But I'm Only Losing $0.03 Per Catalog Mailed!

There are days when you realize that we're failing at math.

Here's the argument, as presented to me.

1. Company has 1,000,000 lapsed buyers (last purchase 13+ months ago).
2. On average, 1% of these customers respond to a catalog, if mailed, after matchback.
3. On average, if the company mails these customers, the company loses $0.03 on every catalog mailed.
4. Company only mails these customers ten times out of twenty annual mailings (whew).
5. We're only losing $0.03 per catalog mailed, that's not so bad, and they are our existing customers, so why not boost our customer file???!!!
6. The long-term value of a reactivated buyer is $20.00 profit, so we only lose $0.03 to gain $20.00 profit.

Here's the argument, as presented by me:

1. You are mailing 1,000,000 * 10 = 10,000,000 catalogs.
2. Only 1% respond, after matchback (and we've debunked that one a million times on this blog, right), meaning that 10,000 customers purchase.
3. You actually lose $0.03 * 1,000,000 * 10 = $300,000 profit, per year.  $300,000 profit.
4. You actually lose $300,000 / 10,000 = $30.00 profit per reactivated buyer.
5. You actually lose $20.00 long-term gain - $30.00 reactivation profit = $10.00 per reactivated buyer.
6. Strategy = DON'T DO THIS!!

Pennies are seductive.  It's so easy to make the decision to lose a few pennies, who's going to notice?

Well, pennies are the difference between being a highly profitable company, and being just plain average, or below average.

Yes, pennies.

What would Kevin do (WWKD)?

1. Realize that half of the customers you are mailing would have reactivated anyway, due to your organic percentage being around 50%.
2. This means that you are actually reactivating half of the customers you think you are reactivating, meaning that you are actually losing $60.00 profit to reactivate a name, a rate of profit you'll never make up with $20.00 of future profit.
3. I would pocket half of the profit now, and re-invest half of the profit in new customer acquisition, growing your customer file more profitably in the process.  I mean, be honest, you're not losing $60.00 of profit acquiring new names from Abacus, right?  So spend a bit more with Abacus, be willing to lose $12.00 to acquire a customer that generates $20.00 of future profit, and you come out way ahead.

The difference between industry-leading profit and average profit is pennies ... pennies per catalog mailed.  When you say you're willing to lose a few pennies here and there, you're deciding to be average.

But If I Cut, I Could Lose Market Share, Right?

There are many arguments against working with me.  Cutting circulation is one of them.

The argument goes something like this.

1. Kevin recommends we cut circulation by 25%.
2. Kevin says this will result in a 6% drop in demand.
3. Kevin says this will result in an increase in profit of $1,000,000.
4. Kevin recommends reinvesting half of the money in new customer acquisition.
5. Company (or trusted vendor) suggests that this is bad, because instead of generating $50,000,000 in annual net sales, the company will now generate $47,000,000 in annual sales, even though company profit increases from $2,000,000 per year to $3,000,000 per year.
6. Company says that it is a terrible thing if infrequent buyers are not mailed, because this means that the customer file will be weaker in the future.

Ok, a couple of points for all of you to consider.

1. How does Zappos, without a catalog, get infrequent customers to purchase?  And don't tell me that "they are different, so they don't count"!!!
2. How does a retail store brand without a catalog marketing division (say Napa Auto Parts) get an infrequent customer to purchase again?

One of the least understood concepts in modern catalog marketing is the concept of the "organic percentage".  This is the percentage of customers who purchase again, without the aid of catalog marketing (or, if you are Zappos, without the aid of any marketing).


Back in 1995, when you stopped mailing a customer, you stopped generating demand from that customer.  This caused your future housefile to weaken, as you did not have enough customers to fuel future growth.


In 2011, when you stop mailing a customer, you face a different challenge.  Assume that the organic percentage for an online-centric audience is 58%.

1. In the next six months, you lose maybe 35% of the demand the customer would generate.
2. In months 7-12, you lose maybe 40% of the demand the customer would generate.
3. In months 13-24, you lose maybe 45% of the demand the customer would generate.

The secret, then, is to mail this customer infrequently enough to save a ton of money, generate a lot of profit, but remind the customer that you're still around.  The customer continues to generate 58% of the demand generated on a full diet of catalogs.

In 2011, this is what happens if you frequently mail 100 infrequent customers:

• 2011 = 100 customers with a last purchase of 13-24 months ago.
• 2012 = 90 customers with a last purchase of 25-36 months ago, 10 customers with a last purchase of 0-12 months ago.

