Late Summer Catalog Observations 2015- Part 1

by Bill LaPierre on August 23, 2015

The fall catalogs are starting to pour in, so it is time for some commentary and observations on what catalogers are doing.

Brookstone:

Here is something you can do at home: go to the Brookstone website and try to request a catalog. Because I worked at Brookstone for nearly ten years, I still love to look at their catalog. But I don’t get it anymore, even though I have made recent purchases from their website. So, I went to their website to request one, and could find nothing that said “Request a Catalog”. I went through every link in the “About Us” and Company Information tabs at the bottom of the home page.

However, I did find this comment in their Corporate Overview “Originally a catalog company, Brookstone today operates a multifaceted Direct-Marketing business that includes catalogs, e-mail and affiliate marketing, and an online site offering hundreds more products than are available in our retail and airport stores.” Ok, so they still think of themselves as having a catalog – but how does one get it?

I finally found a link buried in their FAQs for a place to request a catalog.

The catalog purist in me wants to ask when did we decide to make it nearly impossible to request a catalog? But in reality, this makes perfect sense, especially for a catalog like Brookstone. Most of you have been losing money on catalog requests for years. You did it because you thought it was important to maintain this vital customer service. But if you are a high-end gadget oriented company like Brookstone, do you really want to encourage someone to request your paper catalog, especially if you know it will most likely be unprofitable? Of course not. (Just because you can do something, doesn’t always mean you should.) You want them to sign up for emails and your mobile app.

Take a hard look at the profitability of your own catalog requests, and determine if this is an area which because you have ignored it, is a place that is robbing you of profits.

Paragon:

First, a little background. Paragon has been using a similar cover “template” for several years.  I’m sure the consistency of their creative strategy makes cover designs a snap – nothing to argue about with regards to what goes where. Of course, they may have bored their customer to death a long time ago by making it appear that there is never anything new in their catalog, but a drop in response is the price you have to pay for ease of design.

5-Paragon-Covers

If you have been a long time reader of this blog, you know I love to point out stupid cover tests. But the test below (both covers received last week) could actually make a significant difference.

Paragon-Test-08-2015

First, I applaud someone at Paragon for being able to push this test through – I’m sure it wasn’t easy to get agreement to even do this test. I’m certain there was endless debate over which model to use, whether she was representative of their customer, and should this be a location shot, blah blah blah. But this test illustrates that even in catalogs where somethings appear to be set in stone, someone with a little courage to dare to break the mold can potentially make a big difference.

Holiday Sales Assumptions:

I’m not a financial analyst, but I do try to get a reading of the tea leaves in late summer every year to determine the outlook for the upcoming holiday season for catalogers. Since many of Datamann’s clients are based in the UK, they lack the visibility into what is happening here in the US. Here is my current thinking:

Years ago, one of my clients who was a “well-seasoned” veteran of many holiday seasons shared a bit of wisdom with me. He worked for a major, mid-ticket apparel retailer. In his experience, which stretched back to the early 1960s, in years when a major new technology product was being introduced (color TVs in the 1960s, IBM home PCs in the late 1980s, iPads/iPhone in recent years), his company usually saw a dip in holiday sales because the consumer was shifting dollars into a major product.  The good news is that there does not appear to be such a product on the horizon for 2015.

If you were to read the 2nd quarter sales reports for some major retailers and look at the amount their same store sales were either up or down – Macy’s (-2.6%), Sears (-11%), Kohl’s (+0.6%) and Wal-Mart (+1.5%) – you might think the consumer had stopped spending this summer. But other retailers fared much better in the second quarter, including Target (+2.4%), JCPenney (+4.1%), Victoria’s Secret (+3%), Lowe’s (+4.3%) and Home Depot (+4.2%).  I won’t go into the details of why some were up and others down. Suffice it to say that the consumer is still spending.

But here is the potential problem. As gas prices continue to drop (I paid $2.30/gallon yesterday – woo hoo!) sales of SUVs, and pick-ups have gone up. Ford is running out of frames for F150 pick-ups. New car loans hit a 10 year high during 2nd quarter.  Although Americans have piled on some new debt related to cars/trucks, I don’t think that will be enough to dampen spending later in the holiday season.  Unless there is some other major incident lurking out there that we don’t yet know about (another Hurricane Sandy, the decline of the Chinese economy, something happening in North Korea), the economy looks OK for this holiday season. (Of course, as I’m writing this late Friday afternoon, the Dow average dropped 500+ points on fears of an economic collapse in China, which only goes to show how volatile the economy is, and how irrelevant predictions like this can be).

November 2016

Here’s one more thing to think about. During years with a Presidential election, every mailer has asked whether I thought the election would have an impact on response, and should they delay mailings around the actual election date.  If you asked 100 mailers that question, you would probably get 100 anecdotal responses.  I don’t expect the 2016 election to be any more or less raucous that any other election cycle from the past 20 years. But, I do expect one thing to happen. Most mailers are going to aim to have their catalogs in-home after the election. Because of the growing volume of co-mail pools, that is going to force a ton of catalogs into mailboxes around November 10 next year. It may not be the election that hurts response, but the post-election crunch in the mail box. Think about that when you are evaluating your responses from this fall’s mailings and planning next year.

