PRESIDENT'S CORNER I had several important observations during the two days of discussion:
The ACMA was created last year as our advocacy group by a core group of catalog companies concerned with past representation on postal issues. At present, over 100 companies have joined the association, including large companies like Williams-Sonoma, Crate & Barrel, and Oriental Trading. Hamilton Davison has been hired as Executive Director. Hamilton has years of experience in postal affairs, and the quality of the forum and access to high-level decisionmakers reflect his skill and reputation. I am asking our clients and affiliates to join the ACMA. Stop what you are doing now and log onto www.catalogmailers.org for an application. Dues for small catalog companies start at $1,000. It is critical that you lend this organization your support. If you do not, the alternative—higher postal rates in coming years—will be much more expensive. If you have any reservations about joining, give me a call. I am happy to answer questions and underscore further the need for our own advocacy group. FEATURE ARTICLE CASE STUDY CIRCULATION TIP CREATIVE TIP MULTICHANNEL TIPS CLIENT HIGHLIGHT—THOMPSON & MORGAN SEEDSMEN, INC. PARTNER SPOTLIGHT—LARRY MARMON AFFILIATE FOCUS—PGI/HORAH COMPANIES NEWS BRIEF
PRESIDENT'S CORNER Last week I flew to Washington, D.C. to attend the National Catalog Advocacy and Strategy Forum presented by the American Catalog Mailers Association (ACMA). The event was a real eye-opener and one of the best I have attended in many years. About eighty catalog executives had the opportunity for a one-on-one discussion with Postmaster General Jack Potter, Chairman of the Postal Regulatory Commission Dan Blair, key USPS staff who set postal rates, and congressional staff involved in postal oversight. I had several important observations during the two days of discussion:
The ACMA was created last year as our advocacy group by a core group of catalog companies concerned with past representation on postal issues. At present, over 100 companies have joined the association, including large companies like Williams-Sonoma, Crate & Barrel, and Oriental Trading. Hamilton Davison has been hired as Executive Director. Hamilton has years of experience in postal affairs, and the quality of the forum and access to high-level decisionmakers reflect his skill and reputation. I am asking our clients and affiliates to join the ACMA. Stop what you are doing now and log onto www.catalogmailers.org for an application. Dues for small catalog companies start at $1,000. It is critical that you lend this organization your support. If you do not, the alternative—higher postal rates in coming years—will be much more expensive. If you have any reservations about joining, give me a call. I am happy to answer questions and underscore further the need for our own advocacy group. FEATURE ARTICLE One challenge common among multichannel marketers is allocating limited marketing resources between all the media channels that are available today. Many businesses are arriving at a crossroads in meeting this challenge. The roadmap begins with an understanding of just how well each channel is contributing to the profit of the company, as well as the value of each marketing campaign in acquiring new customers. Can we be sure of which marketing campaign closed the sale and should get credit for the success? In some cases, where unique keycodes can be established, collected, and clearly understood, the answer is yes. In many cases, there are just too many overlapping “touches” to that customer to really know with certainty what created the sale. Sometimes analytics can provide visibility into the source of a sale, other times it cannot. One example of the latter is a recent purchase of a coffee maker for my office. I went online and did the research to identify some choices (SEO, SEM). Next, I stopped by the local retail store to see some models on the shelf and fool with them a little (retail). With the decision of the exact make and model I wanted to buy confirmed, I immediately got buried with my work responsibilities and weeks went by while I supported the local coffee shop. In the meantime, I received catalogs (print) that sold the model I was after, then more catalogs (print), visited retail stores (retail) as I traveled, visited more websites (web), almost bought one, received abandoned shopping cart email (email), and eventually even received an email (email) from the manufacturer. Late one night, I finally went online, foggy with sleep, and made my purchase choosing one of the websites (web again) I had visited for absolutely no good reason. Although one of the catalogs I had looked at did affect my decision, I was not cognizant of it at the time. What channel gets the credit for the sale and provides a hint of where to allocate marketing resources? The reality is that a marketer needs to be prepared to focus on specific targets where they exist and maintain Top-Of-Mind-Awareness (TOMA) and where they do not. When databases and analytics are available to identify specific targets, do your homework. Understand the cost of customer acquisition across the channels. This cost can be determined by dividing the total marketing dollars spent on a given campaign by the number of new-to-file customers. If you have the resources, the acquisition cost should be balanced against the expected lifetime value of those customers. The result of this calculation helps you understand just what the return on investing in customer acquisition will be for any given campaign. While these calculations are fairly common in the print channel, they can be more complex in the e-commerce channel. Even so, an apples-to-apples view must exist across the channels to make intelligent decisions on allocating resources between the channels. If you are able to clearly see marketing spend contributing to overhead and profit, it makes sense to allocate resources to that campaign. Where visibility of the ROI does not exist, TOMA becomes the objective. Again, do your homework. Learn