Example of an Old-School Anniversary Program

Here you go. Doesn't take any effort whatsoever.

P.S.:  When I share stuff like this at conferences, there are groans and eye rolls and heads shaking "nooooooo". That's ok, that's the right of the conference attendee. But as a speaker, I marvel at the ability of an audience to reject ideas and then grumble that "business is bad".

P.P.S.:  It's Nordstrom, 2001. My boss, the President of the Online Division, blows his top (in his way) because I correlate business struggles with S&P 500 declines. His quote lives with me:

• "It's not your job to correlate business struggles with the S&P 500. It's your job to fix business problems. Do your job."

So before you just reject the concept above, think about the quote, and then go fix a few problems, ok??!!

Join Me on June 27 at 12:00pm EDT!!!

I'll be doing a virtual event for Catalog University on June 27 at Noon EDT ... titled WHAT CATALOG MARKETING WILL LOOK LIKE IN 2025.

Yes, we'll talk about the future ... about Bifurcation ... and about how we'll all need to employ the Great Eight if we want to survive.

How much will this cost you?  NOTHING!!!

Click here to register - it's not like you have anything better to do a week before July 4 and you'll learn a ton in the process:  https://www.cataloguniversity.com/pubtalk/the-great-eight-what-catalog-marketing-will-look-like-in-2025/

What Merchandise Goes Into A 22 Page Catalog?

The future of catalog marketing skews in two directions.

1. 30+ contacts to a small fraction of long-term catalog-centric customers.
2. A handful of 22ish page contacts to non-catalog customers in an effort to generate awareness.

When the latter is a goal (and yes, it's going to be a goal in the future), you cannot afford to mess around with merchandise that doesn't sell well.

Period.

You will stuff that 22 page catalog with the absolute best merchandise you have. It's the only way you are going to generate positive return on investment.

This is coming ... we're not going to stop it, it's the future. Best be prepared now ... test the living daylights out of formats and ideas so that you are ready to embrace the future.

Right?

22 Pages

Yup, that's it. That's what Williams Sonoma published a week ago, delivered on a Saturday.

Bifurcation of traditional catalog marketing is coming to all of ya. Yes, all of ya.

For non-catalogers, 16-22 pages will represent a way to create awareness. For non-catalogers, the format will not generate a ton of sales, and the format will barely be profitable. But it will be a better form of awareness than display ads.

For catalogers, it's time to buckle up. 

At the recent Datamann Conference, I shared the concept of "Bifurcation" with the audience. Your customer files are splitting in half. You spent 15 years trying to hold the customer file together (#multichannel #omnichannel), and the customer chose otherwise.

1. A minority of the file, age 60+, are running head-first into retirement, and they're not about to don VR headsets to watch a simulated in-store display in 3D. They're comfortable doing what they've always done. They're going to buy from catalogs until they can't anymore. You can mail these customers 30-50 times per year.
2. A vast majority of the file, age 15-59, do not see you as a catalog brand and have minimal or no interest whatsoever in print. Period. They're buying merchandise from your brand. As a consequence, you'll greatly reduce your contacts to this audience until, one day, you simply won't ever mail them again (if you continue to have 80-120 page contacts in your strategy).

So where does the 22 page contact come into play? How does this represent the future?

• The 22 page contact acts as contact #31 or contact #43 to the best pure catalog customer.
• The 22 page contact is a bridge for the 15-59 year old customer who couldn't care less about print ... bridging the past (catalog marketing) to the future (catalog as an awareness tool).

Solving The Problem

There's probably a thousand different ways to escape the death spiral.

If you want your core brand to succeed, you'll need to focus on Audience, Awareness, and Acquisition ... no doubt about it. Your Awareness Programs have to be at low-cost / no-cost. You'll have to reach different Audiences (or if you are a smaller brand you'll have to find your Audience).

I know, I know, you don't want to hear that.

• "That won't work at our brand. We're unique. We're special. Our heritage is our advantage, and we leverage an omnichannel shopping model that our customers crave."

I get this feedback often.

There are other options.

• Buy a small startup and then choose to not meddle in their business.
• Create a separate brand. J. Crew is in a death spiral. Madewell is not. Good thing Management at J. Crew created a separate brand.
• Create an upscale channel or a low-price channel. A third of what Nordstrom sells is via their off-price channel. A full THIRD. Let that one sink in for a moment. It was probably closer to 10% when I worked there fifteen years ago.
• Become a Supplier/Vendor:  In other words, get your products sold in Target or Walmart or another large brand. I know you don't want to do this, but you already have a presence on Amazon, right? So you're already doing this, right?

I could list a thousand ideas, but you get the picture.

