Five Ways to Improve your Multi-Channel Marketing

Apr 22, 2008 2:06 AM  By

It’s finally happened.

Catalogers are getting an increasing percentage of their sales from their Web sites. And a larger number of customers are originating either from initial online sales or Internet catalog requests.

Many merchants still think of their Internet and catalog businesses as two separate channels. But the marketplace is evolving.

Almost all catalogs are active on the Internet and many Web sellers are using direct mail to contact their buyers. It’s time to acknowledge that these two channels are coming together and will soon be seen as one.

In many companies, catalog and Internet efforts are being driven by managers who are not necessarily working together. There may even be separate budgets and P&L reports for the two areas. This silo method often leads to a failure to optimize some of the largest marketing opportunities – those that involve the use of catalog marketing to drive Internet sales and vice versa.

It has been a common experience that Internet-generated customers have a lower value than those that come from direct mail. In general, the near-term value of these customers is between 40% and 60% of those that are generated via prospecting catalogs. For many direct sellers, over half of the new customers are now attributed as coming from Internet marketing. The most effective way to upgrade these buyers to a higher value status is when they buy from a catalog.

We call this convergent channel marketing. It happens when the catalog serves to upgrade the value of the customers generated by the Internet. Want to develop high-value, long-term customers from Internet purchasers? Send them a sequence of catalogs and upgrade them to multichannel status.
E-mail is an inexpensive way to contact new customers. It is often effective as a promotional tool early in the customer life. But e-mail has aggregate response rates far lower than catalogs. Many web-centric companies are finding that catalogs are effective in extracting subsequent sales from new shoppers who come in via keyword and affiliate marketing:
The rate of Internet sales growth is far outpacing that of catalog sales. So like it or not, companies that have traditionally been catalog centric are going to be getting the vast majority of their orders via their Website. Most are already taking over half their orders through the Web at present, but this will likely become two-thirds or higher in a very few years as customers simply expect to place their own orders in much the same way that most travelers now order airline tickets and hotel rooms themselves rather than call a travel agent (does anyone even remember what a travel agent was?).

Let’s look at some facts:

· Internet growth rate was 18% in 2007
· Catalog growth rate is 7% but it is boosted by internet growth
· Most companies’ catalogs are converging with their internet business
· With proper exploitation of the opportunity, double-digit growth is possible

The convergent world is here, and here are five ways that multichannel retailers can survive it:

1. Know the difference between the channel of order and the channel of origin. Your guide will be the matchback report, and the keys to making it work are the “business rules” – i.e., the decisions of how to attribute results between channels.
2. Maximize the ability of customers to access your company in whatever means suits them at the time they wish to make a purchase. This means that you must acknowledge and enable cross-channel behavior at every opportunity.
3. Keep the internet and catalog management under a single overarching marketing department. Do not encourage silo fiefdoms by shortsighted departmental P&L management that artificially divides internet and catalog.
4. Unify branding across the two direct-to-consumer channels to exploit your underlying brand equity that emerges when a customer buys.
5. Shift marketing resources to new marketing methods, particularly to the internet, as they become available and are seen to be profitable.

Bill Nicolai is a senior partner at San Rafael, CA-based catalog consultancy Lenser.