25 years ago | River Thames, London, UK | c.29th April 1998
In April 1998, we are invited to attend the Your Horse magazine industry awards in London. In their fourth year, they were to be presented once again aboard a pleasure cruiser which set off from the Royal Festival Pier, sailing down the Thames almost to the tidal barrier and then back. It was a full day out, and quite ‘liquid’ in more ways than one…
In addition, we’d been nominated for an award: ‘Best Mail Order Company’, with the winner voted for by the readership With more readers than any other magazine in the UK (even the more widely-known Horse & Hound), it was quite an accolade. It seemed to be as close as it was possible to get to an ‘Oscar’ ceremony for such a relatively small industry.
I took the train down to Euston and then the tube to Waterloo. Not being familiar with this part of London, ‘south of the river’, and before the advent of the mobile internet, I expected to need to take a taxi from there. When I got to the front of the taxi queue, I was surprised when the cabbie claimed not to know where The Festival Pier was. Even an out-of-towner from the North knows that every taxi driver has to do ‘The Knowledge’. It made no sense.
It started to make a lot more sense a couple of minutes later when I spotted a sign nearby, advising that the Royal Festival Hall was only a two-minute walk away. So, obviously, was the pier and clearly, the cabbie hadn’t waited for so long in that taxi rank just to get a thirty-second fare.
To tell you the truth, I wish I could remember as much detail about the day itself. The sun shone brightly as we wound our way downstream, showing London’s famous sights, as it often tends to do, in their most flattering light. I think we were already on the hors d’oeuvres as we sailed beneath Tower Bridge. The main course arrived at around the same time as building site of the much-anticipated Millennium Dome. After dessert and drinks, we arrived at the Thames Barrier, where the boat turned around and our hosts started to announce the awards.
As the title to this post suggests, we won the award in our category and I stepped forward to accept the framed certificate and pose for a picture. It’s important here not to get too carried away: winning at one’s industry awards is hardly comparable to collecting an ‘Oscar’ in front of the world’s media but I have to say, it’s a whole lot closer than not winning one. It was still a genuinely thrilling experience and a lovely way to gain a bit of positive PR for months thereafter. Nowadays, the social media value can make the value of such occasions exponentially higher.
Anyway, I’m pleased to have had that experience. It was a lovely day, with good food and good company and it involved a highlight to my career that not everyone can say they have had. That we went on to win this award for a number of years made it even more special.
Racehorse Handicapping: Predicting the Unpredictable?
The role of a horseracing handicapper is to ensure that each horse in a race is carrying enough weight to offset their differing capabilities and their varying levels of form. It’s seen as a vital task because it means that, in theory at least, champion horses in the peak of their form are matched more evenly with their less illustrious competitors, ensuring a more tightly contested, less predictable race.
Taking the logic to its natural conclusion, the handicapper will only have done their job correctly if all horses in a race cross the line at the same time. While it’s possible (but still unusual) to have a dead heat in a two-horse or, in extremely rare cases, in a three-horse race, it’s functionally impossible for this ever to happen in a race involving a larger number of horses.
Famously, the Grand National is never a close race, using the definition of closeness as the difference between first and last places – indeed many horses fail to complete the course each year and the favourite rarely wins. There are just too many horses, too many obstacles, there is too much distance and arguably, there is too much that is unusual about the preparation to ever confidently hope to call a winner, let alone be able to harmonise the finish across the whole field. In probability terms, there are simply far too many unknown variables to trust any form of predictive modelling that would ever enable a handicapper to achieve the ‘Holy Grail’ of all horses crossing the finish line at the same time. In the face of such overwhelming statistical evidence to suggest its basic futility, why is handicapping necessary?
The answer is that ensuring a dead heat is not the point of handicapping at all. Handicapping is there to offset perceived differences in horses’ abilities and form. It acts as a regulator for betting, ensuring that favourites will not be favoured by the betting public by as wide a margin and that ‘dark horses’ will be viewed less darkly than they would be without handicapping. It serves the industry behind the sport, not the sport itself. There is no handicapping in Athletics purely because the sport exists primarily as a discipline to discern which athlete is the fastest (and by how much). Only the overlay of betting leads to the necessity of handicapping – something which many might see as a perversion of the conventions of pure sport.
Uncovering the ‘real’ reason behind the point of handicapping seems rather dull, irrelevant and perhaps even a little dispiriting but the subject is still of value because it acts as an interesting analogy that mirrors the issues of what can and what perhaps can’t be predicted – and to what extent, the distinction between the two states may become blurred.
Direct Marketing & Parallels with Racehorse Handicapping
The role of a Direct Marketer is to predict, accurately, the event of each customer choosing to make a purchase from an offering in a given time-frame – or not, as the case may be. As with handicapping, various models exist to discern the factors that most affect future behaviour. As with handicapping, these models are widely accepted as being able more reliably to predict the general level of behaviour than would otherwise be the case. As with handicapping, there are far too many variables to translate such improvements at the individual level. At this point, even the offer to give away £1,000 of vouchers with every £10 order will still only yield a certain percentage of response – it will not motivate every customer into action, often for a variety of what appear to be illogical reasons.
It may be suggested that the ‘Holy Grail’ of Direct Marketing is just as simple and just as unobtainable as the race where all horses cross the line together. It is an activity which is segmented using a profile which can determine only those customers who will order.
In reality, for this to occur, not only must this segmentation yield a 100% activation rate for the successful segment, but it must also be shown that all other segments will always yield a 0% activation rate – a practical impossibility.
Just as a handicapper may occasionally achieve a 2-way dead heat, a Marketer may occasionally achieve a 100% activation in a segment with a very small sample. In that circumstance, the Direct Marketer’s expectation is always that that offer, made more broadly, must be transferrable to other segments, uplifting their performance. The activity is then repeated through various other segments with the expectation that it keeps performing profitably until it fails. In short, the ultimate goal state of a Marketer can therefore never happen, as another sale can always be found.
