Catalog Choice: You Decide What Gets In ... Except When They Market Catalog Choice Webinars To You?

Catalog Choice has been a blessing for consumers who do not wish to be marketed to via catalog advertising. When my clients ask for advice, I recommend they partner with Catalog Choice. Honoring customer requests is a good thing! Catalog Choice is like a "widget", if you will, and can be used to make the opt-out process easy.

This past week, Catalog Choice used marketing techniques that are very similar to those employed by catalog marketers. Allow me to explain what they did. I will ask you for your thoughts at the end of this essay.


Thursday, June 19: I receive the following e-mail from Catalog Choice. Please click on the image to enlarge it.


There are several things that are unique about this e-mail marketing message / webinar invitation.

1. I did not opt-in to receive marketing messages from Catalog Choice. They chose to send this marketing message to me without previously obtaining my permission to receive marketing messages from them.
   
2. The "from" line of the e-mail message is from an individual at a PR agency. The subject line does not mention Catalog Choice. The body of the e-mail message is from a staff member at Catalog Choice. I'm not sure where this stands from a can-spam standpoint. At minimum, the strategy is not aligned with standard e-mail marketing practices.
3. The PR agency employed by Catalog Choice graciously agreed to answer my question about how they received my e-mail address (they visited my website and copied the e-mail address), an act I appreciate.
   
4. The e-mail message does not offer me a link with the option to opt-out of future Catalog Choice e-mail marketing campaigns.
5. The privacy policy at Catalog Choice suggests that they may collect information on users, should the user ever send an e-mail to Catalog Choice (I previously responded to an e-mail from Catalog Choice. and may have sent an e-mail to Catalog Choice in the past). Catalog Choice offers an individual like me the opportunity to opt-out of marketing communications by e-mailing them at a unique e-mail address. Catalog Choice offers the following language, regarding volunteered PII: "Limitation of Liability By providing us with any PII you expressly and unconditionally release and hold harmless CatalogChoice, and our subsidiaries, affiliates, directors, officers, employees and agents from any and all liability for any injuries, loss or damage of any kind arising from or in connection with the use and/or misuse of your collected PII."

Wednesday, June 25: I received a phone call from Catalog Choice, asking if I was planning on attending their webinar.

1. I never gave my phone number to Catalog Choice.
   
2. I never gave Catalog Choice my permission to market webinars to me via telephone.
3. My phone number is part of the national do not call registry, though I give it out to my clients, family, and to potential clients at business-related conferences. It is probably true that .org brands can market to the do not call registry.
   
4. Catalog Choice volunteered to me that they obtained my phone number from a presentation I gave in early 2007, a presentation they found via a hyperlink online. My thanks to Catalog Choice management for being honest and forthright about answering my questions.
5. Catalog Choice did, via e-mail and during the phone call, offer to remove me from future marketing campaigns, good for them!
6. I did not get to have a say (in advance) in the marketing frequency employed by Catalog Choice. In other words, I did not get to say whether I wanted one or two or seventy marketing messages. This is comparable to the practices of the Catalog industry.
   

Why Is This Important?

Catalog Choice goes by the tagline ... "you decide what gets in". When it comes to catalog marketers, Catalog Choice aims to give consumers control over what goes in their mailbox. When Catalog Choice markets to me, the marketing strategy is comparable to the practices of the Catalog industry, practices Catalog Choice are hopeful to change within the Catalog industry.

We also know the following:

1. Catalog Marketing requires that forests be harvested, potentially damaging the environment.
2. E-Mail Marketing uses electricity and plastics (computers/servers), often sourced from coal and petroleum, potentially damaging the environment.
   

Obviously, Catalog Choice has a right to run their business model as they wish, a business model that benefits consumers, catalog brands, and the environment --- win/win/win.

Here is my question to you, the e-mail, online marketing, multichannel, and direct marketing leader who subscribes to this blog:

• Is it reasonable for an organization to strongly request that the Catalog industry institute permission-based marketing, yet in their own marketing programs execute the very strategy that they are trying to get the Catalog industry to stop?

I am torn by this topic, since I have always recommended Catalog Choice to my clients. I genuinely believe that Catalog Choice means no harm. It is my opinion that they simply did not think through the parallels of their strategy and the very catalog marketing strategies they are trying to influence, making this an honest mistake. My hope is that the Catalog industry and Catalog Choice can have a strong, collaborative, and beneficial relationship. My hope is that, in the future, Catalog Choice employ marketing strategies consistent with those they wish to encourage Catalog marketers to adopt.

I'd appreciate your thoughts in the comments section of this post. Please forward this post to your colleagues, as the topics outlined are worthy of general discussion in the direct marketing community.

A Sad Outcome Of The Efforts Of Catalog Choice

Catalog Choice continues to use brilliant, grass roots style marketing activities to send the craft of cataloging to the recycle bin of formerly important business models.

• Subscribe to the Catalog Choice RSS feed, to stay updated on their activities.
• Here is the new Catalog Choice Facebook group, educating 40,000,000 Facebook users about the ills of unsolicited catalogs.
• Or simply visit the Catalog Choice homepage, to keep up to date on their initiatives.

I've spent all but three years of my career in the catalog/multichannel industry. I recall the days when my industry was praised by environmental types for not contributing to air pollution, gasoline consumption, and carbon dioxide emissions.

I don't harbor ill-will toward Catalog Choice. They simply created a service that 350,000 frustrated individuals (to date) chose to utilize. Catalog Choice knows how to use modern marketing tools to "spread the word".

I am frustrated for two reasons. One leads to a sad outcome.

First, I am exasperated with my own industry. It is our own scorched-earth policy of over-mailing online customers who don't want to receive catalogs, and our delegation of circulation responsibilities to co-ops without appropriate oversight that caused so many unsolicited, unwanted catalogs to end up in consumer mailboxes. Worse, the Direct Marketing Association told us to ignore the desires of our own customers. Forty percent of catalogers are siding with the DMA, according to a recent Catalog Success survey. We're going to get the end-game we deserve.

The sad outcome of the growing popularity of Catalog Choice occurs when "the little guy" loses his/her job.

While estimates vary greatly, somewhere between $80,000,000,000 and $150,000,000,000 annual sales are generated over the telephone due to catalog mailings.

Let's assume a conservative estimate of $70,000,000,000 sales generated over the telephone. Let's also assume that the average call center and distribution center employee is responsible for processing $400,000 of sales per year.

If Catalog Choice is successful, they may be able to eventually get 10% of the population to opt-out of catalogs (and their presence alone might cause legislation that boosts this number far beyond 10%).

Catalog Choice would facilitate the elimination of seven billion dollars of sales (not to mention what is driven to the web, which I am purposely ignoring to simplify the message).

Worse, Catalog Choice facilitates the loss of $7,000,000,000 / $400,000 = 17,500 call center and distribution center full-time jobs, or 35,000 part-time jobs. And I'm not counting jobs in a vendor community that supports the catalog industry.

These aren't executive-level jobs. Executives get to keep their jobs, because the online channel still needs to be managed. The very folks who created this problem will still be employed.

Nope, these are the kind of jobs that anger me the most. These are $11.00 per hour call center and distribution center jobs. In many cases, these are $11.00 per hour jobs in rural areas like New Hampshire, Vermont, Maine, and Wisconsin, places where there simply aren't other jobs.

These jobs belong to farmers, who work in the distribution center after milking cows at 6:00am, before having to milk cows at 6:00pm.

These jobs belong to spouses looking to supplement income in order to pay a an adjustable rate mortgage that they had to take out to be able to afford a nice home.

These jobs belong to hard working, honest individuals, folks who want to be able to afford to buy a hybrid car, to be able to put solar panels on homes, who already recycle everything they can in their homes, who want to be able to afford compact florescent light bulbs, who unplug electronics to conserve energy, who took this job to be close to home to minimize the gasoline expense and pollution generation required to get a better-paying job in the big city.

Poorly designed catalog contact strategies that cause eco-friendly organizations to take a stand will cause good, honest, hard-working individuals in the lower-middle class to lose their jobs. Even if all of the sales shift online, jobs disappear when sales are generated via the online channel.