In 2011, this is what happens if you infrequently mail 100 infrequent customers:

• 2011 = 100 customers with a last purchase of 13-24 months ago.
• 2012 = 94 customers with a last purchase of 25-36 months ago, 6 customers with a last purchase of 0-12 months ago.

In 2011, if you re-invest some of your profit in new customer acquisition, even at a loss, this is what happens:

• 2011 = 100 customers with a last purchase of 13-24 months ago.
• 2012 = 94 customers with a last purchase of 25-36 months ago, 6 customers with a last purchase of 0-12 months ago, 4 new customers with a last purchase of 0-12 months ago for a total of 10 customers with a last purchase of 0-12 months ago.

Re-investment can protect market share, if done appropriately.  Think about it.

The Arguments Against MineThatData

Many of you tell me about the arguments folks use to encourage you to not hire me.  Let's address a few of these issues.

Issue:  His experience came from Nordstrom, Eddie Bauer, and Lands' End.  They are retailers.  He doesn't know anything about a pure catalog business, and furthermore, anything he learned about killing a catalog division at Nordstrom isn't relevant because they're a retailer with a proud brand heritage, what he learned there won't work for you.  Simply put, his experiences don't translate to your business.

• The most common argument used against me!
• Always remember that Lands' End was a pure cataloger during my tenure there.
• I've never said that the Nordstrom experience was relevant.  I've always said that we measured what would happen with mail/holdout tests, and those tests told us what was possible.  I'm asking you to think, to execute mail/holdout tests.  
• Since 80% of you don't execute mail/holdout tests, I've developed a routine to estimate what would happen if you did execute mail/holdout tests ... a routine that helps you increase profit, on average, by $1,000,000 per year for a $100,000,000 business.
• Ask a classic direct marketer if they have a methodology for understanding what happens if you stop marketing within a channel?

Issue:  He's going to tell you that your annual retention rate is 38% and therefore, you need to acquire new customers.  Everybody knows that it is seven times more expensive to acquire a customer than to retain a customer.  Work with us, we know of breakthrough multichannel campaigns that jump-start businesses so that you don't have to acquire new customers.  Have you heard about QR codes, for instance?  There's a fascinating link between print, mobile, and e-commerce!

• Yes, I'm going to tell you that your annual retention rate is 38%.  I'm going to tell you that because, in all likelihood, your annual retention rate dictates your growth strategy.  I'm just being honest with you.  The most successful clients I work with accomplish 50% of their success by having low-cost customer acquisition programs.  I'm going to be able to tell you what you need to do, in order to grow, and nine times out of ten, it's going to require you to revamp your customer acquisition marketing strategy.
• Ask yourself an important question.  If all of the multichannel campaigns that you've been working on for more than a decade were so important, then wouldn't your annual customer retention rate have grown from 38% in 2000 to 48% in 2011?

Issue:  Kevin gives content on his blog away, for free.  First of all that's anti-competitive, intellectual property is worth something.  Second of all, if he's giving all of this stuff away for free, how valuable can it really be?  Work with us, we have distinct intellectual property that is valuable and needs to be protected.

• Yes, I'm going to give away a lot of freebies on this blog, in fact, I have always given away all of the frameworks I use for methodologies, for free.  
• That's not anti-competitive, that's being nice, it's what we should all be doing, we should all be helping each other.
• If a vendor tells you that what I'm doing is wrong, then ask your co-op why they so willingly help you give away your customers to your competitors for free?
• An average client generating $100,000,000 in annual sales yields a $1,000,000 annual profit on one of my projects.  So what I'm sharing with you must have some value, right?

Issue:  Don't work with Kevin, he steals business from us.  We treat him nice, then he undercuts our project costs.  Simply don't work with him.

• This one is a 100% fabrication.
• I have no idea what it costs for a competitor to execute a project.  When a potential client asks me to bid on a project, I do so in a vacuum, without knowledge of who I am competing against, without knowledge of what competing vendors charge for comparable projects.
• Based on feedback I get, I suspect my costs are cheaper than what competing vendors charge, or I wouldn't hear complaints.
• I have never, ever, attempted to steal a client from a vendor.  Never.  
• This is a fabrication, one coming from industry veterans that you know and respect.

Issue:  Kevin has no idea what will truly happen if you reduce catalog mailings.  Don't fall for his charming mathematical voodoo.  We have housefile optimization models that find the very best customers for your mailings, allowing your business to grow, not shrink.

