ACC PREVIEW: It's Show Time! - Multichannel Merchant

It’s hard to believe we’ve been presenting the Annual Catalog Conference for 22 years, but 2005 promises to be our best show yet. For one, we have two firsts this year: It’s the first ACC under the new Multichannel Merchant brand, and it’s also the first time we’ve held the conference in sunny Florida. What hasn’t changed: The program remains jampacked with stimulating sessions, not to mention enticing exhibitors and numerous networking opportunities. So if you’re attending at ACC, the following preview may help you decide which sessions you can’t miss. But if you can’t join us in Orlando, don’t fret. We have tapped some of the presenters for sneak peaks at what they plan to share. From merchandising smarts and cost-cutting tips to critical creative and Web design best practices, we’ve mined a lode of information to help you better run your business. True, it’s not quite as good as experiencing the show live at the swanky Gaylord Palms Resort, but it’s better than missing out altogether. And so you don’t miss out next year, mark your calendar for ACC 2006, to be held May 8-10 in Chicago. Enough plugs — let’s get on with the show!

Merchandising smarts: notes from the field

By Andrea Syverson

I did not go to school to become a merchant. There was no merchandising major in either my undergraduate or graduate curriculum. There were no “Merchandising 101” textbooks. I learned by doing in the retail world and in the catalog world and thanks to wise mentors who graciously shared their expertise with me and showed me the ropes. Today in my consulting business, I am grateful to be both a continual learner and a sharer of my knowledge and experience with others.

Recently I asked some of our industry’s most experienced merchants (with almost 100 years of combined experience!) to share their “postgraduate learning lessons.” After listening to these conversations, I found several lessons that apply to just about all of us:

Lesson 1: “Trust your golden gut.” — Lillian Vernon, founder of gifts and home accessories cataloger Lillian Vernon Corp. All the merchants I spoke with testified to the power of intuition. Vernon refers to her “golden gut” as one of the very best tools a merchant can have. Pay attention to your instincts. Act on your hunches. Trusting your intuition, coupled with solid marketing and competitive intelligence, allows you to use the best of your right brain and your left brain to tap into consumers’ needs and create products that customers find irresistible.

Lesson 2: “Take big bets on a small range of products.” — Bob Allen, former president/CEO of general merchandiser Vermont Country Store Great merchants never stop taking risks — both large and small. Don’t stop trying new things. Don’t get too comfortable; you might lose your edge, and your customer will get bored. Don’t just copy the competition. Be different. Create your own uncharted territory. Your customers will love you for it. Roll the dice…bet big!

By the way, Allen believes this advice applies not only to products but to people too. “Hire people who are smarter and more creative than you are,” he says.

Lesson 3: “Look for the ‘blink factor.’” — Jerry Knoll, vice president of merchandising for spiritual gifts mailer Abbey Press In his new book, Malcolm Gladwell calls “blink” the “power of thinking without thinking…the unbidden response.” Knoll believes the “blink factor” provides the emotional hook in the merchandising process. From the moment a merchant discovers a product or an idea at a trade show (surprise!) to the way a customer responds to that product while flipping through the catalog (stop! I have to have it!), the blink factor enables merchants and customers to cut through the clutter and make instant choices. For merchants, the blink factor is another emotional and intuitive tool in capturing attention and making important decisions on the spur of the moment. “I take the grabbing power of a product seriously,” says Knoll.

Lesson 4: “There’s nothing like the thrill of the hunt.” — Joan Burden Litle, creative merchandise director for merchandise consultancy The Catalog Connection One of the prerequisites of being an excellent merchant is passion. All the merchants I interviewed get energized by what Litle calls “the thrill of the hunt.” It’s in the merchant’s blood. Once you become a merchant, recreational shopping is never the same. Merchants are continually on the lookout in every nook and cranny for the next big (or little) thing that will delight their customer. The hunt is a 24/7 process that cannot be shut off; merchants live and breathe their customers’ needs, and their “sourcing antennae” are always up. This continual search process is often rewarded by finding just the right thing in a very uncommon place.

