How Multi-Channel Marketing Is A Lot Like The County Fair

July 18, 2006:  I haven't heard a lot of pundits compare today's multi-channel catalog/online environment to the county fair.  Given that we are in the dog-days of summer, it seems reasonable to draw comparisons.

The signature ride of any county fair is the Ferris Wheel.  This ride was invented by George W. Ferris for the 1893 World's Fair, in Chicago.  Around the same time, Sears and Wards were expanding their fledgling catalog businesses in Chicago.  The Ferris Wheel is outdated in the world of modern amusement park entertainment.  It is a two-dimensional ride, with the passenger going up, and down, up, and down.  The first time down, the passenger gets that ticklish feeling in her stomach.  By the thirty-sixth revolution, the passenger is ready to get off, and find a new form of entertainment.  Catalog is similar.  Catalog is not digital, it is analog.  The in-home day of a catalog is filled with anticipation and excitement.  Thirty-six days after the in-home, the employee is ready to move on to another challenge.

The Ferris Wheel is the signature ride at the fair.  Without the Ferris Wheel, the fair loses its identity.  Multi-channel marketing loses its identity without the catalog.

After enjoying the Ferris wheel, it is time for a bite to eat.  The fair offers all sorts of tempting treats that won't be found on the appetizer menu at your local Applebees.  When was the last time you enjoyed an elephant ear?  Or a cream puff?  Or a hot dog on a stick?  For just four dollars, a fair employee will roast an ear of corn over a hot fire, insert a wooden stick into the cob, dip the ear in a molten vat of hot, drippy butter, then generously shake grains of salt on the piping-hot ear of corn.  We willingly fork over our hard-earned money for this unusual snack that provides the carnival workers with a 90% profit margin.  Fair food is a lot like the special services we offer our customers, services like monogramming or gift wrapping, the gift with purchase, or the free phone with two-year contract required.  The food tastes good while you are eating it, but you later realize you didn't need the pork sandwich that was as big as your head.  The same goes for so many of the promotions we offer our customers.

After our stomach is full, we decide to visit the midway.  Game operators hawk us at every turn.  They'll guess our weight for just a dollar, they'll allow us to whack-a-mole, they'll give us a chance to achieve a score of five-hundred in skee-ball.  Sirens are constantly going off, as lucky contestants reap the many benefits of victory.  We empty our wallets trying to achieve victory.  If we are lucky, we score a 390 in skee-ball, and earn the right to take home a small, stuffed snake with poorly glued-on paper eyes.  In today's multi-channel world, the midway represents the series of pundits who hawk us at every turn, offering solutions to all of our multi-channel problems.  They are selling CRM systems, web analytic software, on-demand printing solutions or consulting services that promise to deliver the same look and feel, the same brand experience, across all channels.  Sirens, in the form of press releases, go off every time there is a successful implementation or marketing campaign.  We eagerly research these solutions, because we simply "cannot afford to lose an existing customer in today's highly competitive landscape".  If we are lucky, we push our annual retention rate from 61.4% to 61.6%, but cannot prove it was because of any of the multi-channel software, solutions or services we championed.  Worse, our wallets have been emptied, with money transferred to the multi-channel game operators.  At least we have the small, stuffed snake with poorly glued-on paper eyes to show for it.

Finally, with twilight descending upon the fairgrounds, we visit the roller coaster.  The roller coaster is only for the young, or those who are healthy enough to ride.  Experienced fair-goers sit on benches, watching the young invest all of their remaining coupons on this flashy ride.  For the longest time, the ride goes up, up, and up even further.  But inevitably, the ride levels off, then comes shooting down at mach-three, curving left, then right, looping upside-down, then right-side up.  After a few harrowing corners, where the rider is literally out of control, the ride returns to the station, to the same place where the ride started.  In our multi-channel marketing environment, the roller coaster is the online channel.  Catalog veterans lined the benches to watch young direct marketing experts master search engine optimization, e-mail marketing and portal advertising.  These online marketers, and the sales attributed to their efforts, have been going up, up, and up even further, without an end in sight.  Of course, those of us sitting on the benches know how the story ends.  When we were young, we rode the roller coaster.  Eventually, the ride will level off, and then the ups and downs, the left and right turns, the upside-down and right-side up loops, will provide thrills to today's online marketers.  We all hope that today's online marketers are safely bucked-in, and have secured all loose objects.

Night-time has set-in, and we make our way to the car to head home.  Walking past the livestock pavilion, we smell the odors associated with hard-working youngsters trying to earn a blue ribbon for the lamb they groomed all spring for the 4-H contest.  Similarly, behind the scenes, behind all the glitz of an integrated marketing campaign or price parity across channels or a million-dollar inventory management system, are the customer service representatives and those working in the warehouse.  They pick, pack and ship orders, they take calls from disgruntled customers, they make customers happy each and every day.  With luck, they earn a salary increase from $9.00 per hour to $9.25 per hour, and maybe they earn a blue ribbon for great customer service.

On the way home, we look back at the fair through the rear window of the car.  We're happy that we spent the day there, we're equally happy that the fair only comes around once a year.  In multi-channel marketing, we head home for the weekend, happy that we contributed to the success of our company's multi-channel initiatives, equally happy that the weekend, and maybe our county's fair, await our leisure time.


The 'Multi-Channel' Myth

May 20, 2006:  I have come to the realization that the Direct Marketing industry is in the process of strategic collapse.