• I have a pretty good idea what happens if you reduce catalog mailings.  I've analyzed somewhere between 500 and 1,000 catalog and e-mail mail/holdout tests in my career.  I know a little something about what happens when you don't mail catalogs to a customer.  
• Hint --- what happens is very different than what the vendor community tells you will happen.

Issue:  Kevin doesn't care about market share, so don't work with him.  You want to grow, and we'll help you grow.

• If you define market share as total net sales, then yes, I don't care about market share.
• If you define market share as profit dollars generated, on an annual basis, then I care deeply about market share.
• I'd rather your business be $30,000,000 in annual sales with $3,000,000 profit than to see you be at $50,000,000 in annual sales with $2,000,000 in annual profit. 

Issue:  Kevin isn't accurate enough. If he tells you that the organic percentage is 52%, and it really is 47%, then you've made catastrophic mailing mistakes that will cost you a fortune.

• This one comes up a lot from analytical folks and consultants who compete with me.
• It is an argument that comes from a lack of understanding of the dynamics of actual customer behavior, it comes from having expertise at analyzing campaigns and/or analyzing customers without regard to advertising channels.
• I can be off by 10 points (i.e. 42% instead of 52% organic percentage), and it does not fundamentally change the accuracy of the ranking model, or the amount of profit.  Remember, matchbacks are so grossly overstating demand (i.e. are so terribly wrong) that my percentages do a great job of optimizing profitability.
• I'm seldom off by 10 points, FYI.  And when I am off, the organic percentage is usually greater than what I estimate ... I purposely estimate the organic percentage a bit low, to minimize any problems.

Issue:  Kevin knows nothing about modern digital marketing, he's old-school.  Modern digital marketing experts have advanced KPIs that help you understand how to manage your business.

• I care about customers, customer profitability, and the profitability of your business.
• Can your digital marketing expert calculate profit?
• Can your digital marketing expert tell you your annual retention rate?
• Can your digital marketing expert link data across channels?
• Can your digital marketing expert analyze mail/holdout tests across channels in e-mail marketing?
• Can your digital marketing expert predict the size of your customer file, in any channel, five years from now?
• Can your digital marketing expert predict the size of your customer file five years from now if you decide to double your e-mail marketing frequency today?
• Can your digital marketing expert predict what happens if your catalog is increased from 96 to 124 pages?
• Can your digital marketing expert predict what happens to customer value if a customer adds/eliminates channels?

Issue:  Kevin is completely wrong about the organic percentage.  Listen to him, and you'll be out of business in six months.  You have to advertise to customers, or they won't buy from you.  Period.

• This is one that can easily be answered by a mail/holdout test.  Simply execute the test.  If 98% of customer demand is generated by catalog mailings, then your organic percentage is 2%, and the critics are right.  If your organic percentage is between 35% and 65%, like it is for most of the people I work with, well, then there's something to what I'm preaching/teaching.
• Is it possible that there are other ways to advertise to customers?
• Have you heard of this thing called "the internet", where you can make your products and services available to customers?
• Is it possible that customers love your brand so much that they buy from you, even when you don't advertise?

Ok, your turn.  What are the arguments the vendor community uses to suggest that you work with different solutions providers, arguments you'd like for me to refute?

Borders, RIP

Yup, Borders is finished ... see Gawker for details by clicking here.

The pundits told us we had to do "bricks 'n clicks".  Had to.  They told us what the future would hold, and it held this multichannel nirvana where customers were researching online and buying in stores, so having "bricks 'n clicks" would result in a competitive advantage of unparalleled proportions.

I'm not saying that customers don't research online and buy in stores ... they absolutely do, more than ever.

It's the "your sales will grow" proclamations of consultants, trade journals, vendors, and other folks who've never worked in retail that represents the problem, here.  For the most part, across most businesses ... multichannel customers are the best customers ... but being "multichannel" has not resulted in the sales increases promised by consultants, trade journals, and vendors with a vested interest in selling solutions that benefit them.  If the sales increases existed, you'd have observed huge increases in your annual retention rate and purchase frequency over the past decade, right?

Retail is for big boys, or for small, local folks, there's no in-between.  And if you're going to be a big boy, you're going to be told by another set of pundits that you need to finance a fleet of stores with debt ... lots and lots of crippling debt.

I recall a Retail CFO telling me about how Wall St. would "beat down the stock price" if he paid down debt.

