By Marc Vermut | Associate Managing Director, Customer Success | MarketShare: A Neustar Solution

MEASURING CATALOG EFFECTIVENESS

Tthe first in MarketShare’s “Retail Checklist” series, offering high-level views on crucial issues in retail marketing. The Retail Checklist is for CMOs looking to be sure they’ve covered the right ground, and for C-level retail executives looking to grasp marketing analytics issues quickly.

Five Key Questions For

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While social gets buzz and newspaper print is in decline, the award for most controversial marketing channel may go to the oldest of all marketing formats: the print catalog.

Once the centerpiece of retail marketing, perhaps no other part of the retail marketing toolkit is subject to such a wide range of attitudes. Some brands have completely given up on the channel, shifting print catalog budgets into digital. Others back their catalog with huge investments—sometimes making up to a third of marketing spend. Still other brands have brought the catalog back—as J.C. Penney did, reviving its catalog after a five-year pause.

With no consensus on one right way forward, brand leaders struggle to know how much to invest in catalog marketing (if anything at all), and how to optimize the catalogs that they keep. Fortunately, marketing analytics can guide brands through their most critical catalog decisions. Brands just need to know which questions to ask, and how to ask them.

A good place to start is with these five basic questions:1. How large does our catalog investment need to be?2. What should our catalog look like? 3. What do we need to control for in measuring our catalogs?4. What is our catalog’s optimal circulation?5. Where does the catalog fit in the customer journey?

I’ll walk through each of these questions below.

MEASURING CATALOG EFFECTIVENESS

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5 Key Questions for Measuring Catalog Effectiveness

HOW LARGE SHOULD OUR CATALOG INVESTMENT BE?1

The answer to this question would seem to be straightforward: it should all depend on how much sales—and revenue—your catalog drives. If you can measure significant

revenue driven through your catalog, you should invest more. If your catalog is underperforming, you should invest less.

While that approach seems grounded in common sense, it holds surprising limitations. One limitation is diminishing returns: even if your catalog program

is highly successful right now, increasing catalog investments may not deliver the same results. To understand why, consider the three primary modes of increasing catalog

investment: expanding the pool of recipients, increasing the number of drops your brand’s current catalog recipients receive, and increasing production values.

· As for sending catalogs to more individuals: it’s possible that your initial catalog recipients were your best catalog customers—and the next wave of catalogs recipients will prove far less receptive.

· Sending more catalogs to the same people may not increase effectiveness, either. Perhaps your catalog customers are more receptive to the first catalog they’ve received than they will be to the second, third, or sixth drop that comes their way.

· The same holds true for production quality: beyond a certain quality level, shoppers might not be moved any further by better paper or enhanced artwork. In some instances, quality that’s “too high” may even convince shoppers that the product has moved beyond their price range.

At MarketShare, our analytics guides retail clients across the full gamut of catalog decisions—from significantly dialing down catalog spend, to ramping it up considerably, to many gradations in between.

The first question of any catalog program, of course, is the question of size. Should you build a substantial catalog program, demolish your existing program entirely—or fall out somewhere in between?

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Given these considerations, even very high-ROI catalogs might not be worth the investment of the next marketing dollar over other available channels. Strong revenue might mask fundamental limits on when making a catalog program bigger will not make it work any better.

Another limitation is the interplay between channels. Because every marketing channel interacts with all others, it’s misleading to assess any one channel in a vacuum. J.C. Penney’s catalog revival is a case in

point. As the Wall Street Journal describes the shuttering, then revival of the J.C. Penney catalog program:

It was…[Former CEO Michael] Ullman who decided during his first turn as Penney’s chief to stop publishing the catalog. In an inter-view, he said he thought at the time that catalog shoppers would migrate online.

But the company eventually learned that a lot of what they thought were online sales were actually catalog shoppers using the website to place their orders.

“We lost a lot of customers,” Mr. Ullman said.

Based on the realization of the online impact of the print catalog, the retail giant brought the catalog back.

Many other brands have uncovered similar catalog-online connections. Bonobos, for instance, has shared that 20% of the website’s first-time customers place their orders after receiving a catalog drop—and those customers spend 1.5 times as much as customers who did not receive a catalog beforehand.

The lesson for all catalog marketers is clear: to understand the influence of the catalog, you need to look beyond the catalog channel alone—to see the interplay between catalog and all other marketing channels. Catalog readership might influence digital sales. TV effectiveness can influence catalog receptiveness, which in turn might influences the impact of print circulars. Thus, measuring the effectiveness of any one marketing channel calls for measuring the impact of all marketing channels, working together. This under-standing is crucial for marketing mix modeling—the form of analysis that shows the impact of putting your next available dollar in one marketing channel over another.

Of course, the right catalog investment level will be different for every brand. At MarketShare, our analyt-ics guides retail clients across the full gamut of catalog decisions—from significantly dialing down catalog spend, to ramping it up considerably, to many gradations in between.

