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| | April 2nd, 2008 |
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| "The Difference" |
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| A LETTER FROM MONICA C. SMITH |
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| In the 90's as I was getting my sea legs in this industry and trying to understand what I wanted to be when I grew up, both the industry as a whole and my career were being challenged by a major change in postal regulation and an increase in merger/buy out activity (not unlike today). |
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| The "reclassification" resulting from a shift in postal requirements shaped the format of catalogs from the mid 90's on. I was at Metromail/R.R Donnelley at the time, and I learned a lot about their process and how retailers, catalogers and publishers needed to adjust to a world that literally forced an entire industry to revaluate its strategy overnight.
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| Metromail had been acquired by R.R. Donnelley the year prior to me joining. I was young, the environment was highly political and the merger was not going well. I look back on that time with very mixed feelings. It is fair to say that I did not necessarily fit in the Metromail culture; the team at the time was a mixture of political savvy people and long standing employees that were really good at relationship building and determined to keep their jobs. R.R. Donnelley was trying hard to make this Metromail tool box work for their clients but the client approach came from a very different mind set. R.R Donnelley were Type "A" personalities and highly focused on one deliverable; although I loved the R.R Donnelley team and learned about client servicing, I felt limited by not being a part of the entire client's business. I was caught between two very different companies—both very good—one where there was a great tool box and political savvy personalities, and the other with an ethic of a high level of great service, but slow to move and focused on the end goal of making long term singled focused print sales.
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| Personally and professionally, I felt like I was failing. I found both worlds to be stifling but I learned that I could educate the businesses that came into my path and that I had to deliver on the promise. I needed to make the companies I touched better; a personal/professional imperative that has not changed in the past fifteen years.
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| During this time I looked for inspiration from business books, proverbs and companies which offered aphorisms and words to live by. In my cube, I posted wall to wall reminders and notes of words that would get me focused on my goals and belief system. I know that many chuckled at this, but it worked for me and I'm glad I did it. It fed my soul at a time I desperately needed it.
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| One quote more than any other resonated for me: Champion boxer Jack Dempsey, defined a Champion as someone, "who gets up when he can't." I find it still speaks to me today, not only for me alone but also for the companies' paths that I come across and that we at Marketsmith are responsible for.
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| Our industry is in a tough place on many levels. Not every company will get up—nor will every career for that matter. It is said by some that at this time next year our industry will be 20% smaller. Many of you know that one of our clients, Lillian Vernon, filed for Chapter 11 last month. It was a hard blow for me professionally, primarily because we were so close to bringing that Brand back. All indications are that Lillian Vernon will be back, maybe by the close of this week, but I wanted that on our mantel and on the original timetable. While many companies might not talk about the pain of defeat, I think it is important to know that LVC is a company of accomplishment against great odds, with a great team, about whom we care deeply. In 12 months the company cut its loss by 80%, from $21 million in the red to a loss of only of $3.9 million, (Catalog Success March 2008). My team and the LVC team did great things together, but time, the forces of the industry and a history of poor decisions burdened the timetable.
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| So, in this issue of our newsletter, the underlying theme is "Getting Up,"—meeting the body blows delivered by rising costs, an uncertain (at best) economy, tighter financial controls, competitors who are achieving economies of scale through merger and acquisition, the politics of mergers, the challenges of our internal desires for career aspirations and a customer base with more purchase channel options than ever before—taking these challenges head on, getting up and moving forward.
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| We focus on the need to "Do the Math," a piece which discusses the importance of math and using it to get to the critical metrics companies need to react to. We will also use this article to share some industry benchmarks and talk about why knowing where your brand falls important.
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| Another article presents an interesting case study on merchandising—arguing that understanding consistencies and inconsistencies in price bands is equally, if not more important, than analyzing category performance.
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| I give a first-hand account of my recent trip to meet the Post Master General, John Potter, and his team and the ideas we are presenting to change the current business environment. Instead of whining about it, Marketsmith decided to step up and take action for an industry in peril and go to Washington to help the small and medium size catalogers that have helped build my business. Susan J. Pizzano and a great friend to our company Michael Talbott, Vice President of CMS, (www.cmsdirect.com) worked together to discuss the topic at NEMOA, so we have included their points in our article. The bottom line is that the Post Office, I believe, wants to understand the business of cataloging better and to work with the industry toward a win win solution.