If you are an executive at a catalog organization, and you truly believe that Catalog Choice wants to be a business partner of yours, why not invite the leadership of Catalog Choice to your office? Pay for the visit out of your budget. Give them a tour of your call center. Have them meet the individuals who work there. Actually talk to the individuals who will pay the price of this growing trend.

And once you've completed the tour, sit down with Catalog Choice and come up with a solution before it is too late. There's still time for a solution. Remember, Catalog Choice states that they want to eliminate "unsolicited" catalogs, not catalogs that consumers "want" to receive.

Survey Results: What Purpose Does Catalog Choice Serve?

Please visit the homepage for the latest survey, asking why you read The MineThatData Blog.

You were given a chance to speak out about Catalog Choice, the customer-friendly and eco-friendly organization that protects customers from the misery of receiving unsolicited catalogs.

Here is how you responded:

• 43% = Catalog Choice simply gives customers a way to opt-out of unwanted and unsolicited catalog mailings.

• 14% = Catalog Choice uses this service to promote an eco-friendly agenda.

• 29% = Catalog Choice wants to dictate a new business model to catalogers.

• 14% = We cannot possibly know or understand what Catalog Choice wants to accomplish.

As you can clearly see, our readers are split in their perception of what Catalog Choice wishes to accomplish.

I truly believe catalogers want to honor opt-out requests. I have yet to hear information contrary to this.

Catalogers want to trust one or both organizations (Catalog Choice and the Direct Marketing Organization, contrasting organizations promoting common objectives). Catalogers are reading your press releases and blog discussions, scrutinizing your words and actions. Use your platforms to do good!

Multichannel Forensics: How A Cataloger Becomes An Online Brand

Times change. Multichannel Forensics are a great way to illustrate how times change if you are a catalog brand.

Let's analyze the repurchase index for the catalog channel and the online channel for a catalog brand.

1999: Catalog to Online = 0.06, Online to Catalog = 0.59. Catalog customers are unwilling to shop online. Online customers transfer back to the catalog channel after purchasing online.

2000: Catalog to Online = 0.11, Online to Catalog = 0.48. To the catalog executive, things don't look dramatically different. Online customers still shift back to the catalog channel. For two consecutive years, it appears that the online channel depends upon the catalog for business.

2001: Catalog to Online = 0.17, Online to Catalog = 0.41. Same old same old, if you're the catalog executive. The online channel grows, but online customers switch back to traditional catalog shopping. However, pay attention to each index, one increasing, one decreasing.

2002: Catalog to Online = 0.23, Online to Catalog = 0.33. At this time, the catalog executive notices that catalog productivity is struggling, while the online channel continues to grow. Something seems fishy.

2003: Catalog to Online = 0.28, Online to Catalog = 0.29. The catalog seems to flounder, while the online folks gloat about their wonderful channel. This is when matchback analytics became popular, "proving" that online orders are driven by catalog orders.

2004: Catalog to Online = 0.32, Online to Catalog = 0.23. Here's where management changes occur. The catalog channel continues to flounder, now shrinking. Conversely, online purchasers are on the verge of becoming unlikely to buy over the telephone.

2005: Catalog to Online = 0.36, Online to Catalog = 0.15. We've passed a key inflection point, no longer able to return to "the good 'ole days". Catalog customers are willing to shop online. Online customers are no longer willing to pick up the phone and place an order. It is here that the traditional cataloger mails online customers like they are going out of style, using matchback analytics to "prove" that the catalog drives online orders.

2006: Catalog to Online = 0.40, Online to Catalog = 0.13. The cataloger doesn't realize it, but the online customer is in many ways becoming a fundamentally different customer, not needing catalog advertising to place orders. Yet, because the cataloger mails most online customers, the cataloger mistakenly "proves" that catalog mailings drive online orders. Multichannel Forensics metrics diverge from matchback analytics.

2007: Catalog to Online = 0.43, Online to Catalog = 0.12. The transition is basically complete. The catalog brand is now an online brand that uses catalog advertising. Online customers keep shopping online, while the remaining segment of catalog customers continue to leak into the online channel.

If a catalog executive sees this trend, then she knows that the days of catalog marketing are winding down.

Once again, the trend looks like this:

• 1999 Cat-Web = 0.06, Web-Cat = 0.59.
• 2000 Cat-Web = 0.11, Web-Cat = 0.48.
• 2001 Cat-Web = 0.17, Web-Cat = 0.41.
• 2002 Cat-Web = 0.23, Web-Cat = 0.33.
• 2003 Cat-Web = 0.28, Web-Cat = 0.29.
• 2004 Cat-Web = 0.32, Web-Cat = 0.23.
• 2005 Cat-Web = 0.36, Web-Cat = 0.15.
• 2006 Cat-Web = 0.40, Web-Cat = 0.13.
• 2007 Cat-Web = 0.43, Web-Cat = 0.12.

What does the relationship look like when the catalog business still matters?

• 1999 Cat-Web = 0.06, Web-Cat = 0.59.
• 2000 Cat-Web = 0.11, Web-Cat = 0.48.
• 2001 Cat-Web = 0.17, Web-Cat = 0.41.
• 2002 Cat-Web = 0.22, Web-Cat = 0.34.
• 2003 Cat-Web = 0.25, Web-Cat = 0.32.
• 2004 Cat-Web = 0.26, Web-Cat = 0.31.
• 2005 Cat-Web = 0.28, Web-Cat = 0.30.
• 2006 Cat-Web = 0.29, Web-Cat = 0.29.
• 2007 Cat-Web = 0.30, Web-Cat = 0.28.

If this is the relationship you see, you likely have three separate customer segments:

• Pure catalog customers who buy over the phone when catalogs are sent to them.
• Online customers who are inspired to purchase by catalogs.
• True online customers who do not respond to catalog marketing.

What does the relationship look like when the catalog business IS the business?

• 1999 Cat-Web = 0.06, Web-Cat = 0.59.
• 2000 Cat-Web = 0.08, Web-Cat = 0.48.
• 2001 Cat-Web = 0.11, Web-Cat = 0.41.
• 2002 Cat-Web = 0.14, Web-Cat = 0.35.
• 2003 Cat-Web = 0.16, Web-Cat = 0.32.
• 2004 Cat-Web = 0.17, Web-Cat = 0.31.
• 2005 Cat-Web = 0.17, Web-Cat = 0.30.
• 2006 Cat-Web = 0.18, Web-Cat = 0.30.
• 2007 Cat-Web = 0.18, Web-Cat = 0.30.

If this is the relationship you see, you are truly a cataloger. Your website basically serves the purpose of a glorified order form. Your survival depends upon the mailing of catalogs. Your future, however, depends upon your ability to cultivate a segment of customers who are willing to shop online, not needing catalogs to purchase merchandise.

The future is a bit murky for some catalogers. Many catalog companies have a head start building a segment of the customer base that shops online not because catalogs are mailed, but simply because the customer loves the brand.

Catalogers who do not have this "insurance policy" will struggle, because everything depends upon the cataloger mailing catalogs. Third parties like the USPS eat away at the brand from a profitability standpoint. Third parties like the DMA and Catalog Choice, via opt-out lists, facilitate customer backlash (though the backlash is ultimately our fault, not theirs), further lowering catalog productivity.

Catalogers who have this insurance policy, a segment of customers who buy exclusively online without the aid of marketing, are able to generate profit without the cost of advertising. This profit offsets the lowered profit from USPS cost increases, increases in paper cost, and customer backlash facilitated by Catalog Choice and the DMA.

So the goal for a cataloger is to understand where the customer is in the evolution from catalog marketing to online purchasing. By using Multichannel Forensics, executives are able to discern where a catalog brand stands on the evolutionary path to an online future. The executive then understands what must be done to protect the business, both short-term and long-term.

Response From Catalog Choice: Marketing Strategy

The direct marketing community expressed considerable interest in yesterday's post, entitled "Catalog Choice: You Decide What Gets In ... Except When They Market Catalog Choice Webinars To You". This essay is one of the most read articles of 2008, and has been forwarded via e-mail at a rate far greater than the typical article. Many of the world's largest catalog brands frequented the site today to read about a Catalog Choice webinar marketing strategy that is, for all practical purposes, the same strategy they are encouraging the catalog marketing community to change.

