  That's right, by selling merchandise that customers love!  You can bend yourself into a pretzel trying to link-up online visitation data to your e-commerce order entry system, or you can have your analyst spend a little time figuring out why certain items are more profitable than other items.  In the past decade, we've completely gotten away from what it is that fuels our business ... the thing that fuels our business is merchandise productivity.  Customers must love what we sell, or everything else is pointless.  Sure, integrated databases are important, but they are not a priority!

Number 3 = Social CRM:  Have you heard about this movement?  The vendor community is busy marrying a failed concept (CRM) with a sexy channel that seldom delivers profit (Social Media).  It is not a problem if you do not have a Social CRM solution to manage highly engaged consumers.  If you don't have a solution, go old-school ... pick up a phone and call a customer.

Number 2 = Data Driven Culture:  This is a non-problem for most marketers.  You're constantly being told by the vendor community that you must have dashboards with KPI's (key performance indicators) that determine what your strategy should be. Goodness.  Marketing and Merchandising innovation fuel the success of a business, with dashboards and KPI's tracking the success of Marketing and Merchandising innovation.  Focus your efforts on Marketing and Merchandising innovation!!

Number 1 = The USPS:  Yes, I said that this is a non-problem.  This is a case of fear ... FEAR FEAR FEAR FEAR!  Sure, it won't be pretty if it costs 35% more to apply postage to a catalog, but it won't be the end of the world.  See, there's this unique thing called "the internet", a magical place where you've spent more than a decade building out the discipline necessary to generate sales.  Sure, it will be hard to find new customers without mailing catalogs with the assistance of Abacus-fueled names.  But you have leverage, folks.  Tell your favorite USPS advocate that you will simply cut them out of the picture if they want to sock it to you.  Show them that you'll go from twenty in-home dates a year to ten, and you'll trim circulation per drop by 30%, resulting in a 65% drop in circulation.  Sure, this will be painful to you, but again, you've worked hard to figure out how to drive e-commerce sales without the aid of a catalog over the past decade, so you can manage this, right?

Ok, your turn ... what are the non-problems you'd like to point out?

Age and Productivity

You probably have age data appended to your database, correct?

If you have this data appended to your database, then take a look at annual customer spend by age.

This graph depicts a common relationship.  Customers age 40-49 are the most productive customers.

Catalog brands loved this fact back in 1995, when the average catalog customer was somewhere between 40 and 49 years old.

Today, the average catalog customer is somewhere between 50 and 59 years old, often older.  These customers are 10% less productive than are customers with age between 40 and 49 years old.

For many catalogers, the customer is aging 0.5 to 1.0 years for every year that passes, meaning that in five years, the average customer is going to be 55 to 64 years old, and in ten years, the average customer will be 60 to 69 years old.

Take a look at your merchandise productivity over time ... if productivity is dropping by 2-4% per year, and your customer is in her fifties or sixties, well, you've quite possibly identified the reason why productivity is on the decline.

But How Do You Know What The Organic Percentage Will Be?

By analyzing more mail/holdout tests than I care to mention, I have a really good idea how catalog marketing drives demand to (or cannibalizes) other channels.

You might observe, for instance, that 40% of all search purchases were caused by catalog marketing (not matched back, mind you, but caused as measured in a mail/holdout test).

And you might observe that 90% of telephone orders were caused by catalog marketing.

Well, then you have something, don't you?


You can take a segment of customers at the start of 2010, and you can measure the percentage of demand spent during 2010 by channel.  Take 40% of search, 90% of telephone orders, get the picture?  That's your organic demand.  As a percentage of total, you have your organic percentage!

Now, I use more sophisticated methods than that ... I do this stuff at a customer level, with models that combine prior channel preference with Digital Profiles and the like.  I have time-honored and tested tricks that cause the outcome to be more robust.  

But in general, it's that simple!

JCP Q1 - 2011 Sales

I know you don't want to hear this.

Give this article a read --- Penney improves sales and profit in Q1 - 2011.  Here's a few points for you to consider.

1. Penney will pull $30,000,000 of catalog marketing out of the ecosystem in 2011.
2. Compared with Q1-2011, JCP total sales increased 0.4%.
3. Compared with Q1-2011, JCP comp store sales increased 3.4%.  Comps increased, and yet, the big book strategy was killed. 
4. This means that online + telephone demand had to decrease a bit.