Lesson 5: “I read Yeats.” — Jon Medved, president/CEO of cookware marketer Chef’s Catalog Okay, that Medved reads the poetry of Nobel laureate William Butler Yeats isn’t really the lesson. The lesson here is that great merchants feed their souls, continually and in a myriad of ways. The best merchants I know are actively engaged in the world around them — family, friends, travel, hobbies, avocations. They are innately curious. They are open. They are lifelong learners. They get out of the office. They have fun. They are expert observers. They look outside their own industries. Medved calls this “doing a 180.” They feed their creative juices through books, through artistic endeavors, through inspirational meanderings in exotic and not-so-exotic places. Medved combines all these multiple touch points to stay in tune and keep alert to all that is going on around him and around his customers.

As Celia Tejada of Williams-Sonoma has said, “To create a lifestyle brand, you must first have a life.”

Lesson 6: “I don’t have to personally like it; I just have to know somebody who does.” — Lisa Hammond, CEO of Femail Creations, a catalog specializing in gifts for women Hammond knows she is not creating a catalog for an audience of one. She knows not to pick products based solely on her personal taste. She is in tune with her wide array of customers and wears a wide but focused customer lens throughout the product editing process. Many merchants ask themselves the Question of Three: “Do I know three people to whom I would give this product?” While you don’t have to necessarily love a product, you have to know that your customers will.

Lesson 7: “So many of our smartest, most strategic moves were based on the information we received from listening to our customers.” — JoAnn Martin and Vickie Hutchins, cofounders of Gooseberry Patch, which sells cookbooks, kitchen accessories, and country-flavored gifts The listening skills of merchants must be very sharp. They listen to subtleties, nuances, what customers are and are not saying. They pay attention. Martin and Hutchins credit their catalog’s success to their “ability to listen closely to our customers…and combining this customer feedback with our inner knowledge of trends and products. We read every letter and e-mail to learn exactly what our customers want.” All the merchants agree on the necessity and power of listening to their customers. As a merchant, you need to keep finding ways of staying engaged with your audience.

Lesson 8: “Innovate.” — Jenny Super, unit manager, Hershey Direct Business, a division of the chocolate manufacturer Super is a believer in innovation: “It’s all about creating forward-thinking products that link to your customers’ wants and needs.” Good merchants learn from the competition but don’t add more “me too” products to the marketplace. They build on ideas. They fill in the gaps. They improve. They create something meaningful. They solve problems. They think differently. They create “wow!” products, remarkable products, buzz-worthy, lust-worthy, crave-worthy offers their customers can’t refuse.

Lesson 9: “Be a good student.” — All successful merchants Passion. Innovation. Blink factor. Intuition. Listening. Understanding. They all build upon the basics: studying your subject, doing your homework. Experienced merchants believe in the absolute necessity of being a student of your customer. This involves studying the competition, studying the marketplace both in a macro and a micro way, analyzing sales reports in a variety of ways, investigating cost factors, delving deep into performance metrics, marking up catalogs with square-inch factors, creating visual displays of best-sellers and poor sellers. Successful merchants get an A+ in truly understanding all this information and making it the bedrock of their decision-making processes.

Lesson 10: “To thine own self be true.” — Shakespeare and Syverson When consulting with clients, I often encourage them to construct a “product fit” chart to help their merchants have a tool that makes the product-editing process more brand-centric and strategic, and therefore less whimsical or personality-driven. As I spoke to other merchants, I got the sense that this is something they too believe to be critical to their success. Shakespeare would call this lesson “to thine own self be true” or “know thy brand.”

Merchants play a critical role in brand-keeping. Products that deflect from your brand’s core values and mission cause confusion in the minds of the customer…even if they sell well in the short run. Successful merchants are ruthless editors. They prune their lines carefully and strategically and with their brand’s positioning always in mind.

Andrea Syverson is president of IER Partners, a Black Forest, CO-based merchandising consultancy. Syverson’s “Merchandising Smarts” session is scheduled for Monday, May 23. It is part of her Merchandising Intensive, a series of three sessions on the opening day.

A quick clip of cost cutting session

By Margery Weinstein

You may be convinced that you can’t possibly pinch any more pennies from your budget. But several industry pros are just as convinced that they can prove you wrong. They’ve gone so far as to collect dozens of ways to boost a company’s bottom line, which they’ll share at a session entitled “50+ Cost-Cutting Tips in 50 Minutes.” Among their suggestions:

Take a team approach to reducing returns. Erv Magram, former CEO of women’s apparel catalog Lew Magram and currently managing director, catalog division of Hackensack, NJ-based offshore third-party call center Cyber City Teleservices, advises establishing a quarterly committee to strategize ways of lowering return levels. “What I would recommend is having a sit-down meeting involving merchandising, creative, inventory control, finance, and customer service, and analyzing the reasons for returns and identifying problem item categories,” he says.