This does not mean that Direct Marketing industry itself is collapsing.  Rather, the strategic vision of our industry is being clouded by a veritable plethora of in-fighting over the tools and techniques that will lead this industry in the next decade.

Consider this article in Multichannel Merchant.  Dave Smith discusses utilizing insert media, television and radio for prospecting for new customers.  For instance, he proposes utilizing catalog blow-ins as a cost-effective prospecting tool, and recommends radio spots to promote products that do not require significant visualization to get a sale.  Are these techniques congruent with how a customer behaves in 2006?  Maybe, maybe not.

Another article in Multichannel Merchant talks about using branding as a tool to increase sales.

Direct Marketers are rapidly moving down the evolutionary path of Search Engine Marketing.  This article in iMedia Connection talks about using search for targeting audiences.  Notice the 'marketing channels' tab on the left side of the page.  Click on it.  Do you see a print channel listed there?

And then we have DMNews, who so strongly believes in print as a key driver in multi-channel sales that it rushed to publish comments defending print campaigns without adequately illustrating that the comments were not an actual contributed article.

For the purpose of this post, I define strategic collapse as 'the fragmentation of strategic alternatives into isolated positions that are in opposition of each other'.  As we approach the summer of 2006, the Direct Marketing industry is fully immersed in strategic collapse.

I observe factions who dig their heels in, and promote the many benefits of catalog.  They romanticize the image of a customer sitting on her couch, with the fireplace on, thumbing through wonderful merchandise and beautiful creative that accurately communicates the brand.  They envision the customer picking up the telephone, and communicating her purchase wishes to a caring customer service representative.

I also observe factions who have moved in the exact opposite direction.  These factions are all about online marketing, are all about search.  They care deeply about the bidding process on Google.  They run mathematical algorithms to determine how much to pay online search organizations.  This version of direct marketing is colder, more analytic, more process driven, and ultimately, less strategic.

The brand marketers truly struggle today.  Who doesn't want to create the next Starbucks?  Who doesn't want to replicate the success of Nike?  Marketing has become so much more accountable, and as a result, brand marketing activities can be measured today.  And so often, the return on investment is very poor.  For every Starbucks or Nike, there are thousands of failures.  Accountability is slowly killing brand marketing.  The allure of the success of a properly managed brand campaign drives so many failed brand marketing campaigns.  Brand marketers are further hamstrung by the dwindling television and radio audience.  The channels that brand marketers used are being marginalized by a reduced audience.

And then we have the CRM industry, promoting software that allows marketers to directly communicate with customers.  Frequently, the problem with CRM is that we, as customers, do not want to be marketed to in the way that CRM vendors promote their tools.  Who among us enjoys being up-sold or cross-sold?  Who among us enjoys hearing about the next great thing that we are being offered for a discount, at the end of a purchase transaction?  There has to be a better way to convey the benefits of CRM software.

Direct Marketers get pulled in all sorts of directions.  The 'multi-channel myth' argues that you have to have consistency across catalog, online and retail.  It argues that you have to have the catalog to drive sales at online and retail.  It argues that you have to have a powerful brand message that creates an emotional bond between the customer and the brand.  It argues you must have the CRM infrastructure to capitalize on the customer opportunity at every 'touch-point'.  It argues that merchandise must be available across all channels, and that the customer must be able to dictate where they want to receive it.

In my opinion, these messages are causing strategic collapse within Direct Marketing.  When the focus of a Direct Marketer is on these tactics, and which of these tactics 'is right', the direct marketer is bound to fail.  The focus of the Direct Marketer must be on the merchandise.  Without focusing on the merchandise that the customer wants, the customer won't purchase from you.  When the customer won't purchase from you, none of the tactics described in this post matter, and we lose our jobs.

The Direct Marketer must focus on operational excellence.  Without operational excellence, the Direct Marketer will not be profitable, and cannot stay in business.  The Direct Marketer must focus on what the customer wants.  If the customer communicates that she wants a CRM system that recognizes her everywhere and offers her discounts and up-sell opportunities, then it should be implemented.  The Direct Marketer must focus on acquiring new customers, and ignore the commentary of vendors who state that it costs "x" times more to acquire a new customer than to retain an existing customer.  Anybody who has run long-term planning simulations of a direct business clearly understands the importance of customer acquisition.

Strategically, the Direct Marketer must focus on integrating all of the concepts mentioned in this post.  Too often, the Direct Marketer picks sides.  The catalog executive is chosen to run the Direct division, and brings a bias toward old-school techniques.  Maybe the online executive is chosen to run the Direct division, due to the shift in customer behavior to the online channel.  This can cause all of the old tools and tricks to be forgotten, in favor of great online marketing.  Maybe the brand marketer is chosen to run the Direct division, to promote one consistent advertising message across all channels, at the expense of operational excellence.

It is time for Direct Marketers to stand up for ourselves.  We need to not buckle to the fear we feel when we are told that we must have various marketing tools and techniques in order to be successful.  We need to lead our industry into the next decade. 

I strongly believe we will do this when we focus on offering merchandise that exceeds our customer's expectations.  We will do this when we achieve operational excellence that guarantees future profitability.  We will do this when we accurately measure how our customers interact across channels, brands, and product classifications.  Accurate measurement of customer interactions should strongly influence the direction of our marketing strategy.  When my industry finally does these things, I will be ready to sign-up for the reality of 'multi-channel' marketing.  Until then, everything I read and hear is still a myth.