This Month at Lenser September 2006

Newsletter Archive

PRESIDENT'S CORNER
By John Lenser, President
The LENSER Client Summit is just around the corner on October 18th and 19th here in San Rafael. This year's Summit promises to be the best ever with two days of back-to-back sessions that will help you achieve higher levels of sales and profits!  

Michelle Farabaugh and Carol Worthington-Levy, the two LENSER partners who do not yet have gray hair, will present their widely acclaimed sessions on breakthrough strategies for successful Internet marketing and strong creative integration.  While the conference will focus on more effectively integrating e-commerce with your catalog marketing program, a wide variety of other topics will be covered.  Al Bessin will discuss how straightforward changes to operations can help the bottom line.  A session on power negotiating with your merchandise vendors will be presented by Geoff Wolf and Jackie Daigle.  

Brian Rainey, the CEO of Abacus and our noon keynote speaker on Wednesday, will tell us what is really happening in the catalog world and help us prepare for the trends we will face over the next five years.  The Summit will be wrapped up on Thursday by Liz Goodgold, one of the country's foremost gurus on branding, who will teach us practical strategies that we can employ to strengthen our relationship with our customers.

While the content of this year's Summit is important to all of us, perhaps the most valuable aspect of the conference will be spending time with your fellow direct marketers.  As I look back, I have benefited hugely from the relationships I have formed with those who are daily experiencing what I lived through in running my catalog companies.  During the kickoff dinner at my home Tuesday evening or the dinner cruise on San Francisco Bay Wednesday, you can relax with not only other catalogers but with our partners, staff, and participating sponsors.

If you have not signed up for the Summit, I strongly encourage you to do so.  I know it is difficult to take time out of your busy fall schedule, but in the long run you will be way ahead by giving yourself a break from the daily grind.  You will not only come away with valuable knowledge and new relationships, but also give yourself the needed time to reflect on where your business is going and how you can better achieve your goals.

FEATURE ARTICLE
Get the Most Out of Your Housefile This Holiday
By Michelle Farabaugh, Partner
Holiday is the season in which the majority of multichannel companies make the most profit, so it is more important than ever to make sure you are doing everything you can to get the most out of this valuable resource during the coming season.  Here are six tools and techniques to leverage this valuable resource to its full potential and identify as many responsive and profitable names as possible.

CASE STUDY
Are You Making Decisions in Tunnel Vision?
By Travis Seaton, Director of Circulation, Specialty Groups
With the increased interaction between marketing and ordering channels, it is vital to understand and react to how each drives demand.  When making catalog mailing decisions, are you taking into account the demand that is going to be driven to other channels?  If not, you are severely limiting the impact the catalog can make to your company.  Learn more...

CIRCULATION TIP
By Matt Morton, Circulation and Marketing Manager
Most of the co-operative databases offer a standard optimization product to their clients.  When we want to get really creative and generate big results, we’ll use a product called Dynamic Batch Optimization (DBO).  Learn more...

CREATIVE TIP
The Red Carpet
By Carol Worthington-Levy, Creative Partner
The opening spread of a catalog is sometimes referred to as your “Red Carpet.”  This is the place you greet your customer, show them respect, get them excited about what’s in store for them, and share all the benefits of shopping from you instead of from a competitor.  Unfortunately, most catalogs miss out on this opportunity to “roll out the red carpet” and enroll the visitor into spending time with them.  Read on...

multichannel TIP
By Michelle Houston, Vice President of Circulation and Client Services
Need to drive traffic to stores?  Several of our clients have a retail channel, and one of our goals is to drive additional traffic to the stores using the catalog.  In addition to the typical modus operandi of ordering retail trade area prospecting models from the co-ops, there is a good source of names hidden in the housefile segments, and in prospect lists normally overlooked for traditional catalog mailings, due to marginal performance.  There is still some retail gold left in those marginal names you may be thinking of discarding.   Read on...

CLIENT HIGHLIGHT—LEHMAN’S HARDWARE AND TOOLS
Founded by Jay Lehman in 1955 to serve the local Amish community and others without electricity, Lehman's ships non-electric, old-fashioned, high-quality merchandise all over the world.  Because Mr. Lehman was concerned about the Amish maintaining their way of life, his vision was to preserve the past for future generations by offering products that were very difficult to obtain.  Read on...

