Marketing Statistics and Alternate Facts

by Bill LaPierre on February 19, 2017

We are all familiar (or you should be) with Captain Renault’s famous line in the movie Casablanca, that he is “shocked, shocked to find that gambling is going on in here”, at which point a croupier hands him a wad of money and says “…Your winnings, sir.”

I’m going to share with you some insight I received via an email recently from a longtime reader of this blog, and longtime friend in the catalog industry. His comments and concerns are a perfect encapsulation of an issue which I hear too few of you discuss, and echo Captain Renault’s famous line.

His email was one of several I received from readers regarding a posting I wrote a few weeks back on the death of the catalog media, and the independent voice which publications like Catalog Age used to bring to our industry.  I will share several of the other comments I received from readers over the next few weeks. They all had a common theme, and surprisingly, it was not a wistful, nostalgic yearning for cataloging’s Golden Days. Rather, they all acknowledged that the industry has lost a great deal of knowledge, and basic common sense.

My friend wrote that he was “shocked, shocked” that there could be such a thing as ‘fake news’. He felt that “the people who value this drivel do so because it either reinforces what they already believe or they don’t have a framework for evaluating the ‘facts’ in the story.”

“Which brings me to marketing statistics. Every email service provider, personalized shopping experience vendor, cloud web service seller, total marketing integration service seller with whom I’ve talked has an easy to install, comprehensive reporting suite that will produce pretty graphs showing how effective their product is. How else can I get email, affiliate and PPC services claiming to produce 121% of my total revenue?”

“Without a business strategy the numbers are hard to evaluate and can be used to tell stories that don’t reflect reality.  Our company likes to make a profit so we look at order contribution at a business level.  If we are not making money on the orders we take in it doesn’t matter what the “reports” say.  We also do an analysis by channel but that is secondary. I often wonder whether people who are looking for ‘good marketing statistics’ have a framework for evaluating fake news. That’s really the issue. Without a framework and context numbers don’t matter.”

Mark Twain used to say there were lies, damn lies and statistics. Today he might say there is fake news, alternate facts, and marketing statistics. They all sort of fit together.

My friend’s email reminded me how much I enjoy his wisdom, and his ability to see and state the obvious to which so many other marketers are blind. He is the Sage of Spokane.

His comments reminded me of a speech that a VP of Sales for one of the co-ops  gave at NEMOA a few years ago.   She was presenting a talk on new customer acquisition, and she used projections from the DMA to show that direct mail was trending to grow in the next 3 years. I remember thinking to myself – now, who is better qualified to project where catalog volume is going? Who would you put your money on? The co-op, a company that has millions of transactions from thousands of catalogs, and who knows every catalog’s mailing trend for the past 20 years? Or, would you put your money on projections from the DMA, a trade lobbying group which has access to no company mailing information, only self-reported survey data? Hmmm…., why would the co-op use the DMA’s projections, and not their own? Maybe because the DMA’s projections are always overly optimistic, and were a better fit for her narrative that day.

How many others in the room came to that conclusion? How many were “shocked, shocked” that she would cite so shallow a source as the DMA, when her own company was sitting on more data about the catalog industry than any other source available?

The issue is not so much being able to evaluate fake “marketing” news. The issue is the brain drain and experience drain our industry has suffered. There are very few people left in our industry that can even execute a really good direct mail campaign.  When was the last time you received a piece of mail at work – not an email, but something that went through a postage meter or that had a stamp?   No one does it anymore, because they have been lead to believe it no longer works. In their rush to show that they are not email and social media Luddites, and that they can embrace “Millennial marketing”, catalog marketers have dismissed efforts to make their base books stronger and more appealing. In my opinion, catalog marketers today are not creative, they are lemmings.

Yes, I believe that consumer behavior has changed, and is shifting ever more toward mobile – I see it on an individual level when I watch my wife shop from her iPhone. Yes, I believe that websites need to be stronger than catalogs.

But to ensure catalog survival, we must separate fad from trend, statistical fact from marketing fantasy. To my friend’s specific point about every vendor supplying an easy solution, I encounter this phenomenon frequently with clients that are being told by other vendors how easy it should be to “dial up their marketing”. But, these same vendors never ask the client to provide all costs associated with the marketing – the way I do and the way most list brokers would do – to calculate the marketing program’s profitability (or as the my friend stated, “order contribution at a business level”).

Sadly, I still encounter mailers for whom the concept of calculating profitability on a mailing is a new concept. The thought of assigning profitability to other, less tangible marketing is out of the question. (Errors committed by the new generation of catalog mailers will be the topic of a future posting).

The irony of all this is the second part of that famous scene from Casablanca. Renault is shocked, but then he turns around and accepts the cash from the croupier. In the catalog world, many of us know how to detect when data is wrong/ missing/ misleading/ fake, but we smile, accept the report and say “thank you very much”.   We don’t push back enough and say “Your data is crap, and your assumptions are misleading.” Although, I have no doubt that some of you tell your internal analysts that, and especially tell it to your vendors, not enough of you do, because you lack the insight to know what is real and what is fake.

Wisdom is an asset that often comes only with time and maturity. Don’t overlook it, and don’t under value it. As Lord Tennyson wrote “Knowledge comes, but wisdom lingers.”

PS: In case you are interested, Casablanca’s Captain Renault has a connection to New Hampshire, where I live.  Claude Rains, the actor that played Captain Renault, is buried in Moultonborough, NH.  Bet you didn’t know that.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

There Are Still Some New Tricks

by Bill LaPierre on February 12, 2017

A few weeks ago, I wrote about the death of the catalog media, like Multichannel Merchant magazine. In preparation for doing so, I went out to the loft in my garage where I keep old catalogs and old copies of Catalog Age (predecessor to Multichannel Merchant) to get one to use a photo of in the posting.

