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| | January 3rd, 2008 |
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| "The Difference" |
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| IN THIS ISSUE: |
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| A LETTER FROM MONICA C. SMITH |
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| Dear Colleagues, |
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| Best wishes for a bountiful new year from everyone at Marketsmith. |
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| 2007 was a good year. We experienced 31% growth over the year prior, we have been recognized as the 44th fastest-growing company in the state, and we have 100% client retention going into 2008. |
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| 2008 is not a year for goals; I see it as a year for action. In this newsletter, Marketsmith is taking a very strong position on where catalogers and retailers need to be. The data continue to show that missteps in each quarter are compounded by the realities marketers face in 2008. We know that it is a year of mandates on many fronts, and we want to share these with you. |
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 1. | Focus on EBITDA - With a business and consumer environment facing an uncertain economy, election year, and global fears, the time has come for companies to stop thinking that circulation is the only answer to improving bottom line performance. As discussed in an article I penned, EBITDA is the combination of science, leadership, and instinct. This is a topic I have been close to and we are passionate about. I discuss the need from the top down to provide the data necessary to make the best contact decisions all the way to a contribution positive position, for example, mailers should stop using offers to drive top line revenue and not recognize the strain on the bottom line. Additionally, forecasters must work hand-in-glove with the merchants to deliver realistic numbers in an effort to create an optimal merchandise stock position. |
| 2. | Matchback Technology - We discuss the need to use matchback technology and creating rules around it. 40% of the companies we came across last year still did not engage this important and necessary tool. |
| 3. | Use the Internet to shape Merchandising Strategy - We created a study to show how the use of the internet has allowed for customer transparency to occur in merchandise, pricing, S&H costs, and more. |
| 4. | Self-Regulation Compliance - The DMA is imploring all companies to be obsessed about compliance to ensure self-regulation continues. We believe the days of self-regulation are coming to a swift halt as our embattled industry faces the fight from better-funded targets that need a win. The environmental groups, although well-intentioned, are a goliath, I think, far bigger than USPS, and we already know how our industry fared against the postal service, costing the industry double digit dents into their profits. Another tax could be the final death blow for many struggling catalog companies. |
| 5. | Marketsmith Masters Program - In response to multiple requests, we have decided to present an intensive, hands-on business tutorial program. We are offering a two day session to a limited number of participants where we will share Marketsmith insights and methodology while working directly with individual participant's data. Please contact me directly if you are interested to know more about the program. |
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| More than ever, I recognize that my company offers help for our industry, which is in turmoil. Our industry leaders need heavy lifters who can take companies where they need to go. We need to be wary of those pontificators who only talk the talk but do not walk the walk. We need leaders who are lions, fierce in their approach to challenging times and littered landscapes, addressing issues with tenacity, supported by a team who understands cause, effect, and how to use the numbers on both sides of the equation. The bottom line is that businesses face uphill battles. As companies fight those battles, we at Marketsmith know how to help them win. |
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| Now is the time for your organization to get straight what it faces all the way down to each and every segment. Our phone rang throughout December with the voices of CEO's confused and struggling with their results and challenged with finding where they went wrong. |
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| Success is a team effort between internal people and external service providers, on the same page, with one endgame - profitability. We know improvement can come as quickly as 90 days because we have seen it happen with our clients time and time again. |
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| We expect our growth to continue this year as we bring an understanding of what it takes to get customers to buy, the cost and form of the contact, and the implications of cost of the fulfillment to give shape to an effective and realistic marketing strategy. As we discussed above, there will be many pain points for our industry this year. But make no mistake, our company will grow, not because of the pain, but because we stand as one of the only companies who absolutely will take the pain away, and in fewer than 90 days. |
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| I wish for all of you to be successful. My team and I are always here for you. |
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| My Very Best Always, |
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| M- |
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| FIND THE ROOT CAUSE - AFFECTING EBITDA |
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| By Monica C. Smith |
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| Ben Franklin once said "Industry need not wish." In the last year I have listened to more than one Vice President of Marketing preface a presentation of the "current plan" to the Executive Team with "We hope…" |
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| At that point I pull out my calendar and start to figure how much time my team has to reconstruct the historical data. I then assess how much information the Chief Financial Officer has regarding the variable numbers driving costs in the warehouse, the call center, and general operating expenses. Next I turn to the head merchant to see if the margin percent is up or down. And I do a quick calculation to determine what percentage of projected sales fixed costs represent. |
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| Hope is not a strategy which delivers bottom line results...Read more. |
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| THE MATCHBACK PROCESS |
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| Wendy received a children's clothing catalog and wanted to order a snowsuit for her daughter. Wendy always orders online, so she went to the website and started to look up the snowsuit she had seen in the catalog. Unfortunately, she left the catalog on the kitchen table and did not know the item number or any of the codes printed on the catalog. She ultimately purchased a jacket and snow pants that were not shown in the catalog, and a hat and glove set that was in the catalog. She wanted the items for an upcoming trip to her in-laws' home in snow country, and had the items shipped to herself at her in-laws' address. Needless to say, she did not enter a key code at checkout. |
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| This story is not atypical for catalogers these days. How do multichannel marketers determine what contact vehicle gets credit for a sale? How do they determine who the customer is? Read more. |
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THE RISE OF THE GLASS HOUSE TRANSPARENCY - UNDERSTAND YOUR
CUSTOMER'S EXPERIENCE |
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| As we become more savvy at finding the right customers to contact with the right offer and the right product, what we call "relevancy," our consumers are also becoming more savvy in the wake of the technological evolution. |
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| Consumers still look to catalogs for inspiration and aspiration; however, they look to search engines for price comparisons. |
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| In planning a catalog, marketers must consider marketing objectives, merchandising, pagination/density...Read more. |
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| SUPPORTING CONSUMER CHOICE |
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The catalog industry is under assault on several fronts:
| 1. | Increased privacy concerns |
| 2. | Increased environmental concerns |
| 3. | Rising costs for both supplies and transportation |
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| As responsible corporate citizens as well as business people, it is incumbent upon us to take a firm stand supporting consumer choice and concerns, and operate our businesses according to best practices. Read more. |
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| MARKETSMITH MASTERS PROGRAM |
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| Marketsmith, Inc. is launching our Marketsmith Masters Program. After many requests, we have created an intensive, hands-on two day course where we will share Marketsmith insights and methodology, honing circulation and marketing skill sets. Participants will work with their own data in a secure environment while sharing the learning experience. Marketsmith professionals will impart analytical formulas, reporting formats, definitions, and questions to allow participants to make the most out of their day to day practice of multichannel marketing. The complete focus of the program is to improve marketing skills and practices. We are taking no company advertising or product endorsements. Enrollment is limited to ten participants, grouped by title and company size.
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| Read more. |
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| QUICK HITS |
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| Data Hygiene - Marketsmith finished a significant test on the use of the Cognitive Data addresses changes and how those names perform 12 months later. Call for the findings. |
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| Email Prospecting - Marketsmith is working hard to help clients find success with prospecting through email. Do not throw the baby out with the bath water here. There is opportunity. Talk to your brokers or call us. We have had success with Walter Karl Interactive. |
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| SMS Messaging - Retailers SMS messaging is key for 2008 strategies. Put it into your plan and let us know if you need a calculator to monetize it. |
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