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Break the Mold to Excel Online

This is the second in a series of articles on the keys to success for catalogers and other remote shopping companies in the Online Age. Last month we reviewed the No. 1 key, merchandise (see With Merchandise, More Can Be Less, at www.dmnews.com/archive/2000-08-28/10139.html), and how no one is successful without the proper merchandise.

The second key is innovation. In the paper catalog world, companies too often resist innovation in presenting their merchandise, finding customers or processing orders. This is rationalized as a fear that they will damage their brand image among customers. Unfortunately, when you receive orders from only 2 percent to 5 percent of the people who receive your catalog and only half of these people order again, your brand image, if it exists, is not that strong.

Though many catalogers think their books are unique, that isn’t true. New catalogs tend to follow the design of those already in existence for their product category rather than trying to develop a unique image.

The J. Peterman’s and Territory Ahead examples are rare, and they do stand out in the mailbox because they are different. Moreover, a company is even more reluctant to change once it has a format. Yet, these companies would redo their stores every few years if they were bricks-and-mortar retailers. In cataloging, when a company tries a new look, the results are almost always spectacular.

Williams-Sonoma for years produced digest-size catalogs crammed with merchandise. About four years ago the company tried a larger format with approximately the same product density as before. This allowed it to create an elegant look more befitting its merchandise. The results were so outstanding that Williams-Sonoma immediately switched formats to the larger book even though the per-book cost increased.

When making changes, however, it is wise to do one element at a time. Frederick’s of Hollywood tried to change its format, product mix and presentation to compete more directly with Victoria’s Secret. The traditional Frederick’s customer was confused by this change.

This need for innovation is especially true for catalogers as they begin using the new medium of electronic selling. They have followed the lead of companies such as Amazon, which focused its design on providing easy search capabilities. Yet as any cataloger knows, customers enjoy browsing. Even business catalog shoppers are likely to browse before buying to see whether there is anything else they need. Yet the majority of Web sites, including those of catalogers, are designed with search as the major feature.

Catalogers rely too much on renting lists to find new customers, and they are doing the same thing in e-commerce. Almost all the successful and large companies constantly use alternative media and techniques to attract customers.

Though we don’t think that converting buses into moving billboards or guerrilla advertising will prove effective, that doesn’t mean new ideas should be avoided. There is a need to try new ways to get customers. Some of this involves using traditional media, such as print and broadcast.

Why catalogers shun broadcast is puzzling. One would think everyone would realize the power of radio after the success of the Vermont Teddy Bear Co. in selling teddy bears through radio ads. But to this day it is rare to hear a catalog ad on the radio.

The Internet opens new opportunities to market to customers and prospects. Obviously, there is e-mail to customers, but since most catalogers still receive more than 80 percent of their orders via the phone, they should capture e-mail addresses during these calls.

Catalogers also don’t make use of site linkage. This is one of the easiest and most effective ways to drive traffic. Companies should seek links with compatible sites.

We have found that companies talk about new levels of customer service, such as e-mail notification of orders, but our experience indicates such improvements are still just a goal for most companies. The one area in which dot-coms beat catalogers is in customer service. True, they were starting from scratch and thus had the advantage of developing a new system. But that is no excuse in today’s marketplace. Customers are beginning to expect excellent service, and will go elsewhere if they don’t get it.

A company cannot add some features and not others. To do that will only cause customers to become frustrated. The argument that it is too expensive or requires too much staff is unacceptable unless one wishes to risk being a loser in the future.

For a company to innovate, leadership has to come from the top. This is the hardest part of innovation, as the executive management is most aware of the need to achieve current goals as well as building for the future. Thus, most management avoids innovation and only makes minor tweaks. In this changing world, that is a recipe for disaster.

•Bill Dean is president of W.A. Dean & Associates, San Francisco, a marketing research firm. Reach him at [email protected].

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