CHICAGO — Focusing on building lifetime value can be the kiss of death for catalogers, former Victoria's Secret catalog president/CEO Cynthia Fields said in her keynote address at the Annual Catalog Conference and Exhibition here yesterday.
“Regarding prospect names, we did not subscribe to the lifetime value concept — that being the theory of mailing at a loss now in the hopes of achieving profitability in the future,” she said. “Our philosophy was to mail for a cumulative profit in the here and the now, and on every book.
“When I assumed the leadership, I was given very clear marching orders to increase sales to $100 million within three years or the business would be closed,” she said. “Since we were only doing $50 million, I thought that kind of growth was not possible — at least not profitably. So I decided to mail for profitability in the hope that at least if we were making money, but short of the $100 million goal, I could save the business. The disciplines we installed around ensuring profitability, which included avoiding any version of the lifetime value concept, paid off. We achieved $150 million within three years.”
Fields also said it was important to create an “aspirational” customer image.
“This was a definition of the customer we ideally would like to attract,” she said. “We created a verbal picture that included her age, her size, where she lived, what career she was pursuing, the kind of man she dated and so forth. The story was very precise and included many details, right down to what kind of cocktails she drank. This fantasy woman became our idealized customer. Whenever we made any decision, our touchstone was whether or not she — the aspirational customer — would find what we had done appealing.
“This consistency led to customer confidence, which led to customer loyalty,” she said. “And that loyalty enabled us to increase the frequency of our mailings without eroding response rates.”
Finally, she told catalogers to retain their focus on print efforts even as the Web continues to grab market share.
“Despite the fact that more and more catalog business is coming through the Web channel, you should focus on creating a strong catalog business,” she said. “In the case of a multichannel operation, I believe the Web is predominantly an ordering channel, driven by catalog mailings. A strong Web business will follow a strong catalog business.”