The
Rebirth of Cataloging
Donald R. Libey
Libey Incorporated
Advisors and Intermediaries for the Direct Marketing
Industry
At this beginning
of a new year, we observe another turn of the wheel of the
seasons and yet another rebirth of the catalog industry. As
one year closes and another begins, we continue to be amazed
by the ever-continuing evolution of this vast direct marketing
industry and by the ever-resilient and familiar entity known
as the catalog.
Why
Does the Catalog Work So Well?
Order.
Humans require order. Set us down in the center of chaos and
we immediately begin to create order. It’s what we do—almost
exclusively. If you examine a successful catalog, you find
that it is, essentially, an array of useful products presented
in an orderly manner. The classic, successful business-to-business
catalogs are monuments of studied, unchanging order, i.e.,
Seton or NEBS or ULINE. These catalogs work because complex
information has been displayed and described in a tight protocol
that infallibly orders the information and makes it accessible
and understandable. Take away the protocol of order that governs
these catalog paragons and their level of success would not
be as assured.
A fundamental secret of the catalog master, especially as
it relates to pagination and layout, is the uncompromising
requirement for an ordered protocol of product presentation.
Many of today’s beginning catalog merchandisers and creative
designers have no knowledge of copy protocols, typography
protocols, photography protocols, styling protocols, pricing
protocols, or any of the other strict, descriptive protocols
that were written to cover every eventuality of every element
of catalog creativity, and thereby assuring absolute order.
Each of these necessary protocols is narrative descriptions
of what is allowed and what is not allowed and how it is to
be presented. Catalog protocols are to cataloging what patent
papers are to the U.S. Patent Office. And they are especially
important in an era of integrated operating systems that delight
in creating chaos out of order at the slightest deviation
from proper formatting and execution.
It is important to recognize that this state of pure order
is not for the benefit of the catalog company or the catalog
owner; it is purely for the benefit of the customer. Customers
respond to both order and chaos. To order they respond positively
and predictably; to chaos they respond negatively and predictably.
The masters know this and also know the elements of the catalog
presentation that must be harnessed and brought under a rigid
ordering. Once the inherent order of a catalog is discovered,
it takes on what is almost an immortality of its own; again,
consider the timeless “order” of a Seton or a NEBS catalog.
And that’s why catalogs work so well.
The
Three Questions Allowed By Order
There
are only three questions that people holding a catalog have
in their minds: 1) I wonder what’s new?; 2) Where is it?;
3) How much does it cost? Provide answers to those three questions
and you have met nearly 100 percent of the catalog shopping
demand. To understand the power of this dynamic, consider
the comparable three questions in the mind of a retail consumer
who arrives at a shopping mall: 1) I wonder if they’re open?;
2) I wonder if they have what I want?; 3) I wonder if I can
find a parking place close to the entrance? These are significant
questions that point to why one commercial media is superior
to another.
The questions in the mind of the catalog buyer have not changed
in many years. It is inherently human to wonder what is new;
that is the base curiosity that causes us to respond in predictable
ways. Of the three questions to be satisfied in order to drive
a sale, the newness question is the most important of the
three. If a cataloger can only posit one question in the buyer’s
mind, it must be related to “what’s new?” Only when that question
is adequately dangled do the second and third questions—“where”
and “how much” – form. Again, observe and marvel at the dictates
of order and an order-seeking society.
And if the newness question is the most significant in creating
curiosity, then the business-to-business cataloger must present
a minimum of 35 percent new products in every catalog cycle
to sustain that curiosity. A consumer cataloger must offer
anywhere from 35 percent to 100 percent depending on seasonality
and market focus. Within the human quest for order lies a
human quest for newness and change. Understanding those two
primal motivations of the Consumerus Americanus constitutes
the foundation of catalog industry mastery.
The
Questions and the Channel
Picture
the cover of your catalog and ask yourself the three questions.
You can immediately see the need for clues, answers, guides
and visual stimuli on the cover of the catalog. Now, picture
the Web in your mind and ask the same three questions. What
is conjured up, now? Or, picture a telephone. Hear it ring
and imagine answering it. Ask the three questions now. What
do you see in your mind’s eye regarding this channel? Three
channels. Three images of behavior. Three identical questions.
But a multitude of different responses, stimuli and solutions.
Here is the point: we have become multi-channel marketers,
but we have not become multi-channel behaviorists. Most of
us are still forcing our old concepts of direct marketing
behavior on alternative channels. We want the channels to
bend and meet our old expectations. It won’t work. And in
order for a multi-channel marketing position to work properly,
we will have to once again give rebirth to direct marketing.
Ordering
the Channels
Up
until the holiday season of 2002, most of what had been taking
place relative to the consumer and the Internet over the past
10 years had been preparatory ordering. Finally, in 2002,
the body consumer reached the point of a necessary critical
mass of order and achieved a critical mass of confidence in
on-line purchasing. Everything up to this point had been the
creation of sufficient order to drive consumer confidence.
And it happened in 2002. On-line shopping grew by magnitudes.