Debt > Strategy.

And when sales drop, by as little as 5%, debt becomes a really tough burden to recover from.

Oh, I know, some of the lemonheads are going to say that Borders didn't respond to changes in technology.  That's a pithy response, one that is easy to have in retrospect.  How many times have you made strategic mistakes in your job?  Never?  How many times have your strategic mistakes been made public, so that all marketing experts can openly criticize you?  Imagine being an employee at Borders, for just a moment, especially a non-Executive.

You can overcome strategic problems when you're not saddled with debit.  Heck, you know this, right?  What happens to your mortgage when you suffer a 15% reduction in salary (or you lose your job)?  That mortgage payment becomes onerous, doesn't it?

Debt > Strategy.

Pay close attention to the future of books in a retail environment.  How do the parallels there apply to your business?

Dear Catalog CEOs: The Screen

Dear Catalog CEOs:

Times have changed.

These days, people toss micro-channels all around you.  Your cell phone, your tablet, your television, your laptop ... plenty of screens.

Yes, screens.

Social media is nothing more than a way to communicate across/between screens.

When viewed through that context, there's no such thing as e-commerce or f-commerce or m-commerce ... there's s-commerce, screen commerce.


Catalogers are being cornered by screens.  Customers used to get information from the mailbox, once a day.  Now, customers get information via screens, 24/7/365.

Marketing via the mailbox is very different than marketing via screens.  Early in this evolution, we were taught to use the mailbox to drive business to the screen.  Increasingly, it seems like we're going to have to figure out how to drive business to the screen, independent of the mailbox, if we want s-commerce to thrive.  And no, I'm not talking about the pundit version of mobile (gamification, Apple vs. Google, tablets vs. phones, Facebook, Twitter integration, blah blah blah blah blah blah), because that's like having a discussion in 1995 about Netscape vs. Internet Explorer vs. AOL.  And I'm not talking about putting a catalog on a tablet, that's not likely to be what the customer migrates to over time.


No, I'm talking about having a holistic strategy for how a brand is represented on "The Screen".  We need to start thinking about our screen strategy, content, programming, commerce ... the cataloger is essentially a media company.

All of this, of course, is a precursor to h-commerce ... hologram commerce, right?

Or, we can continue to plan the spreads in our March 2012 catalog.

The Nordstrom Catalog Experiment of 2004 - 2006: When The Catalog Argument Is Right

Yesterday, we covered flaws in the catalog argument, comments I fielded from the catalog industry when we killed the catalog division at Nordstrom.  Today, we review arguments that proved to be true.

True = Frequency Is Important:  One of the consequences of not having a catalog is that you lose a way to communicate with the customer.  We significantly ramped-up our e-mail contact frequency, in order to make up lost sales and to continue communicating with the customer.  That being said, advertising frequency does play a role in encouraging additional purchases and increased customer retention.  Annual retention rates decreased, maybe by 20% or more, without print in the mail.

True = The Culture Changes:  When you eliminate a catalog division, you change the internal pecking order among employees.  The catalog merchant suddenly has a set of skills that aren't as respected as they used to be, the person responsible for creating landing pages suddenly has skills that are in demand by folks who are desperate for ways to drive sales.  If you have a one hour meeting, and now there's no catalog to talk about in that meeting, well, you do find a way to fill the time with other channels, and that spurs a new style of creativity that yields unpredictable outcomes.  You go through a painful 18 month process where you are essentially re-defining how things get done.


True = The Rats Scatter:  I had employees head for the exits, proclaiming that "Kevin's ship is sinking because he's a catalog person" on their way out the door.  Do I look like I'm doing alright today?  I'll tell you this, you quickly find out who has your back at work when your channel is eliminated.  Many employees love channels more than your company, this will become clear when you make significant changes to your strategy.


True = Planning Changes:  So many folks plan a season by starting with the catalogs that will exist, then planning the merchandise that goes on each spread, then forecasting circulation depth and demand, then planning all other channels in an "integrated" manner.  Well, there's nothing integrated about that, is there?  That's a catalog-centric planning strategy.  Take the catalog out of the picture, and you have a whole new way of looking at your business!  Suddenly, merchandise becomes really important.  Suddenly, you need to create events/reasons for customers to purchase, reasons that are not catalog-centric.  Creativity returns to your business, folks.