as much about your customers and their behavior as you can. Then, spend those TOMA marketing dollars where you know your customer roams. Spend it in the channels you know your customer is engaged in, thus allowing customer behavior to guide your allocation decisions. How much to spend for TOMA depends on the threshold for the overall marketing spend within the P&L. The results of the prior year include a component for which the ROI is clearly identifiable and a second one where it is not. The difference between the overall marketing costs and the spend on the identifiable component is designated as TOMA marketing. For example, let’s say top-line sales are predicted to be $1,000,000. The overall marketing budget is 25%, or $250,000. Within the $250,000, you are able to identify $200,000 of print and e-commerce marketing sales through matchbacks and embedded e-commerce keycodes. That leaves $50,000 of marketing dollars that can be allocated for marketing programs where data analysis is unable to link sales and keycodes. These are TOMA dollars. While it is impossible to prove that the $50,000 contributed to top-line sales, most successful companies trust their gut instinct that TOMA is critical and this money is well-spent. Finally, have a strategic marketing plan in place that is reviewed annually and adjusted to meet the objectives of the business. One example might be to first include all marketing campaigns where the ROI is clearly acceptable. After that, begin with the amount of marketing dollars that was spent in the prior year above and beyond the acceptable ROI campaigns and slowly increase it each year until the overall percentage of budgeted marketing dollars meets an acceptable percentage of sales on the P&L statement. At that point, the resources must be limited to meet the profit objectives of the company. Another common example is one where cash resources available do not allow for taking full advantage of the entire universe of marketing campaigns that contribute to profit and overhead. In those cases, a decision must be made on how much to allocate to unproven, TOMA-type marketing. The temptation might be to stay with only targeted campaigns where an ROI can be proven. The problem with this strategy is that consumer behavior is usually not that predictable in these dynamic times of shifting customer loyalties. Your customers are roaming across all the media channels and your competition is lurking in the shadows. Are you willing to concede that TOMA? In all cases, a marketing strategy needs to be developed annually and executed with a passion. CASE STUDY Company A was considering changing from an RFM-based selection methodology to one using statistical modeling. The arguments to make this change were convincing but making such changes should always involve caution. If a marketer is always fearful of making changes and modernizing their processes, they are likely to see declining results; however, implementing great changes is a risky endeavor. There are ways you can and should minimize your risk and here are a few of the steps that we used to do just that. Company A had a complicated segmentation scheme that worked well, though it was a cumbersome process utilizing recency, frequency, and monetary variables in addition to product category purchase behavior. While the segmentation was successful, modeling techniques incorporate hundreds of variables, and many are expanded beyond traditional RFM and product variables (RFM & P). One instance of these expanded variables is recency within product categories. For example, if a person has purchased both women’s apparel and men’s apparel, we would likely qualify them for a men’s offer. Here is a case of two buyers: Both are 2X+ buyers who have spent over $500 with Company A, and have purchased in the last 6 months. Both have purchased out of the men’s and women’s apparel categories. One of them, however, purchased a man’s shirt 6 years ago and all her other purchases have been in the women’s category. The other has purchased equally out of both categories and just last month purchased an expensive men’s blazer. Looking at the RFM & P profiles of both customers makes them each seem like a likely candidate to receive the men’s offer. However, using recency within product category paints a different picture.
Now we were left squabbling over 20% of the circulation. We chose to randomly split our “unique” selection group and the model’s “unique” selection group and take half of each.
The test was now constructed in such a way that we were able to look at the subsequent performance of our “uniques” versus that of modeled “uniques”. In this case there was a significant gain in performance for the modeled uniques over that of our segmentation, yet how could we project what the difference would be for a complete roll-out? Let’s say that the lift in performance using the modeled group was 10%. We also know that 80% of the selected quantity would have been selected using either method, so the 10% lift would be applied only to 20% of the possible mail quantity. Therefore we would estimate the lift in changing our selection methodology from an RFM & P model to using the statistical modeling techniques is only 2%. In order to make further gains, the model would have to beat the current segmentation by a higher margin, or the overlap group would have to be smaller. That being said, 2% of a lot of money is a lot of money, so it may have made sense to continue testing. Our reasoning: there could be greater gains in some offers versus others, and the overlap group may be smaller. If you wanted to further reduce the risk of setting up such a test, you could choose to use a random sample of your unique names, and select an nth of the highest performing modeled uniques such as we’ve shown below. This would not allow you to get an accurate read on what the total lift should be for a roll-out, but it may make you feel better about the initial test and help you ease into this change in methodology with further testing if the test proves to be successful.
