Neck Bears

by Bill LaPierre on February 7, 2016

“With your weird Worcester accent, if you ever tried to sell deck chairs from the Titanic, the voice recognition search engines like Siri, Cortana, Google, etc. are all going to think you are selling ‘neck bears’”.

Mobile-Sinking

That was how Amy Africa explained to me earlier this week where mobile marketing was going. It was also the second time in two weeks that a colleague had emailed me with a reference to the Titanic – a not so subtle reference to the fate of many catalogs. But let me come back to Amy in a minute.

First, an update from New Hampshire – by the time most of you read this Monday morning, the voting in the first-in-the-nation presidential primary will be less than 24 hours away. Speaking for everyone that lives in NH, we love the honor of hosting the primary. We just wish the candidate and survey phone calls would stop, and we’ll be delighted when everyone leaves town Tuesday night.  I’m not going to predict the outcome on either side. But this year’s primary season has shown one thing to be true – you cannot count on the conventional way of doing business anymore.

Second, with eight full weeks to go before our seminar on Customer Acquisition for Catalogs and Ecommerce, we are already more than half way to our goal of 200 registrations. (See below for registration information).

In checking with one of Datamann’s clients to see if she would be attending the seminar, she emailed back “Yes I’m planning to attend, it’s like you designed the content just for me!” And this client is coming all the way from England!

Yes, I did design the content for this year’s seminar around one of the two biggest issues most of you are facing – finding new customers. (The other issue is of course finding the right product).

But here was my conundrum: most of you don’t even think like an on-line company. You are still in love with your catalog. You love designing the catalog, arguing over cover products, and going to the call center to see how many phone orders you received on Monday before noon. Your website is still an after-thought. So why in the world would I ask Amy Africa to give a graduate-level presentation on mobile, when most of you have not even graduated internet high school?

Because maybe this time you will listen and act before it is too late.

Back in the mid-1990s, Amy was one of the first people I knew who jumped onboard the internet train, and this was back when most catalogers (myself included) were still saying the internet was a fad.  I remember attending a conference in 1994, where the owners of the old Music Stand catalog stated that they had done a split cover test, putting their URL on a test cover, and leaving it off the control cover. They were concerned that response to the test cover with the URL was 20% higher than the control, because they were afraid it meant they were hurting their catalog. That’s the kind of logic that Amy has been fighting for 20+ years.

Amy will flat out tell you that most people in the industry who claim to be “mobile savvy” simply don’t understand mobile or mobile search. “The people who think that mobile is a division of ecommerce are the same ones hanging on by a shoestring (or already out of business) who thought ecommerce was a division of cataloging.”

In Amy’s opinion, “the new world of mobile ecommerce, in the next five years, is going to level the playing field again.  And when I say level, I mean obliterate the entire flipping thing.  Only the cockroaches will survive.”

I know that when most of you are designing your catalogs, you still envision your customers sitting on their sofa with either their morning coffee, or evening wine, eagerly thumbing through each spread. I know you do this because this is what I hear you say all the time.

But you are blind to what’s happening in mobile. Go anyplace people are waiting – a restaurant, an airport terminal, the sidewalk – and everyone is looking at their phone. (My wife and I climbed a fairly remote mountain last summer on the Canadian border, and I noticed that while we were there, the first thing each of the other 6 hikers that reached the peak did was check their cell phone when they got above the tree line).

Amy believes that the reason you must invest in mobile (not apps, but sites), is because we read our emails on our handhelds.  Email is high converting traffic.  Plus, search in the future is going to be 180 degrees different – Google is going to keep much of the traffic for themselves, as is everyone else.  So you’ve got to be where the customer needs you – anytime, anyplace.  Your cell phone is now an appendage. Your desktops? – well, not so much.  And your catalog? When was the last time you saw someone pull a Lands’ End catalog out of their pocket while waiting for their order at a restaurant?

But don’t despair – Amy believes that catalogers have a huge advantage that other ecommerce companies lack – you still have a call center.  When your customer struggles with your website or email or text and they push a button, they can get a real, live human being.  That’s a huge advantage most of you fail to properly use.

So yes, even though mobile may be a tiny fraction of your order volume now (just like internet traffic was in 1995), it is coming. And it will come far faster than internet activity did.  Unlike many other consultants who will tell you how to rearrange and dust the chairs of the Titanic to keep your catalog around a bit longer, Amy is going to tell you how “to hop that damn sinking boat and find some other way to survive.”

Of course, I’m terrified of the likelihood of having to use voice recognition search in the future.  Being partially deaf (I’ll bet most of you didn’t know that), I’m already pretty awkward with my cell phone. I’m just hoping that someone develops an app for deciphering my Worcester (MA) County accent, otherwise I’m going to be in trouble when I have to use voice search.

Seminar:

If you have not already done so, register now for Datamann’s all-day seminar for the Vermont / New Hampshire Marketing Group on Customer Acquisition for Catalogs and Ecommerce, on Thursday, March 31, 2016 at the Marriott Courtyard / Grappone Conference Center in Concord, NH.

Registration cost for this all day event:

  • $135 for VT/NH Marketing Group members
  • $200 for non-members
  • $175 for NEMOA members
  • Registrations are accepted until March 29, 2016

Register at: Customer Acquisition Seminar for the VT/NH Marketing Group

The Grappone Conference Center, Concord, NH is located at 70 Constitution Ave in Concord, NH – just north of the intersection of I-89 and I-93. The Marriott Courtyard is already sold out, but below are six other hotels, all located within two miles of the conference center in Concord.

