Silence on the Future of Catalogs

Lots of silence this week, when I discussed the average age of a catalog shopper.

To refresh your memory, here's the "lost generation" for catalog marketers.  Her name is "Jennifer".

She's somewhere between 36-50 years old, with an average of 43 years old.

The data I analyze show that this customer is online-focused.  Catalogs, at best, influence her behavior.

Jennifer doesn't trust us.  When she sees that we're offering her free shipping on orders over $100, she goes online and finds out that last week the business she wants to order from offered customers 20% off, and she finds out that other customers were offered 10% off plus free shipping.  Left with no alternative but to find the best price, she has to use all online resources to facilitate her hunt.

Take a look at this graph ... shared earlier this week in one of the least embraced posts I've written in the past year (click here).  This graph shows the age distribution of our country, and also illustrates the age distribution of many non-kids based catalog brands.  

Look at the 30-39 and 40-49 bands ... Jennifer is not buying from catalog brands at the rate that Judy is buying from catalog brands.

This is a reality that is causing silence.  Nobody wants to talk about the demographic mis-match between catalogers and the general population.


Granted, if you have always catered to a 60 year old customer, then this is meaningless.


But if you catered to a 25-54 year old in 1990, then a 35-64 year old in 2000, and a 45-74 year old today, well, you're just following a generational cohort who will be 55-84 years old soon, and after that ...... ?


Our strategy of fully integrating all channels failed ... it caused our customer base to age significantly, as we only appealed to customers (core customers, as the experts say) who liked a strategy that placed the catalog at the center of the ecosystem.

Now, it is time for us to start rebuilding the business ... protecting the sales and profit from the 55+ audience while searching for a path to the future.

And a path exists!

1. Competition:  We can offer free shipping, especially with a hurdle, by reducing catalogs to Jennifer / Jasmine, using those funds to pay for free shipping.  This is why you hire me, to save money, money you can reallocate.  Contact me here for details!
2. Stop Tethering Online Channels To The Catalog.  Grow these channels ... allow the customers who shop here to use the channel as more than a glorified catalog order form.  I know, easier said than done, but go take a look at the websites of businesses that are not tethered to catalog marketing --- big difference, right?
3. Diversify New Customer Acquisition:  The co-ops have become really, REALLY good at feeding you 55+, rural customers.  Wow.  Sure, these names are responsive, but these names protect your business today, they don't guarantee your future.  We've got five years, plus/minus, to chart a path to the future.  That path begins with the process of acquiring customers like Jennifer / Jasmine.  Do we have the chops to do this?  And yes, I know, you're going to tell me that Jennifer / Jasmine don't have long-term value.  Who's fault is that?
4. Carefully Analyze Merchandise:  This is going to be a theme with me, through the summer and the fall.  Our merchandise planning process is broken, and our ability to analyze "who buys what" is more broken.  Quick --- tell me what sales look like, by merchandise divisions, among paid search customers?  Out of 100 catalog brands, I'd be willing to bet fewer than ten can produce this table.  How else do we learn how non-catalog loyal customers behave?  And, yes
5. Be Nimble:  I know, harder said than done.  The entire catalog planning process is a 7-9 month marathon ... and while catalogers are predicting in June what a customer might purchase next March, online competitors are planning 16 unique sales events for next week alone.  There are online brands that are able to imagine new products, design them, source them, and make them available for sale in two weeks.  Two weeks!  Can catalogers compete with that?  Well, yes, absolutely ... if you step outside of a 7-9 month catalog planning process.

Time for your thoughts ... why are you so quiet, when it comes to this topic?

Email Marketing Evolved 2012: Stockholm

I will be speaking at Email Marketing Evolved 2012 in Stockholm this October (click here for details).  Looks like a good day of content to me, this would be a good time to sign up!

Frequently, my travels include visits to clients wishing to discuss various projects.  If you are thinking of a project, this is the time to pursue it, so that we can get the project completed prior to arrival in Europe in late October.

Contact me now (click here) and send me details of the work you'd like done.  I look forward to seeing many of you in October!

This Isn't What The Multi-Channel Pundits Promised Us: Age Distribution

Take a look at this chart.

The blue bars represent the average age of individuals in 2010, per data from the Census Bureau (click here for details).


The green bars represent what I see across about 65% of catalog brands.  If we exclude Kids businesses (for obvious reasons), the distribution frequently looks like what we see with the green bars.


Yes, this means that the average catalog shopper is old.


That's fine today.  Folks around the age of 60 have more money than folks around the age of 30, right?


For a decade, we were told that if we were "multi-channel", we'd be successful.  We just had to align all of our channels around the core business, providing an "omni-channel" experience that customers craved.


Nonsense.


Aligning all of our channels around our core business caused our core audience to like us.  


It did not cause an entire generation of customers to even bother to consider us.  And that's about to become a huge problem.