Had the overlap group been only 60%, we may have gone for this option, or reduced the size of the sample of modeled names until after we had seen the results of a few tests. If eventually we were to roll out the modeling technique as our primary segmentation and selection method, we would always recommend looking at the recency, frequency, and monetary variables within the model build. You would always expect to see those with higher RFM scores appearing higher in the model, and this is a validation that should always be carried out. CIRCULATION TIP Before you let the suppression lift, create an action plan on how to handle your Louisiana housefile records. LENSER recommends the following steps:
Below are the Katrina zip codes just released from the mandatory suppression. The key to all the recommendations is to test and monitor your Katrina records for response and performance.
CREATIVE TIP That’s right—your email campaign represents you as much as your website and catalog does. So it’s time for some due diligence with your email campaign. Assess how it makes you look, and how you’re speaking to your customer. The irony is that most sellers are sending emails not to prospects, but to customers—the folks who deserve the most care of all when it comes to communication! Don’t risk making your customer bored, angry, or noncommittal. And don’t train them to ignore your emails by making them less than they should be, either. Here are a few tips to make your emails a form of communication that helps you look good and sell in a positive way:
Ever wonder why the big guys can get away with crummy emails, and you can’t? The answer is: they’re too big to feel the pain, but they’re not making any progress by having weak emails, either. Most of us can’t afford to simply run in place—we have to move forward. These companies may not notice when their emails fare poorly, but most mid-sized companies need every advantage. With some hard work, you can support your brand and develop great selling strategies, and even patterns of contact that can pay off as you refine your techniques. Challenge yourself to create powerful emails that represent you at your best, and then take full advantage of what can be a powerful communication and selling tool. MULTICHANNEL TIPS If you have enough to segment each group, great, but even if you have to batch them together and group them as ‘Internal House Prospects’ you may find that these perform as well or better than your core outside prospect lists, and they’re more cost-effective. CLIENT HIGHLIGHT—THOMPSON & MORGAN SEEDSMEN, INC. William specialized in growing rare and unusual plants from seed that were sent to him from many overseas countries. It brought him a sense of adventure and earned him a reputation for introducing many rare and unusual plants, a practice that continues today. His friendships with such well-known scientists as Sir Joseph Hooker, Sir Michael Foster, and Charles Darwin allowed William to grow his passion into a business, which he moved to a nursery at the edge of Ipswich. Eventually, there were three nurseries in town. Though he was already publishing a magazine called “The English Flower Garden,” William felt he needed to share his fabulous breeds and wide selection with a bigger audience. In 1855, his first catalog was produced. By now the seed firm was expanding rapidly and he needed help. So he turned to John Morgan because he believed his business acumen would strengthen the brand. John may have been a stranger to plants, but he was no stranger to business. His sharp mind ensured Thompson & Morgan Seedsmen, Inc. would be soundly financed so that William could continue his breeding program. William Thompson died in 1903 at the age of 80, but had lived to see Thompson & Morgan become one of the country's greatest seed firms with a reputation for introducing more species and varieties to the British gardening public than any other seed company—a tradition that continues to this day. Joseph Sangster only added to that reputation by adding 4,000 plant varieties to the already established 2,000 in the Thompson & Morgan catalog. Thompson & Morgan headquarters and trial gardens, still based in Ipswich, allow their horticultural staff to continue breeding new and exclusive varieties and bringing them to the public. With each annual catalog, they offer the public at least two dozen new varieties to grow from seed. One of those varieties is Amaranthus Autumn Palette—new & exclusive to T&M and viewable at: www.tmseeds.com/product/4567.html. Horticulturist Susan Jellinek says the seed has been very popular. “It’s easy to grow, great for filling in the back of borders, and the color is much more subtle than the traditional Amaranthus.” Gardeners can find valuable growing and sowing information in Thompson & Morgan's free catalog and on their website at www.tmseeds.com. Customers have said time and again that they keep the catalog long after ordering so they can refer to it over and over during the various sowing times. Along with outstanding customer service and a horticulturist on staff to provide helpful advice, everything Thompson & Morgan offers comes with a 100% satisfaction guarantee. In the spirit of William Thompson, they believe genetically modified seeds (GMOs) are bad and have proudly signed the Safe Seed Pledge. Their informal motto is, “If we wouldn’t want to grow it in our backyard, why should you?” After 153 years (and counting) in business, Thompson & Morgan Seedsmen, Inc. still strives to continue the principles that first blossomed in William Thompson’s bakery garden. Please visit Thompson & Morgan at www.tmseeds.com and experience the romance of the seed that first enchanted William Thompson. PARTNER SPOTLIGHT—LARRY MARMON John Lenser first met Larry Marmon several years ago while performing high-level strategic consulting for J.C. Whitney & Co., the country’s most well-known cataloger and internet retailer of automotive parts and accessories. As acting President at the time, Larry became quite familiar with the staff at LENSER and the services we offered. When it came time to add another partner to the firm, John reached into his memory banks and reached out to Larry, who had just left J.C. Whitney & Co. and was ready for a new challenge. "Larry Marmon brings outstanding leadership and experience in multichannel retailing to LENSER," said John. "He has a strong background and expertise in finance, business development, strategy, marketing, and process improvement. Specific achievements throughout his career have centered on restructuring underperforming companies and improving the top- and bottom-line results. His expertise will serve our clients well." Several months later and now well-entrenched in consulting, the move has been a good one for Larry, who enjoys the diversity and complexity of small to mid-size multichannel firms. As Partner, Larry is responsible for helping LENSER clients in all aspects of convergent channel marketing, including developing full contact strategies and marketing plans for catalog, internet, and retail, integrating existing multichannel assets with technical expertise, and guiding implementation of industry best practices. Prior to J.C. Whitney & Co., Larry served as CEO for Aztec Shops, LTD, an auxiliary of San Diego State University, as President of Maintenance Warehouse, a Home Depot company, and has held several leadership roles for Time Warner, Inc., including Executive Vice President, Marketing for Time Life. He earned a BS in Economics from University of Pennsylvania – The Wharton School and an MBA in Finance from the University of Chicago. He is also a CPA in the states of New York and California. We often tease here at LENSER that to be part of the team, you must be either a cyclist or a golfer. In his free time, you can find Larry out on the links and spending time with his family.
