95% of the orders at Hallmark Business Connections are processed online, CEO Tressa Angell says.
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E-mail overload is one of the reasons outdoor gear and apparel retailer Moosejaw Mountaineering plans to increase the number of catalogs it mails this year to nearly 700,000, a 42% increase over the 400,000 it mailed last year, plus the 150,000 it will stuff into packages it sends customers.
“E-mail is certainly cheaper than a mailed catalog, but many customers are opting out of promotional e-mails,” says Gary Wohlfeill, creative director. “Additionally, the catalog is a more persistent branding tool than e-mail. Customers can give it to their friends, keep it on their coffee table, or, in the ideal scenario, toss it in the common room at their dorm at college. It’s not uncommon to receive an e-mail from a customer proclaiming that they’ve read every se ntence in the current catalog.”
Some retailers have eliminated long-standing catalogs in the past year, but in some cases those decisions stemmed from factors beyond the growing role of the web. When Bloomingdale’s, for example, dropped its paper catalog last year, Silver says it wasn’t simply due to the greater return on marketing dollars invested online. A decision that the catalog wasn’t reaching the right target for the brand was another key reason it was eliminated, according to Silver.
When the paper catalog Lane Bryant Woman ceased publication last year, it was because the license under which RedCats USA had been operating it as a separate business had expired and reverted back to Charming Shoppes. Charming Shoppes then eliminated Lane Bryant Woman to concentrate on building up the paper catalog associated with Lane Bryant stores, according to Charming Shoppes.
Rather than simply chopping catalogs out of the picture or cutting circulation off the top as web sales and marketing take on greater importance, many retailers are trying to figure out how catalogs and a web presence can complement each other.
Catalogs, for example, excel at creating desire among consumers and drive shoppers to a web site. They also avoid the clutter of the web. A consumer flipping through a glossy paper catalog gives it her full attention, which may be hard to get online where innumerable banner ads, pop-ups and animations provide constant distraction.
At the same time, a catalog can’t be changed the way a web site can. A catalog can sell only what its printed pages show, and it can’t drop from its pages items that go out of stock. Nor can it leverage events or opportunities that occur after the catalog’s been printed and distributed, such as, for example, switching a dress displayed inside the book to its cover.
Web sites can. When first lady Michelle Obama chose to wear a dress from The Talbot’s Inc. in a spring magazine shoot, for example, Talbots was able to get the dress, and in fact the magazine’s cover shot, onto its web site home page.
With both catalogs and online assets having their strengths, many retailers with catalog experience have concluded they serve different purposes.
“Across the industry, people are seeing that sending catalogs to the current customer base still works well because the response rate is high enough to overcome the increased cost of postage and paper,” says retail industry veteran Bill Bass, interim president of Charming Direct, the direct marketing and web retailing arm of Charming Shoppes.
But, given postage and paper cost increases, catalogs don’t hold up as a prospecting vehicle, Bass contends. “The response rates on a prospecting catalog are so low that as costs went up, it didn’t make sense to send them,” he says.
Moosejaw takes the same approach. Its customer acquisition activities are all online, through paid search and affiliate marketing. But it looks to paper catalogs to re-activate and promote re-ordering among customers who have not purchased in some time.
Retailers who mail catalogs are also getting savvier about online marketing techniques. For instance, King Arthur Flour, which used to send an e-mail about every five days, usually to its entire list, is now e-mailing twice a week, but sending each message to a more targeted segment of its customer list.
For example, it segmented out those bakers who use mixes versus those who start from scratch based on their history of buying mixes versus yeast, flour and other ingredients. It offered both groups free shipping, but sent them different content. The e-mail to the ingredient buyers-likely scratch bakers-showed a freshly baked loaf of cheese bread, while those who bought mixes saw scones prepared from a King Arthur mix.
Over several months following that promotion, King Arthur had a 35% lift in revenue per e-mail sent in the scratch baking segment compared to a non-segmented campaign, and an 8% increase in average order value, Silver says.
To the extent retailers are sending fewer catalogs, either to cut costs or as part of a more targeted segmentation strategy, where are they spending the marketing dollars saved? It’s on a mix of traditional and emerging customer touch points, according to Bass of Charming Shoppes.
Some of those dollars are going right back into postage for those catalogs a retailer still wants to send. “If your costs go up 20%, and you reduce your catalog mailing by 20%, you haven’t saved any money,” he points out. “You’re mailing less, but it’s costing you the same.”
While paper catalogs are still an economically viable route for reaching a retailer’s existing customer base, a lot of prospecting activity has shifted to the Internet, and particularly to search engines. Similarly, e-mail, like catalogs, is also more effective with existing customers than as an acquisition tool, Bass believes.
But two other types of online assets may benefit from dollars being shifted from catalogs, Bass says. One is the e-commerce site itself, as marketers look beyond acquiring traffic to upping the conversion rate from the traffic their marketing generates.
“The industry’s average conversion rate is about 3%, maybe higher for catalogers. If you can take that from 3% to 4%, you’ve just increased your sales by one-third. So there is a big push right now to increase sales by increasing conversions on our site,” he says.