We're stuck in a nasty feedback loop.  Customers age 50-69 love our products.  We measure the products customers love, then we get more of those products, products that 50-69 year olds love.  And with a 38% annual retention rate (average across 75+ clients in 5+ years of doing this), we have to find a TON of new customers each year.  Guess where we go to find new customers?  Co-ops!!  And who do the co-ops feed us?  Well, they feed us responsive names ... and those names tend to be 50-69 years old (and often rural ... just run a report for yourself and learn what's happening in your business).  What do the names that the co-ops feed us like?  Well, it's product presented and merchandised to 50-69 year olds.


We can't get out of this nasty feedback loop.


By forcing the multi-channel experience to revolve around the catalog, and by forcing our primary customer acquisition channel to align with the co-ops, we created the scenario illustrated in the graph above.


I know, I'm supposed to offer a solution to this problem.


But we don't want to hear the solution to the problem, do we?  That requires change.  And we don't want to change what we're doing.  It's fun to spend six months creating the Holiday catalog ... it isn't fun to create sixteen flash sales events a week, it isn't fun trying to build a business that caters to a 30 year old shopper (Jasmine), a business that uses the communications channels of a 30 year old shopper.


When I presented this problem to an industry expert back in March, the industry expert issued the following statement:

• "By the time this thing blows up, I'll be retired."

By the time this thing blows up, I won't be retired.  I'll be busy cleaning up the mess.


It might be a good time for those who won't be retired in ten years to start developing a strategy for a mess that is a few years out, but is now nearly unavoidable.

Dear Catalog CEOs: Content

Dear Catalog CEOs:


Have you had a chance to read this little ditty about the book industry, in the NYTimes (click here)?


It sounds like authors are being stretched ... audiences have an insatiable desire for content.


I want to create a contrast for you.


I recently overheard this comment from an Executive at a conference:

• "We simply don't have anything to tell the customer.  We mail a monthly catalog, and by month five of a season, we've beaten every possible story over the head of the customer.  Our customers are bored.  We're just trying to get to a new merchandising season.  At that time, we'll have a new series of catalogs ready to go."

And I recently overheard this comment from an Executive at a conference:

• "We have sixteen sales a day.  Sixteen!  And each sale is time-limited.  We work with our merchants and inventory team to come up with concepts that stimulate the customer, that cause the customer to act, today.  The customer wants to be told what to do.  That's what we do.  As long as we're in a good inventory position, we can create a sale today and put it up on the site today."

There is something about cataloging that reduces urgency.  Everything is planned.  Everything is planned months in advance.  The DNA embedded in a catalog employee is pre-disposed to thoughtfulness, carefulness, planfulness, steadiness.

The multi-channel movement of the past decade sure didn't help us, in this respect, did it?  Everything had to be integrated across channels, so any ability to be nimble online was squelched by the need to integrate with a catalog that would be mailed months later.

Maybe it is time to reconsider the content we publish.

Maybe it is time to be nimble, to create urgency, to trust a different set of employees with a different set of skills to drive business.

Thoughts?

Friday Notes

Let's start with this image to our right.


This was what was in my mailbox.  On a Wednesday.  In Late May.


There are nine catalogs here.


I've previously purchased from three of the businesses.

1. I bought from one of the businesses, online, twelve months ago.
2. I bought from one of the businesses, just once, online, nine months ago.
3. One business I buy from, in store, monthly.

Which means, of course, that the co-ops self-determined the other six catalogs.  

That big algorithm in the cloud made some mighty big decisions.

Ask somebody at your favorite co-op to run you a report.  Have them tell you exactly how many times they decided to contact, in the past year, the customers they selected for your most recent customer acquisition activity, across all of their clients.  Sure, they'll tell you that they're not going to tell you that metric, just like they'll tell you that they aren't going to tell you the secret sauce that goes into their proprietary, cloud-based algorithms (heck, I tell everybody, even my competition, how I do what I do ... it's not bad for business).  This time, when they fail to offer you transparency, do something about it!  Demand transparency!  Because six co-op based catalogs in your mailbox in late May is unlikely to result in an optimal outcome for anybody except the co-op making algorithmic, cloud-based decisions on your behalf.

Retailers Need To Be Liked:  Have you read this one (click here)?  I'll save you a little bit of time by getting to the punchline:

• "Will it drive sales?  Not likely."

Allow me to communicate a parable.  I was invited to speak at Shop.org last fall.  That's an honor.  You stand up in front of four hundred people and share your thoughts.  You check your phone ninety seconds after finishing and you learn that your quotes have been tweeted seventy-nine times in the past thirty minutes.  For the next six hours, you're a star, people come up to you and tell you how much they loved your message.

But not one individual hired me for a consulting project following the conference.

In other words, it was fun to be "liked".  But there was no correlation between being liked and making a living.  

You have to spend your time wisely.

The same thing can be said for all of us who are trying to sell something to a customer.  The activities that cause somebody to "like" us on Facebook are not the same activities that cause somebody to buy something from us.  Maybe it is time to focus our efforts on selling something.

Beer Market:  Tell me why this concept wouldn't work on your homepage (click here)?  And I'm not saying you do this with every item you sell, but why not choose a dozen items and then experiment with them?  And yes, I realize, the multi-channel pundits will light me up on this one, suggesting that you have to honor the price in your printed catalog at your call center, and this technology makes it impossible because you have dynamic pricing in one channel and static pricing in other channels.  Fine.  Create a dozen new items that you only sell online and try this.  And yes, I realize that the multi-channel pundits will light me up on this one, saying that the subsequent idea is a single-channel-only solution that doesn't fit in the multi-channel constellation they adore.  Well, fine.  

