Why catalogers must eat their young

Oct 01, 1998 9:30 PM  By

R ecently I learned that the largest corporation at the turn of the century-the Microsoft of its day-was the American Lead Pipe Co. How is that relevant to catalogers? The lesson is that the market will always smile on one trend or another, whether it’s lead pipes, preppie apparel, or rustic home furnishings. So any well-run catalog in a strong niche can expect to do good business, at least in the short term.

But to thrive long-term, catalogers need not only to innovate their businesses, but to actually cannibalize them. They can’t just keep making lead pipes better, faster, and cheaper. At some point, they have to reinvent themselves, or else an innovator will come along and capitalize on what they’ve worked so hard to build.

So take a hard look at some of your entrenched business habits to decide if you should start “cannibalizing” them-using some aspects of your business while discarding other aspects that no longer work. Often, “mature” practices, “tried-and-true” formats, and “loyal” customers can start looking pretty vulnerable.

1) Cannibalizing “loyal” buyers Some catalogers have found the best way to thrive in a highly competitive market is to join it-against themselves. Take the Flax art supplies catalog. It cannibalized its loyal customer base for the existing stationery business in its main book by creating a new stationery and gifts catalog.

In essence, Flax created its own competitor for art-themed accessories. But happily, not only does the new book cross-sell product to the existing customer base of professional and amateur artists, it also attracts new, non-artist buyers.

But if you’re going to try developing a wider niche, do it slowly. Think, for instance, of how apparel cataloger Tweeds lost core shoppers in the early ’90s with a sudden switch from earth-toned cotton apparel to funky neon Lycra styles. Yes, it’s a good idea to update and innovate a catalog’s focus, but it’s a disaster to do it overnight. Customer bases aren’t built in a day, but they can be lost in one.

2) Cannibalizing a mail order base Retail has always been the “enemy” of the catalog industry, right? Not for Eddie Bauer, Talbots, The Sharper Image, and scores of other catalogers. Coach, for example, found that opening more retail stores did indeed bring down its catalog business in those store locations. But the overall customer base also increased, particularly when the catalog was used as a traffic builder. In fact, the stores were found to work best in locations that had the highest concentration of catalog shoppers, and vice versa.

No question, retail stores do cannibalize mail order shoppers. And that’s why these catalogers chose to get in on the game themselves. By cannibalizing their mail order bases with retail, these catalogers in fact strengthened their total customer bases.

Along the same lines, some catalogers fear the Internet will cannibalize their mail order businesses. They’re right. Eventually, the ‘Net will enable shoppers to make quicker price and product comparisons, which could eat away at a print catalog business.

But catalogers shouldn’t fight the Web-they should become a part of it. In the future, forward-thinking merchants will no longer marry themselves to a shopping medium. They’ll be wherever the customer is-in the store, in the mailbox, or on the Web.

Gateway 2000, once strictly a direct mail computer company, has now opened retail stores. And, consider Internet-only companies, like music marketer CDnow or bookseller Amazon. com: How long before these e-merchants, realizing that millions of customers won’t buy by computer, start printing paper catalogs as well?

3) Cannibalizing your format True, everyone mourned the death of Sears’s Big Book. But how many people were actually buying from it? As Sears discovered, it doesn’t pay to hang onto a format for sentimental reasons.

Williams-Sonoma years ago was a reliable, digest-size book, laid out with a simple design. To broaden its appeal, however, the company moved to a larger format, and the airier, elegant presentation proved a stronger sell to a less “hardcore” audience of cooks. In short, it sometimes pays to cannibalize the very format that might have made a catalog stand out in the first place.

4) Cannibalizing shipping charges Many catalogers have historically looked at shipping charges as a profit center. Times have changed. Given that most customers expect delivery yesterday-and have their pick of catalogs in the mailbox to boot-shipping charges can be a big turnoff. You may find it worthwhile to sacrifice the profit in exchange for satisfying a customer.

5) Cannibalizing your list rentals At one time, no cataloger wanted to allow customers to opt out of its mailing list rentals. What if everybody opted out? Mailers would be left with no names to rent, no rental income.

Of course, that never happened. Most customers, we know, enjoy receiving mail that’s targeted to their interests. Besides, we also know that if we don’t allow customers to opt out of our rental lists, the government will be happy to relieve us of the chore. Mailing to a customer is a privilege; as such, it’s important to let customers make the call on what they’ll receive.

6) Cannibalizing mailing techniques Most catalogers have made sacred cows of their house files. First-time buyers, for instance, might receive the next eight catalogs regardless of whether they purchase again. Gift recipients might receive a catalog every season. Those who spend $100 might get every edition for a year.

But while a customer who spent $300 with you at Christmas might look like a great spring catalog prospect, he actually isn’t if he buys only at Christmas. It doesn’t matter whether a name comes from a house file, a rented list, or a subscription list; what matters is whether the name is likely to respond. Given the wealth of outside data available on customers today, there’s no reason for catalogers to treat them exactly the same. Cannibalizing old mailing techniques can pay off in smarter mailings.

Bon appetit!