EMPLOYEE SPOTLIGHT—MATT MORTON
As has happened with many other employees, Matt was introduced to LENSER through a chance encounter with John Lenser.  “I remember thinking to myself at that time that John really knew the catalog business,” Matt recalls.  So when LENSER was recruiting a circulation manager a few years ago, the firm focused on an individual who brought with him circulation and marketing experience outside of pure catalog.  Read on...

AFFILIATE FOCUS—COMPUTECH DIRECT
Are you paying too much for merge purge and list processing services?  Probably not.  In fact, you are probably not paying enough!  At LENSER we believe that the quality and detail of the work done at the service bureau can make—or break—the success of your mail campaign.  One of the best we work with is CompuTech Direct.  Read on...

NEWS BRIEF

• The LENSER Summit is just around the corner and over 100 people have already signed up for this enlightening, educational, and fun event.
  
  This year’s Summit centers on integrating e-commerce with your catalog marketing program. The highlight will be a five-part presentation entitled, “Incorporating Your multichannel Marketing Programs Effectively,” led by LENSER Partners Michelle Farabaugh, Al Bessin, Carol Worthington-Levy and Vice President of Circulation and Client Services,Michelle Houston.  Attendees will learn the benefits of building multichannel marketing strategies, effectively incorporating consistent brand messaging in creative, and understanding different channel challenges, all of which will transform your business model—and increase profits.

  And there’s more! John Lenser, President, and Bill Nicolai, Senior Partner, will offer presentations on many of the major issues you will face in the next year.  On day two, LENSER PartnerGeoff Wolf will present “Merchandising: The Secrets of Power Vendor Negotiations,” followed by twelve roundtables covering subjects such as internet marketing, creative strategy, fulfillment systems, business-to-business issues, merchandising, and operations.

  We’ll end the conference with a bang as Liz Goodgold, President of The Nuancing Group, helps marketers demystify and understand the nuances of branding.  With over 25 years of marketing and sales experience, Liz brings proven recommendations to her audience.  From her work with Arco Oil to Times Mirror to Quaker Oats, she has learned firsthand the strategies that perform for both customers and consumers alike.

  Liz is a popular speaker on marketing-related topics, and her views can be found in Inc. Magazine, The New York Times, The Los Angeles Times, Brandweek, and other print, broadcast, and Internet media.  She is also the marketing columnist for Entrepreneur magazine, where she shares her expertise and whip-smart branding techniques with over one million monthly readers.

  For more details, please contact Michele Salmon at 415.446.2500, ext 211 or email her at michele.salmon@lenser.com.
  

FEATURE ARTICLE
Get the Most Out of Your Housefile This Holiday
By Michelle Farabaugh, Partner

Holiday is the season in which the majority of multichannel companies make the most profit.  We all know that the housefile contains the most profitable mailing segments, so it is more important than ever to make sure companies are doing everything they can to get the most out of this valuable resource during the coming season.

Most companies cannot mail their entire database.  The following are six tools and techniques to leverage this valuable resource to its full potential and identify as many responsive and profitable names as possible.

1. Segmentation  Segment the buyer file by C-RFM—channel of origin, recency, frequency, and monetary value.  This simplistic way of looking at the housefile is still one of the most predictive tools that can be used for selecting names.  If you cannot determine channel of origin through your matchback process, at a minimum you can use channel of order.  Don’t forget that even if you cut off the internet buyers from mailings earlier than catalog buyers, seasonal buyers from prior holiday time periods will be more likely to buy than those from other seasons.
   
   All segments of the housefile should be included in the merge-purge to utilize the following techniques.

2. Hygiene Hits  Buyers that have been flagged as moving either through basic NCOA or advanced Intellidress list hygiene are typically more likely to buy in many cases than those customers who have not moved recently, especially if you are in markets such as home décor or kitchen.  By flagging these customers in the merge, they can be segmented out and mailed even if they appear in an older housefile segment.

3. DMA Pander Hits  The DMA pander file should be included in all merges.  Outside names matching the pander file should not be mailed; however, by identifying housefile hits to the buyer file, a company can identify active mail order buyers.  Consumers, in general, do not take the time to write to be included on the DMA pander file unless they are receiving a lot of catalogs, something that is indicative of active mail order buying.  Companies have a right to mail housefile names unless that customer has contacted the company and requested to be removed from the mailing list.  By flagging the DMA pander customers in the merge, they can be segmented out and mailed even if they appear in an older housefile segment.