A response from Chuck Teller of Catalog Choice can be read in the comments section of the original post. If you have interest, please review the response (click the link above) and offer our community of nearly 1,200 daily catalog, multichannel, e-mail marketing, online marketing, and web analytics subscribers your thoughts on the topic. Thank you to Catalog Choice and Mr. Teller for offering a comment.

Cutting The Stack Of Catalogs

The DMA is forwarding an article from Business Week entitled "Cutting The Stack Of Catalogs", featuring an organization called "Catalog Choice" that allows consumers to easily opt-out of catalog mailings.

By the way, Catalog Choice has a blog. This organization "appears" to have an open conversation with consumers. Who "appears" more open, honest and transparent --- this organization, or the DMA, an organization that used a one-way communication to paying members earlier this year urging them to not honor Catalog Choice requests?

But that's neither "here nor there". Let's assume that Catalog Choice is acting with honesty and integrity. Let's assume that your customer is truly requesting to be removed from your mailing list. Let's assume that the DMA has your best interests at heart (which they do).

If you respect your customer's wishes, and you operate your business with honesty and integrity, what should you do when your customer opts out of your catalog mailings via a third party like Catalog Choice?

This isn't 1988. If the customer wants to purchase from you, she can use your website.

Simply remove the customer from your list.

Better yet, for every request you get from Catalog Choice, call the customer, and ask the customer if it was her intention to opt out of your catalog strategy.

Response From Catalog Choice Executive Director Chuck Teller

I am including text from comments received by Catalog Choice Executive Director Chuck Teller. I think it is important that our catalog audience get to hear all sides of this discussion.


Response to Looking Ahead To 2008:

In 2008, there will be a conversation between consumers and merchants about eco-friendly and privacy matters. I look forward to having you and as many members of the multi-channel merchant industry involved in the conversation. I know the consumers are ready to voice their opinion.

I like the fact that you refer to Catalog Choice as an eco-friendly organization. There is a seat at the table for merchants who want to be eco-friendly. In 2008, we will be rolling out a series of Eco-Friendly Best Practices.

My only request at this time is to not add the pre-fix "third party". Catalog Choice and our sponsor organizations (NWF, NRDC and Ecology Center) are not "third-parties". For example, the Ecology Center runs the curbside recycling program in the city of Berkeley. We are an integral component of the direct marketing lifecycle. We do the dirty work of driving around picking up those recycled catalogs.

Happy New Year - looking forward to 2008.


Response to Extreme Makeover, Catalog Edition:

Great post. I think I will point to it from my blog over at Catalog Choice. One item I would like you and your readers to consider is how you can work with Catalog Choice to drive more sales and communicate with your customers that are using our service. We have some programs that we are developing for merchants. Sign up for your free Merchant Account at http://catalogchoice.org/merchants to start your Extreme Makeover.

Chuck

ACCM 2008: Catalog Choice

As best I can tell, Catalog Choice was not in the exhibit hall.

Attendees overwhelmingly shared with me that they were willing to speak with or work with Catalog Choice --- only a few individuals expressed frustration with constant calls from Catalog Choice to accept opt-outs.

There may be folks from Catalog Choice who are in attendance, and I simply haven't run across them. I'd have loved to have seen the DMA have the courage to invite Chuck Teller of Catalog Choice to speak at this conference, allowing their message to be heard along with the message of self-regulation offered prior to the keynote address.

Overwhelmingly, attendees told me they wanted to do "what is right" for their customers.

Extreme Makeover: Catalog Edition

The love (customers/press/bloggers) / hate (some catalogers) relationship with Catalog Choice dominated my in-box and comments over the past week.

We Americans love to assign blame. We love to hold people accountable. We also love to forgive people, and where possible, we love to rescue people from dire situations (i.e. Extreme Makeover, Home Edition on ABC).

It's probably time we, as Catalog industry leaders, conducted a post-mortem on our own business practices, asked for forgiveness, and then rescued ourselves from what may someday become a dire situation.


The Problem: Some Folks Don't Like Us

You're probably not knee-deep in complex business issues the week between Christmas and New Year's Day, so why not take a lap around the internet and learn a little about all the ways various folks hate catalogers.

Read the comments that come after the articles. You'll notice that folks use phrases like "unwanted catalogs". You won't see somebody write something like "I've been a lifelong L.L. Bean customer, but I hate the fact that they send so many catalogs."

So folks don't like our industry when we "send unwanted catalogs".


Why Does Our Industry Send Unwanted Catalogs?

There are many instances when we send catalogs to customers who may not want them.

1. Customers who exclusively purchase via the online channel.
2. Prior catalog customers who have not purchased in a long time.
3. New catalog customers who weren't expecting an onslaught of mailings from a brand.
4. Customers who have never purchased from our brand (i.e. customer acquisition).

Catalogers directly control issues one, two and three. Circulation teams create profit and loss statements for customers in groups one, two and three. If catalogers lost money mailing those groups, the flow of catalog mailings stop.

The fourth group is an intriguing one. Historically, a catalog brand could not survive without a massive customer acquisition effort. As a result, catalogers might mail half of their circulation to customers who never purchased from the brand previously --- with start-up catalogers and low-retention-rate brands mailing maybe eighty percent of catalogs to customers who have never purchased from the brand previously.

Prior to 1995, catalogers rented the lists of similar catalog brands, and exchanged lists with other companies. In the past five years, however, there has been a dramatic shift in circulation away from rented/exchanged lists, to cheaper and better performing co-op lists.


Co-Ops And Dissatisfied Consumers?

While the numbers vary, many catalogers allocate about half of customer acquisition circulation to co-ops (Abacus, Z-24, NextAction, I-Behavior, Circ Base, Prefer Network, Wiland Direct).

So if the cataloger allocates half of circulation to customer acquisition activities (customers who have never purchased from the brand), and half of the customer acquisition circulation is allocated to co-ops, then that means that co-op statisticians decide who receives one out of every four catalog mailings.

To be fair, this isn't dramatically different than cataloger practices in the early 1990s, when the Garnet Hill list might be rented by Newport News. In either case, customers received unsolicited mailings.

There is a subtle difference, however. Customers might have been tolerant of receiving catalogs from a "similar brand" ... the fundamental difference between Eddie Bauer and L.L. Bean isn't enough for the Eddie Bauer customer to get ticked-off when an L.L. Bean catalog arrives. However, the co-op statistician uses equations to decide who receives catalogs. And equations, while more precise and profitable than list rental/exchange models, will frequently target customers incorrectly.

If the co-op statistician notices that apparel customers have an "affinity" with another merchandise line, the statistician builds that information into the model. This might result in an increase in response rate, from 1.5% to 1.65%, a wonderful result for a cataloger. But it could also mean that twenty or thirty percent of the names mailed are "different".

It is in this twenty or thirty percent that problems occur. If the statistician gets creative, there will be better response, but more "risks" are taken with the customers who are mailed. Co-ops may substitute "brand affinity", which customers might be tolerant of, with "product affinity", which customers might not be tolerant of (this is simply a hypothesis of mine --- co-ops, feel free to jump in and comment about this).

Is this the fault of the co-op? Does the co-op provide enough information for you to know who the co-op is mailing on your behalf? Do you provide enough oversight of the co-ops to know who they are mailing on your behalf? Did you pre-think how your customers might respond to knowing that you dumped their purchase information into multiple co-ops, so that they could be mailed complimentary offers by competing brands?


Forgiveness

It might be time to consider asking customers, bloggers, and the press to forgive us. Especially if co-ops determine the names/addresses of individuals who receives a quarter or more of your total circulation.


Extreme Makeover: Catalog Edition

Here are nine ways for us to begin to repair our reputation, and be good stewards.

• It is time for the DMA to do something with the $10,000 to $50,000 each of our organizations pay them each year. And that something is not telling us to "just say no" to Catalog Choice. If one of our customers or one of our prospects doesn't want to receive a catalog, we have to honor that request. Honor the customer, and challenge the DMA for modern solutions and real action.