Maybe lack of innovation is a reason that multi-channel is a failed concept.

Mobile:  You ever notice how one botched IPO causes everybody to view social media differently?  One little line in an SEC document about it being harder to monetize mobile, and all of a sudden, "Facebook is Dead" abounds on the internet.  Experts from near and far are pontificating about this, even though the same reality existed before the public disclosure and the IPO and almost none of the experts bothered to consider the concept as they ran the valuation up and up and up.

When it comes to advertising, folks famously talked about trading analog dollars for digital dimes.  Maybe we're in the first inning of trading digital dimes for portable pennies.

By the way, dear Catalogers, have you noticed the similarities between e-commerce/mobile and where cataloging went in the 1980s?  Catalogers like JCP/Sears/Spiegel sent their 600 page masterpieces, at considerable cost.  Then folks like L.L. Bean and Lands' End obliterated that business model with 124 page, lower-cost assortments, targeted to niche audiences.  Thirty years later, we're in the same place.  E-commerce is the 600 page masterpiece, mobile is the targeted 124 page assortment with much less cost.

Just think of the parallels as mobile obliterates traditional e-commerce among Jasmine's generation.




Speaking of Judy:  Did you read this little gem about Judy and her love for Best Buy's Geek Squad?  We spent a decade chasing channels, when we should have been focusing on customers.  Now that we're stuck with a 55+, rural audience, why not look at ways to meet the needs of a 55+, rural audience?

I Just Don't Care About Customer Profitability

One of the most delicious comments of the past year was uttered by an Executive ... this individual told me this nugget:

• "I just don't care about customer profitability.  I don't make decisions on a customer-by-customer basis. As an Executive, I make macro-level decisions.  Do we invest in a new product?  Do we remodel a store or build a new store?  Do we close down our call center and outsource it to India?  Do I hire talented employees?  Do I add a catalog to the contact strategy?  Do I cheat and use paid search to drive traffic, or do I do the hard work to allow organic search to succeed?  Every decision is made at a macro-level.  And if I make the right decisions, customer profitability takes care of itself.  Never, ever, do I sit in my office and say to myself, 'what is the best strategy for Nancy Jones in Medford, Oregon?'"

Boy, that quote is going to chew up some of the pundits in the marketing blogosphere, huh?

Maybe we should turn the story around, focusing on the marketing pundits in the vendor community who demand a true one-to-one, customer-centric strategy of all of us:

• When you write blog posts, are they personalized to your audience ... is each message different, or do you blast the same message to everybody?
• When you publish an email newsletter, do you have fifteen different versions, customized and personalized for different audiences?
• When customers and prospects visit your website, do you have different landing pages for each visitor based on visitor preferences?

The reality, of course, is that few of us focus on individual customer profitability.  There are times when we can make a significant difference (my "A" "B" "C" "D" "F" grades in Catalog PhD projects, for instance).  And there are the other 85% of instances where we make macro-level decisions.

Maybe it is time to be more realistic ... to realize that the macro-level decisions are hard ones, ones that ultimately determine how successful we are.

Attribution: What Do We Really Know?

Here's a few thoughts for you.  Please read these quotes:

• "Mason Crosby kicked a 42 yard field goal as time expired, leading the Green Bay Packers to a 24-21 victory over the New York Giants."
• "The Dow Jones Industrial Average dropped 124 points, or 1.1%, on reports of a two billion dollar trading loss at JPMorgan Chase."
• "Our meeting won't start until 10:15am, because Penny is held up in a traffic jam."
• "My computer is running slow because it is infected with a virus."
• "Janice, a fifteen year veteran, was promoted to Vice President of E-Commerce because of her outstanding work optimizing our email marketing program during the past year."

Each quote offers some form of attribution, correct?

Let's be honest.  Does Mason Crosby deserve full credit for a win?  What about the other 120 plays in the game, contested by forty-four teammates?  What role did each player, and each play, have in the outcome of the game?

Can anybody prove that a two billion dollar trading loss at one company, by one individual, caused billions of shares traded in nanoseconds by computer algorithms to yield reduced market capitalization at companies not remotely connected to the trading loss?

Can we prove that a traffic jam kept Penny from getting to a meeting on time?  Did Penny leave for the meeting soon enough?  Could Penny have chosen a different route?

Even if a computer is running slowly because of a virus, could the user have done anything different to avoid getting a computer virus?

What role did the other fourteen years play in Janice becoming a Vice President?

In life, we accept ambiguity, don't we?  We don't demand a full accounting for how each project that Janice worked on over fifteen years contributed to her promotion.

But in Marketing, we view this differently?  We somehow think that we can parse every stinking click, every visit to the mall, and every silly tweet into a category that results in the division of a $100 order across the 27 actions that led up to the order.

What do we really know about the value of all 27 actions that led to a $100 order?

Discuss.