And next year it will grow magnitudes again. It is now trusted
by more people than those who do not trust the channel.
Smart direct marketers have just completed a period of ordering
in a multi-channel environment. They have mastered the cataloging
answers to the three questions and have that channel firmly
in place. They have, where appropriate, mastered the telephony
channel, either outbound or inbound, or both, and have that
channel firmly in hand. And they have spent 8 to 10 accelerating
years learning the inherent order of the Internet channel
and have reached a point of common-sense order that now allows
a fully integrated channel addition to the marketing arsenal
(read: profitable). We are now poised for a rebirth.
Birth
Requires a Mother . . . So Does Rebirth
Since
the first nascent moment of the first catalog, all sales—business-to-business
or consumer—have been birthed from the field sales and retail
sales worlds. Think about it. Our world of catalog marketing
is wholly derived from sales taken away from field sales and
from retail sales. We have not created new sales; only taken
away or shifted sales from other channels. If there were no
catalogs or direct marketing, the field sales and retail sales
worlds would be, very conservatively, some 2 to 3 trillion
dollars bigger. Direct marketing’s mom and dad are retail
and field sales. And Mom and Dad are not pleased.
Almost every business-to-business marketer I know admits that
their true competition is retail, and every consumer marketer
faces this reality daily. In a commercial world where substitutes
can be found, and where those substitutes can be found within
1 to 12 miles of any business location, retail will have a
primary, competitive influence. If you examine the strategic,
geographic positioning of both retail consumer and business-to-business
merchants, you find that niches are served by placing retail
stores within 12 miles of niche customer concentrations, that
is, no customer should ever have to drive more than 12 miles
to make a purchase. By locating two stores 25 miles apart,
the 12-mile circle is established for niche customer satisfaction.
By targeting 12-mile circles in densely populated universe
areas, the geographic niche and market share strategy can
be readily seen.
Knowing this, why are catalog marketers not challenging their
biggest competitors right in the competitive arena? Why not
do geo-selects and blanket a 12-mile or 25-mile overlapping
circle with catalogs specifically targeted to local competitive
offers? Why not take the rebirth of direct marketing to the
battleground and meet the competition in hand-to-hand combat?
And if the wisdom of this strategy is unclear, consider what
is likely to occur in the immediate years ahead.
Retail
is Overbuilt. Catalogs Are Not.
Any
reader who truly believes that this country can sustain all
of the retail stores that already exist and that are being
built need not detain themselves here any further. You are
already hopelessly Pollyanna-ish.
First, few of the retail merchants own their real estate.
Insurance companies, pension plans, state government annuitants,
REITS, and a host of other fragile, investor-benefit structures
own the strip and destination malls of America. The actual
tenant merchants (your competitors) are renters. They have
little or no investment risk, only high, unsustainable operating
overhead to remain in business.
Second, if there is a minimal, say 15 percent, pull-back in
retail spending, these investment structures cum landlords
are in deep trouble. Consider: the 2002 retail season was
a disaster financially and there was actually 1 to 2 percent
growth, year on year. Imagine the gnashing of teeth if there
was a 15 percent decline in retail spending. And, that is
possible. Allow me to draw your attention to oil prices, war,
global instability and global financial stress. If there is
a draw-back in retail spending—whether consumer or business-to-business—(it
makes little difference), there will be a lot of shuttered
and boarded retail stores. As this nation is inevitably forced
back to a consumption equilibrium that is significantly below
the levels of the most recent decades, what happens to all
of that excess retail capacity? Will we repave the mall parking
lots with grass? Face it: the post-1970s level of U.S. consumption
is simply not sustainable in a common sense outlook for the
future.
What will happen is fairly clear, it seems to me. We are doubtless
headed into a period of increased financial stress. Cities
and states are already experiencing unfunded mandates from
the Federal government for Homeland Security and a plethora
of other expensive, special interest regulatory and legislative
imperatives. The local coffers are empty and the only solution
is markedly higher taxes. Higher taxes mean less disposable
income. Less disposable income means a reduction in spending.
A reduction in spending means excess retail capacity. And
that means store closings and downsizing and reduced manufacturing.
Probably for at least 10 years or more. A “consumption winter”
descends on America for the first decades of the 2000s. Genuine
buyers, both business-to-business and consumer, will be driven
into an escalating environment of scarcity of products, services,
convenience, advice, civility, and geographic access. There
is a corrective period coming in retailing—bank on it!
But, catalog companies are not over built. Catalog companies
are not nearly as subject to excess capacity. Catalog companies
are not at the whim of investor group or pension plan landlords.
Catalog companies can “relocate” their geographic competitiveness
at a moment’s notice. They can zero in on a geographic area
that is no longer served, or is underserved, by retail competition
by simply doing a zip-select. Catalog companies, indeed direct
marketing companies, are positioned by virtue of their internal
and financial structures to take significant share away from
mass and small retailers in the decades ahead. Our industry
clearly has the financial and operational advantage in this
period of economic re-ordering if we have the ability to re-focus
on segmenting lists and mailings to the changing and opportunistic
local level.
