By now, you have read this newsletter from a reputable catalog vendor (
click here to read the newsletter). Yet another traditional catalog vendor is choosing, maybe because of economics, maybe because customer/clients require the shift in focus (how could I possibly know the reason), to move in a different direction, a direction away from catalogs. I can't judge the tone or the message, I can only say that I've seen the story before ... a vendor demanding that catalogers plow paper into the mail later announces that they are initiating a process to ensure their future over the future of a catalog brand.
Here's the problem.
These vendors told you that the future was all about putting paper in the mail, paper that would cause customers to buy online. For a decade or more, they made this promise to you ... if you were "multi-channel" the way they told you to be, your business would grow.
By and large, in the B2C world, your business didn't grow. Is your business 30% larger today than it was in 2001? If your answer is "yes", it means you only kept up with inflation, and did not truly grow. A business needed to grow by 60% over the past decade to generate appreciable growth above and beyond inflation that results in an appreciable increase in profit.
In other words, "multi-channel" did not work. At all. Sure, there are more channels than ever before, but they don't work in a way congruent with the story told by the vendor community. The channels sure didn't cause customers to spend more ... if anything, they simply spread out demand across channels.
The thing we never think about is the age of a customer.
It turns out that the age of a customer means an awful lot.
In other words, a large percentage of 65+ year old customers love receiving catalogs. They thumb through the catalog, then they purchase merchandise over the phone ... not everybody, mind you. But this is what we observe, over and over and over again. Go ahead, overlay demographic data on your file, and you'll see this as well.
Your 55-64 year old customer was trained to receive a catalog, then shop online. This is the "multi-channel" customer the vendor community trained us to harvest.
In other words, catalog marketing isn't dead ... among customers age 55+. Catalog marketing is what it always has been to this audience. In fact, run productivity reports among this audience ... you may observe minimal changes in productivity over time.
Then, the model breaks down.
Customers age 45-54 represent a transitional period. This is where e-mail marketing thrives. This is where search thrives. This is the customer cohort most influenced by "Web 1.0", as the pundits say. This customer was 30-39 when the internet burst onto the stage. This cohort was weaned on Microsoft, Yahoo!, Google, Netscape, AOL, and Amazon. Catalogs can work among this cohort ... the key word is "can".
Customers age 35-44 are fundamentally different. These customers are not likely to pick up a telephone. This makes this audience much harder to track. These customers are "multi-touch", they use numerous channels, combined with word-of-mouth, to purchase merchandise. We have a hard time measuring "what works" across this audience. The reality is that everything works, and nothing works. Worse, these customers are not acquired by catalog marketing at the rates we're historically used to seeing. This audience, by and large, is fueling the customer acquisition problems catalog marketers face. We pay Abacus $0.06 for access to the name, but the name doesn't respond like a 55-64 year old customer. Perform a demographic overlay, and look for yourself, you'll observe this trend, too. The 35-44 year old audience is becoming the front-half of the "mobile generation" ... meaning they have earning power and they embrace technology in ways that customers age 45+ struggle to understand. In many ways, this is the iPod/iPad generation. This generation adores free shipping (think Zappos). This generation bores easily. This generation has a foot in both old and new, with a skew toward new.
Customers age 18-34 are, again, fundamentally different. Catalogs have very little relevance here, on a mass scale ... perform the demographic overlay and run your productivity reports, you'll see what I'm talking about. This is the "Web 2.0" generation ... no, not the 56 year old who tells us about the "social customer", but the 26 year old who actually uses social tools to behave in a fundamentally different way than other customers behave, fusing social and mobile in ways that a 56 year old marketer cannot leverage in a way that allows a business to "scale". It's this infinite number of micro-channels across a diverse array of potential customers that frustrates traditional marketers (i.e. catalogers). The cataloger wants to rent 2,000,000 names for $120,000. This audience seemingly cannot be reached by "one size fits all" message ... unless, of course, that message is delivered though channels embraced by this audience. By and large, catalogs are not embraced by this audience.
The big shift in the past decade is the abandonment by customers age 18-44 of the catalog business model. We focused on using the catalog to drive a customer online, and by doing so, we attracted a 45-74 year old audience. A decade later, we cut the 18-44 year old audience out of our business.
We aren't getting these customers back by working harder.
We can say that the customer "changed", like some in the vendor community suggest. This is the easy way out, it allows us to, once again, make incorrect predictions about the future, it allows us to purse new technologies tethered to old business models (i.e. catalog on iPads). This strategy has a low probability of success.
Customers haven't changed. Demographics changed. Baby Boomer kids now dominate the 18-29 year old demographic, and are about to enter prime earning years. Baby Boomers dominate the 45-64 year old demographic, and are heading toward retirement.
In other words, it is my opinion that we need two business models.
We need a catalog business model calibrated to a 55+ audience. This model will undergo consistent and frequent budget cuts, increased targeting, maximization of the "organic percentage", harvesting of profit, and a general wind-down over the next decade as the 55+ audience becomes a 65+ audience. We optimize profit, then we exit the business model at some point.
We also need a business model calibrated to an 18-44 year old audience. This model is not likely to include a traditional catalog strategy, though print can be used from time to time. This model requires fundamentally different thinking. It is my opinion that we must invest in this audience, this audience assures our future.
Right now, "The Big Shift" is steamrolling us. We are essentially addressing the 55+ audience, and wondering why our businesses are eroding? We must begin investing in the 18-44 year old audience, if we want to remain relevant in 2020, while optimizing profitability from catalog mailings to the 55+ audience.