• Have you considered joining the American Catalog Mailers Association? It won't cost you the $10,000 to $50,000 it costs to join the DMA. While this organization believes that the response of the press to the folks at Catalog Choice "give them the willies", I perceive this organization wants to "do what is right". Best of all, you could play an active role in doing "what is right".
  

• Make it easy for your own customers to opt-out of catalogs. You make it easy for customers to opt-out of e-mail campaigns, don't you? The reality of the marketplace is that you have to do this for catalog mailings as well. Times have changed.
  

• Strongly consider the mailing strategy you employ for online-only customers. These customers may consider you as an online brand, not as a cataloger, hence their dissatisfaction of your online mailing strategy.

• Give customers a say ... give them an option to receive half of your mailings, and brand this choice as being "eco-friendly". Test the living daylights out of this ahead of time, so you know the ramifications this will have on your business.
  

• Oversight ... do a "deep dive" with the co-ops. If you allow co-ops to mail a quarter of all your catalogs, you have given a quarter of your brand authority to co-ops. Wow. Do you oversee the vendors you work with in China to ensure that the working conditions are acceptable? If you do, don't you think you should provide the same oversight with co-ops? And if co-ops won't provide transparency, well, then, you need to think about your relationship with them, don't you? The folks who work at co-ops are good people, they will respond to a catalog industry that demands oversight.
  

• Would a little "PR" hurt? Catalog Choice gets picked up by major publications all over America, quoting the billions of trees catalogers harvest each year. As a result of our inactivity, Catalog Choice muscled in, and now has a seat at our Executive Table, managing our brands for us. Why can't catalogers go on the offensive? How much would it cost for a catalog to plant "x" trees each year? And how much good will would be done by having the press, bloggers, and TV stations all reporting the fact that two hundred employees spent a random Wednesday in July planting trees? Why aren't we good stewards? Why don't we "toot our own horn" when we do good? Why don't we tell our customers that we're planting four trees for every tree we cut down? And if we don't plant four trees for every tree we cut down, why don't we start doing this?
  

• Speaking of PR, why not tell the world that over the past five years, we spent "x" dollars less on catalog mailings, moving that money into online marketing that theoretically reduces our carbon footprint?

• Launch new initiatives online. Test various new products and brands online, and via e-mail. Use online marketing to test the initiatives before rolling out new products and brands via paper. And then tell the world how many trees you saved by doing this.

I could go on an on. Catalogers, it is time for an Extreme Makeover. It is time for action.

Ann Curry And The Today Show Feature The Cute Kids Cancelling Catalogs

If you were at work this morning when The Today Show featured a piece on how to cancel catalogs, please watch the segment here.

Ann Curry sat at a computer monitor, and opted-out of Red Envelope, Pottery Barn and Mrs. Fields catalogs.

Kudos to Catalog Choice and those cute kids for getting attention via grass roots efforts. This goes to show you how individuals and small teams can make a difference. How things get done in this world is rapidly changing ... Catalog Choice provides a great example of how to market a useful service via social media, illustrating how mainstream media does the work for you when social media is executed properly.

Catalog Choice reports that they've had an onslaught of traffic today. Ted Wells reports that 500 visitors an hour are checking out his blog.

The Today Show, via their website at MSNBC, is challenging all schools to do what the cute kids accomplished. Here is a link to the Today Show Challenge.

Of course, there's some level of irony involved in having NBC and The Today Show take shots at companies like Red Envelope, Pottery Barn, and Mrs. Fields.

When I ran Ann Curry's video on the MSNBC site, I was subjected to unsolicited advertising from Best Buy, I could not fast-forward over the ad, MSNBC forced me to watch it. I might have wanted to opt-out of that advertising opportunity, however, I could not.

Here's a sampling of the national companies that pay the salaries of employees of The Today Show via unsolicited commercials I did not have a choice to opt-out of while watching the program in real-time this morning:

• Honda, Smuckers, Hyundai, Pillsbury, Olay, Air Wick, Dannon, Clorox, Turbo Tax, Slim Fast, Pampers, Cheerios, Kashi, Olive Garden, Progresso, Oreo, Bank of America, Head and Shoulders, Nestle, Lysol, Visine, Capital One.
  

Obviously, I cannot speak to any details on the practices of these companies ... I am simply hopeful that all of these companies don't over-harvest trees or mis-use fossil fuels to produce the products, services and packaging that paid the salaries of the folks bringing us The Today Show, the show that promoted Catalog Choice.

What Happened? What Will Happen?

This is the final post in a recent series of discussions about customer frustration with catalogers.


What Happened?

A portion of the population are using a combination of social networking tools, internet technology and external funding to express dissatisfaction with a perceived abundance of unsolicited catalogs.


Are Consumers Really Upset With Catalogers?

It has become obvious that some consumers, and maybe a signification minority of the population, are dissatisfied with catalogers. The internet makes it very easy for folks to express their frustration. For example, read about folks who are frustrated about unwanted catalogs and junk mail.


Did Consumer Behavior Change?

Consumer behavior in 2008 is different than in 1995, the final year that catalogers owned the field of Direct Marketing. In 2008, consumers (by and large) want control over the shopping experience. Today, the consumer wants to "opt-in" to the brands she wants to have a relationship with. She wants to determine if she has a relationship with Williams Sonoma, The Territory Ahead, or Bloomingdales, not the other way around.

The consumer has been trained to anticipate this type of relationship. In e-mail marketing, the consumer (for the most part) opts-in to the marketing programs she wants to be part of. In search marketing, the consumer decides which paid ad to click on, which natural search result to follow. In retail, the consumer has always had control --- nobody forces her to shop at The Limited unless she wants to shop at The Limited.

Elsewhere, consumer control is increasing. The consumer uses a DVR or a VCR to avoid television advertising. She opts-in to the blogs and media she wants to participate in. She can opt-out at any time.


Isn't Cataloging An Opt-In Form Of Marketing?

For the most part, the consumer does not have control over catalog marketing. Catalog businesses do not survive without a fresh supply of new customers. Therefore, catalogers must "prospect", or send catalogs to customers who have not previously purchased from a brand.

A customer checks her mailbox, and finds a J. Jill and an Eddie Bauer catalog. She never purchased from J. Jill or Eddie Bauer. These catalogs are, by definition, "unsolicited", meaning the customer did not request or "opt-in" to receive these catalogs.

When you read about consumer dissatisfaction with catalogers, the "unsolicited" catalogs are a large source of the frustration.


Are Catalogers Doing Anything Different, Causing Frustration?

Catalogers made numerous (but subtle) strategic changes that cause a consumer to believe she is receiving more unsolicited mail than in the past.

• Industry Consolidation. During the past decade, firms purchased numerous catalog brands that were struggling financially. When multiple catalog brands are being managed by one firm, it is common practice to merge the customer files of each brand. The firm may elect to "cross-market" catalog brands, resulting in customers receiving catalogs the customer may not have previously received. The customer perceives this "cross-marketing" as "unsolicited mail".
  

• Co-Op Databases. The biggest change in cataloging is the use of co-op databases. Catalogers give the name and address of catalog purchasers to companies like Abacus. The co-op combines information about the merchandise a customer purchased, across all participating catalog brands. For a small fee (less than a dime per name/address), the cataloger benefits by being able to mail "similar" customers, those who have yet to purchase from the catalog brand but possess similar behavior. The cataloger, however, does not determine who receives the catalog --- the co-op statistician identifies "like" customers, the cataloger trusts the co-op statistician to make this decision. By and large, this has been a good relationship for the catalog brand, as co-op statisticians are able to find prospects with acceptable response rates at a low cost. The consumer, however, might lose in this situation. The co-op statistician might over-mail some consumers, causing those consumers to perceive an excess in "unsolicited catalogs". The co-op does not share profits with catalogers or customers. It would be interesting to see what happened if the consumer demanded a share of the profits generated by the co-op.
  