Even if a model existed to find just the people who would only ever respond to a given stimulus (its magnitude), it would still be akin to believing “this is all the sales you can ever make”. It would be perfectly efficient, of course but it doesn’t necessarily mean that revenue is increased by all that much. It just clarifies the process of when to stop chasing the extra sales.
In reality, this a problem we’re highly unlikely ever to face. Customers are people and people are (at the individual level) incredibly difficult to predict. The ‘Holy Grail’ state just shows us what a perfect level of predictability would look like, which is useful when it comes to comparing and evaluating our own methods.
Applying a Predictive Model in Direct Marketing
As a contrast to the imaginary problem above, real-world examples of response rates across the segments of an activity tend to adhere to a more familiar principle: the law of diminishing returns.
This is taken from campaign data from a previous Spring/Summer campaign, using segments driven by our prior ‘Points Analysis’ method of segmentation and recorded from response codes given during telephone orders. For this reason (as it therefore ignores web orders from that campaign), the percentages are not relevant here, just the shape of the curve.
As with the ‘Holy Grail’ curve above, it starts off steeply, implying that this is a clear way to predict the responsiveness of one group over another. However, as the trendline (I’ve used a logarithmic trendline, by the way) progresses along the segments, it flattens so that by the lower segments, it almost represents an admission that the model can’t really say if the second to last segment contains significantly more predictable customers than the last segment.
Using the ‘revenue-building’ logic discussed above, this uncertainty can be (and often is) presented as a positive feature. As long as the responsiveness is at a profitable level, this ‘long tail’ becomes something of an asset, as it assures the Marketer that more sales can be added, with a positive ROI until the point on the axis where the curve touches the break-even point of response. The fact that these sales happen to come with decreasing levels of efficiency may be seen as a price worth paying.
One rather fundamental problem in the collation of the above chart was that the response metric was based on order-level, not customer-level responses. At this point, we need to be rather pedantic: the issue of predictiveness relies ultimately on the response of an individual to a stimulus, which is then grouped by the segments of similar individuals. Using the principles of RFM (the categorisation of customers by Recency Frequency and Monetary Value), order-level analysis conflates the effects of both R and F, when we require them to be viewed in isolation. To illustrate this point, consider that one hundred orders from a given segment may imply one hundred responding customers but it could in reality translate to just one very responsive customer – or any combination of reciprocal factors between.
Since then, we’ve adopted the more standard Binary segmentation model, which ensures the monitoring is at the customer-level, preferring the percentage metric ‘Activation’ (customers who ordered in a given season as a percentage of customers stimulated, by category) over the more traditional, order-level metric ‘Response Rate’ (orders received using a given response code as a percentage of catalogues circulated with that media code). The uncertainty factor of one customer ordering a hundred times versus a hundred customers ordering once each has been subsequently removed. We can now monitor precisely how many customers have ordered, as well as the number of orders those customers have placed, collectively and individually.
The Activation performance of the Binary list for the most recent Spring/Summer campaign, expressed for each group shows a similar curve, implying the same adherence to the law of diminishing returns as the older Points Analysis-derived curve above.
Once again, the asymptotic (flattening) curve implies a longer tail beyond the limits of the mailing list, which, using the methodology of the Binary process (with its allocation of decreasing points for customers ordering increasingly further back in time), also implies that further revenue can only be attracted at a less efficient rate. In effect, it’s almost telling us that after a certain point, we can mail anyone using this rationale and we’ll probably get the same return, whatever it is. This is hardly what you would call a predictive model.
All this is implied but none of it can be taken for granted, just as no segment that yields 100% Activation ever implies that the ‘Holy Grail’ has been achieved – there is always the question “what further potential is there?” to answer. It’s clear that we need other means of predictiveness to unlock the secrets of the deeper recesses of our mailing list.
The Limitations of the Binary System
Largely as a result of the paranoia/healthy scepticism (call it what you will) of putting all our eggs in the basket that is Binary segmentation, we have, since adopting Binary, also endeavoured to add a wider pool of customers to our recent mailings selections than merely those segments suggested by that system. It’s not unusual or ground-breaking to do so; it’s a practice that’s routinely done by even the most faithful proponents of Binary segmentation and it’s called deep-diving.
Using our previous (semi-proven) Points Analysis system as our deep-dive axis, we mailed representative samples from these deeper segments of customers and named them groups -1 to -5, in accordance with the Binary nomenclature.
What we found was that a huge proportion of the -1 group customers were activated (far more than we had anticipated), the equivalent of the Group 12 Binary segment, i.e. the best segment of the ‘Good’ portion of the list. Thereafter, the activation rate dropped massively for the -2 segment and continued to tail off gradually through to the -5 segment.
Perhaps it should come as no real surprise that there is a significant increase in activation in any Binary analysis from the 1 segment to anything that is essentially the ‘best of the rest’. I have to presume that a known increase in activation at this point in the list is not only common but probably also a phenomenon that is to be expected. Conversely, I have no idea if the level of disparity at this point is generally as great as we have found it to be. I rather suspect it isn’t.
There are two benefits to this figure being so notably high, which represent the twin roles of predictive segmentation I have already outlined. Firstly and most prosaically, it represents almost 7,000 activated customers and almost £300,000 of additional revenue. Secondly, it gives us a definition of customer type that we know we can continue to stimulate efficiently and it strongly indicates at what point this metric provides segments that are inefficiently stimulated. It also calls into question the wider viability of a system that seems to ignore a cohort of customers who are capable of yielding half as many activations as those it selects.