Holiday Inn – Concord (closest to the conference center)

Marriott – Fairfield Inn – Concord

Marriott – Residence Inn – Concord

Hilton Hampton Inn – Bow/Concord

Best Western – Concord

Comfort Inn – Concord

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

Two weeks ago, in my posting Change Must Come For Catalogers, I mentioned that one reason that your sales are not growing is that “Your merchants maintain the same level of lousy productivity per catalog that they did 10 years ago – largely because no one has held them accountable for increasing productivity.”

A reader emailed me and basically asked “I understand how I can hold Marketing accountable, because I can calculate response rate. But how in the world can you hold merchants accountable? There’s no way to measure merchandise productivity”.

You can all see what’s wrong with that statement. First is the automatic assumption by most catalogers that Marketing alone controls response rates. Second is the assumption that there is no way to measure merchandise productivity, because there is.

But let’s also be honest – most merchants think their job is to find new product. They may acknowledge they are responsible for the performance of the products, just don’t ask them to be responsible for the measurement of that performance. They don’t want to be analysts. They will gladly turn that responsibility over to others, as long as that analysis is fair and accurate. I’ve also found over the years that if you want them to use it, you need to make it simple and easy to understand, but still effective.

I had the benefit of learning how to do merchandise analysis from one of the few true masters in the industry – Jim Alexander.  Jim did a project for us when I was at Brookstone in the mid-1990s, and I saw the simplicity of his technique. I have since adapted his technique and use it with my own clients. It is not complicated, though, perhaps time consuming the first time you set it up.

Over the years, Jim has spoken at NEMOA and the DMA Catalog Council about merchandise analysis, and he always stresses one important point – square inch analysis simply measures your productivity at allocating space within the catalog to a product. It does not measure what the customer really wants.

Instead of square inches, the true measure of merchandise productivity is sales/ book/ product. It is similar to using sales/book to measure circulation performance. But adding in the extra dimension of the number of products allows  measurement of merchandise productivity.

Most of Datamann’s clients claim to do some form of “square inch analysis”, where they calculate the sales and profit productivity of each item in the catalog, factoring in the amount of space given that product.

And this is where most catalogs go astray. A normal “square inch analysis” focuses too much on the wrong two things:

  • First, it focuses too much on simply measuring square inch productivity. You might have a product with mediocre sales, which does not take up much space, and therefore manages to make it into your “acceptable” square inch performance criteria, simply because you gave it just the right amount of space.  But it is still a mediocre product, and will never contribute to your growth.
  • Second, the normal square inch analysis puts too much attention on individual products. But isn’t that what it is supposed to do? Yes, it supposed to identify good and poor performing products, but all too often the merchants responsible for using the report become lost in the minutiae of individual products (especially ones they introduced) and they lose sight of the larger picture, which is growth of successful product categories.

Using sales/book/product addresses that. (Note: the math is gross sales/ number of catalogs mailed/ number of products in the catalog.)  This number allows the merchant to compare overall merchandise performance from book to book, and season to season regardless of circulation. To a degree, it also takes into account the page count, since the number of products is contingent on how many pages are available.

I also add two additional factors to the analysis: margin/book/product and profit/book/product. The three factors combined allow management to “raise the bar” on product performance by establishing either an average or acceptable minimum for each of the three factors (but most just usually stick with sales/book/product). Merchants are “challenged” to only keep products in the catalog that meet or exceed that average or minimum. This forces the merchant to evaluate a number of factors: simple demand (does my customer want it?), margin (what’s this product really worth”) and profit (how much space do I need, and should I cut or expand pages?).

Those products that meet the acceptable minimum for all three criteria are products worthy of being kept in future mailings. (Jim Alexander’s original analysis factored in sale/book/product and profit/book/product. I added margin/book/product as I found that many hard good mailers retained too many products with absolutely awful margins).

However, if you use “average” performance as your cut-off criteria, then your performance will continue to be average. You need to challenge merchants to “raise the bar” of merchandise performance.  The amount to raise acceptable performance is unique to each catalog and each business. But use 10% as a starting point.

Further, looking at individual products is not enough. Most merchants think in “single” product terms. They become attached to individual products that they developed, and they mistake the importance of individual products over the power of the whole category of products.

Consequently, you also must calculate the average for these three measurements at the product category and sub-category levels. This reveals which product categories to grow and contract.  This is the critical point most catalogers fail to get correct in their merchandise analysis because growth does not come one product at a time. You need to pick the right categories for that growth – that is where your customer is buying.

Because I conduct many of these analyses each year, I can compare performance between mailers on all three factors as well, just as a list broker can evaluate response rates among mailers. The differences in performance between catalogs are sometimes staggering.

That’s my method of merchandise analysis. In a future posting, I’m going to review a very different way, favored by my good friend Frank Oliver, who was the merchant for the Brookstone Tool catalog when I was the marketing guy for the catalog (about 25 years ago). Just by chance, Frank sent me an email last week, with his insight on what’s troubling most catalogs these days, summed up in Frank’s memorable prose “Oh Billy. Catalogs don’t sink like the Titanic with one major collision, but die from a thousand “pin-holes” flooding the company with dead inventory, annoyed suppliers and ex-customers who won’t even take the time to post a bad review on the junky products”.

Titanic

Stay tuned.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

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