A Sweet Anachronism:

Target Marketing magazine recently published their annual list of the 50 top mailers. This is not based on postal receipts, or printer’s logs. It is a highly subjective list based on mail received at their sister company, Denny Hatch’s Who’s Mailing What.   Here’s what is funny – the list still includes whether the mailer’s customer list is available for rental, and if so, who is the list manager. Only 12 of the top 50 still have their list on the market. What a sweet reminder of a long ago mailing industry metric.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

The Little Things

by Bill LaPierre on August 16, 2015

My father always said that it was the little things that get you. I can hear him saying “You can spend a lot of time getting the big things right, but some little screw up down the line will cost you time, money and a lot of aggravation, and erase all of the other things you did right.”

I’m going to give you two recent examples of this phenomena that are applicable to everyone, one of which is directly related to cataloging, and the other is tied to customer acquisition.

The Catalog Example

Two weeks ago, one of my subscribers sent me a very long and thoughtful email about an experience he had had the day before with a nationally known catalog company. This is not a lesson about good or bad customer service. It is how we forget the most basic tenet of cataloging – and sales in general. We forget to put a human touch on getting a response.

The company he ordered from is upscale, and I will leave their identity at that. He ordered a sweater and vest for $267. (“A lot for a sweater and a vest, but at my age they will probably see me out”).  Knowing a little about the company, that amount is slightly higher than their average order.

But when the reader went to check out, he found the shipping and handling was $19.95, which for him was a deal breaker. His comment was most insightful “I know the ins and outs of many businesses but at the end of the day it comes down to price based on what the market (me) is willing to pay. We’re all trying to get that right. Which audience will pay what for what? I was not willing.”

In the catalog world, we all have an average order. For some catalogs it is $50, for others it is $500. For those with a $50 average order, a “high end” buyer might be someone who spends $125, which might be a low end buyer to the catalog with the $500 average order.  When we offer incentives to push the average order up, and increase response, most catalogers tend to focus on getting the tier of customers just below the average to move up.  Get the $40 order to move up to $50 by offering free shipping over $50. We construct all kinds of A/B tests to validate whether this works.

The problem is that we don’t evaluate what is happening with our best customers – that top 20%, who are spending in amounts way over our average order. We assume that because they can afford to spend lots of money on our stuff, that they will not have that momentary pause at check out when they see the shipping and handling fee.

I’m not a big fan of promotions, especially free shipping if you are a hard goods company shipping heavy items like cast-iron cookware. But, offering free shipping – especially in apparel and soft goods – to customer spending 25% over (not under) – your average order threshold probably makes sense. At least it ought to be tested. Take a look at how much your big spenders contribute to your bottom line and you will see why you need to keep them from jumping to competitors.

Here’s the punchline on this whole episode. The reader that sent me this note saw that the cataloger had “live chat” on their website. His comment: “My experience is that companies that engage in the live chat option and all the costs associated with it train their people well.  The CSR I engaged with was acting like an owner. She immediately offered me a free shipping code and explained how I was to use it in the checkout process. Sale made, {the catalog} wins though with a bit less profit and the customer gets what he wants.”

So, is this how we are all going to be trained to deal with catalogs in the future, that if you take the time to complain, you get a discount or get free shipping?  When did we stop thinking about the nature of the customer’s experience with us as a company? Stop focusing on the results of some A/B shipping test and think about your customer as a human with emotions that need to be addressed to get a response.

The Non-Catalog Experience

With the exception of readers living in Iowa, those of you in the other 48 states have no idea what it is like to live in New Hampshire in the months leading up to the presidential primary every four years. The candidates are everywhere. Literally.  And it is especially true this year with so many candidates on both sides running.

It is particularly fun to watch how humble these candidates can look, when they are accustomed to speaking to large crowds in their own home state, and they come here to speak to a crowd of 12 supporters at some road side maple sugar house.

My political persuasion is of no consequence to this blog, and hopefully you will never be able to detect what it is, although I will say I’m registered in NH as an “Undeclared” voter. But last week, I received a postcard announcing a presentation by one of the candidates that I was somewhat interested in hearing, which was to take place in Keene, our county seat, and which is a fairly big city by NH standards. There was a unique URL on the postcard at which to register, along with a phone number. That night, I saw in our local newspaper an announcement that this candidate would also be speaking the following morning in my little home town.

Only it wasn’t listed correctly in the newspaper. It said the candidate would be at a restaurant in our town (we only have one), but it stated the location of the restaurant as being in the next town over from us. I was willing to overlook this NH geography faux pas since we don’t get many candidates stopping in our town (population 1,100).

