Fixing The Jasmine Problem: A Five Year View

Every catalog business has a "Jasmine Problem".


You know this is true, you just don't know how to deal with it.  You have customers who order online, who you can't attribute to any form of traditional advertising.  You throw 2-3 catalogs in the outgoing package, you throw them a hotline catalog or two, and then you pummel her with 18 catalogs in the next year.  At the end of the year, your segmentation scheme suggests that "online customers aren't profitable", assuming your segmentation strategy accounts for channel preference.


For so many catalogers, this is the end of the road.  The online customer isn't profitable, so we stop trying to grow the e-commerce side of the business.


Here's the thing, folks.  There's no law on the books, as best I can tell, that says you ever have to mail a customer a single catalog.


I've analyzed a lot of tests in my life.  In a typical catalog mailing, it's not surprising to observe the following:

• If you don't mail Judy, 20% of the demand remains, with 80% disappearing.
• If you don't mail Jennifer, 45% of the demand remains, with 55% disappearing.
• If you don't mail Jasmine, 70% of the demand remains, with 30% disappearing.

And in the case of Jasmine, the amount of demand generated is frequently small, as her interests and loyalty are different than observed with Judy or Jennifer.

So, why do we even bother to mail Jasmine anything?

Next week, we'll explore what happens to a business, long-term, that changes strategy with folks like Jasmine.

Staffing Perspective, Five Year Projections

Maybe you remember 2001.  I sure do.


There's a reason catalog brand put all their chips in the middle of the table, betting on "multichannel".  Coming off of the internet bubble, companies were faced with a series of decisions regarding the online channel.  In many companies, online staffers worked in different buildings, or on different floors of the same building.  They operated a different promotional calendar, one chocked full of 20% off plus free shipping offers that tempted existing customers to shop the emerging channel.


I was hired in 2001 at Nordstrom as Vice President of Direct Marketing.  Our Executive Team inherited a $300,000,000+ catalog/online business that was losing more than $30,000,000 profit per year.  


Just let that fact sink in for a moment, will you?  


An established and profitable company being taking on those kind of losses, with an existing infrastructure in place?


So, back in 2001, you had a group of business leaders who had one job, and one job only ... fit the existing business model and the new business model together, NOW, and make it profitable.


This was happening all across our industry.  The old-school folks, by and large, won that battle, simply on the basis of profit ... existing channels were considerably more profitable, at that time, than emerging channels.


Now, as long as business leaders evolve and change as market conditions change, an "integrated" or "multichannel" approach may make sense.  By and large, we didn't do that.


Eleven years later, we're at an interesting crossroads.


In so many ways, the tables have turned.


Some folks will tell you that without the catalog, they'd be out of business.


Other folks will tell you that they've run the numbers, and it shows that the catalog is simply generating break-even demand, that without the catalog, the business would be half as big and just as profitable.


In the latter situation, which you see as much as a third of the time, what do you do?  You have a significant staffing dilemma here, don't you?  Tons of bright, highly qualified people, bursting with skills, skills that will need to find a place in a future business model dominated by Jennifer and Jasmine.


I run five year business plans for folks (contact me for your own, customized five year forecast).  We simulate what might happen if the catalog didn't exist, or if it only existed for the "Judy" portion of the file.


You might want to think about this topic ... a five year business plan ... one that considers what happens if you expand catalog marketing or drop catalog marketing or modify your catalog marketing plan in some way ... one that factors in search and email marketing ... one that explores the potential of newer marketing channels.


Who in your organization is responsible for crafting a five year sales plan?  What tools does that person use?  Do you have scenarios ready to share with your CEO/President/Owner?

The 1%

No, not the stuff the press talks about.


In marketing/analytics, "the 1%" represents the tiny number of industry-based employees who ultimately determine whether our businesses succeed or not.  You know who these people are.

• Your search vendor.
• Google.
• Retargeting partners.
• Catalog co-ops.
• Your marketing analysts.
• Your email vendor.
• Customer-facing social media managers.

Sure, there are others, but I point these out so that you have a loose understanding of what comprises "the 1%".