Ordinarily, as the Direct Marketing wheel turns and the results of one campaign’s test shape the standard practice in the next campaign, thoughts turn to the question of what methodology to test next. With such a statistical disparity as this, it’s also difficult to escape from the conclusion that the Binary model as it stands may not be wholly suitable for our requirements. This is not to say that the practice hasn’t been worthwhile or indeed that the notion of measuring campaign performance at the customer level isn’t of value. In fact the opposite is true: With ever more ordering methods, media codes as a means of recording performance are dying and, even if we could resurrect them, we would return to the same non-relational order-level analysis that tells us nothing about the customers on whom our business depends.
I would always advocate a customer-level metric, even if I might always wish for a method of segmentation that is more clearly suited to our list profile. The reporting disciplines required and indeed the limitations that customer-centricity can have on budgeting for additional in-season activities are all, in my view, a small price to pay for the insight the analysis can give to actual customers. As we move inexorably to a more sophisticated multi-channel interaction-based data model which encompasses customers’ web visits, email responses, retail transactions and even social media activity, it is clear that our basic ‘currency’, the only differentiating factor we have, to analyse anything of significance will eventually (and then always) be at the customer level.
Having said that, if we’re at the point of re-drawing the boundaries of what constitutes ‘very good’ customers from ‘good’ and so on, we can also have an eye on what shape of curve we’d like it to produce, based on recent customer behaviour tracked against information known about customers before that activity occurred. As I have already outlined, the process of measuring the performance of an activity has two basic roles: to assess both its magnitude and its efficiency. A curve that simply emphasises the magnitude of success is too steep and does little to imply where further success might be found. A curve which places too much concentration on efficiency tends to be too horizontal and very quickly can become practically non-predictive.
Obviously, there will always be customers who are more responsive than others in any database so it’s true to say that any curve will show degradation. In fact, as it’s a symptom of a correct profiling methodology, activation curves should have a degrading, downward-sloping shape from customers who are predicted to be the most responsive, down. It’s also fair to presume that if you measure a list against any given single metric, there will always be a ‘best of the rest’, chosen using a different metric which may out-perform the usual list, so at some point a secondary or even a tertiary segmentation metric should be considered. A problem can occur if those segments suggested by other metrics out-perform the primary-metric segments by too much. This may imply that a better, more appropriate primary profile would have included those names in the first place, something which would ensure the risk of missing such customers from a future campaign is minimised.
An Easy Win: Challenging the Timeframe
One way to improve the primary metric we have (Binary) may be to re-define that timescale of the selection. The version of Binary that we’ve adopted is based on Yes/No (or 1/0, hence the name ‘Binary’) classifications for a customer’s ordering profile over each of the last four six-month seasons. It is entirely predicated on the fairly standard assumption that a customer is a customer from the date of their first order until exactly two years beyond the date of their last order. By extension, anyone on the list who hasn’t ordered for over two years must be considered a lapsed customer and is removed from the house list. They may continue to be contacted, but only as part of a reactivation programme.
The fact that the Binary system is based on a two-year model and the fact that it was adopted by ‘mainstream’ catalogue operators such as Littlewoods and La Redoute seems to have a fair degree of compatibility. I have always been (and remain) dubious that the simplistic ‘two year rule’ applies as strongly in a niche market such as our own. As a ‘safety net’ against pinning our performance on adhering to it, I ensured that our mailings included a ‘best of the rest’ deep-dive, based on high point-scoring customers (who would therefore have been mailed under our previous segmentation model), who, being outside of the Binary segments would therefore have been inactive for over two years.
As we have seen from the most recent data, this 30,000-deep segment yielded a response (and therefore a Return on Investment) performance, similar to the ‘12’ group in the standard 4-season Binary model. Evidently, our less Recent, more Frequent and/or higher Monetarily-valuable individuals were able to outperform most of their more Recent counterparts. The cut-off at two years has always seemed arbitrary and inappropriate for us – and these figures appear to support that position. Recency is therefore not necessarily ‘king’ in a niche market, even if it may be considered as such by more mainstream operators.
To corroborate this view, perhaps it’s helpful to contrast the characteristics of a mainstream proposition and a mainstream customer with those propositions in a more niche market context.
Mainstream v Niche: Some Observations
Mainstream catalogue companies have tended to define their core markets more by the way they choose to buy (i.e. by choosing not to walk into a shop) far more than by the type of products they buy. They are in competition with a far wider section of the market, selling standard products to a broad section of the public. Light fittings, pyjamas, holiday footwear and all the other day-to-day offerings were always generally available on any high street or in a plethora of other catalogues or websites, in which there is usually massive competition. It is therefore difficult for them to create a sense of what their brand represents beyond their pricing, the quality of their merchandise and their service – certainly no-one can define their range as a whole as representing and supporting a ‘lifestyle choice’. Even before the further commodification of retail by search engine and affiliate sites, their offering was often close to being commodified by the presence of so much competition.
It is easy (and perhaps fair) to conclude that they must therefore adopt a ‘plenty more fish in the sea’ approach to customer retention over acquisition. If customers are that easily acquired, and if retention can prove to be so difficult, it follows that it is seen as far easier to entice a new customer than it is to win back one who has not been back for a relatively short amount of time. It’s dangerous to suggest they acted arbitrarily in arriving at two years as the determinant of dormancy; it seems reasonable to expect that it was driven by their data, suggesting a parameter that was appropriate for their purposes.
Conversely, niche market businesses tend to define their customers by a specific activity or affinity, which is to a greater or lesser extent important to all of their customers. They may find that the percentage of customers willing to buy remotely in that market is far higher than in general (historically) because of the relative lack of credible alternatives. Broader ranges of products that appertain to that activity or affinity may be more difficult to build, depending on the obscurity or the scope of that activity or affinity. Wider competition will always be present but, at their strongest, these niche markets are filled with customers who define their interest as a ‘lifestyle choice’. These brands do not just purvey goods, they represent or even define a lifestyle.
