Survival Strategies for Small Direct Marketers, Part 2 (1,269)
By Lois Boyle and Steve Trollinger
Last month we discussed five major pitfalls for catalog marketers, the problems that arise if your catalog business stumbles into any one of them, and how they can be avoided. This month we pose several questions focusing on five pitfalls and how they relate to the catalog core competencies of merchandising, creative and marketing. Ask these questions of your own catalog.
As a refresher, the five pitfalls are:
- No obvious road map—having no long-term plan for marketing or financial performance.
- Lack of systems/controls—not having the systems to effectively execute the direct marketing fundamentals of targeting, communicating, tracking and analyzing direct campaigns.
- Suffering from the Mighty Mouse syndrome—hindered by trying to do it all.
- Database blundering—not capturing the data that you need or not being able to use the data you have.
- Unrealistic identity—lacking understanding of the niche you fill in the market.
Let's look at the core competencies.
Most new or small catalog owners begin with a merchandise concept they believe the market needs. In direct marketing, it's imperative that the concept develop and grow into an authoritative set of products that is constantly refined and updated to meet the needs of a growing customer base. Your ultimate goal as a merchandiser should be to get customers to think of your catalog first when shopping in your category of products. The following questions will help reach that goal:
Does your merchandise concept provide products that fill a unique market need? Have you positioned this concept as if you are the authority? If you share this category with other catalogs, have you provided a twist that is uniquely yours? Do you track your competition to hone your unique niche?
Understanding your merchandise niche and staying true to it allows your customers to quickly identify the unique benefits you provide.
Is your merchandise concept sustainable and broad enough to grow the product line across multiple categories? Are you looking for category opportunities that will appeal to your customers but remain within your brand story? Do your products appeal to a broad enough audience so that prospecting opportunities are not limited?
While your product line may be limited, planning ahead for merchandise expansion will allow you to plan for growth.
Are you analyzing your transactional data to guide your merchandising decisions? Do you know how to build a square-inch analysis and how to take advantage of what you learn? An accurate square-inch analysis will outline product and category opportunities (and failures), price point opportunities and other meaningful trends. Are you paying attention to what customers are telling you on the telephone, and what products they're returning?
Active listening comes in many forms and reacting to customers' responses allows you to provide products that customers really want. Most small catalog owners or managers already are merchandise experts and do it better than any other core competency. But this doesn't mean they understand or have time to track or analyze important database information.
Do you have a process for communicating key information to your creative team? Do you hand off a pagination that is guided by analysis and takes advantage of key hot spots? Do your writer and designer understand the key benefits of every product and the reason it's included in the merchandise concept?
Many small catalogers forget the key sales tool is the catalog itself. Many times the creative presentation is left to amateurs. Your writer(s) and designer(s) are your sales team. If they don't know what they're doing, your catalog may not survive.
Are your writers and designers trained professionals who understand the rules of direct marketing? Do they understand how to sell using hot spots and eye-flow research? If you have a creative team on staff, be sure they've been trained to sell. If you're hiring outside, employ direct marketing creative professionals with proven track records.
Are you arming your creative team with the right information? Have you integrated key marketing and merchandise information so that creatives understand what you're marketing, when and to whom? Do they understand key merchandise objectives or those special price points that appeal to customers? Creating a successful catalog program includes building a process that involves the creative team at the beginning of a campaign.
With a clear road map that outlines the marketing and merchandise plans, a creative team can impact the bottom line. It's their job to communicate those goals to your audience(s), but it's impossible if they don't know what the goals are.
Does your creative team understand the brand you represent and how it's differentiated from your competitors? Does the creative presentation set you apart and weave branding messages throughout your catalog and Web site? Do your front and back catalog covers stand out in the mail with a distinct message telling recipients who you are and what you're selling? Without the luxury of a household name, small catalogers must work twice as hard to tell their story. Every printed word and image must be brand-enhancing.
Are you cutting back on creative costs when trying to drive down advertising costs? This is where many small catalog businesses err. The creative presentation is your only sales tool. Instead, integrate your contact strategy with your creative plan and look for ways to re-purpose creative over multiple catalog drops. This saves on creative costs and printing/production costs.
Starting and growing a catalog business is an exciting venture. Small and new catalogers often enjoy the marketing aspect of the business because it gives them the satisfaction of seeing what happens when the creative they've worked so hard on is mailed. Get a list, mail it and watch the customers come in. The truth is that you should have a plan for where you are, where you want to be and when you want to get there.
Along the way, you should be asking and answering questions on acquisition costs, retention rates and segmentation opportunities. Without a plan, good partners and stringent analysis, your catalog business might never grow to its potential.
What customer counts and orders do you need to fulfill your financial goals? Have you outlined contingency plans for dealing with greater- or lower-than-anticipated average order size or response rates? What can you afford to spend to acquire a customer? Do you have an established mix of prospect lists and customer file mailings in your mail plan? Have you outlined a contact strategy that looks beyond the next mailing or two to the next year, with projected sales?
Do you have a process for capturing source codes? What about with online orders? Does your staff understand the importance of getting a source code from every customer who calls in? Do you understand the definition of success among mailings in terms of response rates, AOVs, customer acquisition costs and sales per catalog?
Are you relying on data to drive your list tests, offer tests and rollout decisions? Do you know where your best customers come from? Can you perform lifetime value analysis on the customers in your database? Are you able to segment your database for effective targeting of offers and communications? Do you know your historical customer retention rate, and have you built a program to reactivate older buyers and "refill the bucket" of lost buyers?
The database will give you the ammunition to determine whether customer file attrition is a problem and some insight into how to address it.
Some would argue that a soft economy, plenty of competition and dwindling consumer confidence have made survival for the small and new cataloger more difficult. Ask questions and think about your business. Take a proactive position to grow, and have a plan for how to get there. You can survive!
Lois Boyle is president of J. Schmid & Associates, Shawnee Mission, KS. You can reach her by e-mail at firstname.lastname@example.org.
Steve Trollinger is senior vice president of client marketing of J. Schmid & Associates. He can be reached at (913) 236-8988, or email@example.com.