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5 Key Questions for Measuring Catalog Effectiveness

2 WHAT SHOULD YOUR CATALOG LOOK LIKE?

There are numerous decisions brands must make around what the catalog should look like and be—how many pages the catalog should have; whether it should include all of the brand’s product categories, or if a specialized catalog would perform better; even quality issues like paper and inks. These are all decisions with optimal answers that marketing analytics can provide.

To offer just one example, consider choice of which product to display. For instance, imagine an electronics retail-er debating between placing one of two items prominently on its upcoming catalog. One item, a high-end smart-watch, is a low-selling item but draws attention—and may get more customers to open the catalog. The second item, a mid-priced digital camera, sells well already; placing it on the catalog cover would likely drive still higher sales of that one item—but may not perform as strongly as the smartwatch would for driving overall sales. Which is the best product to choose? The right marketing analytics will address that question, capturing the impact of the deci-sion on both the featured category and across other categories.

Bringing analytics into catalog production can also help to align teams and programs. The product placement di-lemma above, for instance, is a more complex problem than catalog content alone. It involves balancing co-op proceeds and merchant relationships with enterprise sales—impacting merchandisers, buyers, sales and market-ing alike. Analytics can create a numbers-based framework that places all parties on the same page.

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Bringing analytics into catalog production can also help to align teams and programs—putting merchandisers, buyers, sales and marketing on the same page.

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Season

Customers are more likely to respond to your prod-ucts at certain points of the

year. Is your catalog perfor-mance improving, or is it just

the Holiday season, Back to School, or Memo-rial Day weekend?

Inclination to buy

Shoppers typically receive catalogs for one of two reasons: because they’ve asked to; or because they’ve been identified as consumers who align closely with the target audi-ence. This means that catalog shoppers start off with a high potential to buy. Given catalog

recipients’ built-in bias toward the brand, it’s easy to over-credit the catalog for a purchase a shopper may have made regardless, or with only minimal convincing. Be sure you can control for

predisposed buyers, and that you can account for other impacts in the marketing journey. Also, be sure to take favorable bias into account when comparing catalog performance to the performance of other channels.

WHAT DO WE NEED TO CONTROL FOR?

Catalogs will inherently perform differently based on a number of factors. Below are just a few.

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The buying & brand experience

The catalog is, obviously, just one component of the customer’s relationship with the brand. The nexus of price, convenience (and even thrill) of buying, and the product itself will ultimately have an enormous impact on catalog-driven sales. A sub-

par catalog might still perform well with optimal pricing; poor site loading times or a poorly-staffed call center can hurt catalog-driven orders; a low-quality product can

translate into product returns. When measuring catalog success, it’s critical to disentangle effectiveness of the catalog itself from te related factors that can determine the catalog’s ultimate success.

Concurrent promotions

What other offers are you running concurrently with

your catalog drop, or within your catalog? Is there a door-

buster to take into account? A loyalty points day? Are there discounts that are in the book itself?

CIRCULATION

There are scores of decisions that go into catalog circulation; I’ll just offer a few:

• How will you determine the target group of recipients?

• What’s the optimal number of recipients within that target group?

• What’s the right cadence of catalog drops—weekly, monthly, quarterly, or other?

• What day of the week drives the most catalog conversions?

• How should the brand sync email sends with catalog drops? Should the customer receive an email the day before a catalog drop, the day of, or the day after? (Or does it not matter?)

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5 Key Questions for Measuring Catalog Effectiveness

Weather

Competitor’sSearch

Impression

Competitor’sOffer

(Billboard)

Buys in Store

$$$TV Ad

Retargeting Ad

Display Ad

Good PR Display Ad

Social

Paid SearchImpression

Social

A TYPICAL CONSUMER PURCHASE JOURNEY

THE CUSTOMER JOURNEY

Ultimately, your catalog is just one amongst many touches between your brand and the customer. How has it worked in concert with the rest of the marketing engine to drive more purchases? That is a critical question every marketer needs to ask—and that marketing analytics needs to answer.

What does it mean to incorporate catalog measurement into the broader picture of the customer journey? Consider the example of Neiman Marcus:

“Say you have a customer—and on Monday she’s sent an email from NeimanMarcus.com,” explains Michael Navarro, Director of Customer Insight & Analytics at Neiman Marcus. On a Wednes-day she gets a Neiman Marcus catalog; on Saturday, “she walks into our downtown Dallas store and makes a purchase.” Neiman Marcus’s analytics program is able to “take those touchpoints and allocate credit to all the various marketing touchpoints that preceded her purchase.”

The goal of catalog measurement is to understand the impact of catalogs in the context of your entire marketing engine. Be sure your analytics can achieve this.

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MarketShare’s clients use its analytics and tools to direct tens of billions of marketing investment dollars globally.

Learn more at www.MarketShare.com