In a niche market, almost by definition, there aren’t quite so many ‘other fish in the sea’ and even customers who have been lapsed for a number of years are a far greater prospect to approach once more than any attempt to trawl for a fresh batch. If customers are not so easily acquired, and if retention proves less difficult than in the mainstream sector, it follows that it is disproportionately easier to entice an older customer than it is to acquire a new one. It seems clear that these markets inherently find the mainstream parameter of dormancy at two years to be inappropriate for their purposes.
Extending the Binary System from Two Years to Three
The Binary system’s strengths are its customer-centricity, its ability consistently to predict the difference in response between more regular-and-recent and less regular-and-recent customers and its scalability. Its weakness is the fact that we can prove that it has omitted perfectly responsive customers. Perhaps this can be corrected by using its scalability to ensure that they are re-admitted into the process.Under a four-season (two-year) standard model, the categories are defined by fifteen groups, which is the number of permutations of order activity (or inactivity) across four seasons. One point is awarded for the least recent reported season (four seasons ago), there are two points for an order three seasons ago, four points for orders from the penultimate season and eight for the last season. The number of points awarded doubles, the more recent the season, which seems like an arbitrary system but is actually an ingenious mechanism to ensure that every single permutation is represented by a different number of points.
In this way, we may contend that Recency is a vital factor in predictive modelling whilst also expecting to target customers that are patently less Recent in profile. The crucial point being that we have evidence that suggests we cut off responsive customers too readily by adhering to a ‘two-year rule’. By re-introducing segments of longer-dormant customers, we become able to evaluate their relative value – and therefore the predictiveness of this wider flavour of Binary analysis. Like the current four-season model, there’s also the thorny issue to consider of how many high-performing customer segments that even this model may continue to ignore.
We can’t turn back time but we can simulate the conditions of a six-season Binary selection. It is possible to re-order the customers we may have selected for the current Autumn/Winter campaign using a six-season Binary model. From there, we can identify not only which customers were mailed but also which customers placed an order in the current campaign and compare them with the equivalent responses using the usual 15-point, four-season Binary model. With six seasons, the number of permutations of orders increases from 15 to 63.
This hugely increases the level of granularity that the list analysis can give and will also help to establish the importance of the 5th-last and 6th-last season on predictiveness for a forthcoming campaign. Using four seasons (two years), the Binary graph for Activations from the current Autumn/Winter campaign to late November looks like this:
The same response data under a six-season (three year) Binary grouping shows a similar degradation but with more definition between high-performing and low-performing segments.
The added granularity helps to provide more evidence of predictiveness at each end of the Binary spectrum. Almost two hundred more customers are classified in groups which yielded an Activation rate of over 40% than in the 15-point model and over six hundred more customers are classified in groups which yielded less than a 10% Activation rate. If a 10% rate was shown to be the break-even point for inclusion, then this information would identify names who the Binary model would not predict a sufficient response. If no other justification could be found to mail those names, then that information could demonstrate a saving of unnecessary expenditure.
A ‘Health Warning’ for Any Model of Segmentation with a Single Axis
As we’ve already seen, demonstrating a suitably stratified segmentation model is only the first requirement of achieving a fully-optimised list. We must also ensure that no other potentially responsive segments are omitted. I’ve also highlighted the almost inevitable need for some subsequent segmentation criteria to exist beyond the reaches of the primary (in this case, Binary) model. Not only should this process stimulate as many as possible of the remaining responsive segments (a ‘best-of-the-rest’ group), it should also seek to test other responsive techniques beyond that.
A good example of that methodology would be the segmentation of customers, irrespective of Binary and Points, who have previously ordered during a Sale for a mailing of a Sale Catalogue. This is based on a given principle (that a customer is a known Sale responder). In the field of probability, this is known as Conditional Probability: where a given condition already exists, results in outcomes with a higher degree of probability and therefore predictiveness. The methodology appears sound but the result may or may not agree but either way, the results of that decision will shape our future selections.
Currently, our preferred secondary metric is the Points from our long-standing ‘PointsAnalysis’ table, which was created for our previous segmentation technique, where customers accrue 100 points every time they order, gain 1.5 points for every pound they spend and lose a point for every day that passes without an order.
In order to pursue this line of segment development, we will need to more clearly record what segments were used and on what basis. Where transient variables such as Points are used, the figures at the date of segmentation need to be written back to the database to enable better, easier analysis and cross-reference between the segments used and their eventual performance.
As part of my reconstruction of a six-season Binary in Excel, I have been able to identify customers mailed with and responding to the Spring/Summer Deep Dive catalogues. I have also been able to reverse engineer their historic Points level at around January 15th, based on their November Points and their known activity since January. This graph is what that analysis suggests. I can’t guarantee perfect accuracy within each Points band but I can say that the totals for each group match those given by a report for the activity of groups -1 to -5.
These responses strongly suggest that there are responsive customers to be found outside of the 4-season Binary model we employed in that season, bearing in mind that the Activation level for Binary group 1 was 4.6% and the “-1” Deep Dive group yielded around 18% Activation.
There’s nothing wrong with mailing across multiple axes of segmentation, as long as the hierarchy is established (if a customer qualifies for a segment in each method, which one wins and which method is left with the rest?) and as long as each segment is performing well. Curves which become too horizontal may still be predictive at the level of each category but also show that the method itself has begun to lose its predictiveness at that point. Thought should be given to the point in the list/on the axis at which one model is abandoned and another is given free rein to replace it.
For example, using the derived ‘live’ data for the current campaign below, comparing six-season Binary with Deep-Dive, based on Points, it may be concluded that, long tail or not, groups 1-4 should not be mailed but those quantities replaced by the best of the rest on the Points scale.
