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| A LETTER FROM MONICA C. SMITH |
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| Dear Colleagues, |
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| As our final newsletter of the year we go out with nothing less than a fully loaded edition of "The Difference"; it should be called the "Red Meat" edition. |
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| What a year it has been. Unfortunately, our sanguine predictions were dead on and we are looking at a holiday season that will be down as much as 10% over last year and we will have had to say goodbye to certain catalogers that were unable to sustain the cost increases leveled upon them. We saw little if no outrage by the Direct Marketing Association and we see the grave threats to the catalog industry as whole still looming. |
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| For the full year of 2009, we expect flat growth in terms of customer buying segments as a blended whole: |
  | The community of savvy shoppers who buy only off-price will continue to grow. These buyers love and cherish the Brand but are less concerned with the luxury of the Brand experience. To reach them and win their sales, Brands must focus on quality, easy access, and easy return. Think accessibility in 2009 on all levels. |
| Traditional core shopping seasons like Christmas, Back to School, and Spring Fashion will continue to contract. Buyers will be looking for the bargains that follow these seasons. The traditional retail calendar will shift to shorter seasons on full price and longer seasons on off-price. All marketers will need to respond to these changing consumer behaviors. |
| The number of households shopping the multichannel world will be flat. Graduates, new marrieds, and divorced couples will continue to create new households, participating in the economy but with a restricted spend. The senior citizen segment is growing and as it moves into retirement, its spending will be constricted, as seniors feel the brunt of this current financial upheaval and try to conserve their funds in its wake. |
| The new marketing stratagem for 2009 is regionalizing your contact strategy. Focus on region as a start, then merchandise, and then consumption. |
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| Therefore, 2009 is the year for the sophisticated marketer to rise up, take what marbles are left, and plow forward. Marketers need to use finely honed tools to lead the Brand worlds to the next level irrespective of the revenue size of their organizations or products. |
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| To those industry leaders in all sectors who continue to be mired in the spiral downturn, I say, in the words of the character of Loretta Castorini played by Cher, to Ronny Cammareri played by Nicolas Cage, in the movie Moonstruck (the one handed baker in love with his brother fiancé), "Snap out of it!" Stop asking for the dissection of the data, endless hours in a conference room with no windows looking to find marketing spend cutbacks. Search out those individuals and or suppliers who will show you only one thing, and that is, your customer path to purchase. |
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| Build your team with those who understand, articulate, and know how to respond to what is happening with the market, the merchandise, and the customer's decision to spend or not spend. Stop surrounding yourselves with those whose fear helmet is so tight it keeps them from being able to see beyond the walls of their offices or their next paycheck. Warriors only need to stick around for the fight. |
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| Many in the direct industry have long believed that customer in/customer out was the mantra of retailers, that they did not know how or really want to understand their customers. Catalog and online marketers like to tell stories of egregious missteps in the work of retail marketing - standard practices of blanketing coupons on door steps with little regard to affinity, poor capture of customer information, lack of understanding of the customer desires, and a world of missed opportunities to cross sell; while gloating that they as direct marketers, had the understanding, the tools and the focus to find their customers and speak to them. |
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| Well… it is a whole new world out there. Say "good-bye" to your old whipping post. This last month I had the chance to attend a multichannel marketing forum held by Women's Wear Daily focusing in on multichannel marketing for Brands in all sectors and sizes. A single word, "WOW!" The line-up was filled with impressive speakers - industry leaders who shared their vision, passion, and desire to ensure they are aspirational, relevant, and targeted in a multichannel world by using data, trends, and an obsession with the customers' desire to consume their product. |
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| These leaders were talking growth, big ideas, using target marketing and data to drive the way they deliver value to the customer. They talked of luxury being attainable for all. They described the new luxury which is about incredible, personalized service. Many of the great Brand names discussed the same key directives: |
 | The desire to have a place in the consumer's life, where the product was a manifestation of shared core values between the company and the customer, creating trust in the Brand. |
| The need for both new and old media to be measured and integrated. |
| Merchandise wrapped in great service as the foundation for a Brand's growth trajectory. |
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| These speakers all got it - that the customer and how she consumes is paramount. Treating her with respect, understanding what she would love to have next, and making sure she is in love with the experience is mission critical. Retailers are poised for moving to the next level. |
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| At the same time, this year I listened to many catalogers who have lost their passion and understanding of the customer except through what I call RFM on steroids - using pumped up segmentation to cut back circulation to the point that growth is impossible. These marketers have lost their focus on the customer path to purchase as they try quick fixes to respond to the crisis of insanely overpriced United States Post Office costs and the failed and grossly overpriced technology systems. These mailers show a lack of desire to integrate merchandise purchase behavior into the contact chain for relevancy, and consequently have driven response rate down and costs up. There are very few places for these catalogers to turn. My heart breaks for the direct industry community that gave birth to my career. But in 2009 you can no longer linger; every cataloger must move forward with bold steps of action and laser focus on the customer. |