For instance, when he was at Lew Magram, the company was able to cut returns 25% in its “special occasion” dresses category by allowing customers to return the item only if a special hang tag had not been removed. “It made the merchandise category viable and profitable once again,” Magram says.
Test an increase in shipping and handling charges. “I’ve never seen results of a test where increasing shipping and handling charges incrementally reduces response,” Magram notes. If a company that is shipping 300,000 orders a year increases S&H by $1 per order, it will have added $300,000 to the bottom line annually.
Consider video-conferencing when interviewing out-of-town applicants. “I see this as a trend in the future to save money, especially as more companies get high-end broadband access,” says Dan Smolen, vice president of Norwalk, CT-based Victoria James Executive Search. Smolen is quick to point out, however, the importance of meeting face to face with a prospective employee before an offer is made, since that is the only way to gauge personal chemistry.
Bring some or all of your catalog prepress and proofing stages inhouse. Ellen Hurwitch, vice president, print production and procurement for New York-based marketing firm MRM Partners Worldwide, says that companies can save at least 20% by doing prepress inhouse using design software such as InDesign and proofing inhouse with color-calibration software such as GretagMacbeth’s Eye-One.
Adopt standard catalog trim sizes. Most presses run best producing catalogs that are 8-1/2″ × 10″ or 8-7/8″ × 10-7/8″, Hurwitch says. Printing catalogs with trim sizes even just slightly larger or smaller than those standard sizes can cost you money. Hurwitch says one cataloger client that was printing an 8-1/2″ × 9-1/2″ book was throwing out an inch and a half of paper per catalog. “It amounted to not only a 15% waste of paper, but 16 pages and one whole make-ready could have been eliminated by designing for manufacturability.”
Try co-mailing. Each month Boca Raton, FL-based jewelry cataloger Seta Corp. saves up to $44/M in postage by grouping its catalogs with five titles from three other catalog companies as they get shipped out from the printer, says vice president of marketing and creative services Dennis Worth. Seta, which averages 1.5 million catalogs a drop, has been co-mailing for every drop since the 2002 holiday season. Consolidating, or bundling, its catalogs with those of the other participating companies produces a mail bundle consisting of 2.5 million-5 million catalogs. When one bundle is that large, says Worth, it is able to bypass both the U.S. Postal Service’s six regional bulk mail centers (BMCs), which are its regional sorting centers, as well as the USPS’s Sectional Center Facilities (SCFs), postal areas identified by the first three digits of the zip code. Bundled into a special USPS run, the catalogs can be transported directly to enhanced carrier routes (ECRs), the exact neighborhoods or city areas where they will be distributed.

Magram, Smolen, Hurwitch, and Worth will be the panelists at “50+ Cost-Cutting Tips in 50 Minutes,” moderated by consultant Katie Muldoon, at 3:45 p.m. on May 24.

Cooking up creative success

By Margery Weinstein

What you sell is the meat of your catalog and brand. But if that meat doesn’t look appealing or isn’t easy to digest, your book will amount to a paltry meal for potential customers, who will throw it in the trash like yesterday’s supper.

In keeping with the metaphor, the 11 consultants who will be offering catalog critiques at the Annual Catalog Conference are acting as taste testers. In each 15-minute one-on-one critique they will sample a catalog and offer a free snapshot review. Here, two of the consultants, Gene BeHage and Mike Wychocki, whet your appetite for the conference’s critiques.

Sweet emotion

Good creative is guided by more than statistical models of results, says Gene BeHage, president of Beverly Shores, IN-based Gene BeHage Consulting. Paying attention to your demographics means creating catalogs that reflect how well you know your customer — not just statistically but also emotionally.

“I think there’s a lot of mediocrity or sameness, a lot of comfort in following the pack rather than being the leader, and I think that’s really putting a cap on the ability of companies to break out creatively,” says BeHage. “Concentrating on statistics, modeling, and regression analysis is all fine and good, but [if you focus solely on that] you never get to know that particular demographic from an emotional standpoint. What turns on a 50-year-old is a lot different from what turns on an 18-year-old. Too many catalogs are not molding creativity to what turns on the customer.”