There are of course too many variables to merely prescribe a ‘one-size-fits-all’ answer here. Issues of quantities of names available within each group together with associated AOVs and break-even Activation levels all play a part. The main issue at this stage is that we give ourselves the impetus, and the tools, to break away from a single system of segmentation, as long as our focus remains at the customer level.
Whatever we do, it should be a far more scientific process than simply betting on the horses…
This month, I’ve chosen to dedicate a thousand words to the wisdom of catalogue publishing versus some of the more obvious alternatives. This is a tough assignment for me. I could easily write ten thousand words on the subject, maybe even enough to leave this issue of your trusty ETN looking like a… well, you do the punchline.
Of course, the reason I’ve only got a thousand words is the same reason you should avoid catalogues: cost. Printing catalogues can be eye-wateringly expensive but if you think that’s pricey, try posting them as well. Oh, and any mistakes in production can’t be corrected, leading to costly proofing processes, significant potential for missed opportunities and little alternative but to withdraw products from sale if they’re mistakenly priced too low. Catalogues also act as a Sword of Damocles over your stockholding – if you run out of anything, customers will not take kindly to your printed promise that you have it. Basically, they’re an argument with your suppliers waiting to happen.
While none of this is new, the financial risk these days is thrown into even sharper relief by the fact that in theory at least, the digital alternative is free. Email and Social are so much more immediate and far less costly. Any page on your site can be edited every day if need be and if products do sell out, you may miss sales but you have the choice to limit the damage by suppressing any troublesome items in the meantime. Finally, a website can carry your entire range but a catalogue reduces its ROI severely when it includes much beyond your winners. All of that being the case, why on earth would anyone pay for a physical compendium?
There are some reasons. A tangible presence, ideally, with some heft to it is a good way to symbolise your credibility: “Look, we can afford to send you this charming selection of products lovingly represented on glossy 50gsm paper” you can almost hear it say. They also convey an indication of the extent of your range that any homepage will invariably struggle to match: “never mind the production quality, feel the width”.
Catalogues also invite customers to indulge in the rather old-fashioned pursuit of browsing – not just searching for the specific thing they’ve recently decided they want but actually spending time considering owning every item their eyes dance over in a more relaxed, day-dreamy state of mind. If search-based web shopping is akin to hunting for today’s meal, catalogue browsing is more like foraging for a whole winter foodstore.
Unfortunately, the binary nature of this comparison is rather ruined by the fact that these days, almost all your catalogue recipients will, having chosen the items (on paper) that they wish to order, then go online to place it, thus messing up all your nice, neat reporting structures (more about that in next month’s issue) so this is not a by-extension suggestion that paper catalogues mean you can eschew the website. The best way to think about it is this: in the days before the web, a catalogue usually represented an entire conversation with a customer; today, it’s really only there as an ice-breaker – if you go beyond the small talk, the conversation will inevitably continue online.
A catalogue therefore performs a much more specific role than it used to, which is why you’re far less likely to see your doormats groaning under the combined weight of quite so many ‘big book’ versions. To prove the rule, there are still some exceptions – Next and Argos being the most obvious examples in the ‘normal’ world.
These leviathans of a bygone age may seem a comforting reminder of constancy in an uncertain world but bear this in mind: Next have flirted with charging for their directory and are also very sophisticated at deciding which customers should (and shouldn’t) deserve to be on their ‘VIP’ list to whom free directories are sent. If you happen to find your coffee table supporting the Next directory, their hard-bound Summer Fashions volume and the extensive Next Furniture opus as well, clearly, someone in your household is spending a fortune with them.
Argos have made overtures about ditching their familiar brick of paper, reduced its format and pagination but even with the simplicity and impressiveness of their app, they still haven’t yet dared to shake their money-maker out of their marketing budget.
In our own little part of the ecosystem, a similar story can be told – with the added twist that there seem to be a number of what we used to call ‘trade catalogues’ somehow finding their way into consumer magazines. It’ll also be interesting to see how successfully my old friends at Krämer will utilise their legendary katalog as a means to entice British consumers to send their orders to Hockenheim.
So, are catalogues really a relic of the past or an under-rated means to stake a claim to the future? With questions like this, there’s very rarely a simple answer beyond “it depends”. Catalogues are no longer the only way to carry out distance-selling but they are capable of out-performing all other techniques in certain circumstances. For that to happen, there are lots of variables to consider, not least number of pages and number of copies.
The ‘Holy Grail’ catalogues offer is a more compelling way to start a conversation with the right people on your list. I’d argue that if you don’t know who those people are yet, you probably shouldn’t be sinking too much money into catalogues until you do.
Why? ‘The 40/40/20 Rule’ is a principle established by marketing expert Ed Mayer in the 1960s which states that 40% of the success of a marketing campaign is based on reaching the right audience, 40% on the offer you make, with only the remaining 20% based on various other factors such as its presentation and format.
Without knowing precisely what to offer, and specifically to whom, you may be consigning yourself to an expensive mistake.
Look out for my next column, about the downsides of marketing your offer online, in the August issue of the ETN, out August 1st.
The Autumn/Winter 2011 Catalogue is just about to be printed and will be with you by the middle of August but as we’ve found recently, even without anyone seeing a single product, it’s already creating a following.
Over the 25 years that we’ve been publishing catalogues, we’ve always found the choice of the front cover to be quite tricky. Equestrianism is, as we all know, quite a broad church, with many riders seeing themselves as a devotee of their own particular discipline and many more equally proud not to be associated with any competitive activity. This peculiar stand-off has meant that we’ve always been very sensitive to the risks of giving the wrong message with our covers. Dressage, for example, is supposed to represent the ultimate in harmony between horse and rider but even the most stunning photography of a dressage pairing in mid-piaffe carries the risk of identifying Robinsons too closely with that particular discipline.