I definitely decided to go hear the candidate. I used the URL on the postcard to register, but it was only valid for the appearance in Keene. So, I called the phone number. I was already to hang up on the 6th ring, when finally a campaign volunteer answered. He must have been speaking on a 1990’s vintage cell phone via Skype, or some equivalent, because I would have had a clearer connection if I had been talking with Buzz Aldrin on the far side of the moon. I could barely hear or understand him, which is not a good way to impress voters.

The phone number I called was unique to registration for the event in Keene. He asked for my email address so he could send me a free ticket, but when I told him I wanted to attend the event in my home town, he said registration was not necessary. I pointed out to him that the newspaper had the wrong town listed for the restaurant location, which did not seem to pique his interest.

On the morning of the event, our one TV station in the state was reading its daily listing of which candidates would be where that day, and it announced that this candidate would be at Audrey’s Restaurant (which was correct), but gave the location as being in a town with a slightly similar name, on the opposite side of the state.

It’s the little things that get you, the little screw ups.

This candidate is focused on big issues – the economy, taxes, ISIS, etc. But the candidate’s campaign staff, which probably has not even left their home state to even set foot in NH, is making no effort to help the candidate locally.  They had me on the phone. They asked for my email address, but because they did not need to send me a registration, I doubt the volunteer took my email address down, as I have received no follow up communication from the candidate.

I ultimately decide not to go hear the candidate that morning. My feeling was if their campaign was that screwed up, they had no chance of winning. I predict this candidate will drop out of the campaign the second week of March.

This is no different than the catalog that has great merchandise, great creative, and fantastic marketing, but lousy inventory planning or lousy customer service that drive customers away.

A Good Program:

If you missed this announcement in Kevin Hillstrom’s blog last week about his new benchmarking program, check it out. MineThatData Elite Productivity Index

I think this is a great idea. When I worked at Millard Group, one of our competitors had a report they issued to clients where they took the monthly percent that mailers were above or below plan, and averaged them together. So if ten tiny mailers reported they were 5% above plan, and one giant mailer said they were 30% below plan, that company reported that on average, mailers were 4% above plan.   The folks at Millard always wanted me to issue a similar report, and I had to explain that you could not average the results of LL Bean and Lands’ End with some of our tiny clients, especially if all we were getting from the client was “percent” above or below plan.

Kevin’s report removes much of that size bias when comparing your performance against others in the industry. It will also be an incredibly useful tool to measure your own merchandise performance.

And no, Datamann does not receive any commission from Kevin if you sign up for this program. We simply think Kevin’s a wicked smart guy, who is developing valuable programs for the catalog industry (which includes our clients). And we want to see this succeed.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

Where Are The Heroes?

July 26, 2015

I am not a fan of science fiction. The closest I came was watching the old black and white Superman TV show from the 1950s, which was already in syndication when I was growing up in the 1960s. I did not watch Star Wars for the first time until I met my wife in the […]

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Lifestyle Creep – Part 2

July 19, 2015

A few weeks back, I wrote about how many hard goods catalogs go to extreme lengths to make their catalogs devoid of models, or said another way – why are there no people? (click here) I purposely left out one important reason as to why I believe this phenomenon has happened at many companies, just […]

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New Launches – They Got “It”

July 12, 2015

This past week, I met with the owners of two new companies who plan to launch catalogs this fall. These are two of several new catalog launches that Datamann is working on for Fall 2015. (A note to other B2B companies – if you are not getting new business like this, maybe you should think […]

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The 8 Hour Window of Vulnerability

July 5, 2015

As most of you are just getting back to work after enjoying a 3-day weekend in celebration of Independence Day, I’m going to take a departure from my usual observations on the catalog industry, and give a brief personal experience from 25 years ago, which relates to what is happening in the catalog world today.  […]

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Use Yah Blinkah – Think Before You Market

June 28, 2015

Sometimes we just make it so hard for customers to buy from us because we don’t have a clue how to sell to them. If you have ever heard me speak at a conference, you’ve probably detected that I have a “slight” New England accent. Actually, it is a “Worcester” accent, which is far worse […]

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What Curated Collection?

June 21, 2015

I received an email last week from a company that said they would be “curating” a chicken BBQ in a few weeks at a special event they were hosting. Come on – get real! How do you “curate” a BBQ? Among the many buzz words promulgated by the trade media and catalog industry experts is […]

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Of the Catalogs, By the Catalogs and For the Catalogs

June 7, 2015

I’m hoping that most of you recognize that I borrowed my headline from The Gettysburg Address.  I thought it was appropriate since much of what I’m writing on today is borrowed. First, do you remember the talk I gave at NEMOA last spring, in which I exposed the catalog co-ops as simply a mass of […]

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Our Industry Is Not Replacing Leaders

May 31, 2015

Today’s posting is a personal note of gratitude and reminiscing, but it is also a commentary on what is happening to our industry. This coming Saturday, June 6 is not only the anniversary of the D-Day landings, but it also marks the end of one of my good friend’s catalog career. Frank Oliver, Senior Product […]

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