No catalog, and sales increased, debunking the myth that you must have paper in the mail to drive retail sales.

Also note the tasty tidbit about how expenses increased because of free shipping to online customers.

Your future --- catalog circulation reductions will be used to fund online free shipping.  The trick, of course, will be to figure out how to drive traffic to a website without as much catalog marketing.  Retailers do have an advantage, here, a big advantage.

Come See Me Speak in Moscow on May 26, and May 27

In the United States, we have leading conferences like Shop.org or Internet Retailer.  In the UK, we've got ECMOD.  And in Russia, we have the Week of E-Commerce (Russian, English)!  I was invited to give a pair of presentations, this should be a lot of fun!

On May 26, I'll discuss Lifecycle Marketing topics with an Executive-level audience.  

On May 27, I'll give a half-day seminar on the nuts and bolts of Multichannel Forensics.

Here's an English-translated outline of speakers, it's a good roster if you ask me.


I am so looking forward to meeting with all of the folks in Russia who regularly follow the action here on the MineThatData Blog!!!

Follow Up To Dear Catalog CEOs: 10 Problems

If you're a catalog expert, it would be instructive for you to review the comments from Ernie Schell and Don Libey, following yesterday's post about ten problems that challenge our industry.

The goal the article, of course, is to get you to think.

Mr. Schell points out that there are successful catalogers catering to a younger audience.  We don't hear enough about that.  I know of a business that was founded by catalog marketing experts, right in the teeth of the Great Recession ... this business is growing rapidly, catering to a 30-44 year old audience.  It can be done!  Unfortunately, it seems like it is the exception, not the rule.

Mr. Libey points out that catalog success can be found in B2B catalog marketing.  That's true.  85% of my client work is in B2C, where we are facing very different challenges.  B2B catalog marketing is a blend of classic catalog marketing, e-commerce, replenishment needs, unique products not found elsewhere, volume discounts, and human beings.  This results in a very different dynamic than the issues that challenge B2C folks.


Again, the goal of the article is to get you to think.  I'm not about to promote solutions, there's no more certain way to be wrong than to tell everybody what to do and how to do it.  Each situation is different.


That being said, there are themes that I stand behind.

• Brilliant merchandising usually wins.
• Great customer service usually wins.
• Reducing catalog marketing expense to customers who don't want as many catalogs results in increased profit.
• B2C customer files are aging rapidly, and our industry won't talk about the implications of this problem.
• Matchbacks and Attribution benefit our vendor community more than they benefit us.
• We are letting our vendors push us away from innovation, especially in customer acquisition and print production.
• We need smart people.

It's good that smart people like Ernie Schell and Don Libey commented ... now our industry needs your feedback.  What's working, what's not working, what are the problems, what are your suggested solutions?  If you work at Abacus, or Experian, or Donnelley, or Quad, or any of a veritable plethora of catalog vendors, you likely disagree with my comments ... hop on and share your thoughts about where you disagree with me.  We don't have to agree.  We do, however, have to help catalogers achieve improved productivity.  I thoroughly welcome disagreement on this blog, as long as the disagreement is well-thought out, rational, and data driven.  Share your thoughts!

Dear Catalog CEOs: 10 Problems

Dear Catalog CEOs:

Let's review ten problems that are slowly burying the catalog industry.  How many of these problems plague your business?

Problem #10 = Brain Drain:  You see it across the board.  The best and brightest are determining the sentiment of a user on Twitter.  Clearly, that's important, but it isn't as important as measuring the appropriate mix of new and existing product.  Smart, young individuals are not choosing to work at catalog brands.  And the exodus of experienced, seasoned Executives is making matters worse.  Finally, Gen-X is too small a generation to provide a veritable plethora of talent.  All in all, it's not a good situation.  Be honest, when is the last time you heard your twenty-two year old dream about getting a merge/purge job at J. Jill?

Problem #9 = Matchbacks and Attribution:  We butchered this one.  We listened to vendors who have a vested interest in making sure we continue to put as much paper in the mail as possible.  Matchbacks are fundamentally flawed.  Execute mail/holdout tests as soon as possible, and learn your organic percentage.  Most of the folks I speak with learn that between 30% and 70% of online demand is organic, and is not driven by catalogs as believed to be via matchback analytics.