Of course, we have nothing against dressage riders (heaven forbid!) but neither have we anything against showjumpers, eventers, carriage drivers or those who prefer any other discipline and the last thing we’d want was for our catalogue to be dismissed by other riders (and bear in mind that we can’t be arrogant enough to presume every rider in the country knows who Robinsons are) as ‘for dressage riders’ or for any other specific group. I’ve blogged before about trying to identify the common themes that unite all riders and horse owners and concluded that there may be fewer than you’d think. The obvious one of course is the horse itself and it’s a fairly safe bet to assume that we’ll always have a horse present somewhere on our front cover… …probably. So the image has to appeal to everyone and offend no-one – if at all possible.
I’ve always felt that this is exactly the mission that the BBC face when they draw up the schedule for BBC1 on Christmas Day: upto 18 hours of films and programmes that everyone can watch without anything that anyone would consider to be inappropriate. That might sound simple but I’ve always suspected that it’s a much more difficult task than it looks. Of course a day full of Disney films either side of the Queen’s Christmas Message would meet that requirement but is there sufficient interest there to stop people turning over? Especially these days, with so many more channels… The consequence of attempting to steer clear of any sort of offence is usually to drive headlong straight into another pitfall – blandness.
Carrying on the Christmas telly analogy, that’s why we have the standing joke about Christmas always involving Morecambe & Wise and The Great Escape. There’s nothing wrong with either of these great stalwarts; they’re proven over many years to be very popular viewing. This popularity is also their weakness – we’ve all seen them before. They’re not particularly imaginative. They’re not exactly different, are they? I know that lots of people have had quite firm views over our cover images over the years and whether they’re complimentary or not, I’m always flattered that anyone feels strongly enough to tell us. It would be a far worse situation if we were to inspire nothing but apathy. Certainly, we’ve had plenty of internal discussions and debates over the image with which we’re happiest to associate our brand, twice a year. It’s sometimes an awkward process but always a necessary one which always seems to bubble along until the print deadline is too close for comfort.
I’ll admit that we’ve always tended to be a little conservative with our imagery and that in doing so, like the BBC at Christmas, we risk coming across as a little bland. In recent years, we’ve tried to mitigate the difficulties of choosing an appropriate cover by using silhouettes (a move which was inspired by looking at Next Directory covers at the time, I’m not ashamed to say). Instead of trying to take a ‘perfect photograph’ ourselves, they were easier images to come by and we had slightly more control over the composition of the picture this way. Crucially, from my point of view, it was also a unique style which I felt help to make us different (that word, again) from the other equestrian catalogues out there. Since then, we’ve opted to use the world of online stock photography – websites full of usually (but not always) impressive photographs of almost anything you can image.
In addition to our catalogue covers, the use of these images has helped us transform our instore experience. Once again though, things aren’t quite as straightforward as they seem. Being mostly American, any search for ‘horse’ on a stock photography website will inevitable return far more Western scenes than we’d ever use, virtually halving the number left for us to consider. Then there are a wide number of pictures of horses that are photographically impressive but that would immediately alienate you, the customer.
What do I mean by that? Well, images that carry with them a certain baggage that are easy to spot for you or me are, bless them, perfectly acceptable to many photographers, however good they are. As a consequence, pictures that include subjects like horses with their ears back, hatless riders or riderless horses alone in a field, wearing a bridle are all ruled out of the equation. This year, when we held our usual internal straw poll of the eight or so images to choose between, something happened that I can’t recall happening before: we had an almost unanimous verdict. What made it all the more remarkable was that the clear winner was the most radical, least bland choice available. It’s a black-and-white image and the last time we featured one of those on the front cover of anything, it was the early 1980’s and we couldn’t afford to print in colour.
So, in case you haven’t seen it yet, here it is in all its glory (see below). We’ve also posted it on our Facebook and Twitter pages and once again it was met with what can only be described as universal acclaim. Maybe we’ve been lucky this time but I’d like to think we proved that it is possible to appeal to the widest possible number of people without descending into blandness. Ultimately though, it doesn’t matter what I think. What you think is much more important!
If you’ve received your Sale Catalogue and you’ve found something you like, I invite you to go to bed early tonight, just like I’ll be doing. As you’ll no doubt already know, our Winter Sale starts online tomorrow morning at the less-than-Godly hour of 3am and we all need to be up and fresh in time for it. Why on earth do we put ourselves (and you) through this inconvenience?
The simple answer is that we’ve found over the years that it’s the safest – and fairest – time of day for us to start a sale. Here’s a little of what we’ve learned over the years: I’m afraid to say that starting an online Sale in working hours has proved to be a complete ‘no-no’. We tried it one Christmas Eve and it instantly killed all our systems. It meant that I had slightly depressed Christmas that year and I’m sure lots of customers were disappointed.
Unfortunately, the fact that it was so easy for everyone to access the Sale was precisely the reason it was so difficult for us to handle. We had to find a way of ‘frightening off’ some of the initial surge in demand. The obvious solution is, I’m afraid, unsociable hours – which is why we’ve started our Sales overnight for the last few years. In fact, midnight used to be our preferred time but even this could lead to problems. If the site still ran slowly over the first hour or so, customers who had planned to stay up until midnight to spend half an hour shopping online were still up at 2am and starting to complain that they hadn’t been to bed yet.
We felt that not only was 3am even more inconvenient (and therefore even safer), it also meant users are more likely to have had some sleep and therefore any delays (perish the thought) should be less troublesome – we hope… There’s also an inherent fairness in making things really awkward for everybody. It means that those who inconvenience themselves the most are most entitled to the deals which are least commonly available, so morally, it seems to work well. It’s the same ‘law of the jungle’ that governs other areas where demand hugely exceeds supply, like tickets for Cup Finals or Glastonbury.