For example, the colors you would select for a catalog cover aimed at teens and young adults should contrast with those you would use for a book targeting middle-aged shoppers. While red, a color known to evoke feelings of excitement, and black, a hue that consumers have been found to associate with strength and power, might be ideal for a younger market, a catalog selling to an older audience might do better using colors such as brown, known to trigger feelings of dependability and warmth, and dark blue, a tone often associated with trustworthiness, intelligence, and authority.

The most successful marketers have long put into practice the use of colors to trigger emotion, says BeHage. It’s no secret, for example, why United Parcel Service painted its trucks brown: The high-profile use of that color will encourage the public to think of dependability whenever they see the trucks making their rounds.

When selling to a customer base with a broad age range, BeHage suggests crafting your online design to skew younger than your print creative, since online shoppers are known to skew younger than offline buyers. Your online graphics should be “sexier and more confident,” BeHage says; in the print book, you should favor more-subtle photos that reflect practical values such as reliability.

Even when targeting younger customers, however, your copy must remind them of how they will benefit from buying your products. Headlines, for instance, should not only grab the attention of browsers and encourage them to read more but should also point out the benefits of the merchandise. And don’t underestimate the power of the word “you,” BeHage says. Copy should speak directly to your customers and prospects; as BeHage says, it needs to tell you how the merchandise will make you look younger or your life easier.

One emotion you don’t want to invoke in customers is frustration. So make your catalog — and your Website and other channels, for that matter — as user-friendly as possible. For example, place indexes at the beginning of the book so that shoppers see it as soon as they flip past the cover.

And let readers know that your numbers are toll-free; don’t assume they know that “888” is toll-free like “800.” “There are so many numbers out there that customers don’t necessarily know which are toll-free,” BeHage says. “That’s a lack of detail that really puts up a roadblock for response.”

A tasty tale

Mike Wychocki, executive vice president/partner of Sausalito, CA-based catalog consultancy Haggin Marketing, agrees with BeHage on the importance of emotion. Strong catalog creative, he says, is able to draw on the emotions of customers through the story it tells.

The story begins on the cover. An office supplies merchant might highlight the fulfillment of practical needs by depicting five ways to organize a cluttered office; a home decor merchant could begin its story by displaying an idyllic room — as Pottery Barn does, Wychocki says — and suggesting that readers can inhabit it by opening the catalog…and of course buying the products.

From the cover, each issue of the catalog should have a theme or some underlying logic to it, says Wychocki. He cites high-tech gifts cataloger/retailer Sharper Image Corp. as a master of this concept. Each of its catalog editions has a subtle theme that is not announced on the front cover with a label but is nonetheless evident: a health-solutions theme, for instance, that allows it to showcase such best-sellers as its Ionic Breeze, or a sound-solutions theme, in which its line of audio merchandise is brought to the fore.

“If themes are nonexistent, then you have the old Sears book with page after page of stuff,” Wychocki says. “It makes for an uninteresting catalog read.”

Coinciding with the unraveling of your catalog’s story, there should be a “merchandise matrix” that enables cross-selling throughout the book, says Wychocki. This matrix is constructed by giving your customers at least two ways to find product; one way, for instance, could be by solution, while the other way might simply be by merchandise category. Home decor cataloger/retailer Restoration Hardware, he says, has learned the art of the merchandise matrix well. You can search through categories such as furniture, or you can search by solution-oriented goals such as “Entertain Outdoors” and “Lounge in Style.” “Its stickiness keeps you involved in the story, so if it’s not for one reason, it’s for another that you keep turning the pages,” Wychocki explains.

Compelling creative also means not boring shoppers with a repetitive layout that features the same pattern of graphics on each page. “I think a really good catalog is like a well-written symphony,” says Wychocki, “with some loud and some soft parts. You want to make sure your customers are turning every page because they don’t know what’s coming next.”

Copy, too, should avoid the pitfall of droning predictability. Wychocki recommends breaking up text with such editorial aids as technical sidebars, subheads, comparisons, call-outs, and testimonials. He points out that the more technically sophisticated your product, the stronger the copy needs to be. It is for this reason, says Wychocki, that Sharper Image will sometimes offer editorial-like text on how its products work, while a company like Williams-Sonoma can get away more easily with emphasizing “beauty shots.”