• Online Customer Behavior: When a customer purchases from the website of a catalog brand like Orvis, Garnet Hill or Norm Thompson, she may or may not perceive she is buying from a catalog company. We can never know how the consumer truly perceives the brand. If the consumer perceives her relationship as an "online" relationship, catalogs are perceived to be unsolicited. However, much of the catalog vendor ecosystem depends upon catalogers for financial well-being. The co-op collects money each time prospecting occurs. The printer collects money each time a catalog is mailed. The paper industry thrives off of a strong catalog marketing program. The post office relies upon catalogers for revenue. Trade journals live off of the advertising of vendors who depend upon catalogers. The catalog ecosystem thrives if the online customer is mailed a catalog. Over time, catalogers were re-branded as "multichannel merchants", to signal the perceived importance of mailed catalogs in the growth of the e-commerce industry. The disconnect between customers (who may not want catalogs after an online purchase) and the catalog ecosystem (an ecosystem that thrives on mailing online customers catalogs) cause problems.

What Does This Mean For Consumers?

We are likely seeing the early days of consumer dissatisfaction. Consumers will demand control over unsolicited catalogs (i.e. prospecting). Consumers will demand control over the number of catalogs they receive from the brands they purchase from. The noise will get louder, and more widespread, until the consumer perceives control shifted from the brand to her.


What Does This Mean For The Direct Marketing Association?

It is entirely possible that the DMA will be forced to respond to growing customer dissatisfaction, either by adhering to state or federal legislation, or by yielding to the growing popularity of services like Catalog Choice. Telemarketing and e-mail marketing are fundamentally different today than they were five years ago. Catalog marketing is likely to be altered in a similar manner, over time.


What Does This Mean For Catalog Brands?

The catalog business model will be forever changed. Catalogs will become an "opt-in" marketing strategy, maybe within as little as five years. Consumers will decide if they want to receive catalogs, and consumers will dictate how many catalogs they receive per year. Consumers will decide if they want to be part of a "prospect pool", a group of customers willing to receive catalog marketing from brands the customer has yet to purchase from.

The catalog brand will not be able to prospect in the traditional sense. Catalogs will be used to advertise merchandise to existing housefile customers who enjoy this style of advertising.

The best catalog brands will begin, well in advance of these changes, to shift catalog marketing dollars to the online channel. The catalog brand will be forced to accept online shoppers with lower annual repurchase rates, lower average order sizes, lower lifetime value, and marginal loyalty.

Traditional catalog brands will demand the development of advanced targeting techniques, in an effort to entice prior customers who have not purchased in several years to buy again. Traditional catalog brands will focus on building internal lists of opt-in catalog customers and prospects that are mined for various catalog mailing activities.


What Does This Mean For The Catalog Vendor Ecosystem?

There will be winners and losers in the catalog vendor ecosystem.

Co-ops will undergo dramatic transformation with the loss of unsolicited prospecting. Co-ops will reinvent themselves as miners of information about existing housefile customers.

Printers will survive by adapting to the needs of the opt-in catalog customer. Expect printers to execute "micro-catalogs", catalogs that offer targeted merchandise based on past purchase history and website browsing activity. This idea is not a new one, having been bantered around for the past two decades --- but the economics of opt-in cataloging will necessitate dramatic changes in merchandise targeting and personalization. Printers will lead the way on this front.

Printers will have to lead the way, because the volume of catalogs in the mail in an opt-in catalog world will be greatly reduced. This will drive up the cost of postage, which in kind will lower the number of catalogs that a catalog brand can afford to mail. "Micro-catalogs" will have to offer variable merchandise (i.e. different merchandise offered to different customers on the same in-home date) in order to generate enough sales to offset the high cost of postage.



What Does This Mean For The Catalog Employee?

Baby boomers created the explosion in catalog marketing between 1980 and 1995. For the baby boomer, this new catalog reality will be difficult to cope with. I expect a mass transition in the leadership of catalog brands as opt-in cataloging becomes a reality.

For the employee looking to transition a business model, there will be unparalleled business opportunities. Savvy leaders will be financially rewarded after successfully transitioning catalog businesses online while at the same time shepherding the creation of an "opt-in micro-catalog" business model.

For call center and distribution center employees, this will be a time of disruption. Call centers will become "instant response centers", geared to offering online shopper assistance. The instant response center will not be staffed to the levels of today's call centers. The best catalog brands will proactively train employees for the future of our industry, minimizing disruption.


What Does This Mean For The Customer?

Customers will have more control over what appears in their mailbox. This will be heralded as a "good thing". A to-be-determined amount of "impulse purchases" will cease to exist, without advertising to generate the purchase. The consumer will become even more engaged with the online channel, and will depend even more upon Google and consumer recommendations to direct her to the brands she trusts. At some point, consumers will rebel against Google, feeling that the giant search brand "controls everything".


Will There Be Hope?

This transition will not be without pain. Many industries are being transformed by the internet. Cataloging is to e-commerce as the CD is to the MP3 file. Look at what is happening in the television industry, or newspaper industry.

For catalogers, the transition is overdue, and when it is suddenly forced upon the industry, challenges will exist everywhere.

And yet, I feel that hope exists. An industry that has largely done things the same way for decades will be transformed. There will be creativity the likes of which haven't been seen in our industry. Many of us will make it through the transition, enjoying a customer base that trusts us, that pulls information from us (instead of us sending unsolicited marketing to them), that advocates on our behalf, that finds new customers for us. We will celebrate with our best customers, we will find ways to reward our best customers (and I don't mean 20% off coupons or free shipping).

I believe in the future of our industry. I will be there with you, every step of the way, helping us get through the transition that is coming.

Audience Development: Here's A Mistake I Made

Back in November, I asked readers what they wanted to learn about. I received many responses from folks who wanted to learn more about my thoughts concerning Catalog Choice.

So I spent a lot of time writing about Catalog Choice in December and January.

Traffic, and more important, subscribers, increased by almost 20%. Almost instantly!

Good for Kevin, right?

Wrong.

Audience development is all about cultivating the right audience. In my case, I attracted an additional two hundred subscribers, folks who were actually offended by some of the topics I wrote about. I received e-mails from individuals who challenged my integrity and knowledge of my industry. All of a sudden, a vocal minority didn't like me!

I developed the wrong audience.

I began to receive unsolicited e-mail from organizations friendly to Catalog Choice, asking me to help spread the word about various ecological issues (ironic, given that stopping unsolicited mail is the objective of the folks marketing to me --- but unsolicited digital mail was ok).

When I stopped covering Catalog Choice, subscriber counts plummeted. The unsolicited e-mail campaigns slowed, but to date, have not stopped. It takes a lot longer to correct an audience development mistake than it takes to build a non-congruent audience.

For direct merchants, building a productive customer file is probably second to merchandising in importance. And yet, we make mistakes comparable to the mistake I made all the time.

I purchased an item from a company six months ago, at full price. Since then, nearly every e-mail campaign sent to me by this brand offers me up to sixty percent off my next purchase, if I use the code offered in the e-mail campaign. Clearly, this brand is trying to develop an audience that enjoys the thrill of "x" percent off merchandise offerings.

An executive recently told me that his e-mail marketing list of over a million individuals only responds to free shipping, buying more than four times as much merchandise if free shipping is offered than if it isn't offered. He developed an audience that only responds to free shipping. He cannot get away from free shipping unless he develops a new audience. It won't happen by wishing, only by hard work.

I've made countless mistakes developing an audience that enjoys and participates in Multichannel Forensics. Let's learn from our mistakes, let's develop audiences relevant to the niches we serve.

My Keynote Address At The Catalog Conference

If I were invited to give the keynote address at the Catalog Conference, now called the ACCM, you would hear a presentation that sounded something like this:

Good morning, everybody! Thank you for inviting me to share my views on the multichannel marketing industry with you.

Let's start the discussion with a show of hands. How many of you enjoyed receiving the old Sears catalog, or J.C. Penney catalog, back in the 1970s and 1980s?

Me too. My Mom shared the J.C. Penney catalog with my siblings. I'd thumb through the catalog, looking for a computerized chess game. Somewhere around page 594, I'd find the game. I'd ask my parents to give this game to me as a Christmas gift.

Even though we had a J.C. Penney store in my home town, the catalog represented "the store" to me. I felt lucky to receive a catalog, as if I were part of a secret club of people that got access to unique merchandise, delivered to my home within four to six weeks. I mean, where else was I going to find a computerized chess game in 1980?