How do you diagnose if your business is in a death spiral? See how many of the bullet points below fit your situation:

• Customer Acquisition counts are in decline on comparable spend levels.
• You have a channel where > 50% of new customers are acquired, and that channel is dying (i.e. retail/malls or catalogs/co-ops).
• Your Management Team reacts by spending less on marketing / customer acquisition and then spends more to cause customers to become more loyal.
• Your average %-off discount to your loyal customer base is increasing over time.
• Your primary sales channel is in structural decline (retail = malls, catalogs = well, catalogs).
• Your best customers prefer existing items that have been sold for several years and do not diversify into new products offered by your merchandising team.
• You create new channels (i.e. BOPIS in retail) and new customers largely ignore the new channel while existing customers switch to the new channel without increasing spend.
• You invest heavily in Loyalty Programs but have few customers with > 60% chance of purchasing again in the next year.
• Management responds to customer acquisition challenges and de-leveraged ad-to-sales ratios by cutting marketing spend further ... accelerating the death spiral.
• You pay for more than 85% of your new customers.
• When you have an idea somebody with history at your company says "we tried that in 2009 and it didn't work."
• Merchandise productivity is in decline.
• Merchandise productivity is improving but customer acquisition counts are falling at a faster rate, causing sales declines.

How do you dig yourself out?

• Create low-cost / no-cost Awareness Programs.
• Diversify your Customer Acquisition Programs beyond malls/retail, catalogs/co-ops, Google, and Facebook.
• Develop new brands and do not market those brands to your existing customer base.
• Buy small startups and let them grow without interference.
• Buy a dying company and integrate their customers into your brand.
• Develop luxury channels or off-price channels.
• Become a vendor for major brands.
• Maintain marketing spend.
• Shift discounts from blanket 40% off promos that are run 5x a week to limited promotions on individual items, and couple this with limited inventory buys that exempt your brand from non-stop clearance activity.
• Shift focus from loyalty to awareness and customer acquisition. If loyalty was the answer there would be four thousand case studies of brands who saved themselves while dying by focusing on the most loyal customers.

Next week I'll have a potpourri of topics while I'm in Europe ... the week after, I'm going to flip-the-script ... instead of focusing on a Death Spiral, I'll focus on a Treasure Hunt ... in other words, we'll view the problem from a positive standpoint, ok?

Chasing Customers Further Into The Death Spiral

In retail, the "services" channel is viewed as a secret weapon. Buy online, pickup in store ... buy in store and ship to store ... buy in a store and ship home ... visit a store with no merchandise ... curbside pickup ... these concepts are viewed as "solutions".

They are solutions.

They are not solutions to the death spiral.

Getting a customer to buy online and pickup in a store is hard ... you are asking the customer to execute multiple steps ... in other words, you are creating a "friction-filled" experience.

The more friction you add to a transaction, the more you push existing customers toward that style of transaction. In other words, you are trying to squeeze more money out of existing customers. Squeezing more money out of existing customers traps you deeper in the death spiral, because you don't solve the biggest problem ... that being "how are we going to find new customers??"

If you don't believe me (and you work in retail), divide your business into three channels.

• Pure E-Commerce.
• Pure In-Store Purchases.
• Service-Related Purchases (like Buy Online, Pickup In A Store).

Once you have the three channels, compare the following.

1. New customer counts by channel.
2. Source of existing customers by channel ... in other words, are your Service-Related buyers prior in-store buyers??
3. Future value based on last year's channel preference (i.e. does the Service-Related customer spend more in-store next year after a Service-Related purchase, after controlling for historical spend - and spend more everywhere??).
4. Future channel preference - does the Service-Related purchaser ever go back into the store and buy at the same rates as prior years?

If you take a customer who would have bought 3x a year in a store and turn the customer into a customer buying 2x a year via Service-Related purchases, you've just accelerated the death spiral. 

If you take a customer who used to buy in a store and turn the customer into a Service-Related customer, you are in the process of turning your store into a distribution center ... and you have a lot of long-term thinking to do to evaluate the long-term consequences of your decision.

Merchandising In The Death Spiral

Ok, it's become terribly hard to acquire new customers. You've cut back on marketing, making it even harder to acquire new customers. You instead focus on your "best customers", trying to squeeze every last penny out of their wallet in an effort to stave off the death spiral.

Oh boy.

When you cater to your "best customers", you cater to "the past". Yes. Your best customers have years (sometimes a decade or more) of experience with your brand. They have established tastes. They like buying Widgets ... and if you introduce Bidgets they get frustrated. They don't like Bidgets, they like Widgets.

Your death spiral accelerates.

When your best customers reject Bidgets because they love Widgets, you force your merchandising team to focus on Widgets ... it's a "data-driven" approach ... your data says your customer loves Widgets and hates Bidgets and therefore you need to expand your Widgets line. And because you are focusing your limited marketing resources on best customers, you want to please best customers, therefore you feature more Widgets!!

Why is this a problem?

Think about this from a DirecTV standpoint. They need new subscribers, and they need younger subscribers. However, as they lose subscribers they need to make budgeted sales numbers ... so they squeeze out more money from existing subscribers by pushing the same products to the same customers they've always had. Meanwhile the skinny bundles (think YouTube TV) that younger customers want (or can afford) make no sense within the DirecTV framework (and yes, I realize they have an online bundle, and how's that bundle working for them?). So the merchandise assortment, via a "data-driven" approach, shows that paying $140 a month is "right" ... and that drives away prospects making it harder and harder for DirecTV to survive long-term.

When you are stuck in the death spiral, you make marketing investment decisions that speed up the death spiral. Those decisions result in somebody deciding to squeeze more out of existing customers. When you squeeze more out of existing customers you paralyze your merchandising team into focusing on what your long-term customers love instead of what you need to do to get out of the death spiral.

And on it goes.