These folks decide who receive your catalogs.

These folks decide who receives each personalized version of an email campaign.

These folks decide what gets seen in search, and these folks direct traffic to your website as they see fit.

By directing the traffic, these folks determine the merchandise that gets purchased ... your merchants are ultimately responding to the traffic that the 1% send to the merchant.

If there was one thing that I was able to synthesize from discussions with more than 200 individuals at NEMOA, it was this ... there is an evolution in the thought process ... one where the 99% are beginning to think about how they wrestle control of a business back from the 1%.


Your thoughts?  Can control be taken back from the 1%?

NEMOA: Think About The 5-10 Year Cliff For Judy-Based Businesses

We've talked about the cliff facing catalog brands that market to Judy, the 59 year old, catalog-loving Baby Boomer.

I know, I know, we don't want to talk about this.  Who would want to talk about this?

Let's use an example outside of catalog marketing, since we won't take this one personally.  Go to Quantcast, and take a look at the folks who read DMNews, the trade journal that historically represented the catalog industry ... click on this link for details.

Clearly, and I mean CLEARLY, this is a trade journal read by Judy, and to a much lesser extent, by Jennifer.

Twitter verifies this ... under 7,000 followers ... remember, Judy isn't a big fan of Twitter, and is on Facebook to see her children and grandchildren.

If you were the editor of DMNews, and you knew your audience was largely 59 years old and was going to be retiring in the next five years, how would you respond?  Be honest, what strategy would you employ to make sure your long-term success was protected?

Now that you've thought about that, think about the catalog brand you represent ... is your customer Judy?  And if your customer is Judy, what do you do in 5-10 years when Judy retires and stops spending money?

We had a lot of good, spirited discussions about this at NEMOA ... a great place for the industry to consider what the future looks like.  Some of the conversations were about the cliff that Judy-based businesses are about to drive off of.  It's time to take these conversations to our Executive Board Rooms.

Dear Catalog CEOs: NEMOA Direct X-Change

Dear Catalog CEOs:


Hopefully, you attended NEMOA this past week.  You see, no other conferences covers what catalog marketing has become, none.  Many conferences are on the bleeding edge now, covering topics that are sexy and interesting, but not yet generating sales volume.  NEMOA covers reality.


That's not to say that the content is out-dated, nope, the content is very practical.  I attended a session hosted by Carliss Million (Lorel Marketing Group) and Bret Moore about rebranding efforts at Suregrip ... this session was sensational, illustrating the ROI improvement as well as the creative/digital efforts required to move a brand into the future.  I heard rave reviews about a session from Jennifer Kwiatkowski of Plow and Hearth about modern contact strategies.  I attended a good session from Kent Phillips of SmartPak, and Phyliss Mosca of Ulla Popken did a very credible job of explaining "Jennifer-based strategies" as I'd call them (video, blogs, forums, brand-building, relating to the customer).


Conference attendance was spectacular, FYI.


My talk was all about Judy, Jennifer, and Jasmine ... email me and I'll get you the slides.


If there's one thing that the audience told me about Judy, Jennifer, and Jasmine, it was this:

• "Judy, Jennifer, and Jasmine make more sense to us than channels do."

In other words, the audience could understand why Jennifer would use search, that made more sense to them than "the search customer" made to them.  This is important.  We spent the past decade babbling about channels like they mean everything.  If anything, the theme of this conference wasn't about "channel", but instead, it was about "customers".

And that, my friends, is a huge change of pace.  We all know how those who support us tried to offer channel-based products and solutions for a decade or more.  At this conference, business leaders appear to have made the leap, talking about customers instead of channels.  Later in this article, I'll explain why I think this is happening.

It is interesting to note the generational differences at this conference.

I had members of the "Judy Generation" tell me that tablet-based content doesn't work, or tell me that social media doesn't work, or tell me that mobile isn't the way they shop.  These folks adored their catalogs, heck, they adored catalogs in general.  There's nothing wrong with that.