My love for computerized games continued into the 1990s. I purchased a computerized backgammon game from J&R Music World in 1993. Of course, the world changed over the twelve years that passed. The J&R Music World catalog was a lot smaller, with a "targeted" merchandise assortment. This targeted catalog merchandise strategy drove the "big book" strategy of Sears and Montgomery Wards into history.

What would you do today if you wanted to purchase a computerized chess game? Google? The world is changing, isn't it?

1993 might have represented the final "Golden Age" of catalog marketing. Computers allowed professionals to practice database marketing, a craft where customers were matched-up with targeted merchandise offerings, greatly increasing the productivity of each page circulated. Catalog marketers enjoyed a near monopoly over the customer mailbox.

We decided how many catalogs the customer would receive. We rented names from other catalog brands, we exchanged names with our closest competitors. Would Zappos give away their most precious asset, their customer file, to competing online shoe brands in exchange for access to the names and addresses of customers shopping from the competition?

We practiced this strategy, in fact, we built our industry on the basis of this strategy. This whole thing called "the catalog conference" was a convenient excuse for all of us to get together to talk about our practices in renting and exchanging outside lists. We'd have sixteen of us representing two companies and four vendors in a cramped hotel room, sitting on beds and folding chairs, talking about exchange balances. And at the end of the day, Direct Tech hosted a killer party. All of that on the shoulders of the profit generated by the customers we shared with each other.

We controlled everything, the customer had almost no control. If we wanted to get a Lands' End catalog in the hands of a customer, we figured out how to do that. And as long as one or two percent of the customers cared enough to purchase from this intrusion, we could continue practicing our craft.

We didn't realize it, but we enjoyed a unique moment in time. Collectively, we identified a universe of maybe 20,000,000 households who were willing to shop via distance. The big companies did the hard work, the smaller catalog startups leveraged all that hard work to grow themselves while adding incremental names to the pool. Ultimately, we all shared the same 20,000,000 households. We thought we were independent brands competing against each other. Instead, we were a loose federation of collaborators, working together for the benefit of all of us.

Today, Google manages the households that matter.

While many prior generations made catalog marketing possible, it was the Baby Boomer generation who injected steroids into the concept. Baby Boomers managed the businesses, Baby Boomers got the catalogs into our mailboxes, and Baby Boomers purchased from these businesses.

Life was good.

And then this thing called the "internet" appeared.

At first, the internet was this funky thing we played with on a 9,600 baud rate modem. We could send and receive e-mail, we could visit static web pages.

I worked at Eddie Bauer in 1996. Our website, http://www.ebauer.com, was in the embryonic stages of development. My Vice President would stop by the office of our online marketing analyst, and rib him about whether we hit our forecast of seven orders for the day.

Nobody mocked the online marketing analyst in 1999, when fifteen percent of direct-to-consumer orders at Eddie Bauer came through the internet. Still, catalogers felt that online marketers were "cannibalizing" the catalog business. "If the catalog didn't exist, you wouldn't have a business" was a statement you frequently heard. The internet staff benefited by having an existing order-entry system, an existing call center, an existing distribution center, catalogs that drove website orders, and existing in-house systems to manage the business.

For the next eight years, a battle ensued over who truly generated sales and profit. The battle appeared to be meaningful. In reality, we made a mistake. We took our eyes off of the customer for a decade, spending our time arguing whether old-school marketing methods still worked or not.

Instead of learning how customer behavior was changing, we focused on attributing orders back to the paper that theoretically drove the order. Our industry invented a term, called "multichannel", to define the relationship between advertising, customers, and channels. We focused on the attribution side of the term "multichannel", instead of the ramifications of multichannel customer behavior.

During the decade of multichannel attribution illustrated via matchback algorithms, we lost our customer. The Baby Boomer responsible for the rampant growth of the catalog industry in the 1980s and 1990s aged. This customer is slowly being replaced with Gen-X individuals, customers who have different needs and different shopping patterns. This generation uses technology in a different way than do Baby Boomers. Even more profound are the differences in customer behavior among Gen-Y, the children of Baby Boomers. If Gen-X embraced e-commerce, then Gen-Y embraces social networking.

Both generations view the catalog in a different light than do the Baby Boomer generation. A Baby Boomer might read a catalog at night, ordering online after thumbing through the wares of a leading catalog brand. A Gen-Xer might use the catalog for inspiration, or might throw the catalog away, opting for the assistance of Google, searching for whatever pleases the customer. A Gen-Y consumer might purchase merchandise on the basis of a good review from a peer on Facebook. Of course, these are gross over-generalizations, meant to inspire thought.

The cataloger ultimately markets to the Baby Boomer generation, noticing that customer acquisition becomes more challenging as the Baby Boomer moves out of her prime shopping years.

Two other issues are shaping customer behavior. In the past decade, customers took control of the telephone via the "do-not-call" list. Customers are taking control of the e-mail in-box via spam filters and e-mail opt-in practices. In the next five years, customers will take control of the mailbox. Catalog Choice simply represents the embryonic stage of this movement. Eventually, our customer will tell us how often we get to market to her via catalogs, if at all. We are not prepared for this fundamental shift in customer behavior. All throughout history, we determined when the customer received something from us. In the future, the customer will determine when she receives something from us, if at all.

The final issue that is transforming cataloging is storytelling. Catalogs have always been about telling stories. Think about the fanciful tales told in the old J. Peterman catalog. When a cataloger has control over the customer relationship, the cataloger is able to tell the story that the cataloger wants to communicate.

A combination of e-commerce, e-mail, and search marketing ruined the ability of the cataloger to tell a cohesive story. When a customer goes to your website, you have no control over what the customer does. She can arrive via the home page, she can arrive via a landing page. She can use the search function of your site to shop. She can simultaneously use Google to compare prices on a similar item across multiple brands. The cataloger is no longer the primary factor in a purchase relationship with a customer. The cataloger is a spoke on a giant ecosystem-based tire.

This hurts the cataloger in many ways. Stories are like a moat that protects a catalog brand, causing the customer to cross-shop other items. When the customer makes up her own story, a "mashup" of other brands found via search, marketing, and word-of-mouth, she realizes that the cataloger may not offer the lowest cost, the fastest or most inexpensive shipping, or the best quality.

The same forces damage the merchandising strategy of the cataloger. Any brand can see what the cataloger offers, copy/improve it, source it in China for a lower cost-per-unit, offer free shipping, and outperform the cataloger in paid or natural search, stealing business from the cataloger. The online ecosystem ultimately drives our merchandising strategy. If one item achieves good standing in natural search, while another item fails to make an impact, then technology is driving the performance of items offered. Regardless, our catalogs and the cohesive stories told in our catalogs are not as relevant in the future unless the internet/Google decides that we are relevant. We will be forced out of business by low-cost competition, or we will achieve success by offering high-gross-margin niche product that Google determines is highly relevant in the niche it participates in.

What is also interesting is the fact that by avoiding these challenges, the cataloger indirectly moves the customer base older and older. Numerous CEOs confided in me that the average age of the customer purchasing from catalogs is advancing at twice the rate of time. In other words, an average customer of 50 years old in 2003 is now an average customer of 60 years old in 2008. This is an odd side-effect of technology. By avoiding the dynamics that are shaping the internet, the cataloger partners with co-ops to find customers most likely to respond to catalog marketing. The audience that remains loyal to catalog marketing is the audience least likely to embrace technology. Co-op technology helps in the short-term, but has the potential to move the catalog brand toward a customer base that is unsustainable.

By now, what should be clear to you is that the catalog business model we managed in 1993 no longer exists. The competitive advantages we enjoyed fifteen years ago are gone. This doesn't mean we can't be successful. We can be very successful. However, we will have to apply modern technology, a thorough understanding of customer behavior, and an absolute attention to detail across all online marketing strategies.

The cataloger of the future will gracefully manage catalog mailings, providing twenty contacts a year for the customer who wants twenty contacts a year, a universe that will continue to decrease in quantity. Over time, the majority of customers will demand that they determine how many catalogs they want to receive, if any. This will end the practice of using lists and co-ops to manage customer acquisition. New customer acquisition will happen online. This concept is a terrifying one for catalogers, one that cannot be avoided.

