Study Helps Build Industry StandardsFor the past eight years, my company has participated in the production of the leading benchmarking study on cataloging, "The State of Catalog/Interactive Report 2000." We have worked with the DMA on the study for the past three years. Traditional cataloging is the shopping channel most analogous to e-commerce. As such, anyone engaged in remote shopping, whether traditional paper cataloger or dot-com, will find a wealth of data to help benchmark their company in this study.
This is especially true as more dot-coms incorporate a paper catalog into their marketing. However, one may ask what is contained in an industry benchmarking study or why would anyone in remote shopping even want one?
The answer to the first is simple; an industry benchmarking study gathers data from firms within an industry and uses the information to establish standards or benchmarks of performance based on the median point for each question. These questions range from circulation practices and results to merchandising methods, operation results and financial performance.
The answer to the second question is because companies in every industry are constantly trying to figure out how their performance matches with other companies, especially those companies reputed to be the best in their industry segment.
In a perfect world, one would know the best companies' performance standards in many functional areas, such as marketing results, interactive activity and sales, as well as operations, merchandising and financial. Unfortunately, it is rare that a company can see the line-by-line results for any company, especially among e-commerce companies. The next best thing is a study that presents the results from a large number of catalogers.
An example from the marketing section will illustrate how a benchmarking study can help dot-com firms improve. Since the segment-by-segment results for competitors is not likely to be available for many reasons, the primary one being that all companies treat this information as confidential, the next best thing is to see what is happening within an industry sector. With conversion rates, for example, in the latest edition of the study, the consumer catalog respondents reported a 2.7 percent response rate for their flagship catalog and an average order value of $82. This was for the whole year and included all non-sale mailings.
For a dot-com company to know what catalogers are achieving in response rate and order average allows one to compare to its conversion rate and order value and to see what it can do to improve its performance in these two critical areas. The data from the respondents are categorized by their target market and by company size: $1 million to $5 million, $5.1 million to $20 million, $20 million to $50 million and more than $50 million.
Thus a company can construct a matrix that shows what the companies in its market and its size are achieving to use in measuring its performance. Moreover, by looking at the results for those not of its segment or size, a company may see other areas in which it can improve. Does a larger company mean economies of scale in operations or staffing? If so, are the gains in these functional areas really that great?
Among the other topics covered in the marketing section that have value for dot-com companies are source of names, how mailings are segmented and the policies on privacy and shipping and handling fees.
In the interactive section of the study, a dot-com company will find data on subjects such as use of the Web site, services offered, linkage programs and use of portals. Other studies conducted by traditional marketing research firms answer some of these metrics, but even Shop.org in its quarterly studies uses data from this study to support or contrast with e-commerce activity.
In the operations section one will find data on order processing, both at the entry and fulfillment level. Measurement of customer satisfaction and shipping method usage are two other important cost topics covered in this section.
These are but a few examples that every dot-com company would consider valuable when trying to find out how and where to improve itself. There are more than 600 data points gathered from the respondents. A note of caution, however: Remember when reviewing an external benchmarking study that it does not provide a company with how to reach industry standards, but rather the areas that need improvement if a company wants to be a leader in its industry or segment.
However, to do all this it is necessary first to get a copy of the study. This is available from the DMA, by either calling their library/resource center in New York or going straight to www.the-dma.org and then to the DMA book store on the site to order the study.
• Bill Dean is president of W.A. Dean & Associates, San Francisco, a catalog consultancy that aids remote shopping companies in their decision-making. In addition, Dean leads seminars and talks for companies and organizations on cataloging and how to succeed. Reach him at www.dean-assoc.com or 415/512-7305.