Good Advice in a Bad Year

As we predicted, 2008, is proving to be a rough one for many direct marketers.

We knew all along that we were facing the summer Olympics and a national election. But few of us could have foreseen the economic downturn and credit crunch that have sent venerable catalog companies like Lillian Vernon and Sharper Image into bankruptcy.

And things will get even rougher as the mortgage crisis reaches its peak this summer and the drama surrounding the Presidential election continues.

But this is a strange downturn because it is not affecting everyone the same way.

Every airplane that I have been on for the past three months has been filled to capacity. When I vacationed in January, every resort was full. In February, the number of jobs contracted but unemployment rates actually dropped.

Meanwhile, baby boomers are retiring, and that means jobs are opening up. A recent survey shows businesses intend to hire 16% more college graduates this year than they did a year ago, and a long-term labor shortage is developing.

It seems to me that things are not too bad for the middle and upper income portions of the population—i.e., most of our customers.

In fact, a review of the early spring results for more than 70 of our retained clients shows a very mixed picture.

In apparel, six clients were exceeding plan; four were under. In gardening, seven were at or substantially above plan with only one below plan.

In specialty hobby catalogs, eight were at or above plan with three below plan. In home décor, five were substantially below plan with only four at or slightly above plan. Of other clients, nine are at or above plan with three below plan.

In general, the more upscale the client, the better their company performed. The exceptions were home décor, where business is very poor, and gardening, where it is outstanding. I guess if you cannot redecorate your new home, you plant a garden at your old home.

I gave my clients this advice: Stay with your original marketing plans and avoid the potholes. Yes, the potholes continue. My wife and I, along with most other Americans, will be completely absorbed on April 22 when Pennsylvania conducts its presidential primary. This is not a day you want your catalog going in-home—and to the extent that you can avoid certain “pothole” dates, we recommend you do.

While it is tough to avoid the series of primaries in May, do avoid the following dates for your in-home targets:

• August 8-24 – 2008 Summer Olympics, Beijing, China

• August 25-28 (Denver, CO) – Democratic National Convention

• September 1-4 (Minneapolis, MN) – Republican National Convention

• October 27 – November 3 – Week before the National Election

• November 4 – National Election Day

I have one other observation regarding response results—those that are doing well have focused on presenting great product, staying in-stock, improving their creative, keeping their prospecting at needed levels to replenish their house files, improving their web marketing, and controlling expenses.

Well-managed companies with strong fundamentals tend to weather the storm.

John Lenser is the president of San Rafael, CA-based catalog consultancy Lenser

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