The cataloger of the future will reduce catalog advertising expense, but won't pocket the savings. Instead, the money will be reinvested in faster delivery options at a lower cost. Customers will demand that all direct-to-consumer brands follow the lead of Zappos.

The cataloger of the future will be required to become very, very savvy at online marketing. I'm not talking about executing paid search campaigns. I'm talking about every aspect of online marketing, paid search, natural search, affiliates, shopping comparison marketing, portal advertising and pay-per-click, social networking, and techniques we cannot envision today. Countless brands never mail a single catalog, yet run profitable direct-to-consumer businesses using these techniques. Do a search for any product and see what I mean.

The cataloger of the future will manage a heterogeneous customer base, one resistant to mass-mailings of catalogs or e-mail blasts. This will require an attention to detail in online marketing expertise that does not exist today.

Vendors who rely upon the catalog ecosystem will need to adapt as well.

The biggest potential winner is the traditional list organization, somebody like Millard or ALC. The future of cataloging won't be in renting or exchanging lists. The future could be in identifying groups of individuals with common interests. We might work with Millard to build/find a group on Facebook that likes mens tools or rugs or scrapbooking, whatever is relevant to our business model. The traditional list organization competes against algorithm-based organizations like Abacus by
adding the "human" element --- linking people who have interests together for the betterment of people, not brands. Catalog brands succeed as a side-benefit. For those brands who want catalog-focused customers, co-ops will be there to serve them.

If I were to poll the folks in this room about the biggest issues in cataloging in 2008, three themes would emerge.

1. The crippling effects of the 2007 USPS postage increase.
2. The recession of 2008.
3. The approach Catalog Choice uses to encourage catalogers to accept unverified opt-out consumers.

Catalogers that survive the first two issues will face interesting long-term issues, as outlined in this discussion. We survived the transition from big-book to targeted catalogs. We survived the transition from targeted catalogs to multichannel mailings that drive e-commerce sales. Our industry will survive the transition to a self-service customer who calls upon us when s/he has a need, a transition that is opposite of our established practice of calling upon a customer when we have a need. Market forces require that we make this transition.

My Interview With Seth Godin

Note 4/4/2009: This is an April Fools Day Story.

I'm so excited to share with you a recent interview I conducted with marketing expert and famous author Seth Godin!

Mr. Godin was kind enough to make a trip to the Global Headquarters of MineThatData and graciously share his thoughts on the changes occurring in what we affectionately call the Multichannel Marketing (aka Catalog) industry.

So today, April 1, 2009 (ahem), I share "the interview" with you!


Kevin: Mr. Godin, thank you so much for making the trip to the MineThatData Global Headquarters.

Seth: Nice to be here, Kevin. I'm a big fan of the work you're doing with Multichannel Forensics. Are these heated leather floors we're standing on?

Kevin: Laminate.

Seth: Oh.

Kevin: Have you ever shopped from a catalog?

Seth: Absolutely. I've always enjoyed the Garrett Wade catalog. The best catalogs are the ones that made it through "The Dip". If you want a German-Made Sodbuster Knife, you know that the Garrett Wade catalog will have it. They understand who their target audience is, and their relevant and timely e-mail messages inform me of needs I didn't even know I had.

Kevin: What do you think of the catalog industry, not the catalog industry of 1989, but the catalog industry of 2009?

Seth: Like many industries, the catalog industry is being transformed by the internet. This is good for customers. Customers have more choice than ever before, and customers have access to the best prices.

Kevin: But this isn't always good for catalogers. The productivity of catalogs, especially those sent to customer acquisition segments, is declining, rapidly.

Seth: I always say that "the new thing is never as good as the old thing". Catalog brands had a spectacular run alongside the baby boomers, and had huge advantages over retailers. The catalog brand "knew" who their customer was, sending timely, targeted, and relevant messages to enthusiastic customers. Catalogers, in many ways, invented Permission Marketing. But the old thing (catalogs) are going away, and what we're replacing catalogs with (e-mail, websites, blogs, social networks, search, tribes) simply aren't as good yet at creating demand.

Kevin: Why do you think that the old thing, the catalog, is going away?

Seth: Catalogs used to be the best vehicle to provide targeted, relevant, personal messages. As a result, the catalog industry built huge systems. An entire list industry grew to support catalogers. Printers, paper reps, the USPS, merge/purge houses, they all evolved to support the delivery of the most targeted, relevant, and personal messages that ever existed. And that worked well, for a period of time. But the system didn't deserve to last forever. The cost structure associated with this huge system is unsustainable. The system is being replaced by three separate but powerful dynamics.

Kevin: And those dynamics are?

Seth: First, a customer can receive a personalized message via e-mail or RSS that costs the cataloger nothing to send. Each catalog costs, what, $0.75 to deliver to a customer, with a whole bunch of intermediaries taking their $0.10 of the pie? The economics are no longer sustainable when a competitor can send a personalized, relevant e-mail campaign that the customer opted-in to receive. The customer has some control over e-mail delivery, and has complete control over content via RSS. Look at your business, Kevin. You have almost 2,000 subscribers, and you spend absolutely nothing acquiring subscribers, do you? And yet, those 2,000 subscribers pay your mortgage for you.

Kevin: But e-mail marketing might generate only $0.15 per e-mail delivered, while a catalog might generate $3.00 or $4.00 per catalog. So the new style of marketing isn't "working", if you will.

Seth: The new thing is never as good as the old thing.

Kevin: What else?

Seth: Second, the customer is now in charge. In 1989, the customer shopped from distance only when she received a catalog. In 2009, the customer determines when and how she wants to shop. The catalog marketer must make the transformation from pushing merchandise at the customer to allowing the customer to pull information when she has a need. This is maybe the hardest thing for a cataloger to do --- to transform from pushing messages to facilitating the pull of information.

Kevin: It's especially hard when the cataloger is going through a customer acquisition death spiral.

Seth: And that brings me to my third point. The cataloger always controlled the start of a relationship, by renting lists from and exchanging lists with competitors. That strategy worked in 1989. But in 2009, the customer demands control over the relationship, and she's not going to tolerate receiving a catalog in her mailbox that she didn't ask to receive. The future demands that the cataloger be a "leader of a tribe", if you will.

Kevin: Describe what you mean by being a "leader of a tribe"?

Seth: Instead of renting names and addresses, the cataloger will transition to the role of a tribal leader. The Garrett Wade marketing role will evolve, speaking to an individual who lives a lifestyle that demands a Japanese Pattern Crosscutting Timbersaw. Garrett Wade identifies a group of individuals who have common interests, providing the tools needed for tribe members to achieve their potential. The tribe partners in the marketing role with Garrett Wade, they invite individuals to join, individuals who share common interests.

Kevin: But that sounds like a lot of work.

Seth: It is a lot of work!

Kevin: So here's the problem. The catalog brand has numbers that they need to hit, now, in order to keep people employed. What you're talking about sounds futuristic, esoteric, theoretical, almost unachievable.

Seth: I always say that "The best time to change your business model is while you still have momentum". Catalogers still have momentum. And it isn't easy to give up the idea of sending catalogs to a mass audience that doesn't have choice. Get over it! While you think about a different business model, folks like Zappos successfully apply a different business model. It might be the only option if the catalog industry wants to stay in business, long-term.

Kevin: Our time is almost up. Do you have anything else you wish to share with the catalog industry?

Seth: I'd tell the catalog industry to make things happen. Take initiative! You practiced permission marketing before permission marketing was popular. You have a virtually endless number of channels to practice permission marketing in today, and you have loyal customers who are waiting for you to lead them into the future. So lead them there!

Kevin: Mr. Godin, thank you so much for taking the time to speak with the MineThatData "tribe".

Seth: My pleasure, Kevin!

Catalog Choice: Affiliate Program

What are your thoughts about Catalog Choice entering affiliate marketing?

• Announcement on the Catalog Choice Blog
• Example with Gardeners Supply

Most of my clients carefully analyze affiliate marketing relationships, and thoroughly understand the new customer / existing customer issue with affiliates. Hint: It's a good thing if you get at least 80% of your affiliate marketing business from new customers.

