10 Principles of Catalog Shopping for Retailers
As more retailers turn to the Web, direct mail and catalogs to offer customers alternatives to burning gas traveling to malls, many are taking a crash course in direct marketing, seeking ways to make the direct channel work for them.
Last month, we laid out the first five of 10 key principles retailers should follow to make the most of catalogs and the Web to augment their retail/multichannel programs. Here are principles six to 10.
6. Use effective segmentation to select names for catalog contact. While very sophisticated segmentation and scoring models have proven successful at larger companies, it’s best to first exploit the power of recency/frequency/monetary (RFM). Variations of this method are the simplest and often best ways to extract names from the consolidated customer database.
In the simpler days of yore, companies could use plain RFM segmentation to get most of the available sales from their housefiles. Today, however, consider a C-RFM-P segmentation structure with the following specifications:
C: channel of origin — generally store, catalog and Internet, but also can be others, such as TV or magazine advertising;
R: recency by discreet time bands, such as calendar season, but not with proximity to current date;
F: frequency of your total orders — 1x, 2x, 3x-plus;
M: monetary transaction value average; and
b>P: product dominant interest or trade style, such as tabletop vs. décor or sailboat vs. powerboat.
7. Examine your product selection, and use the catalog to your best advantage. Typically, you carry the fewest SKUs in your stores, more in the catalog and, of course, you offer everything you have available on the Web site. Until recently, consumers have favored companies with authoritative “big book” catalogs. But this appears to be changing.
Consumers are becoming more comfortable using internal search on Web sites — so much that they often favor companies’ sites over the large printed compendiums that used to be so effective in establishing market authority.
On the other hand, small best-of collections in economical 32- or 48-page formats still prove uncompetitive with larger offerings.
Today, consumers favor larger, saddle-stitched catalogs with at least 64 pages up to the 1-lb, perfect-bound size of about 150 pages. In these larger formats, upward of 1,000 product blocks can be shown with perhaps 5,000 SKUs. This is more comprehensive than most stores can show, but far less than the limitless selection possible online.
8. Promote aggressively across channels using your catalog. Try the following:
• place a store locator in prominent spots in your catalog and site;
• mention in the catalog that additional selections are available on your site;
• promote ordering via phone or online with pickup at the store;
• offer to “happily” accept product returns at your stores;
• be able to accept catalog requests at your stores and on your site, then be able to mail those catalogs immediately — don’t wait to send them in batches; and
• include a copy of your catalog in shipment boxes of orders placed by first-time Web buyers.
9. Go for sales “tonnage,” not just ROI. It’s a simple fact that catalogs generally have at least 10 times the aggregate sales response compared to e-mails. Too many retailers favor e-mail because of its intrinsically high return on investment. But too many e-mails diminishes customers’ attention to your communications and diminishes brand equity.
Most companies can contact good customers about 13 times a year via catalog mailings. As a proactive means of communicating, catalog remains king of the contact toolbox.
10. Entertain and educate while you sell. Fewer consumers curl up on the couch with their computers than they do with catalogs. Exciting photography, entertaining copy and strong editorial views are where catalogs excel.
Bill Nicolai is a senior partner at LENSER, a catalog marketing agency based in San Rafael, Calif. You can reach him at (415) 446-2500 or firstname.lastname@example.org.