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| Finally, not being one to avoid controversy, I will discuss the need for an emotional commitment to your Brand. Do you love your Brand—that Brand you work for or that you have built? For instance, Mr. Vinod Gupta loves his Brand and his Brand screams it. Whether you agree with his strategy or not, fear him, envy him, want to meet him, or however else you react, the reality is that his deep commitment continues to bring value to his business model through acquisition, product, partnerships, customer awareness and a rather savvy Executive team. The man loves his Brand; you can tell by his smile in his ads. But the question is, "Do you love your brand, and do you love it enough to work through the current obstacles and pain, to understand the model and build out the innovation pipeline, to demand growth and look to alternate methods to make that happen in real time?"
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| This newsletter edition may be more a diary of the entrepreneurial soul on my journey through Marketsmith's first business recession as my team and I try to carry not only ourselves but the dozens of companies that are relying on us to help them across the finish line. There are times when I yearn for the days when I was surrounded by the great leaders and survivors and inspirational sayings in a cube on Fifth Avenue, and my paycheck was signed by Susan Hendricks, President of Metromail and one of the first women leaders in the industry to bust through the ceiling, as I search to find grace under pressure, strength to offer to those I know are looking for work, and insight and energy to share with an industry that needs to rise up, re-invent, and re-energize.
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| I close with gratitude to the days of Metromail and RR Donnelley and draw upon a time when two great companies fought to save themselves from each other and to save their clients from difficult industry challenges—where I learned to be strong. Where I learned that you can make a difference, that you can be political without being soulless or selfish, and that the industry will change sometimes for the good and sometimes for the bad.
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| Here is our roadmap for all to see: At Marketsmith Inc., we will surround your brand by really smart, caring people to help you navigate the choppy waters of the economy using sound data and metrics. And, most importantly, we will be obsessed about delivering quality—going the extra mile even when it is not explicitly in the scope, giving you the boost to "get up." We know that now is when our skills are needed the most. At Marketsmith, Inc. we guarantee to deliver upon the promise. We have to.
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| My Very Best Always, |
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| M- |
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| Email Monica to catch up at ACCM |
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| LOVING YOUR BRAND |
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| By Monica C. Smith |
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There is a rock group called The Fray and they have a popular song called "Over My Head." In the song, they sing about loving a girl so much that it's effortless - "She's on my mind; she's on my mind." I think when you love a Brand so much "She's on your mind; she's on your mind," you're thinking about where this Brand can take the customer—solutions, challenges, competition, product, margin, scalability, value to the customer—every detail that goes into defining and making the Brand a reality.
Read more. |
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| PRICE BANDS - A KEY DRIVER IN MERCHANDISE STRATEGY |
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| When was the last time you looked at your price bands? And when you did, did you also look at your response rates and your contribution?
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| At Marketsmith, we have found that often companies do not look at the relationship between price bands and response rates. That relationship has a direct impact on the short term bottom line and the long term health of the company. We have seen response rates fall significantly in nine out of ten cases when the average price increased. Read more. |
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| DO THE MATH |
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| In our Company, when we consider possible new employees, we give them a math test that uses logic, Excel and the creation of formulas to calculate standard operating metrics like breakevens, profit/loss, response rate and average orders. The majority of people who take it do not do very well. |
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| As an industry, we have gone from boom days when all we needed to focus on was how to support our growth, to much shakier times when the stakeholders in our companies are looking carefully at the bottom line and asking "Is this business profitable? Is it healthy?" Those are not questions that can be answered without careful analysis of many metrics that measure not only performance but the relationships among various cost centers and the effect that a change in one department has on the results of another. Read more |
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| THE POST OFFICE AND YOU |
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| by Monica C. Smith |
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| On Monday March 12, 2008, I was asked by the Director of American Catalog Mailers Association, Hamilton Davison, to join him in Washington to meet the Postmaster General and six other Post Office officials to discuss the current state of the Catalog Industry. The ACMA started last April when a few catalogers were completely stunned by the last minute change in the postal rate that went from an estimated 8% to a staggering 18% to 24%. The ACMA is trying to catch up after the blow was already delivered. Today they have close to two dozen members. For them to be able to sustain their efforts, they need 80 additional members. |
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| Up to this point in time we need to recognize that the catalog industry has had virtually no representation in Washington. There is a general belief that the DMA is working specifically for catalogers, but that is not accurate. The DMA represents publishers and non catalog mailers as well as a wider range of service agencies supporting the broad direct marketing industry. Other industry niches are represented by smaller associations, non profit, financial, etc. Because catalogers are highly fragmented and often very competitive...Read more. |
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| POSTAL CALCULATORS UPDATED |
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