Learn How to Improve Now from a Great Futurist (No, Not Me)
As has been its annual custom, B-to-B list firm MeritDirect’s annual co-op event in White Plains, N.Y. on July 12 was kicked off by a provocative and entertaining presentation by catalog veteran and futurist Don Libey.
Having heard Don speak plenty of times in the past (and despite his frequent speaking appearances, rarely does he repeat a single concept, strategy or idea), I’ve long since learned how to filter through his motivational pep talk and the meat of what he delivers. While always entertaining, his shtick is always chockfull of meat, but it often looks beyond tomorrow. And after all, we all want to know what we can do today, right?
Not to take anything away from his past presentations, but this one struck me as meatier than most because of its immediacy. Don’s typically made bold projections of what catalogers will have to do in order to survive tomorrow and beyond, sometimes way beyond. But he presented 20 “pillars” for catalog businesses to perform best — and profitably.
I felt these were worth the space of this edition of The Corner View, because of the remarkable combo of their relative “no-brainer-ness” and the remarkable number of companies that often struggle to adhere to them. He admittedly based these pillars on the standout structure of two catalog clients, one with less than $200 million in sales, the other with less than $20 million in sales, neither of which he’d reveal.
1. Vision. Catalog owners, Libey said, “have absolutely defined vision.” This results in the intentional creation of every element of the company when it comes to product, service, niche, people, training and communications.
But he pointed out that most companies tend to operate in a “blithe” mode; one of, “Let’s do this, this week and see what happens.”
Catalogers with vision, on the other hand, say “this is what we’re going to do and how we’ll do it,” Libey said.
But he contended that “we’re not developing leaders who have intentionally designed businesses that won’t work until they dominate.” To do this, he said, catalog leaders must forge ahead evening the face of diversity. “Never reverse course,” he urged.
2. Product. We at Catalog Success run plenty of articles that champion product as king. Often, our experts urge catalogers/multichannel marketers to ensure they have a unique selling proposition that begins with offering a highly unique product line.
But in his presentation, Libey suggested that there’s an entirely different view to take on product development. “Get really good at developing proprietary products,” he advised. “Don’t look at another commodity product coming out of China. The day of knock-off, commoditized products is gone. Growth is now in the development of proprietary products that are sufficient to create your own brand.”
To do this, he recommends that marketers bring along and train true product creators, rather than product sourcers. “Merchandising is taking over, but it’s being bastardized to mean little more than a good sourcer, someone who knows his or her way around the Orient,” he said. “A true product creator looks at a product oddly.” When the actual product isn’t unique, find a way to package it differently as a means of making it something proprietary.
3. Distribution model. Become all about distribution now, Libey advised. The old model is a centralized distribution model with one warehouse. The new model is decentralized to reach customers quicker.
Put products in the hands of customers as close to them and as quickly as you can, he said. “The model may need to be warehouse, drop-ship, catalog or telesales,” he added, “but go increasingly local.”
4-5. Culture, People. Ingrain vision, product knowledge and your distribution model in everyone in the business, Libey said. All employees should know what the company sells and what its niche is. Create a cultural DNA into everybody inside and outside your company.
Pose the following: “You want to do business with us? Here’s our culture,” Libey said. “People are infatuated with the DNA in [successful] companies. They know their role, communicate it to customers and customers respond that they love the culture.”
Bad culture exists when owners and CEOs run the business with a “Do what I say” approach. Other bad culture warnings include turf wars between merchandising and marketing, siloing of information, a lack of communication and employees afraid to ask questions because they may not be along the lines of the party line.
Finding good people to buy into a solid company culture is a challenge for catalogers too. “This industry doesn’t produce 42,000 college grads a year,” Libey noted. “Ninety percent of the people here probably came into this industry from another field. Develop your very own universities inside your company for every opportunity you’ll need to fill in the future.”
6. Tools. Never skimp on spending adequate money on the right tools, Libey noted, particularly new ones.
7. Niche depth. Be the best in your niche, Libey advised. “Most companies are vague about niche depth,” he noted. “About one-third of them know who they are. A lot of them can define their niche. But when the analysis is done, they’re all wrong.”
8. Trusted advisors. Find printers, online service firms, list brokers and other vendors that you can entrust. Don’t practice vendor bending, he advised, in which you take your best trusted advisors and reveal nothing about the financial performance of your company.