4. Multi Hits  Multi hits from the prospecting cooperative database models and outside lists also provide a way to identify and reactivate older housefile names.  Because the cooperative database models are based largely on recency and outside lists are ordered based on recency, the multi hit will identify housefile buyers that are not only active in direct buying, but are also active in your particular category.  These hits should be flagged, segmented out, and mailed even if they appear in an older housefile segment.

5. Regression Modeling  Regression modeling can be very effective to select buyers to mail, especially in a large housefile or one that is made up of mostly internet buyers.  Before using a regression model, hotline buyers and very high C-RFM segments are typically able to be selected for mailing.  Regression models can be used to predict other customers that are most likely to purchase.  Keep in mind that these models should be updated on a regular basis and different models should be created for different seasons—a spring model vs. a holiday model.

6. Cooperative Database Optimization/Reactivation Model  Even after implementing the above tools and techniques, there will still be a group of customers that will not be identified for mailing.  Don’t give up there, especially in the most responsive and productive season of the year.  Take the remaining housefile names and send them to one of the cooperative databases to have an optimization or reactivation model run.  There will be a small number of customers the model will identify that can still be included in the mailing.

CASE STUDY
Are You Making Decisions in Tunnel Vision?
By Travis Seaton, Director of Circulation, Specialty Groups

With the increased interaction between marketing and ordering channels, it is vital to understand and react to how each channel drives demand.  When making catalog mailing decisions, are you taking into account the demand that is going to be driven to other channels?  If not, you are severely limiting the impact the catalog can make on your company’s bottom line.  Figure 1. shows a recent study by Forrester that illustrates how each channel drives demand.  As you can see, the catalog is driving a significant amount of demand to other channels.  So it's imperative to take this into account when making mailing decisions, in order to maximize the performance of all channels.

Figure 1.

During the decision-making process for catalog circulation, it is optimal to take performance to a profit/loss level which incorporates the demand driven to other channels.  A mail/no mail decision needs to be made based upon the total profitability of a segment, which includes compensation from all channels.

Internet Channel  A fairly clean and easy way to adjust demand driven to the internet is to run a matchback of internet orders against the catalog mail file.  Those orders that match should be credited back to the catalog and incorporated into the Profit/Loss or P/L.

Retail Channel  This demand is not as easy to identify since transaction capture at point of sale is usually minimal and doesn't allow a matchback to be run.  If this is the case, demand cannot be credited back.  Therefore, another adjustment must be made to compensate the catalog.  The preferred method we see is to have retail bear some of the catalog cost for demand driven to the store.  A basic method to determine the amount that retail should credit to catalog is to look at the performance difference between catalogs mailed into store trade areas (STA) and those mailed outside the trade areas (NTA).  For like segments, if you see that NTA performs at $3.50 and STA performs at $2.80 you assume that 20% of the demand per book was driven to the retail store.  Therefore retail should compensate the catalog for the books that drove the 20% of demand.

In our case study, 30% of the circulation was mailed to an STA.  As calculated above, 20% of the demand for those STA catalogs went to retail so our adjustment for this campaign amortized over the whole mailing is $.06 per book.  This reduces our cost per book from $.65 to $.59 in our P/L equation.

Both adjustments make a profound impact on P/L, which affects your catalog circulation decisions.  Below is the sample study that shows what that impact can be.  It's clear that without compensating for "lost demand" to other channels, the catalog circulation would only be profitable out to 24 months.  When internet orders are matched back the circulation can then go out to 36 months and when retail compensation is adjusted then circulation can go out to 49 months before losing money.

If you were to make mail/no mail decisions based on the non-adjusted results, you would be severely under mailing the catalog, which would hurt all channels. Therefore it is extremely important to make channel adjustments and not make circulation decisions with tunnel vision.