To learn more about Larry Marmon, please visit his bio. AFFILIATE FOCUS—PGI/HORAH COMPANIES Over 25 years ago Dick Goldsmith founded his company, Horah, as a best-of-breed direct mail production agency. Hearing how disappointed clients were with print brokers who sold them printing and other services and then left them hanging, Dick was convinced that the most valuable selling proposition he could offer prospective direct marketing clients was service, accompanied by good pricing. Taking this position, it meant that sometimes he’d be under-bid by brokers who just wanted to make the deal but through the years, Dick found that his return business expanded substantially, thanks to this dedication to service. That’s why while many print brokers are kicking back and enjoying their commissions, it’s not unusual to find Dick press-side, or working with his lettershop, or discussing options with a USPS representative, all on his clients' behalf. He’s been doing that for too many years to do any less. Aside from the printing, lettershop, and mail house that PGI has, the added capability that Dick found the most intriguing of all is called Streamlyne. This is an online system that PGI has developed using proprietary programming, to enable franchises and stores within a retail environment to access sophisticated printed material online. LENSER client Online Trading Academy has been utilizing Streamlyne to provide their 20+ franchises with a way to prospect to their potential students at the local level. LENSER develops direct mail tests for Online Trading Academy which are tested in the main office in Irvine because it boasts one of their largest and most mature markets. Then the top winner and a strong runner-up are posted on their Streamlyne website. To make the Streamlyne program even more powerful, it’s backed up by a sophisticated database of Online Trading Academy mailing lists and house lists, which help to manage a contact strategy program the client developed with the help of LENSER Partner Al Bessin. After a customer places an order on Streamlyne, the packages are printed and mailed at PGI/Horah’s state-of-the-art printing facilities. With a specialization in direct mail, from traditional postcards to very complex direct mail programs, it’s a perfect fit. And Dick adds, “A great way to drive traffic to a website is using mail—including catalog and direct mail or postcards—that provide many different ways for a customer to notice what our clients are selling. We’ve seen the return on investment come in higher than email in most cases.“ As an affiliate partner that a number of LENSER clients have worked with, PGI/Horah is a dependable and easy way to explore direct mail options. Dick Goldsmith’s friendly style and infectious enthusiasm for his work makes him fun to work with, too. But don’t let his light style fool you—Dick has served as president on the DMA Agency Council and has produced some of the nation’s most successful direct mail programs. As we continue to strengthen our breadth of services, LENSER has identified and carefully screened key services to support its clients, representing the best in their areas of expertise. As part of the LENSER promise, each of these companies will keep its fees competitive and “always go the extra mile” for LENSER clients. We have successfully partnered with PGI/Horah Companies to our clients’ direct benefit and continue to do so today, and more exciting integrated programs are on the way. To learn more about PGI/Horah or any of our other affiliates, please contact Michele Salmon at 415-446-2511 or e-mail . NEWS BRIEF
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And who knew that Larry would be such a huge fan of the Discovery Channel's Deadliest Catch? On a recent client visit, Anna-Lisa Ulbrich, LENSER Senior Marketing Manager, reported in on her Blackberry with the above photo and this message, "Larry and I were in a restaurant in the Seattle airport this evening and two of the guys from "The Deadliest Catch" were there. Apparently the guy on the left is the captain of one of the crabbing boats—The Time Bandit (Capt. John Hillstrand). Larry was so excited, as you can tell from the photo. Almost as excited as he was to get a Prius rental car, but I didn't get a photo of that."