Catalog Critiques will take place 1 p.m.-4 p.m. on May 23. In addition to BeHage and Wychocki, scheduled consultants include Multichannel Merchant columnist Herschell Gordon Lewis, president of Lewis Enterprises, and frequent Multichannel Merchant contributors Lois Boyle, president of J. Schmid & Associates; Chris Carrington, president of Catalogs by Lorél; Mary Ann Kleinfelter, owner of Marketing Solutions Today; Carol Worthington-Levy, partner/director of creative services, Lenser; and Glenda Shasho Jones, president of Shasho Jones Direct (and author of “Gotcha covered!” on page 34).

Circulation calculation

By Mark Del Franco

Circulation planners have twin goals: to achieve maximum response and sales, and to mail to as few nonresponsive names as possible. After all, it’s relatively easy to boost sales — all you have to do is increase the size of your circulation. But more names also mean greater costs, and if you don’t make in revenue what you spent to obtain those sales, your circ plan can’t be regarded as a profitable one.

Scarsdale, NY-based Michael Grant, a database marketing consultant specializing in circulation planning, addresses those challenges on a daily basis — and he’ll be discussing them in some detail at the Annual Catalog Conference. But first he spoke to Multichannel Merchant about some of the crucial metrics.

Multichannel Merchant: Calculating breakeven is of course one of the most important metrics of any business. What’s entailed in calculating it for a cataloger?

Grant: To calculate a breakeven, you’ll need a few key facts about a given catalog and how your business works: cost per catalog, cost of goods sold, cancel and return rates, and operations rate. You’ll note that these are only variable costs. You don’t want to include fixed costs in the equation.

Multichannel Merchant: Why use just variable costs?

Grant: Well, because as soon as you cover your variable costs, you are contributing toward paying for your fixed costs. So if you include fixed costs in your breakeven calculation [because you would appear to be able to afford to mail far less], you won’t mail all the mail cells that could be contributing to your fixed costs.

Multichannel Merchant: How can catalogers more accurately analyze the performance of their lists?

Grant: Again, try excluding your fixed catalog costs such as creative, photography, and copywriting. Correct circulation planning analyses focus on just the variable catalog costs.

Generally speaking, any cost that is not dependent on the number of catalogs printed is a fixed cost. The costs associated with each of these are also called one-time costs, since they are incurred one time and will not change regardless of whether you print a thousand books or a million books.

These fixed-cost items and any others that are incurred just one time should not be included in any analysis when selecting whom to mail to.

Let’s say that your breakeven demand per catalog with fixed costs is $1.25, and the breakeven demand per catalog with just variable costs is $1.00. Any segment that has a demand per catalog between $1.00 and $1.25 would fall into a gray zone. The use of fixed costs to make your decisions would eliminate all segments that fall into this category. However, since these segments are covering all of their variable costs and additionally cover some of the fixed costs, a mailer would be remiss not to mail all of them.

To illustrate the benefit for a given mailing, let’s say that a mailer has 500,000 buyers that fall into this category. And these buyers have an expected $1.20 demand per catalog. Then there’s an additional $100,000 in contribution realized by using a variable breakeven demand per catalog [$1.20 less $1.00 equals $0.20 additional contribution per book; $0.20 times 500,000 additional catalogs mailed equals $100,000 extra contribution].

Multichannel Merchant: What are some other key statistics?

Grant: Demand per catalog is a key measurement statistic. But if you have different page counts in various catalogs, demand per circulated page is the correct measurement metric, as you must look at the lowest common denominator.

And looking at demand per catalog for one mailing campaign is not going to suffice. You need to look at it over a period of time to understand seasonality and trends in your business. If you’re a gift mailer, for example, you’re naturally going to see your demand per catalog increase significantly in the fourth quarter; response and average order in the first three quarters of the year may be lower. So this is something you should take into account when planning for acquisitions and house file mailings.

Grant will be speaking at the morning portion of the Circulation Intensive, 8:15 a.m.-10:45 a.m. on May 23. He will also be speaking on “Improving Response and Profitability Using Advanced and Basic List Hygiene Techniques” at 2:15 p.m. on May 24.