It sounds like Customer Service heresy to say so, but it’s the simple fact that few retailers will admit – even though everybody knows it: If you want something enough, you’ll do what it takes to get it. There, I’ve said it. Please don’t think less of me. I’m just trying to be honest with you!
All Sales are naturally very busy times and to an extent, we as customers do with in reason accept that fact – don’t forget, we’re all somebody’s customer, so I feel I can say that. When Next (for example) hold their retail Sales (ususally from 5am), there are almost always long queues at every store. The thing about Sales at retail is that it’s obvious to all how many people are there – because you can see them all. While each person has made the effort to travel there, I’m sure that if the event was ridiculously over-subscribed, the fact that such a crowd would be obvious to others often serves to make some of them think again and drive straight back home. Retail Sales are therefore self-limiting to some extent.
On the web, it’s not that straightforward – for anyone. We have a good idea of the number of people who visited the site on the first day of each of our previous sales, so it would be inaccurate to say we don’t know what to expect, but that doesn’t mean to say our estimates will be right this time. It’s also a lot easier to join in as a customer, because you don’t even need to leave your bed, so even our best estimates could be way out. Of course, this has a bearing on the amount we invest in our systems to accommodate this expected demand.
From the customer’s viewpoint the unpredictability will be even more frustrating. Over-subscribed websites work slower (or fall over completely) and items sell out sooner, all things likely to frustrate people and understandably so. At least the company holding the online Sale will know why things are slow – or worse – because they can see the visitor stats. The poor customer may appreciate it’s busy but they won’t know the just how many people are also online’, so there’s a chance they’ll get even more frustrated. Unlike with retail, this self-limiting factor just isn’t there. I should pause here to point out that I appear to be painting a very negative picture about the process. That’s because we try wherever possible to bear in mind a ‘busiest day imaginable’ scenario – so we can prepare to handle it. I refer you to my earlier blog about store openings The Perils of Success, in which a similar theme is explored: being too busy can be worse than not being busy enough.
Yes we’ve had our moments over the years where our online Sales have sailed close to the wind of disappointment in some quarters and I’m also sure it’s impossible to impress all of the people all of the time – although we’ll never stop trying to do that. Over the last two years, I feel we have got a lot closer to the kind of infrastructure that allows us to deal with such a vastly inflated demand.
This year, I believe we’ve been able to improve our capability even more, so I’m optimistic (make that cautiously optimistic) that this Sale will be our best ever – for all of us! In recent years, we’ve been let down firstly by hardware (the boxes of physical kit we have) and then by bandwidth (the ‘speed’ of our web connection). Consequently, it’s required us to add more web servers and a load balancer to ensure that more people can interact with the site at the same time. We’ve also freed up our systems by removing functions like ‘WebChat’ and ‘Others also bought’ for the busiest times.
The other big difference this year is that we’ve been able to increase our bandwidth by a factor of 12. Does this mean we can handle 12 times the demand? In theory, yes but in practice, we’ll have to wait and see… Eventually, if our IT team have done all they can do and we’re still busier than expected, we will at some point run out of things to sell. In effect, our stock levels will have become the ‘weak link’ in the system. We buy and make available ever more stock for our Winter Sale each year and we’ve done that again this year but obviously no seller expects to hold significantly more than they believe they can sell.
Again, to the frustrated customer, a problem here may look like we don’t know what we’re doing – but that’s because they can’t possibly know how many other people are online – or what they are buying. To give you an idea of our online Sale stock this year, it’s more than we currently have at our Ashton and Cannock stores combined. Will that be enough, just right or too much? My answer today, the day before the Sale is that I think it will be about right – although I’m sure that some of the lines will sell out very quickly. I will however know a lot more by this time tomorrow – if I’m still awake!!
If you’re planning to go online tomorrow at 3am, good luck and email me with your comments either way.
One of the pitfalls of being involved in any sort of publishing is that you often forget what the time of year is. The relentless need for monthly magazines to produce next month’s issue (often with the following month shown on the cover) by the end of this month means that to writers and publishers, summer starts in March, Christmas occurs around early October and Easter can be as early as the New Year! When speaking to our friends at magazines like Your Horse, I often feel like I’m entering a strange world where the next six weeks have ceased to exist, kind of like amnesia but in the other direction. When you think about it, the same must be true of anyone working in the soaps. Every so often, you’ll see a giveaway, like evidence of snow in an episode aired in May – look out for that this year! One of the more interesting ‘work’ days out I am fortunate to have is to a venue which just happens to be an occasional location for Emmerdale. I’m told that the continuity people who are there during the shoots are permanently worried about making everything look like it’s a month and a half in the future. In the case of the humble catalogue production department, our timing can be even longer into the future. With Spring/Summer and Autumn/Winter campaigns, the deadlines may be less frequent, but the thinking is even further ahead. With that in mind, I was almost going to tell you how we’re very happy with the way our Autumn/Winter ’08 catalogue is shaping up and then I remember that you’ll only recently have received our Spring/Summer catalogue. Do you see what I mean? Time and again, time plays this trick on me.
Maybe I can put it this way: I hope you like our new selection and indeed our new catalogue. We’re very proud of it and we hope it’ll be very popular, but I expect it to be the last of its kind, a throwback to a simpler age. In the evolution of mailorderus catalogi, we’re at the point in time where the species has to adapt to a changing environment. If we don’t develop the equivalent of warm blood or opposable thumbs, we risk becoming a dinosaur and nobody wants to look forward to being a rather famous skeleton.