Instead, show all your trusted vendors financial statements, your balance sheet, circulation numbers and all vital information. “Say, ‘here’s what I’m looking for’,” Libey said. “’If you can figure out how I can get 10 percent better performance and profitability, you can have half of it.’ That way, you get 40 to 50 ideas that work. Open up and grow together or close up and die. Don’t bend over your paper buyer for another 2 percent off. It’s stupid.”
9. Image. When pillars 1-8 are all there, people want to be associated with you, he said. Know who you are and what everybody thinks about you and what they’re willing to do.
10. Urgency. With all pillars in line, “get on with it,” Libey said. “But nobody can make a decision because the owner or the people in charge in the country that owns us might get all bent out of shape and I may get fired. But when all the pillars are formed right, you just get on with it. This isn’t the dress rehearsal, it’s the play.”
11. New customers. There are two types of companies, Libey pointed out: those that get a few customers and keep them forever and those who get many customers, but don’t keep them very long.
“If you believe you can abandon your catalog or scale back circulation and survive,” he said, “look at new customer acquisition today more than ever before. It’s more difficult than it was just six months ago, and far more difficult from 10 years ago. If you do it the same way you did five years ago, you’re dying.”
Analyze your customer base, have models created, allocate dollars. “It all takes very hard work, smart people, and trusted advisors to come up with small tactical changes to grow your business,” he noted. “Invest in prospecting, ramp up your investment in prospecting. If you’re a second or third tier company, there’s a first tier company doing this, taking marketshare away from you. If you don’t respond, you won’t grow.”
12. Analytics. Zero in and have the finest reporting of analytics, Libey advised. “Know the answers to almost everything; don’t refine anything. Don’t retrofit anything or import anything. Be built for the next five years and know how to use it. Run effective dashboards and develop competitive wisdom.”
13-14. Customer service, fulfillment. While never skimping on providing top-notch customer service, make sure your fulfillment is able to “talk” to another part of your company, Libey said. “Third-party fulfillment isn’t the way to do it if you want to be a tier 1 cataloger,” he said. “Develop decentralized fulfillment centers all over the country. Go right into the lap of the customer.”
When it comes to fulfillment, catalogers should try to be like Wal-Mart and Target by coming to live in customers’ towns. “It’s all about supply chain,” he said.
15. Finance. Tier 1 catalogers are able to score investment money. But their investors have non-ownership relationships with equity, Libey said. On the other hand, investors in tier 2 or 3 companies say, “We can’t give you a buck and a half without having 85 percent ownership of your company,” Libey said.
To dominate a niche and be a “real” player, catalogers need $15 million to $30 million available for opportunistic acquisitions for new customer acquisition in investment prospecting.
16. Creative. Libey said he’s observed many catalogers abandoning everything they’ve learned, spending so much time learning the online side and other non-creative matters. “Create creative offers,” he advised. “Don’t be, ‘This is what we got, this is what we sell it for,’ and just offer an occasional discount.”
17. Circulation. Don’t abandon circulation planning in favor of relying totally on co-op databases. Circulation planning in many companies, Libey noted, is being placed in the hands of the most inexperienced people at catalog companies who do little more than “partner up with Abacus and let them take care of it,” he said. “Circulation planning is very complex and it’s the lifeblood filtering through your company. It needs to be in the hands of professionals who understand it in depth.”
18. Strategic planning. Libey advises, meet daily, follow strategic plans, tweak them, change them a little, but always stay with the focus, culture and niche dominance.
19. Communication. Top tier companies communicate at every level, Libey said. “Everybody’s got the same story, goal, vision and is doing what they’re supposed to do,” he pointed out. “They communicate to customers who communicate back, and to vendors who also communicate back. They have a successful sphere of communication. Other companies, keep it all a secret.”
20. Board of directors or advisors. It’s a mistake to have board members who are just dollar oriented. A catalog company board should consist of a true industry expert in the particular product line the marketer serves, a multichannel marketing expert, a solid financial person, and a private equity person who understands and uses sources and applications of money. This board member should also understand catalog ratios and know the analytics cold, Libey advised.
In lieu of a lawyer, also name a trusted advisor to your board, he pointed out. “This could be someone you’ve grown up with, relied on and have absolute faith in to tell you the truth,” Libey said. “It’s not about big names.” With a sold board in place, “then listen to what they tell you. Don’t just make them a rubber stamp.”