I mentioned to several people this week that 2009 is the most interesting year I've seen in Catalog Marketing in the past decade. In so many ways, the industry has been in a decade-long "multichannel" fog that is finally being exposed for not delivering unfettered profits. Business models are being dismantled, unpredictable alliances are emerging, and a deep split is forming between catalog tradition and survival/adaptation.

Where do you think the catalog industry is heading?

73 Vital Multichannel Catalog Tips

Please feel free to forward this article to anybody you feel would benefit from the information. Add your tip in the comments section of this post.

Here is the hyperlink you can forward to your multichannel colleagues: http://minethatdata.blogspot.com/2008/01/73-vital-multichannel-catalog-tips.html

1. Remail catalogs are on their last legs. Where possible, use new creative, the customer knows the difference.
2. Honor all catalog opt-out requests, regardless of source.
3. Urban customers like to use catalogs to shop retail stores.
4. Suburban customers like to use catalogs to shop your website.
5. Rural customers like to use catalogs to purchase merchandise over the telephone.
6. It is very likely that you are under-investing in online marketing (paid search, portals, etc.).
7. Online customers have lower lifetime value than catalog-sourced customers. Get over it!!
8. Profit and loss statements should be generated, by item, on a quarterly basis, measuring profit across all channels.
9. Statistical models almost always outperform RFM models.
10. RFM models are perfect for understanding comp-segment performance.
11. Increased product density in catalogs is generally correlated with increases in phone/mail channel sales.
12. If your customer acquisition activities are at a break-even level (on each incremental segment, or in total), you are probably under-investing in customer acquisition, throttling the long-term growth of your brand.
    
13. Ease up on mailing online-only buyers.
    
14. Ease up on mailing retail-only buyers.
15. Use mail/holdout groups to understand if catalogs need to be mailed to "multichannel customers". Determine how much of the sales volume will happen without mailing any catalogs.
16. Matchback algorithms over-state the effectiveness of catalog marketing.
17. Multichannel Forensics (white paper, book) should be used to understand when customers are willing to switch channels, or no longer need catalog advertising to purchase from your brand.
    
18. If you double the number of pages in a catalog, expect a 50% increase in sales volume.
19. Do not test new merchandise or new creative strategies in mailings targeted to new customers.
20. Thoughtfully evaluate the mix of new and existing merchandise offered to your best customers.
    
21. Pay close attention to the Zappos business model. Pay REALLY close attention!
22. If more than one out of every five catalogs you mail is sourced from a co-op database, pay very close attention to the merchandise preferences of co-op customers vs. all other customers --- your future merchandising assortment may be driven by co-op statisticians, not by you!
23. If more than one out of every five online purchases is sourced from Google, pay very close attention to the merchandise preferences of Google customers vs. all other customers --- your future merchandising assortment may be drive by Google, not by you!
24. Accurately forecast segment-level household counts. Your inventory management team thanks you for your support!
25. Don't cut back on customer acquisition during an economic downturn, or during an inflationary expense environment.
    
26. Use Multichannel Forensics to forecast the five year trajectory of each of your channels, and then pro-actively change the trajectory of each channel in a favorable manner.
27. Don't outsource your intellectual capital. Keep smart people, and pay them what they are worth.
28. Learn from your online marketing and e-mail marketing staff.
29. Cross-train your catalog marketing, online marketing, e-mail marketing and social marketing experts.
30. If your catalog marketing, online marketing, e-mail marketing and social marketing experts do not defend all of their decisions via profit and loss statements, immediately train each individual on how to produce a profit and loss statement.
31. Listen to your business intelligence and data mining staff for advice. Don't ask these folks to drive your business strategy.
32. Adding a 20th catalog to your contact strategy will probably not cause a proportional increase in sales.
33. Adding a 20th catalog to your catalog strategy will probably cause a proportional increase in expenses.
34. Multichannel customers are not always your best customers.
35. Execute and analyze mail/holdout tests in every catalog and e-mail marketing campaign.
36. A growing minority of consumers view your catalog marketing efforts as "junk mail", as being a threat to the environment. Respond to this trend!
    
37. If a catalog customer has not purchased in two years, but visited your website yesterday, mail this customer a catalog.
38. All of your future catalog and e-mail targeting strategies will require a database of summarized online visitation behavior.
39. The best catalog marketing in the world will not overcome shoddy financial or operational management of your brand.
    
40. Customers who order three or more items, only to realize these items are not available, will have lower lifetime value than customers who receive the items they wish to purchase.
41. Channel data ages differently. Catalog purchases have a long half-life. Online purchases have an average half-life. Retail purchases have a short half-life.
42. Do not allow phone/mail transactions to drive your overall merchandising strategy. These transactions are disproportionately driven by age 50+ rural shoppers.
43. Keycode/Source Code response management is a dying craft.
44. Your list management, list rental/exchange firm, or co-op partner should be viewed as a "trusted adviser".
45. Conversely, list management, and list rental/exchange folk, or co-op partners should be branding themselves as "smart people" rather than "list people".
46. If you merchandise a catalog for multichannel success, you will probably end up mailing an unsuccessful catalog. Pick a primary channel, and merchandise to the target customer of the primary channel.
47. The merchandise mix of items purchased in a store is likely to be different than the merchandise offered in the catalog you mailed to a store customer. Optimal catalog merchandising to drive store sales is a complex and misunderstood process.
48. Forty-eight pages may drive just as much online and store volume as do eighty-four pages.
49. When an online/store shopper is willing to purchase without marketing assistance, gladly stop marketing to the customer.
50. As you add channels, pay close attention to your purchase metrics. During the past decade, we haven't significantly "pushed the peanut" on repurchase rate, orders per repurchaser, items per order, or average order size, in spite of additional channels and additional marketing expense.
51. Special catalogs have special products at higher-than-average price points.
52. The first twenty pages and the back cover of your catalog mean EVERYTHING. This is not real estate worthy of experimentation or careless branding strategies.
53. Identify order starters (the items that cause a customer to purchase) in catalog and e-mail marketing activity. Capitalize on these items across all marketing activities.
54. Your database must have summarized and detail-level catalog, online and retail purchase behavior, updated on a weekly basis, at a customer level.
    
55. Your database must have summarized and detail-level online visitation activity, updated on (at worst) a daily basis, at a customer level.
    
56. Your database must have summarized and detail-level marketing expenditures at a customer level.
    
57. If you purchase campaign management software for your direct mail and e-mail activities, expect staffing turnover due to differences in skill-sets between traditional circulation tasks and campaign management circulation tasks.
58. Demand oversight and a collaborative relationship with your co-op statistician. This person has a disproportionate influence on your brand.
59. Long-term, you are an online brand that mails catalogs, not a catalog brand with a website. Start transitioning your staff today for this long-term certainty.
60. You can successfully integrate all of your merchandising and inventory systems across channels. You may not have the marketing expertise to take advantage of multichannel systems integration.
61. The days of charging $14.95 for one week shipping/handling are coming to an abrupt end. See tip #21 for more details.
62. You will be amazed how much waste is pared from your marketing activities when you're no longer able to charge $14.95 for shipping/handling.
63. Challenge the ACCM, and DMA conferences to feature speakers with innovative and relevant ideas. Demand that our best conferences provide you with a roadmap to the future.
64. Talk openly about how Catalog Choice will impact the long-term future of your business.
65. Talk openly about how you would alter your marketing strategy if you were not allowed to mail catalogs to customers who have never previously purchased from your brand.
66. Become best friends with the folks who work in your Finance department.
67. Become best friends with your Web Analytics expert.
    
68. When vendors talk about huge targeting and data mining successes, be skeptical. It is likely that the success is due to previous failures in marketing strategy, not in targeting/data mining strategy.
69. Listen to the passion your Chief Merchandising Officer has about merchandise. If you find a talented person anywhere else in your organization who has comparable passion for his/her craft, hold on to that person with all your might!
70. Realize that almost nobody in your organization understands the economics, response, and profitability of your catalog, e-mail and online marketing efforts.
71. Become the person in your organization that thoroughly understands the economics, response, and profitability of your catalog, e-mail and online marketing efforts.
72. How will you ever innovate if all you do is follow "best practices"?
73. If you want to improve your multichannel marketing strategies, listen to your customers before you listen to vendors / research organizations.