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| So, fear not. In this issue we give catalogers and retailers insights and tools we believe to be game changing in 2009 and show how Marketsmith can take you to the next level of play to read results and optimize advertising spend. |
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| Read on. Look in this edition for the article on merchandise - the lost art/lost revenue, the elusive marketing database - why does it make us angry (because the cost is high and the value is low), more postal points, and finally what Monica would do if she were running your business, Ask the Marketsmith. |
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| Additionally, we at Marketsmith have created a game plan for mailers to address the economic uncertainties. If you would like a copy, please let me know and I will send it to you. |
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| Finally, I would be remiss if I did not say that I am eternally grateful to those who have given this newsletter the opportunity to be seen by so many. I greatly appreciate your notes, your forwards and your questions. To you all know that I am humbled by your graciousness and I take seriously the trust you put in me and my staff to deliver beneficial and groundbreaking content and services. |
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| To all of you, your team and your family from me, my team, and my family, please have a wonderful holiday season, keep your chin up, do great and be great in 2009 and beyond. |
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My Best Always,
M- |
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| WHY DATABASES MAKE US EXECUTIVES MAD |
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| by Monica C. Smith |
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| Recently, we did a comprehensive review of a prominent niche luxury retailer's customer's path to purchase. What does that mean? We identified customer trends over the course of five years in gender, age, and product category purchases. Then we mapped subsequent customer behavior correlating it to what the Brand had done from these three perspectives - marketing communication/content, merchandise introduction (price point/gender), and changes to the originally purchased product line. |
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| We articulated the information on the customer's path to purchase and buying behavior to demonstrate the importance of communication with the customer and keeping track of the different values of customers based on gender, age, spend, or product purchase. We also added the view point of a customer who bought multiple times versus one time (new to the file). |
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| While the Brand has focused more on women's product over the last three years, women have shown an increase of 17% in lifetime spend and men's spending has grown at a faster rate, by a 29% lift. |
| - Observation: Read more. |
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| MAKE EVERY PAGE COUNT |
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| Every marketer could use a game changing event in 2009. Here is what we are finding repeatedly: The over circulating of pages is being treated very similarly to a "Hail Mary" pass. We know companies say they do square inch analysis (I don't necessarily believe this to be true); we know that companies are not using circulation techniques on paid search and do not determine spend by contribution; and we know very few if any catalogers look at circulating pages through merchandise down to contribution. |
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| With the seemingly ever rising costs of postage, paper, and printing, plus the consumer concern for excess paper, it is critical to make every page of communication with your customers the most effective and efficient it can be. In planning a catalog or store/web driver mail piece, you want to know - What is the optimal number of pages to deliver the highest revenue at my target return on investment? |
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Let's answer that question looking at the last point first.
Read more. |
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| ASK THE MARKETSMITH |
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| In this issue of the Difference we are inaugurating a column for you, our loyal friends and colleagues. We will answer your questions on the marketplace and multichannel marketing business issues and concerns, drawing on our collective years of intuition, experience and expertise. We are also adding this feature to our website: www.marketsmithinc.com/askthemarkesmith. If you have a question you would like us to answer, please email it to askthemarketsmith@marketsmithinc.com. We will answer it in our next newsletter or on our website. |
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| Hi Marketsmith, |
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| I have a question. We usually mail a gift catalog in late October, but with election year and economic conditions changing, we are debating between mailing earlier to arrive in early October or later to arrive just after the election. Abacus provided history from 2004 which indicated NOT to plan mailings a week or two just prior to the election - we certainly understand that. |
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| Curious…what would you recommend? |
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Kind Regards,
G. |
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| Dear G., |
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| We have a great deal of data around this. Here is what we are telling those who ask, and also what we are doing with our clients: Read more. |
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| POSTAL UPDATES |
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| Last month we sent you a bulletin about upcoming USPS regulations. Here is an update on those issues: |
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| NCOA Processing - A reminder that the new rule takes effect November 23, 2008. For all standard mail, the minimum frequency of change-of-address processing will be 95 days instead of 185 days. This requirement applies to all Standard Mail - letters, flats, parcels and Not Flat-Machinables - as well as automation-rate and presort-rate First-Class Mail. This means that on November 23, 2008, any mailing must have addresses that were updated no earlier than August 20, 2008. |
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| Address Location on Flats - This new regulation takes effect March 29, 2009. The USPS has created a two pager that is very explicit in detailing requirements. It can be accessed at Addressing Fact Sheet for Standard Flats. |
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| From the site:
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