Strategy How to Revamp Your Marketing Strategy
By Stephen R. Lett
Changing your marketing strategy is one of the most difficult and risky things you can do as a cataloger. Is there a right time to do it? And just which way will work? Some would argue that a change in strategy should be gradual and implemented over time. Others might recommend making all strategy adjustments at once — a precarious move.
This month, I'll discuss how to effectively change your marketing strategy and identify ways to best accomplish your objectives.
Time For a Change
When sales have been flat or in decline two or three years in a row, it's time to think about modifying your marketing strategy. This occurs when a catalog stops growing its 12-month buyer file. Often, it results from a limited prospecting universe, particularly with businesses in niche markets. If your 12-month buyer file isn't growing, your revenue most likely will decline.
You have options. Manage business for profitability (and let it gradually decline); pocket what you can. Or alter your marketing strategy by expanding your potential buyer universe to start growing again. This isn't easy, but it's doable. There are only a few ways to grow a catalog business. For example:
- If there's a prospect universe to support your offer, increase circulation to expand your merchandising offering and add pages to your catalog.
Acquire (or start) another catalog title.
If your sales are flat or declining, you might not have the universe in your niche market to grow. Consider expanding your merchandising offerings to sell more product to existing customers. If your product line can't be expanded and you can't increase circulation, but you still want to grow, you either need to acquire another catalog company or alter your strategy. It's important to recognize when there's a need for change and to make a conscious effort to alter your strategy or continue as is and do nothing.
What's In a Name?
Changing your brand image or catalog name is at the heart of a strategy change. It's also very risky. The results of a name change can be devastating — at least in the short term — on both your housefile and prospecting results. Customers and prospects have been conditioned to identify with the brand. When the name is changed, they might no longer recognize you. And if they do, their trust could be in question.
When deciding to change the name of your catalog, it's important to consider the long-term gain vs. the short-term pain of doing so. Here are recent test results from a name change, taken after the initial mailing:
|Mail Date||Key Code||Selection||Net Mailed||Orders Rec'd||Gross Demand||Avg. Sale||% Resp.||RPC|
|Test Group||B||Subtotal Test Group||69,077||1,686||$122,773||$72.80||2.44%||$1.78|
|Control Group||A||Subtotal Control Group||69,077||2,258||$154,863||$68.59||3.27%||$2.24|
Control Group A was mailed with the cover version that featured the name customers and prospects were used to seeing. Test Group B was mailed the cover version with the catalog's new name. While the test group produced a slightly higher average order size, the response rate was significantly lower than that of the control. The revenue per catalog (RPC) was $2.24 from the control group vs. $1.78 from the test group. The response rate fell because customers didn't recognize the brand, even though the "old" name was printed in smaller type under the new name to tie them together. To customers, who have the final vote, it was a change in the brand.
Shift Your Customer Base
Altering the demographics of your customer base also is a difficult task. It's an evolution, not a revolution. This is something that needs to occur over time, in step with changes that are made to the merchandising strategy. Don't try to use your list selection to change your customer base. You can't appeal to a different audience without changing your merchandising, and you need to be careful not to abandon your existing customer base. For example, you won't appeal to a younger audience simply by mailing younger lists.
It's the merchandise offer that first must change. But again, this needs to be accomplished over time. You don't want to alienate your current customer base.
Get the Job Done Right
Whether you make changes to the catalog, type size or lists — match the changes to each other. Often when strategy changes are made, the job is only half completed, and the follow-through is lacking.
Say you want to begin to shift the market from an older to a younger age. At the same time, you need to alter the catalog creative using a "younger-looking" type style and size, younger models, etc. You also need to test lists that fit the demographics of the merchandising appeal and direction. Consider using two different covers: one for the housefile and outside lists that know you, as well as a younger-looking cover to appeal to the "new" customer whose attention you want to grab. Don't try to reinvent yourself overnight, but rather continue the same marketing strategy your customers are accustomed to while you introduce a "look" for the new customer.
Altering your marketing strategy is a risky proposition. What's more, it's not easy. It takes time. It's not a matter of simply mailing to different prospect lists. It's much more complicated. A redirection of the merchandise strategy must come first. The circulation plan follows, and it needs to be consistent with the strategy. If there's good reason to change your strategy, by all means do so. Consider the risks and execute wisely.
Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 537-0375.