Five ‘extraordinarily simple’ ways to boost Web sales

By Heather Retzlaff

Merchants that have both a catalog and an e-commerce site reap roughly one-third of their sales on average from the Internet. Yet impressive as that seems, Eric Svenson, vice president of e-commerce services provider DMinSite, says the potential for more Web-based revenue remains untapped.

Winning more online sales, Svenson says, boils down to maximizing the value of each visitor by improving conversion rates, boosting the number of people who opt in to receive e-mail, and increasing average order sizes for those who order. And the way to accomplish that, he says, is “extraordinarily simple”: Lower the shoppers’ cost of transacting online with you. “If you believe that time is money and every click increases costs,” says Svenson, then the way to increase value is to reduce the number of clicks during checkout, e-mail sign-up, catalog requests, and other routine tasks.

What are the best ways to do this? Svenson shares what he says are five sure-fire ways to give a lift to your online sales:

Provide solution-based navigation
Simply put, solution-based navigation is designed to help customers find a solution to a problem. “People don’t want to buy products; they want to buy solutions,” says Svenson. He suggests providing drop-down menus that show Website visitors possible solutions in the form of product categories. The result, he says, is fewer clicks than traditional navigation and a 40% lift in conversion rates.
Create featured-category links
Different from traditional navigation bars, featured-category links are listed alongside products showcased on the home page to direct visitors to areas of the site with similar products. Not only do featured-category links draw shoppers deeper into the site, but they also act as a visual index of products offered. Svenson says that visitors who click on featured-category links are more likely to buy than those using traditional navigation.
Offer thematic categories
Unlike traditional product categories, thematic categories allow selection by unifying themes such as new items, best-sellers, customer favorites, and Web specials. In particular, consumers are interested in what other consumers are buying, Svenson says. In fact, for one of DMinSite’s home decor clients, thematic categories account for eight of its 10 top navigation links.
Use dynamic e-mail promotion
“There’s a high value of getting an e-mail address, but not if you already have it,” notes Svenson. So rather than consistently devoting a significant amount of real estate on your Website to encouraging visitors to opt in to receive e-mail, you should “dynamically re-analyze” the space — in other words, remove the sign-up mechanism once consumers have registered for a newsletter. This way, when those who have already opted in return to your site, they’ll see a different promotion in that valuable spot of your home page.
Display previously viewed items
Showing the 10 items a consumer most recently called up during current and past visits is what Svenson calls low-tech personalized navigation. The links give visitors the opportunity to be one click away from the product they’d passed up yesterday, minimizing the number of clicks they would otherwise have to go through to find it via traditional navigation. And placing previously viewed links on each page — including the shopping cart — lets consumers in effect cross-sell to themselves.

Svenson’s colleague Jennifer Wells, senior commerce site manager at DMinSite, will address “20 Effective Web Design Techniques to Drive Sales and Boost Average Orders” May 24 at 7:30 a.m.

Let’s get this business started

By John Fischer

There are usually two different kinds of people just entering the catalog business,” says Lois Boyle, president of Shawnee Mission, KS-based direct marketing agency/consultancy J. Schmid & Associates, “those who have an existing company and an infrastructure in place but don’t have a catalog, and those who are basically starting from scratch.”

While those who are adding a catalog to their existing channels may be at an advantage in terms of certain fixed costs, they need to understand the basics of launching a catalog as much as the kitchen-table entrepreneurs do. The daylong Small and Start-up Catalog Intensive at the ACC, led by J. Schmid founder Jack Schmid, will home in on those basics.

Before you order business cards and stationery for your new venture, Boyle suggests taking the following steps:

Ensure your financial resources
Even if every element of the business goes your way, Boyle says, it’s likely that your catalog won’t break even until its third year. So make sure you have enough money for the long haul.
Understand what drives success
That includes finding the right margins, spending advertising dollars wisely, and calculating average order values. And don’t underestimate the importance of renting the right prospecting lists or of prospecting at the right time. Boyle says that generally speaking, it is usually best to start prospecting in early spring or fall. But knowing the nuances of your particular niche is also crucial. “In the pet supply industry, for example, late spring is far more critical than other times of the year,” says Boyle. “Many household pets, particularly cats and dogs, have a wider variety of needs during the warmer weather.”
Develop a definable merchandise concept
A tight merchandise concept results in a definable book. “Think more along the lines of Pottery Barn when you are defining your new catalog — not Sears,” says Boyle. “Many of today’s consumers seem to prefer specialized ‘lifestyle centers’ as opposed to multipurpose stores. The malls we know today are slowly dying. Time is so precious — the less effort a potential customer has to put into a purchase the better.”