True = The Vibe Disappears:  When you mail a catalog every three weeks, there's a cadence that runs your life ... you live for the in-home week, you thirst for information, you wonder if the books are being delivered or if the merchandise stinks, you try to project the book to completion and then think of the ramifications of the book being above/below plan on the rest of the year.  You use book performance to drive liquidation strategy.  You use book performance to drive customer file reporting that drives future circulation depth and strategy.  Well, when that cadence is gone, oh boy, the vibe disappears.  Your sales spikes disappear.  Your business acts a lot more like a retail business than a catalog business.  You find something else to live for.


True = Traffic Matters:  In the catalog world, circulation depth determines traffic.  Without the catalog, well, what causes traffic?  Good question!  Circulation and response rates are replaced by traffic and conversion rates, and the accountability shifts.  All of a sudden, the web analysts is getting important questions, and is required to provide answers, because you can't blame the catalog for traffic increases/decreases anymore.  You shift your mindset, you shift your cause-and-effect thinking.  Honestly, you become more open-minded about business when you don't have a catalog to give credit to or place blame on.


True = The Merchandise Assortment Shifts:  The old-school catalog customer drives the assortment, because her demand is most easily measured and attributed back to the catalog.  Take the catalog away, and you change the demographics of the customer buying merchandise, and that causes the productivity of some items to change, and that fuels changes in future merchandise assortments.  In eighteen months, you've taken your merchandising assortment in a different direction.


True = It's Harder To Forecast Inventory:  The honest truth is that an e-commerce business is very similar to a retail business, from an inventory management standpoint.  In retail, when that stack of 50 shirts is gone, it is gone, and you don't know if you could have sold 53 shirts or 83 shirts or 1,113 shirts.  So you have to have more of a gut feel, you're less metrics-oriented.  In catalog, you capture lost sales, and lost sales help you forecast inventory next year.  In other words, the retail inventory expert is more adept at handling e-commerce than is the catalog expert, once the catalog is gone.


True = You Grow, Professionally:  My experiences in the non-catalog environment shapes the work I do for clients today.  When clients suggest that the catalog is a "must have" or "is the brand", I know how to proceed, because I've been there, I've felt that way myself, and I've seen what it is like to not have the catalog there anymore.  You most certainly grow as a professional, you are removed from your comfort zone.  If you are an e-commerce professional, your turn is coming ... mobile has the potential to transform your world in the way that e-commerce transformed catalog marketing.

That last point is the most important one.

E-commerce leaders are going to be put through their paces in the next five years, should mobile become a commerce force.  Catalogs are to e-commerce as e-commerce is to mobile.  E-commerce wonks will deal with a new generation of leaders, leaders that bring a new generation of tools and analytics and workflow processing tailored to the mobile channel.  History repeats itself.

The Nordstrom Catalog Experiment of 2004 - 2006: Flaws In The Catalog Argument

Earlier this week, I talked about the thirty months surrounding the closing of the catalog division at Nordstrom.

I'm always amazed at the chutzpah of the catalog industry in refuting a story that they did not experience.  It's as if my experience couldn't possibly have happened.  I'm repeatedly told all of the reasons why what I experienced can't happen anywhere else, in spite of the fact that anybody who does mail/holdout testing already knows that orders happen without catalog marketing!



Let's review the flaws in the catalog argument, as told to me by the catalog industry .  Each argument offered by reputable members of the catalog industry, folks you know and trust, are highlighted in bold print below.

Flaw = You Can't Grow Without New Customers Sourced From Catalogs:  This one is frequently perpetrated by a fraction of the folks who work for co-ops.  Obviously, this argument is flawed, because the argument assumes that there is only one way for a company to acquire new customers, and that one way is via one or more of the co-ops.  Even back in 2006, there was this thing called the internet, and it turns out that there are ways to acquire customers online ... just ask Zappos if you'd like to learn more about the topic.  Many catalogers have many sources for new customers ... print ads, online marketing, search, television, radio, magazines, you name it.

Flaw = Catalogs Drive Sales To Retail, You'll Hurt Retail Comp Store Sales Without Catalogs:  The flaw in this argument surrounds the interpretation of "driving sales".  Matchbacks suggested we were driving upwards of a billion dollars of sales to stores at Nordstrom.  My goodness, the matchbacks were really wrong!  If you execute mail/holdout tests, you'll quickly learn the real impact of catalogs on retail sales.  Execute the tests, and learn for yourself if your catalogs are as mission-critical as you believe them to be.

