How to Alter Your Marketing Strategy
by Stephen Lett
How do you know when it is time to alter your Marketing Strategy? What’s more, how do you go about doing so? Altering your strategy is one of the most difficult and risky things you can do. Some would argue that a change in strategy should be gradual and be implemented over time. Others might say to make all strategy adjustments at once and move on (an approach we think is extremely risky). This month, we want to discuss changing your Marketing Strategy and how best to accomplish your ultimate objective.
WHEN TO KNOW IT IS TIME FOR A CHANGE
Companies begin to think about altering their Marketing Strategy when their sales have been flat or in decline the past two or three years. This occurs when a cataloger stops growing their 12-month buyer file. Often, this is the result of a limited prospecting universe particularly with businesses in extremely niche oriented markets. If your 12-month buyer file is not growing, your revenue will most likely be declining year-after-year. The options are to manage the business for profitability (and let it gradually decline); pocket what you can. Or, you can alter your Marketing Strategy by expanding your potential buyer universe in order to start growing again. Not easy but a doable task. There are really only a few ways to grow a catalog business. One way is by increasing circulation (if there is a prospect universe to support your offer), to expand your merchandising offering and add pages to your catalog or to acquire (or start) another catalog title. If your sales are flat or declining, you might not have the universe in your niche market to grow. So, you need to consider expanding your merchandising offerings in order to sell more product to existing customers. But, perhaps your product line cannot be expanded. If you cannot increase circulation or expand your product line and still want to expand, you either need to acquire another catalog company or alter your strategy. It is important to recognize when there is a need for change and to make a conscious effort to alter your strategy or continue as is and do nothing.
WHAT’S IN A NAME
Changing your brand image or name of your catalog is often at the heart of a strategy change. It is also very risk. Results of a name change can be devastating, at least short-term, on both your housefile and prospecting results. Customers and prospects alike have been conditioned after many mailings to identify with the brand. When the name is changed, these same groups may no longer recognize you. Or if they do recognize you, their trust could be in question. When deciding to change the name of your catalog, it is important to consider the long-term gain vs. the short-term pain of doing so. Here are test results from a recent name change after the initial mailing, i.e., short-term results:
|TEST GROUP "B"|
|12/21/04||WW5001A||0-12 Mo. $150+; 2x or more||10,066||439||$34,542||$78.72||4.36%||$3.43|
|12/21/04||WW5002A||0-12 Mo. $50.00-$99.99; 1x||12,729||308||$25,523||$82.91||2.42%||$2.01|
|12/21/04||WW5003A||0-12 Mo. $150+; 1x||12,872||278||$19,841||$71.40||2.16%||$1.54|
|12/21/04||WW5004A||0-12 Mo. $1-$49.99; 2x or more||11,123||218||$16,125||$74.00||1.96%||$1.45|
|12/21/04||WW5005A||0-12 Mo. $100.00-$149.99; 1X||11,304||243||$15,309||$63.07||2.15%||$1.35|
|12/21/04||WW5006A||0-12 Mo. $1-$49.99; 1x||10,983||201||$11,433||$56.79||1.83%||$1.04|
|Subtotal - Test Group||69,077||1,686||$122,773||$72.80||2.44%||$1.78|
|CONTROL GROUP "A"|
|12/21/04||WW5001B||0-12 Mo. $150+; 2x or more||10,066||503||$40,012||$79.50||5.00%||$3.98|
|12/21/04||WW5002B||0-12 Mo. $50.00-$99.99; 1x||12,729||382||$28,889||$75.65||3.00%||$2.27|
|12/21/04||WW5003B||0-12 Mo. $150+; 1x||12,872||412||$32,619||$79.11||3.20%||$2.53|
|12/21/04||WW5004B||0-12 Mo. $1-$49.99; 2x or more||11,123||331||$17,641||$53.22||2.98%||$1.59|
|12/21/04||WW5005B||0-12 Mo. $100.00-$149.99; 1X||11,304||399||$22,443||$56.24||3.53%||$1.99|
|12/21/04||WW5006B||0-12 Mo. $1-$49.99; 1x||10,983||230||$13,258||$57.73||2.09%||$1.21|
|Subtotal - Control Group||69,077||2,258||$154,863||$68.59||3.27%||$2.24|
Control Group “A” was mailed with the cover version featuring the name that customers and prospects had been used to seeing for many years. Test Group “B” was mailed the cover version which featured the new name of the catalog. While the test group produced a slightly higher average order size, the response rate was significant higher from the control. The RPC (Revenue per Catalog) was $2.24 from the Control Group vs. $1.78 from the Test Group. The response rate fell because customers did not recognize the brand even though the “old” name was shown in smaller type under the new name to tie the two brands together. In the eyes of the customers, who have the final vote in the end, it was a change in the brand.
SHIFTING YOUR CUSTOMER BASE
Altering the demographics of your customer base is also difficult to accomplish. It is an evolution; not a revolution. This is something that needs to occur over time in step with changes that are made with respect to merchandising strategy. Do not try to use your list selection to change your customer base. You cannot appeal to a different audience without changing your merchandising and you need to be careful not to abandon your existing customer base. For example, you will not appeal to a younger audience simply by mailing younger lists. It is the merchandise offer that must first change. But again, this needs to be accomplished over time and not over night in order to not alienate your current customer base who is paying the light bill today!
COMPLETE THE JOB
Changes to the catalog, type size, lists, match it all. Often when strategy changes are made, the job is only half completed and the follow through is lacking. Let’s assume, for example, that we want to begin to shift our market from an older to a younger age. At the same time, we need to alter our catalog creative by using a “younger” looking type style and size, younger models, etc. We also need to begin testing lists that also fit the demographics of the merchandising appeal and direction. Consider using two different covers; one for the housefile and outside lists that know you and another younger looking cover that will appeal to the “new” customer you are trying to appeal to. Don’t try to replace what has been over night but rather continue the same marketing strategy your customers are accustom to while you introduce a “look” for the new customer.
Altering your marketing strategy is a risky proposition. What’s more, it not easy to accomplish successfully. It takes time. Lots of time to alter one’s strategy. Its’ not a matter of simply mailing to different prospect lists. It is much more complicated than this. A re-direction of the merchandise strategy must come first. The circulation plan follows and it needs to be consistent with the same strategy. If there is good reason to change your strategy, by all means do so. Consider the risks and execute properly.