CIRCULATION TIP
By Matt Morton, Circulation and Marketing Manager

Most of the co-operative databases offer a standard optimization product to their clients.  When we want to get really creative and generate big results, we’ll use a product called Dynamic Batch Optimization (DBO) from Abacus.  In traditional optimization your file is compared to the activity of all co-op members in one process or “round.”  There is a lack of visibility into the affinity variables since RFM characteristics are paramount, plus batch sizes are so large that they limit a more refined look into specific mail order characteristics.  In DBO, your names are compared to subsets of the members in succeeding “rounds,” each subset having different characteristics.

Here’s an example for a gardening offer:  In round one, your names may be ranked into the twenty segments that have a plant or seed purchase in the last twelve months from members in your product category.  Round two may have another set of criteria such as any garden hardgoods purchased in a twelve month period.  The third round may then rank the remaining names not selected in the first two rounds by applying traditional RFM optimization.  In many cases, most if not all segments in round one will be selected to mail because the synergy names trump higher dollar non-synergy ones. Rounds two and three would be just the best segments based on RFM performance.

CREATIVE TIP
The Red Carpet
By Carol Worthington-Levy, Creative Partner

The opening spread of a catalog is sometimes referred to as your “Red Carpet.”  This is the place you greet your customer, show them respect, get them excited about what’s in store for them, and share all the benefits of shopping from you instead of from a competitor.  Unfortunately, most catalogs miss out on this opportunity to “roll out the red carpet” and enroll the visitor into spending time with them.

Keep in mind that even if you’ve sold to a customer before, you are still a relatively uninvited guest.  While selling merchandise is your goal, most customers don’t respond well to you just throwing your goods at them with no introduction or finesse.

A brief intro letter in addition to the other elements of the opening spread does take up space, but can be a great investment – if you do the job well.  To do it well, you’ll need to work with your creative team and even the merchants to plan the space properly and make it a really enrolling spread.

To make the spread as strong as it can be, it’s essential to have a clear understanding of your own unique selling proposition and to reflect that in your copy and content.  You also need to identify your hottest selling products and understand what will really catch your customer’s eye and pull them in.  Consider these elements and issues when you plan your opening spread:

1. Opening Message  Who should it be from?  It shouldn’t be too long, so how can you provide a welcome, but get to the point quickly?  What new products or very popular products can you promote (with page numbers)?  How can you acknowledge the reader for their good judgment in considering you as a resource?

2. Institutional Items  You need to provide response methods, including website, toll free ordering number, a fax number and even a special customer service number, if you have one.  In what order would you prefer the customer respond to your offer?  Are your ordering personnel highly trained for upsell?  Or are you understaffed in the call center and would therefore prefer customers respond online?  Are there any special shipping options such as overnight delivery?  This must not take up too much room—the best place to put more details, such as return policies, is on the center spread, to one side of the order form.

3. Your Offer  What is it, and what are the terms—minimum amount spent, deadline to respond?

4. Table of Contents  How can you make it short enough to be useful, and how can you use it as a way to confirm to the customer in a nutshell what is inside the catalog?

5. Product for Sale  What can you sell on this spread (preferably on page 3) that would show your diversity, using popular and new products?  You can’t pack this spread with too much stuff, since drama is one of the things that keeps people’s attention.  Is there a hero product you can use that would exemplify the kind of thinking that goes into your merchandising?  What other products could go there with the hero that would show different categories within the catalog?

If you think this looks like an important and complex assignment, you’re not mistaken.  This “Red Carpet” can make or break a catalog.  It’s something you should plan on spending extra time with, and putting your best creatives on to – the creatives who really love selling.

multichannel TIP
By Michelle Houston, Vice President of Circulation and Client Services

Need to drive traffic to stores?  Several of our clients have a retail channel, and one of our goals is to drive additional traffic to the stores using the catalog.  In addition to the typical modus operandi of ordering retail trade area prospecting models from the co-ops, there is a good source of names hidden in the housefile segments, and in prospect lists normally overlooked for traditional catalog mailings, due to marginal performance.  There is still some retail gold left in those marginal names you may be thinking of discarding.

Once you have made “mail” and “no-mail” decisions, take the “no-mail” records and run those names through a zip code select based on the store trade area.  While these names tend to yield lower ROI for the catalog, results with retail POS transactions indicate a higher ROI when the retail POS are accounted for in the matchback logic (read Travis Seaton’s Case Study in this issue for more detail).