Once you’ve got the resources, the numbers you need to hit, and the merchandise concept down, you can start to focus on other elements, such as catalog pagination — which items should go where, the approximate number of pages that will best showcase your offerings, and how to establish select “hot spots” in your particular layout.

Determining the precise layout of your catalog will require testing, Boyle says — most likely multiple tests. One rule of thumb, however, is that a new catalog should be at least 32 pages. A catalog with fewer pages won’t have a broad-enough array of products and price points to satisfy today’s option-hungry public, Boyle contends.

Beyond your early preparation and planning you also need to remember how important the fulfillment process is. “Once you start getting orders, you must be able to fulfill them,” says Boyle. “That’s why it’s a good idea to consider outsourcing materials when you are beginning. Given that it usually takes at least three years to break even in a catalog environment, outsourcing is definitely one way to go.”

The Small and Start-up Catalogs Intensive begins at 8:15 a.m. on May 23. In addition, Boyle will be speaking at the “Multichannel Critique: Are You Leaving Easy Money on the Table?” session at 3:45 p.m. on May 24 and the “Extreme Creative Makeover” session at 10:45 p.m. on May 25.

Strategies for better b-to-b marketing

By Heather Retzlaff

What do business-to-business merchants want? The same thing as their business-to-consumer counterparts: increased profits and sales. But while the basic goals of b-to-b merchants remain for the most part the same from one year to the next, the challenges they face change frequently, and quickly, says Mary Ann Kleinfelter, owner of Marketing Solutions Today, a Milford, NH-based consultancy specializing in b-to-b marketing.

One area that Kleinfelter says b-to-b marketers continue to struggle with is improving the profitability of customer acquisition. Here’s where they might do well to follow the lead of consumer catalogers, she says, by using cooperative databases. Although consumer mailers have been using co-ops for about a decade, business catalogers have jumped only within the past few years.

Kleinfelter offers two foolproof ways for b-to-b merchants to use co-ops:

Create a customer model based on your catalog’s customer file, then apply it to co-op databases to find prospects who should make good matches.
Using that model, analyze co-op databases to see where prospects overlap for industry selects specific to your catalog. Capture prospects who appear on more than one of these selects, because they’ll tend to be a tighter fit to your model and a better customer.

Another area that Kleinfelter says b-to-b marketers continually struggle with is presenting merchandise in the catalog in the most profitable way. Performing a square-inch analysis of your catalog will enable you to sort the strong sellers from the weak and help you to determine the best use of catalog hot spots — including the front and back covers, the opening and closing spreads, and the center of the book, where it breaks open or where the order form is.

B-to-b marketers also struggle with presenting the best promotional offers to customers, says Kleinfelter. Although free shipping and handling is the most popular offer, value-added offers such as free e-mail newsletters, white papers, or any other type of additional information work well for b-to-b marketers.

Kleinfelter is moderating the morning sessions of the Business-to-Business Intensive, “Developing Your B-to-B Catalog Marketing Plan” and “Integrate Your Multichannel Efforts,” beginning at 8:15 a.m. on May 23.

Enhancing lifetime value

By Mark DelFranco

Arthur Middleton Hughes has long preached the importance of calculating customers’ lifetime value (LTV). “Lifetime value has become the standard method of determining whether a strategy will work or not,” says Hughes, vice president/solutions architect for database marketing firm KnowledgeBase Marketing, based in Richardson, TX.

Among the myriad ways of improving lifetime value, says Hughes, are

creating “gold customer” loyalty programs
sending e-mails along with print catalogs (since customers who shop via multiple channels have a higher LTV than single-channel buyers)
offering online one-click ordering
using software to determine the “next best” product to promote to a customer
cross-selling online or in the call center.

Only about half of marketers make an effort to grow LTV in such ways, Hughes says — but that’s an improvement from just a few years ago, he adds, when virtually no one did so.

To implement these programs, however, you need to be using what Hughes calls a marketing database. Using a traditional operational database won’t deliver the desired results, he warns.

