Church of the Customer: December 2005 archives
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December 31, 2005
Striking back at catalog dumpers
My post about the weighty marketing of unwanted catalogs elicited some forwardable comments.
David Locke thinks there's a entrepreneurial idea trapped underneath the rubble of unwanted catalogs: Create a free, web-based opt-out database for citizens, then charge companies for access to it. "Companies sending the catalogs out are hoping for a decent response rate, and would save money by cleaning the lists they use against the opt out list."
Jennifer points us toward a Time article about Victoria's Secret, which prints and mails more than 1 million catalogs per day. There's this factoid, too: "Over the past decade, catalog production has grown 40%, and in 2004, more than 18 billion catalogs were mailed, more than 64 for each person in the U.S." The effects on the environment make one cringe.
Indeed, an activist group unhappy with the voluminous use of paper by Victoria's Secret has been protesting at more than 150 stores and created a protest website. Is the protest working? Hard to say but parent company Limited Brands lost $12.3 million in the third quarter, with a 4% drop at Victoria's Secret contributing to the loss. Let's hope the execs at Victoria's Secret are not planning their growth strategy around printing more catalogs.
Geoff Jones points out that in the U.K., one can "mark [unwanted catalogs] unopened, 'return to sender' and repost them for free." The U.S. Postal Service makes a similar offer, but only for unwanted merchandise, not everyday junk mail.
Which leads us to the Big Daddy of opinion-leaders: the U.S. Supreme Court (which didn't comment on my blog post). It ruled on a 2003 case about unwanted mail:
"Today's merchandising methods, the plethora of mass mailings subsidized by low postal rates, and the growth of the sale of large mailing lists as an industry in itself have changed the mailman from a carrier of primarily private communications, as he was in a more leisurely day, and have made him an adjunct of the mass mailer who sends unsolicited and often unwanted mail into every home. It places no strain on the doctrine of judicial notice to observe that whether measured by pieces or pounds, Everyman's mail today is made up overwhelmingly of material he did not seek from persons he does not know.
"We categorically reject the argument that a vendor has a right under the Constitution or otherwise to send unwanted material into the home of another. If this prohibition operates to impede the flow of even valid ideas, the answer is that no one has a right to press even 'good' ideas on an unwilling recipient."
The weighty opinion of the court only stopped porn vendors from sending unwanted catalogs of fleshy consumerism. The court's only known spawn was a do-not-mail form from the U.S. Postal Service. (A few enterprising people are using that form to stop some other forms of junk mail.)
JunkBusters is dedicated to this topic. It offers numerous tips about staying off lists and reducing unwanted catalogs, but the problem is: Stopping uninvited catalogs is the opposite of efficient. It's as if a group of high school kids toilet-paper your house every day but in a Kafka-esque twist, the police are powerless to apprehend the easily-catchable kids. Instead, you must drive to the home of every offender and confront their parents, who may or may not care.
With conversion rates of 2-3 percent, catalog sales are hardly remarkable, but it's economically easier for companies to "spray and pray" (as commenter Steve Dembo said) than to ask customers and prospects for permission. As the Supreme Court says, "No one has a right to press even 'good' ideas on an unwilling recipient."
And that's where the soup boils. The marketers who bombard us with unwanted catalogs are convinced their "good ideas" are just what we want. But like gang members caught in a turf war, they show little concern for the collateral damage of spray-and-pray. They're driven by numbers, not relationships. The effects of deforestation and landfill usage don't impact quarterly numbers. Instead, these marketers are just soul-less cogs in the business thresher machines whose ultimate customer is Wall Street and shareholders, not the rest of the world.
Companies who focus on customer evangelism change the world for the better. They don't pollute it with the detritus of unwanted offers for panties and Nascar pocket scanners.
Perhaps the protests against Victoria's Secret are a sign of things to come for the rapacious catalog-creators.
December 30, 2005
Online shopping's big numbers
Paging through two summary reports about this year's U.S. holiday shopping season reveals some eye-popping numbers:
* Spending online reached $18.1 billion in November and December. That's a 25 percent increase over 2004, according to ComScore. (It's unlinkable from here but ComScore's front page has a link to the report.)
* Nielsen/NetRatings said Web purchases totaled $30.1 billion (PDF report) in the period, an increase of 30 percent. (Nielsen includes spending at auction sites like eBay whereas ComScore does not.)
* Nielsen's spending distribution for 2005, with the percentage change from 2002 figures:
Stores: 68% (-10%)
Catalogs: 5% (-1%)
Online: 27% (+11%)
At those rates, online purchases would eclipse store purchases (as a percentage share) in 7-8 years.
* Nielsen's top categories of online spending with the corresponding percentage changes from 2004:
1. Apparel/clothing: $5.3 billion (+42%)
2. Computer hardware/peripherals: $4.8 billion (+126%)
3. Consumer electronics $4.7 billion (+109%)
4. Books $2.9 billion (+66%)
5. Toys/videogames $2.2 billion (-9%)
And people once said customers would never purchase clothes online...
