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The Formula Has Changed – What is Really New?
The article below is by our good friend, Bill Lapierre. His contact info is below.
Datamann works with many consultants that bring us clients for whom we do their merge processing. One of those consultants called the other day to check on what I was hearing about sales and response among our other clients. Many of her clients – most of whom are successful mailers, or least have been in the past – were not doing well this season. She lamented that she felt that “2015 is the year the formula changed. We have reached the tipping point where what used to work no longer does.”
2015 certainly has been different. Response has been stagnant right up until last week, with many of you reporting to me and to Mike Hayden at 4Cite Marketing that you broke order records from Thanksgiving through Cyber Monday. But that spurt in orders will not be enough to make up for what was lost throughout the earlier season starting around September 1, for those of you that saw soft responses. If response goes absolutely bonkers in the next two weeks, some of you might just end the season flat to last year. But many of you won’t.
I see 2015 as just one more cog in a long series of changes.
When I went to work at the Potpourri and Stitchery catalogs in 1986, we conducted our last big house and prospect mailing for Potpourri – a gift catalog then no different than it is today – in mid-September, followed by a small re-mail of house names and outside multis around October 20. And that was it until after Christmas.
When I went to Brookstone in 1989, I was amazed to see that they mailed a drop of their “holiday” book in mid-November. Granted, it represented 5% of the circulation for that entire catalog, and it was only to existing customers – but a mailing in November! I even called my old boss at Potpourri and told him that Potpourri needed to consider this novel idea.
Through the 1990s, I kept adding more circulation to that November drop. Then we added a second November drop. At the same time, I heard that other mailers were prospecting in November. What a novel concept. Prospecting for new customers that late in the season.
I’m not going to document every change during this time, but Brookstone’s catalog division and the industry as a whole kept evolving. We finally added an online order processing system and 800 number (we were late to the party on both of these), and overnight shipping. Just as I was leaving in 1997, there was talk of starting a website. Yes, two years after the launch of Amazon, Brookstone still did not have a website, or even internal email!
When I worked at Millard Group – the nation’s leading catalog list brokerage company at the time – during the late 1990s and early 2000s, a client once told me that a blind monkey randomly picking names from the phone book could do as good a job as his circulation manager in picking names to mail. This was not intended as an insult to the circulation manager. Rather, it was meant as a testament to the power of their catalog. No matter what they mailed, and to whom, they could drive orders and sales, they could grow and they were making money. Lots of it. That was in the glory days of the catalog industry.
Now we are stagnant. For mature mailers, you are lucky if your base catalogs – the one on which you built your companies – are able to grow at all over prior year. This is not just applicable to consumer catalogs heavily dependent upon fourth quarter sales, but B2B catalogs as well.
I still see some catalogs making dumb and foolish moves (more on this next week), but most of you manage to get it right. There are no major mistakes within your catalogs. You have simply put your customer to sleep. They are bored with your catalog. And no, they are not bored with the creative – they are bored with the content, the merchandise, and the products.
The culture and success of every organization is shaped by the worst behavior the leader is willing to tolerate. Most of you allow your merchants to play a silly game with the future your company. That game is called “what is really new?” Look at your own catalog and count the number of products that your merchants and buyers claimed were “new” this year. Then compare that against a book from five or ten years ago. Yes, the SKU numbers are different because the vendor changed or a new button was added. But it is still fundamentally the same product doing the same thing – whether you are looking at apparel, hard goods or gifts. And the food catalogs are the worst – they haven’t changed their product assortments since the Eisenhower administration.
This “game” is dangerous because the merchants and buyers want everyone to believe what they sincerely believe – that they are bring new products to the assortment. But it’s a shell game. And your catalog suffers because of it.
I tip my hat to the few companies that have made an effort to develop completely new businesses in an effort to either appeal to a new customer, or at least offer existing customers something new. Country Curtains’ new catalog called Prospect and Vine is an excellent example. I know they are putting as much emphasis on their web activity for this new venture as the new catalog. It may not work (although I suspect it will) but at least the folks in Stockbridge are trying something new. Are you?
Or are you still sending out the same tired pagination with no merchandise analysis at all, with the same products that have always been there because they are marginally profitable? Are you then having to send emails and even letters out to your best customers offering 20% off and free shipping to drive response? And when that doesn’t work, raise the stakes to 40% and 50% discounts? Just look at the emails in your inbox this week to see which catalogs are suffering. You don’t need to give away 50% discounts when sales are good.
2015 will turn out to be a turning point for many of you because you have found – finally after many years of ignoring the trends – that the old formula of mailing books all through the fall, just no longer works. Nothing you have tried in digital has helped to fundamentally move the needle either. All you did was spend a ton of money to prove it. The consumer has fundamentally changed. No matter what you do from a creative standpoint, they look at your catalog and say “there’s nothing new here” because there is nothing new. It’s still the same yoga pants, the same Shetland sweater, even the same ugly red corduroy pants with little Christmas wreaths. You are not LL Bean who experienced a run on their Maine Hunting boots last year even though they have been in the catalog literally for 100+ years. That happens too rarely.
You failed years ago to develop a product line with great margins, that lent itself to constant change and evolution. And even now that you know this is where your emphasis needs to be, you fail to adequately support new product development. It’s far easier to throw money at retargeting.
By early January, we will know by how much Amazon and other innovative companies grew by this year, mostly at your expense. Make a commitment now to make 2016 the year that you will change in order to survive. Over the next couple of weeks I will discuss steps for doing that.
Remember, the ending is never what you imagined…
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by Bill LaPierre
VP – Business Intelligence and Analytics
Datamann – 800-451-4263 x235