Problem #8 = Paper and Printers:  It's happened twice this week to me ... an Executive tells me that they will not be experimenting with page counts because their printer has pinned them into an efficient boundary.  Since when do you let a third party dictate your strategy?  Printers are not going to save the world by forcing you to mail 64 page catalogs without experimentation, coupled with QR-code coupons for 15% off!  We need to tell our vendors what they are going to do.  For too many years, our vendors sold us solutions that benefited the vendor.  Enough.  Be a leader!

Problem #7 = Social Media:  You're probably expecting me to say that you need to get knee-deep in social media, or you're history.  Wrong.  For most catalogers, it is the opposite.  Social media is a drain on resources that threatens to erode profit.  Now, let me be clear here.  I think social media fits perfect in your contact center.  Let the real customer relationship experts, your call center staff, find the right path to social media success.  Every minute that a marketer spends trying to develop deep, emotional relationships with customers is a minute that is taken away from optimizing e-mail campaigns, understanding what motivates a customer to buy merchandise off of a catalog spread, or takes away from calculating the profitability of search marketing activities.  Finally, social media is not a sales generator among customers age 55 and up.  Ironically, catalog customers are, by and large, age 55 and up.  Do not listen to the social media mudheads who want social media to succeed so that they generate page views and followers that validate their perceived popularity.  Do what is right for your business.

Problem #6 = Inflation:  You analyze profit and loss statements, and you see that catalogers survived the past decade by optimizing margins and minimizing variable costs.  Well, margins are about to be gutted, and variable costs are headed north.  Our industry does not have an answer to this problem.  We rely on paper, on fuel, on coal (website), and on cheap outsourcing of resources (China, Indonesia).  The cost of all those things will increase.

Problem #5 = Free Shipping:  We will be forced to offer free shipping, or cheap shipping.  With inflation gutting our profit and loss statement, we'll have no choice but to mail far fewer catalogs in order to fund free shipping.  And once most of us are offering some form of free shipping, we'll see the lift associated with free shipping disappear.  Oh boy.

Problem #4 = Algorithms:  We simply have no control over anything anymore.  Abacus decides which 64 year old rural prospect receives your catalogs.  Obtuse retargeting software determines which 46 year old discount-based shopper buys online.  Heck, I use geeky math to determine the optimal number of catalogs to mail to a customer.  Tell me exactly what it is that you truly control anymore?

Problem #3 = Relevance:  How relevant is a catalog brand in the era of social shopping, group discount websites, Target, Wal-Mart, Home Depot, eBay generating billions via mobile, you name it?  You want to have some fun at lunch?  Go recruit twenty of your brightest analyst and manager level staffers, treat them to sandwiches, then go around the table and ask them where they shop and why they shop there.  At the end of your discussion, count on one hand the number of catalog brands they mention.  Ask your staff how they learn about brands ... I doubt it is through a rented name from Abacus!  Relevance is a big issue ... nobody wants to talk about it because there aren't any easy answers.  I'm to a point now where I advocate creating a separate brand to address the under-40 audience, you're simply not going to woo them with ninety-six pages of home-spun stories delivered seventeen times a year via the USPS.

Problem #2 = Customer Productivity:  Demand that your marketing staff overlay age information on your buyer file.  Then get ready to cringe.  Look at demand per customer by age ... demand per customer usually peaks somewhere in the early 40s.  After age 50, customers spend less and less per year, until the customer hits age 65, where annual spend sinks into oblivion.  In many cases, your productivity isn't declining, but instead, you are dealing with Problem #1 ...

Problem #1 = Age:  Fifteen years ago, you managed a vibrant, 45 year old customer.  Today, you manage a 55-60 year old customer.  In other words, customers are aging about 0.7 years for every year that passes.  This is a huge problem.  First of all, customer productivity declines after a customer passes her early 40s, so your customer base is capable of spending less and less as time goes by.  Secondly, when a customer base ages, it means that your brand lacks relevance among younger customers.  In large part, we caused this ... we listened to the pundits who told us that print was required to drive traffic to a website?  The pundits didn't go a step further ... they should have analyzed the age of the customer who used print to shop online.  Had the pundits done their due diligence, they would have realized that they were inadvertently asking you to target an older, rural audience.  We listened to the pundits.  Now we have a problem.  I do not see any way that catalogers fix this problem ... we will ride the Baby Boomer generation into retirement, struggling to manage expenses and maintain productivity as we ask this generation for yet another incremental dollar of demand.

Time for your thoughts ... what do you believe are the biggest problems that catalog marketers face?