Categories: Shopping, ComScore, Nielsen, Research
Word of mouth and operations
L.L. Bean says offering free shipping from its web site has been the key to its record web-based sales this holiday season.
A company spokesperson told the Times that the company offered free shipping for the first time this year and it "clearly shifted traffic from our call centers to the Web."
Amazon taught the world that trick back in 2003 when it shuttered its advertising efforts to make free shipping a word of mouth component of the business. Word spread quickly. Two years later, the idea of incorporating word of mouth into operations is still working for Amazon.
December 29, 2005
WOMMA auctions off conference passes for charity
The Word of Mouth Marketing Association is trying to raise $20,000 for charity. To do that, the organization is auctioning 20 passes to the upcoming WOMBAT conference on eBay. 100% of the proceeds will go to various charities, including:
* Juvenile Diabetes Research Foundation
* Habitat for Humanity
* Heifer International
* American Red Cross
* Leukemia & Lymphoma Society
* Electronic Frontier Foundation
Get more info here.
[Disclosure: Ben and I are on the Advisory Board of WOMMA. I am speaking at the conference.]
December 28, 2005
Weighty marketing matters
During the past month, I received 14 pounds of catalogs in the mail. That's roughly a half-pound per day.
I didn't ask to receive any of them, either, a claim my postal carrier could hardly be blamed to question.
Yet companies well-known, and some of them not, sent me at least one, sometimes two, three or more catalogs between Nov. 21 and Dec. 22, 2005.
Fourteen pounds, and I'm not even a big shopper. With catalog-to-purchase rates hovering at 3.67%, (PDF) and the average catalog arriving as a full-color, 70-page production on semi-glossy, unrecycled paper, that's a significant level of waste (in time and resources) to convince about 3 people out of 100 to buy a Nascar Pocket Scanner with FM radio (Home Depot Direct).
A few numbers about the companies trying to reach my eyeballs via catalog in one month's time:
* Harry & David sent the most: 6
* Pottery Barn sent the largest: A 191-page book, weighing nearly a pound
* Pottery Barn sent the least relative: Pottery Barn for Kids (I'm kid-less)
* Percentage of companies from whom I had purchased an item in 2005: 45%
* Number of items I bought as a result of catalogs received: 0
I'm an online shopper, not a paper-catalog shopper. No level of improved catalog creative output or increased mailing frequency will change that. By now, all of the BigCo database marketing systems should be smart enough to parse this.
One solution: Sign up for a do-not-spam list... but it'll cost you $5 to register online vs. free if you, heh, send your info via snail-mail.
Intuit's connectivity
"I started Intuit in my den, struggling through tough times and using cardboard boxes for furniture. But I never lost sight of my dream to improve the way people manage their finances."
-- Intuit founder and chairman Scott Cook, in a letter that accompanies the packaging for QuickBooks 2006.
Compared with the massive effort to create software like QuickBooks, it's the comparatively small detail like a letter with a personal story from the company founder that helps bridge emotional connections between BigCo and the individual customer.
December 27, 2005
Word of mouth and small business
The Wall Street Journal today examines word of mouth for its piece, "Small Firms Turn to Marketing Buzz Agents." (Subscription required.)
While writer Tara Siegel Bernard examines one company that employed an outside buzz-agent model to bolster word of mouth for a new product (Vermont's Franklin Foods), the headline is a bit of a misnomer since she also profiles the dependable Bike Friday, which does not rely on outside agents.
Bike Friday has built an enviable customer tracking system on its own, and the company knows which evangelists are influencing its annual $3.5 million in sales any day of the week. (Read our 2002 case study of Bike Friday here.)
As I mentioned in the piece, I think it's prudent for small businesses to explore word-of-mouth marketing using the built-in, massive buzz networks most companies often forget: their existing, loyal customers.
December 21, 2005
SNL's got buzz
Just for fun... here's the most talked about skit from last weekend's Saturday Night Live. It features the same Magnolia Bakery that we talked about in our last podcast.
Warning: The song from the video will be stuck in your head for an entire day : )
UPDATE: Catch the lyrics to the video here; they are "crazy delicious."
LINK to video: Lazy Sunday: The Chronic(les of Narnia)
The most influential media
Word of mouth is the chief influencer when it comes to purchase decisions, no matter the age group, according to a new study.
A few times per year, Big Research surveys a panel of 15,000 people; across the board, the panel ranked word of mouth as the most influential medium for buying stuff.
The 10 top list of most influential media, all age groups:
1. Word of mouth
2. TV
3. Coupons
4. Newspaper inserts
5. Read article
6. Direct mail
7. Magazines
8. In-store promotion
9. Cable TV
10. Internet advertising
Word of mouth that drives sales is the result of existing customers talking about your remarkable product, service, people, or experience, not because you put a guy in a chicken suit on a website.
December 20, 2005
Word of mouth, every day
Walter Carl says about 17% of our daily conversations include a brand, company, organization or service.
He arrived at the figure by asking a group of college students to take note (PDF) of every conversation they had over the course of seven days.
What were the topics of conversation in the remaining 83% of conversations among those college students? Walter doesn't say but my guess is that beer ranked pretty high.