I looked through a few old issues of Catalog Age from the late 1980s and early 1990s. There were articles that went into great detail explaining the benefits of NCOA, using an 800 number, talk time in the call center, mailing to Canada (that topic never seems to go away), and the best way to allocate multis on a remail. It was a nostalgic trip back to the topics that were so important when I first started in cataloging 30 years ago.

Now where are we? All of these marketing wonders of years past are now taken for granted, or are misunderstood. We no longer debate the pitfalls of desktop publishing, whether to include a FAX number on the order form (most of you don’t even have an order form), and your list broker, who you counted on to negotiate your list deals, has retired. We can’t even count on the likes of Hershell Gordon Lewis and Don Libey to warn us of our excesses and mistakes.

There are still many neat tricks that you can do with a catalog to drive response. But, just like I’m sure a lot of great blacksmithing secrets went to the grave when cars replaced horse and buggies, so too are the many secrets of cataloging going to disappear.

So let me give you a new one for your circulation planning.

Most of you segment your file by RFM, which is fine and adequate for many of you. You further segment by channel – typically by whether a buyer purchased by mail or phone (typically labeled “catalog buyers”), or whether they ordered via your website (typically labeled “internet buyers”). You may also break out your retail store buyers and Amazon-only buyers (which I recommend).

But, it’s the web/internet buyers that can be further segmented to improve your response rate when mailing a catalog. During matchback, those “web buyers” that matched a mailed catalog can be identified as “catalog from web buyers”. These buyers are not true web buyers – they still used/needed the catalog to respond. They will perform better in future mailings than the pure web buyers (customers acquired through SEO, PPC, email, etc.) with whom they were previously grouped.

When Datamann identifies these customers for clients, we keep these “catalog from web” buyers separate from those catalog buyers that ordered over the phone, partly because they perform at a slightly lower response than mail/phone buyers, but also because in the future, they may be the customer to whom you can mail a smaller catalog aimed at driving these buyers to the web.

In general terms, these would be the difference in magnitude in response you would experience between these groups of buyers, when comparing equal RFM segments:
Mail/phone buyers = 3%
Catalog from web buyers = 2.75% to 2.50%
Remaining (pure) web buyers = 1.75% to 1.25%

If you model your names for mailing, your models probably already take this performance by source into consideration. If you use traditional RFM for your mailings, this adds an additional set of segmentation for buyers, and requires an additional step (identification of the names through matchback), but the added value in the difference in response is worth the effort.

Finally, by identifying those web names that in theory, needed no catalog to respond, you have identified those names to which you potentially do not need to mail a catalog, and have potentially reduced your overall circulation expense.

There are still some good tricks to employ to drive response with your catalog. This one is simple to identify, easy to implement, and very profitable. Go to it.

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by Bill LaPierre
VP – Business Intelligence and Analytics
Datamann – 800-451-4263 x235
blapierre@datamann.com

I Get It, They Don’t

February 5, 2017

Who in your company “gets it” and who doesn’t?  More important, who in your company is never going to “get it” with regards to how their work must evolve to keep pace with the changes our industry is facing? Years ago, I sat through a day-long meeting for a client that wanted to make a […]

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B2B Medical Catalogs

January 29, 2017

I write too often in this space about consumer catalogs, and don’t devote enough attention to B2B catalogs. So, if you are a consumer cataloger, you can take this week off. I’m going to take a look at the sterile world of medical catalogs. Many B2B catalogs seem to be 15 years behind their consumer […]

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Only $200, What A Deal!

January 26, 2017

Last fall, I gave you a detailed explanation of what Kevin Hillstrom would be speaking about at the Datamann catalog seminar, which we host for the VT/NH Marketing Group, on March 30th. (Click here if you missed it – “What Is Missing Is Not Metrics, But How We React To Metrics”) Yesterday, Kevin’s blog gave […]

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And That is The Point I Reach for my Cellphone…

January 22, 2017

Registration is well under way for Datamann’s annual catalog seminar, which we host for the VT/NH Marketing Group. This has become the largest one-day catalog event in the country. This year’s event is Thursday March 30 in Concord, NH. (There is a link to the registration at the end of this posting.) At last year’s […]

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Press On – Why Coolidge Matters to Catalogs (Really!)

January 18, 2017

Most of the catalogers that are readers of this blog reported that they had soft sales this past holiday season.   There are many reasons, some of which I have previously reported. I think Amazon took a far bigger chunk of business from each of you than you probably are willing to acknowledge. Few of you […]

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Henry’s Many Options

January 15, 2017

Everyone always asks for specifics on how to grow their catalog business. So, let’s use Henry Repeating Rifles as an example. Let’s get my gun credentials out of the way. I own two shotguns which belonged to my grandfather, and a .22 single-shot Ithaca rifle which my father bought for me 50 years ago, and […]

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A Canary In The Catalog Coal Mine

January 8, 2017

Here is a wake-up call for the new year: Catalog reporting is gone. Have you noticed what is missing lately from your mailbox?   When was the last time you saw a magazine focused on catalogs?  Catalog Age long ago evolved into MultiChannel Merchant, but now even that title is gone. Catalog Success evolved into Total […]

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Play Like You Have Nothing To Lose

January 4, 2017

Athleta is playing to win, playing like they have nothing to lose. They are taking risks, not playing it safe. See if you agree. Since the NFL playoffs begin this weekend, I’m going to give you a football analogy with application to catalogs, and specifically to this Athleta cover.  (My apologies to my many UK […]

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