“An operational database is used to process transactions and get out the monthly statements,” Hughes explains. “For a cataloger, this database is used to process the orders, charge the credit cards, arrange shipment, and handle returns and credits.”

While a marketing database will likely get a great deal of information from the operational database, it also includes additional information, such as
preferences and profiles provided by the customers
promotion and response history from marketing campaigns
appended data from external sources
LTV and RFM (recency/frequency/monetary value) analysis, leading to creation of customer segments
modeling for churn and next-best product.

“The marketing database passes data back to the operational database,” Hughes says. “It may advise the operational database on which segment each customer has been placed in, which may lead to operational decisions. ‘Gold’ customers, for example, may get different operational treatment.”

Hughes’s session, “Multichannel Catalog Customer Lifetime Value (LTV): How to Calculate and Use It in Marketing Strategy,” is scheduled for 3:30 p.m. on May 24.

Breakthroughs and bloopers

By John Fischer

If there were a precise formula for marketing success, there’d be no need for the ACC session entitled “This Worked, That Didn’t.” Naturally people have preconceived notions about which strategies are likely to work and which will fail, says copywriting legend (and Multichannel Merchant columnist) Herschell Gordon Lewis. “But the notions have to be secondary to what the results ultimately prove.”

During the session, panelists will share examples of what has and hasn’t worked for them. For instance, freelance copywriter Jenna Myers plans to bring a folder full of error-ridden copy that was inadvertently distributed, to show that skimping on proofreading doesn’t work.

When it comes to copy length, Myers says that less tends to work better than more. Pictures, not words, are what immediately grab readers’ attention, so she advocates keeping copy blocks as short as 100 words apiece to allow more room for product shots.

And not just any product shots. For King Ranch Saddle Shop, a Kingsville, TX-based merchant of western-flavored leather goods, on-location shots work best. “All of our products are shot on the ranch with real working cowboys as well as with both cattle and horses,” says catalog and merchandise manager Rose Morales, who says that the studio shots the company used to feature weren’t as effective.

King Ranch also found that putting a high-ticket item on its front cover pays off. It added a sofa to its product line that sells for $5,000 in the spring catalog. “Two drops went by, and we didn’t sell a single sofa,” Morales says. “But when we featured this item on the cover, within the first two days, we sold three units.”

“This Worked, That Didn’t,” featuring Lewis, Myers, and Morales, along with Nigel Swabey of U.K. cataloger Scotts of Stow and Hello Direct catalog creative director Tom Walker, is scheduled for May 24 at 10 a.m.

Wheeling and dealing

By Mark Del Franco

Neiman Marcus. Brookstone. Paragon Holdings. Cornerstone Brands. Specialty Catalog. They’re among the multititle, multichannel merchants that have been acquired since the start of the year.

In the first quarter of 2005, 11 deals have been transacted, a far cry from the 21 deals transacted in the first three months of 2004. But while the quantity of deals fall short of last year’s, the quality certainly doesn’t.

“Many of the deals in the past few years were those of businesses that were troubled or needed to be liquidated,” says East Greenwich, RI-based consultant Coy Clement. “Companies are selling based on the strength and interest rather than a desperation or a need to sell a business.”

A similar principle applies to buyers, who are looking for opportunity rather than simply acquiring companies on the cheap. “There are definitely strategic and financial buyers out there, and money is available to do deals,” Clement says.

At the ACC, Clement will be comoderating the Acquisitions Executive Forum, which will cover strategies for getting deals done and explore optimal ways for buyers and sellers to work together. Topics will include how to work with lawyers and accountants, how to deal with employees, and how to build momentum to get to the close.

Pairing buyers and sellers remains a challenge for the multichannel marketing industry, Clement says: “Owners of small and midsize businesses need to understand what’s valuable to buyers.”

Clement will moderate the Executive Forum “Catalog Acquisitions and Growth Financing: How They Will Impact Your Business?” along with Larry West, president of New York-based catalog intermediary West Cos. Joining them will be Jared Florian, president of Hudson, OH-based Universal Screen Arts, which acquired Signals and Wireless in April 2004 from Target; and Rich Hebert, president of Alston, MA-based BlueSky Brands, which purchased Paragon Holdings. The forum is scheduled for May 24 at 10:45 a.m.