So what are we going to do next time to make this new catalogue seem like a quaint, old-fashioned relic? Well, I’m sure you can agree that I can’t possibly discuss that here (yet), but I’m also sure you can probably guess the direction we’ll be heading. And here comes the other curse of the publisher: the fact that you hardly ever get the chance to be proud of the thing you worked so hard to create – because you already know that in the pipeline is something that promises to be much, much better. I can’t wait until we can share it with you…
As HMV, Blockbusters, Jessops and many others have found recently, if something can be downloaded these days, there’s far less demand for the physical version of it. While we’ve certainly noticed that we don’t sell the same proportion of books and DVDs that we used to, thankfully, most of our range needs to be a physical item because riding and horse-owning are physical activities – although I’m sure that if anyone was able to perfect a way of downloading a way to a groomed horse or a mucked-out stable, they’d never have to worry about money again!
On the one hand, we’re thankful that we’re not in an industry that is so vulnerable to digital alternatives but on the other, it’s a mistake to think that we’re not in any way affected by the changes to the way that the public consumes information digitally. Take for instance the case of the humble catalogue. Like most companies that were working in ‘mail order’ before the World Wide Web was even a glint in Sir Tim Berners-Lee’s eye, the catalogue still holds a special place in our hearts.
Catalogues gave us the opportunity to find new customers, to try new things – to become the business that we are today. We’re so proud of our roots and the progress we’ve made since then that any visitor to our admin offices today will find our staircase adorned by pictures of every main catalogue we’ve ever produced.
On the other hand, catalogues are incredibly time-consuming to produce, eye-wateringly expensive to print and post, they’re always one mistaken detail or broken supplier promise away from making us look like liars or idiots for months on end – and many people would say they’re not particularly environmentally responsible.
As much as we’re proud of our catalogue heritage, only a misty-eyed nostalgic would claim that catalogues don’t have their difficulties. Certainly, there have been many times over the years when looming deadlines or unreliable technology have raised our stress levels and we’ve had to console ourselves with the thought that ‘if it was easy to do this, everyone would be doing it’.
In rather a sharp twist of irony, the arrival of the internet as a shopping medium has all but proved that old throwaway line. Distance selling online is now much easier (and cheaper) for small traders than paper and, guess what? these days, it often does seem like ‘everyone’ is now selling equestrian products online. The battleground for us to compete for your affections these days is, it seems, not in the letter-box any more but in the virtual world.
In the 29 years we’ve been producing brochures and catalogues, we’ve seen the number of other companies doing the same thing go from two or three in the 80s to perhaps twenty or so ten years ago and back to two or three again today. It’s even conceivable that there will be no other equestrian-specific paper catalogue worthy of the name by this time next year. We won’t know until then but the fact that it’s even possible is astounding enough.
This puts us in a tricky position. We know that when we launch a catalogue, sales go up sharply. Would all of these sales still happen if we suddenly stopped putting ink on paper? We’d rather not find out if that’s the case by just trying it, in case it proves to be a big mistake. There’s also the question of catalogue size to consider. It’s great to be able to produce over 200 pages of products and, in doing so, show off the breadth of our product range simply by inviting customers to ‘feel the width’ (which is something that websites still struggle to convey). This is all well and good but at 200+ pages, many of them will contain the same popular-yet-unchanging products that we’ve printed ten or twenty times or more. Should we really worry that you might think that we don’t sell ‘old favourites’ in products like haynets or water buckets or grooming kits if we don’t keep showing you that we do?
‘The Same as Usual: A4, about 150 pages, a full selection of Spring stuff’
‘Just new stuff and good ideas – I expect you to still offer everything else’
‘You know what? I don’t even need a catalogue these days. I’d still order!’
At the time that I write this, it has elicited 72 responses:
32 people (44%) chose answer ‘a’: keep the status quo.
35 (49%) went for ‘b’: a version with fewer pages and a smaller range in print
Just 5 (7%) plumped for ‘c’: the paperless option – no catalogue at all.
While I’d like to thank those 72 people for their help, we have to be a little careful here – it’s not what a market researcher would call ‘scientific’ but it’s interesting, all the same. It proves nothing but it does lend support to the theory that we could significantly cut down on the amount of paper we produce without adversely affecting our ability to tell you what great products we can offer you.
We know what proportion of our orders are placed via our website but we have to be a little careful not to presume that all those orders were only brought about by the website, not the catalogue. In short, we don’t want to take for granted that you will order from us even if we don’t send you a catalogue. Why should you? It’s our job to entice you to order and if we don’t do that bit properly, why should we expect you to order at all? To inform our view, we’ve looked at what’s happening with paper in other industries and other markets.
Catalogue companies like Joe Brown’s and M&M Sports have dabbled in smaller, thinner catalogues. We may not know what those exercises have proved to them but the fact they’re even doing it indicates that they’re at the same crossroads that we are. Where the old-fashioned ‘big books’ still exist, they appear more likely to come with a price, albeit a nominal price and I even heard a rumour (and it’s only that so don’t quote me) that Argos may be getting away from 1,000+ pages, in favour of developing their very impressive smartphone app further. If that does happen, it’ll surely be another nail in the coffin of the old-style ‘doorstep’ catalogue. So, against all this background – and more besides, we’ve decided to keep in step with innovation and produce a smaller, slimmer Spring/Summer catalogue (see below).
It’s probably only a matter of time before we decide to do the same with its bigger sibling, the Autumn/Winter catalogue. Some may suggest that we’re even seeing the beginning of the end of paper catalogues as a means of customer communication. I’m not sure about that; there were many similar predictions about the impending demise of paper around the time of the ill-fated ‘dot-com boom’ nearly fifteen years ago. Just like the famous old Mark Twain quote, it turned out that rumours of the catalogue’s death were ‘greatly exaggerated’, the lesson being that just because someone has said that something is on the way out, it doesn’t mean that they’re right. It’s a good thing to remember but at the same time, let’s not forget that nothing lasts forever. Mark Twain did eventually die, so you could say that those ‘exaggerated’ rumours, although inaccurate at the time, would come true sooner or later…
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