Flaw = Multichannel Customers Are The Best Customers:  My phone was flooded with calls from folks suggesting that without catalogs, we will "cause" high value customers to become average-value customers.  One year after eliminating the catalogs, best customer performance did not change, in spite of having one less advertising channel to buy from.  The flaw in the argument is just because multichannel customers are the best customers does not mean that if you take a channel away, you lose customer value.  Again, execute a few mail/holdout tests, and you'll know the real answer.

Flaw = Catalogs Inspire Purchases And Create Demand That Would Not Otherwise Exist:  This argument sounds sooo seductive.  Yes, catalogs create demand that would not otherwise exist.  E-mail marketing does this, too, as does mobile and social and search.  Now, among a 55+ rural audience, few things are as good as a catalog at creating demand.  For other customers, the jury is out ... there are many ways to generate demand.  I recall my Chief Marketing Officer staring me in the face, saying "find another way to create demand, Kevin, this isn't the first time we stopped doing something in our 100 year history".  You'd be amazed how many ideas you come up with if somebody takes your primary way for creating demand away.  I became an instant advocate for doubling the search budget, which turned out to be a great decision, because without catalogs in the matchback/allocation routine, search performance improved, significantly.

Flaw = Online Customers Have Low Lifetime Value:  This may be true, but the logic is flawed.  Here's the deal, folks.  I could acquire one catalog customer at $20 profit, or I could acquire 1.5 online customers at $14 profit.  The latter is more profitable than the former.  Our online business exhibited strong increases in the customer file, coupled with lower demand-per-buyer metrics, the net of which was more profitable without $36,000,000 of catalog marketing bogging down the profit and loss statement.

Flaw = Customers Won't Find Your Products If You Don't Advertise Them In A Catalog:  This is another seductive argument that is without merit.  Some of you out there tell me about year-long holdout tests you conduct (i.e. mail no catalogs for a year) where the rank-ordering of product sales in the no-mail group is identical to the rank-ordering in the mail group, and you still generated 65% of the sales in the holdout group.  Think about that one for a moment.  How did the customer find items when they weren't advertised?  We executed a similar analysis at Nordstrom.  My inventory executive simply refused to believe test results, test results which were validated once catalogs disappeared.  The truth is that if customers are trained to visit and use your website, then customers will find products.  Get customers to your website, and make it easy for customers to search/navigate.

Flaw = The Catalog Is Needed, Because It Is The Best Representation Of The Brand:  This is an opinion, not a fact.  Go ask 10,000 customers what they think!  I hear this argument every week, seriously.  Tell me why the catalog is a better representation of your brand than your website, or your Facebook presence?  Be honest.

Flaw = The Catalog Is Needed, Because It Is Used To Tell A Story:  Seductive, but making this argument requires two major assumptions, both flawed ... you assume that the customer wants/needs to be told a story ... and you assume that the story you tell via catalog marketing is better than any other story told through any other channel.  These assumptions are flawed, you have a diverse array of customers visiting your website with varying interests.


Flaw = Customers Can Take Catalogs With Them, They Can't Take Their Laptop Everywhere With Them:  This was an argument used by catalog experts to take the online marketing wizards down a peg.  This argument also makes a flawed assumption, the assumption that customers are carrying catalogs everywhere, shopping 24/7/365.  Mobile advocates are about to make the same, incorrect assumption.

Flaw = If You Kill The Catalog, You'll Experience Brain Drain As Catalog Execs Leave The Company:  I heard this one a lot.  This argument requires one to believe that catalog expertise trumps all other expertise.  Even I was arrogant enough to believe this one, and I was really, really wrong.  Relevant experience, and merchandising experience, are worth more than catalog experience.

Flaw = Once You Hurt The Customer File, The Customer File Will Never Recover:  This argument worked in 1995, when you didn't really have a vibrant online channel.  Since about 2003, customers have options ... the customer can shop 24/7/365, without a catalog, right?  At Nordstrom, the customer file wasn't hurt, it simply evolved to reflect the marketing channels that still existed at that time.  Instead of focusing on "the catalog", focus on acquiring customers and retaining customers.

Flaw = You'll Lose The Customer Who Depends Upon Catalogs:  This is true, but half of the statement is missing ... "You'll lose the customer who depends upon catalogs, but you may acquire customers you wouldn't have otherwise acquired."  So few people in the catalog industry acknowledge the possibility of the second half of the argument.

Ok, those are some of the flaws in the argument.  

Tomorrow, we'll cover some of the things we missed by not having catalogs in the mix.