I met bright people, like Courtney English at CoffeeTable.  Go check out the company she works for.  Yes, I realize that tablet-based commerce will only account for a few percentage points of your annual net sales, but come on, isn't it time to experiment and learn?  Like many in the "Jasmine Generation", Ms. English spoke fondly of Pinterest, of fashion blogs that curate assortments for her ... these are concepts that are foreign to Judy ... but these are concepts that are critical if you want sales from Jasmine.  It is my opinion that every catalog exec should spend a few hours each week learning from employees who are part of the Jasmine Generation.  Form a committee of a dozen employees under the age of 30, and mine their shopping brains for tips and hints about the future of commerce ... you're going to be amazed by what you learn ... I know I am amazed by what I keep hearing!

One of the smartest comments came from Rod Ford of Cognitive Data.  He spoke of the technological capability of the vendor community to execute one-to-one communications to "segments of one".  He mentioned that we, as business leaders, are unable to execute business strategies at a level that technology is able to execute for us.

Folks, this is an important point.  We have an analytics community that is driving us to, what one individual called "Connected CRM, or CCRM".  There is no doubt that this style of business management is more profitable, and will generate more sales than business as usual.  And there is no doubt that 99% or more of the employees in a company lose significant control over the customer experience as we go down this path.  This isn't fun for the 99%, it creates a 1% vs. 99% argument ... and I think you're probably familiar with that one.  I think this is why I continue to hear executives talk about "the customer", relating to the customer via social media or through brand-based strategies, strategies where the executive takes control back from technology.  I spoke with maybe two-hundred attendees at NEMOA last week, most of the executives I spoke with indirectly referenced a desire to relate to customers outside of technology.

This is going to be a tug of war, on two fronts.

1. For business leaders, there will be a war between technology leading the customer, and brand/social/merchants/content/curation leading the customer.
2. For customers, there will be a war between technology telling the customer what the customer wants (the "Jennifer Generation") and human beings curating for others (the "Jasmine Generation").

If your company caters to Judy, it's business as usual, with the noticeable caveat that Judy is going to retire in the next five years, and then what the heck do we do?

If your company caters to Jennifer, technology is facilitating Jennifer's ability to get the best deal at the best price.  Amazon and classic e-mail marketing (20% off plus free shipping all day every day) already won this battle.  We are going to have to adapt to the world that Amazon (and our zeal to make email marketing "work") helped create for Jennifer.

If your company caters to Jasmine, you make a subtle pivot into having smart social media folks curate every-day low prices and style for Jasmine, combining technology with a humanity that is missing from the Jennifer experience.  Curation is not included in the catalog marketer's vocabulary, is it?

That's the general theme I took from Direct Xchange by NEMOA.  What did you take from the conference?  And if you are a Catalog CEO / Executive, what caused you to not attend, or what would have to happen to cause you to attend in the future?

P.S.:  Speaking of technology, I mentioned Ulla Popken one time in this post ... and before even publishing the post, the first article I read on the internet contained a display ad from Ulla Popken.  This is exactly what I am talking about ... the 1% (math folks) continue to take control over the customer experience ... I'm not saying this is good or bad, but I am saying that my image of Ulla Popken is now fused with remarketing via Mashable.  We don't yet know if this is good, bad, or meaningless, but we should be thinking of the significant importance the 1% play in impacting a business.

Setting Up Accountability For Judy, Jennifer, and Jasmine

Let's pretend you assign a merchant/creative/marketing expert to each persona.

Here's Judy, Jennifer, and Jasmine.

Three customers, somewhere around 59, 43, and 27 years old.  Each customer requires a different marketing approach, don't you think?


Each customer is coded in the database (that's what I do, email me for details).  Think about each customer as a separate line of business.  You assign a merchant/creative/marketer to each team (preferably at the Manager/Director level, to give folks a practical leadership opportunity), and you give them authority to grow their customer audience.


What might work with Judy?

• A possible increase in the catalog mailing strategy.
• Targeted catalog mailings with unique merchandise offerings.

What might work with Jennifer?