Now,
couple that formidable strategic advantage with the functional
advantages of the Internet, and we begin to see the scope
of the rebirth of direct marketing and the shape of cataloging
to come. The catalog remains integral; the Web becomes the
tertiary destination; the speed and relevance of offers become
critical; the geographic targeting becomes incessantly local.
We no longer focus only on prospecting lists at the macro
universe level, but prospecting lists at the local “universe
of one” level. The rebirth of direct marketing will follow
and fill the voids left by retail store closings. We fill
the vacuum. Customers are shape-changed and order is restored.
A large portion of retail purchasing is shifted to self-directed,
remote purchasing, and the established, experienced, invested
catalog and Internet channel masters win . . . if you want
to and if you do something now to assure your dominance in
the inevitable commercial milieu of the future.
What
Would You Want In The Rebirth of Direct Marketing?
If
I were authoring the strategic plan for the decade ahead for
office supplies, I would be looking for innovative list work
that would provide me with the combined universes of all businesses
in the U.S. located within a 12-mile radius miles of all recently
closed big box office supply stores and segmented into the
12 regions of this report on a hierarchical basis of economic
viability.
If I were in the MRO business, I would want the geographic
lists of all businesses within a 12 mile radius of every closed
big box MRO retail supply store. If I sold to contractors,
I would want lists of every construction-related business
within 12 miles of every closed Home Depot. And then I would
create offers and incentives for each of those local niches
on a local basis, in a local voice.
And as the retail downsizing panoply develops, we have the
innovative ability and capacity to track and develop localized
list segments for every major SIC group that has a local retail
presence. We can develop shared databases of retail-challenged
or retail-vulnerable customers. We can do it for the shared
benefit of catalog businesses. And, we can do it for food
service equipment, dental supplies, office furniture, safety
equipment, agricultural supplies, landscaping equipment, and
on and on for nearly every niche target group you can name.
And we can make offers and position ourselves as local suppliers
interested in the customer’s local needs.
The rebirth of direct marketing will occur at the local level
and it will fill the competitive void left by a shrinking
and diluted retail presence.
The
rebirth of direct marketing will consist of more of what we
are good at, but focused not on national universes, but on
local segments of underserved local universes.
The rebirth of direct marketing will occur on the local retail
battleground.
The
rebirth of direct marketing will unite direct, catalog and
e-com marketers and it will finally be recognized that list
rentals among direct competitors are absolutely and unabashedly
essential in an all-out war for market share derived from
the bones of the retail channel dinosaurs. You cannot afford
to keep your list from your increasingly cooperative and mutually
sustaining direct marketing and cataloging colleagues, especially
if they are competitors. Not renting your list to competitors
is classic 1970s thinking.
The
rebirth of direct marketing will occur only in an environment
where a disillusioned, disenfranchised, discommoded and disappointed
retail customer is made to feel welcome, important and appreciated
by a channel that is genuinely thoughtful of and thankful
for that customer’s business.
The
rebirth of direct marketing requires that we do more of what
we have always done so well, but that we now bring it to the
individual customer at the local level. It is back to basics
locally. And the battle is for channel conversion of market
share, one customer at a time. Even Wal-Mart is massively
vulnerable.
The
Next Prospecting Frontier
Local
prospecting. Mastering local prospecting to zero in on reduced
retail activity in your niche will pay off for several reasons:
1.
You learn about “local” direct marketing, an extension of
the national direct marketing we have all experienced for
so many years. Local is different than national and it requires
far more sophisticated segmentations and economic profiling
of both business-to-business and consumer prospects. And,
the list and circulation expertise, uniqueness and experience
will be priceless for the future.
2.
You develop “local” offers and local relevance for local customers.
We have never gone out with prospecting offers that are geared
to a small geographic target. By necessity, printers will
have to develop local segmentation binding and multiple offer
press capabilities that reflect and cost-effectively drive
this local marketing focus. Imagine: a marketing campaign
replete with lists, offers, printing and mailing targeted
to business buyers in specific cities and areas where major
big box office supply stores are closing. Now, imagine the
same campaigns in every city and area where they are closing
. . . and read the teaser copy on the catalog cover: “Your
OfficeBox at 5th and Oak may be closing, but we’re still here
. . . and we’ve got what you want, at better prices, and we
can deliver to your door . . . FAST."
3. You have all of the internal IT systems , call centers,
fulfillment operations necessary to make this work at the
local level, and it’s already paid for. You also have highly
skilled and experienced marketers who can find those customers
if they will only begin to look locally.
4.
It is a “No Risk” strategic concept. Right or wrong, true
or false, prophesy or shamanism, you benefit from learning
how to better service customers on a local basis as well as
a macro-national prospecting basis. And, if you really believe
you want to have local distribution and local warehouses and
local retail stores (as many of you are actually thinking),
then you have to master local prospecting anyway. But, my
belief is that you can master local prospecting and marketing
from a centralized position. Your chief strategic advantage
is economic. Don’t obviate that advantage by getting
into the retail business!