• Smaller catalogs that drive Jennifer to the web.
• A strong search marketing program.
• Significant experimentation with the email marketing program to identify the best creative strategies to inspire online purchases.
• A zeal for creating landing pages that are "to die for".
• Experimentation with iPad-based commerce.

What might work with Jasmine?

• Elimination of most/all catalog mailings.
• Viral-based email marketing strategies that focus on time-based deals and bargains.
• Mobile strategies that integrate social and flash sales.
• Social shopping ... think Pinterest / E-commerce integration.
• Integration of friend-based events with current e-commerce business.

Anyway, you have better thoughts about this than I have, so have at 'em!!

Is there a way to focus on customer personas, managing the business via customers instead of via channels?

Thoughts?

More on the Future of Cataloging

On Monday, we talked about the future of cataloging.  Here's my thoughts, once again, positioned via the "Judy / Jennifer / Jasmine" persona framework:

• In 2001, we made a decision.  Instead of allowing the online channel to grow and thrive as an independent entity, we elected to integrate it with our core business, and by doing so, we homogenized the experience, causing the online channel to reflect the core buyer we already possessed.
• Since 2001, we decided to embrace co-ops as our primary method for acquiring new customers.  The models employed by co-ops selected 55+ rural customers, as they should, given their job is to optimize response within catalogs, catalogs preferred by 55+ rural customers.
• This dynamic (catalog + website appeals to a 55+ rural customer ... co-ops deliver 55+ rural customers that will shop online after receiving a catalog) fueled a feedback loop that, eleven years later, resulted in a customer file that is fundamentally disconnected from the average consumer in America (a person in her early 40s).
• Now that we are disconnected from the average customer, anything new and trendy we try, stuff appealing to a customer age 18-49, simply doesn't work when marketed to a 55+ rural customer.  This fuels the feedback loop.
• Long-term, this feedback loop is unsustainable.
• Toss in USPS challenges, and short-term sustainability is questioned.
• The secret to sustainability, over the next decade, is for the catalog brand to follow an age band (50-59 year old customers) instead of following a cohort (59 year old customers that will become 69 year old customers).  This means that the catalog brand must become proficient at speaking to "Jennifer", the current 43ish year old e-commerce / Google maven.
• As the catalog brand switches from Judy to Jennifer, there will be a consistent reduction in catalog advertising dollars, as Jennifer buys from you for reasons largely independent of catalog marketing.
• The catalog brand that tries to jump the bridge from Judy to Jasmine is likely to struggle.
• The catalog brand that sets up a separate, unique brand tailored to Jasmine might experience success.
• The catalog brand that rides Judy into the sunset may experience nice levels of profitability for a period of time, prior to an erosion of all business metrics.
• The transition from Judy to Jennifer won't be without struggle.  Jennifer demands free shipping, and likes discounts.  In order to fund these activities, catalogers will have to cut back on catalog housefile marketing activities to Jennifer.
• It may be possible that the catalog brand can mail more catalogs to Judy.

The wisdom of this pivot is mentioned in this article about L.L. Bean.  I recall working at Eddie Bauer in the late 1990s.  There was a groundswell of momentum to appeal to a "younger" customer.  So, we attempted to do just that!  We swapped out images of durable forty-eight year old men standing in streams wearing jeans with shirt-less twenty-five year old men holding a canoe over their heads.  Well, that got us "younger" from a creative standpoint, but it hurt sales, significantly.  We pulled back.

That was 1998.  You didn't have much choice back then, you were a "brand" that spoke to everybody pretty much the same way.

Today, it's 2012.  You have a nearly infinite number of channels to play with.

The key, of course, is to not stuff a channel that Jasmine likes down Judy's throat.

In the old CRM days, there would be a customer manager responsible for each persona.

1. A Manager/Director responsible for growing sales among people like "Judy".
2. A Manager/Director responsible for growing sales among people like "Jennifer".
3. A Manager/Director responsible for growing sales among people like "Jasmine".

Maybe that's not such a bad idea today.  Put a merchant/creative/marketer in charge of each persona.  Develop independent strategies for each persona, based on the channels each persona utilizes.

It's worth a thought, isn't it?