CLIENT HIGHLIGHT—LEHMAN'S HARDWARE AND TOOLS

Founded by Jay Lehman in 1955 to serve the local Amish community and others without electricity, Lehman's ships non-electric, old-fashioned, high-quality merchandise all over the world.  Because Mr. Lehman was concerned about the Amish maintaining their way of life, his vision was to preserve the past for future generations by offering products that are very difficult to obtain.

Over the years, Lehman’s products have proven to have broad appeal.  Homesteaders, environmentalists, missionaries, doctors in developing nations, and others living in areas where there is no power or unreliable power can rely on Lehman's for products they need to survive.  Natural calamities and man-made disasters, such as the Northeast Blackout of 2003, have led to a search for products which support self-sufficient lifestyles and get people through difficult times.  What started as a tiny business employing Jay's father, brother, and sister in a one-room hardware store in northeast Ohio is today one of the world's largest purveyors of non-electrical products and historic technology.

In early 2002 Lehman’s was looking at opportunities for growth.  They were unsure of the next steps to achieve greater growth and wanted expert advice to get them there.  Bruce Detweiler Breckbill, V.P. of Direct Sales at Lehman’s, was looking for outside expertise.  “I identified three consultants that seemed good.  I discovered these three in trade magazines through their ads as well as from reading articles they had written.  I had personal interviews with two and a phone interview with the third.  It wasn't that the other two were incompetent, but there was something about John, how he presented himself and his services, and his quiet confidence and expertise that put LENSER on top of our list.”

Since the summer of 2003, LENSER has been providing strategic growth plans by developing Lehman’s circulation plans, advising on catalog production, layout, and style, and providing overall strategic advice and direction for future success.  The advice has been invaluable, according to Bruce.  “One of the best values we get is having the benefit of all the experience of the LENSER partners.  With this background we can move forward, knowing that what we are doing aligns with industry standards.  It gives us a sense of confidence about what we are doing and where we are going as a company.  And one of the real benefits of working with LENSER is that their staff is diversified enough that someone at LENSER has expertise in just about any area where we might have questions or desire some feedback. “

Lehman’s works in partnership with Al Bessin, the managing partner on the account.  According to Al, the challenges are unique and intriguing.  He notes, “Working with Lehman’s is a real pleasure.  They have discovered the value of finding a niche and continually developing it.  As a result they have lots of opportunity to grow further and we look forward to helping them get there.”

Lehman’s invites you to visit their store in Kidron, Ohio where you'll see the Amish buggies parked at the 65-foot hitching post, rolling farmlands, picturesque windmills and clotheslines, and much more.  You'll truly think you have stepped back in time.

EMPLOYEE SPOTLIGHT—MATT MORTON

As has happened with many other employees, Matt was introduced to LENSER through a chance encounter with John Lenser.  “I remember thinking to myself at that time that John really knew the catalog business,” Matt recalls.  So when LENSER was recruiting a circulation manager a few years ago, the firm focused on an individual who brought with him circulation and marketing experience outside of pure catalog.  Matt had been in the publishing industry for 11 years and had assisted with a start-up venture at String Letter Publishing for music CDs and books.  LENSER felt this experience would greatly enhance the firm’s skill set, plus as Matt notes, “I was confident that I was joining a team of experts.”

During the past few years, Matt’s experience in all facets of marketing—from customer database management to direct mail and package insert programs—has allowed both LENSER and our clients to grow.  “We tend to have type A personalities that go a mile a minute,” mentions Michelle Houston, Vice President at LENSER.  “In Matt, we have the same great circulation manager skills, but someone who is mellower,” laughs Michelle.  But in all seriousness, Michelle adds, “Matt’s experience, maturity and interpersonal skills are invaluable for a consultancy firm.  He shows great patience and wisdom when it comes to client management and his clients appreciate his level of skill.”

For Matt, working at LENSER has provided a collegial atmosphere and a great deal of learning experience.  He affirms, “Everyone is helpful and has so much experience that when you have a question, you are able to rely on the expertise of the entire team to utilize the body of talent within the organization.  When you add up the years of experience the LENSER team has collectively, there really is very little that this group hasn’t dealt with before.”

AFFILIATE FOCUS—COMPUTECH DIRECT

Are you paying too much for merge-purge and list processing services?  Probably not.  In fact, you are probably not paying enough!

Many mailers neglect this vital link in the chain between you and your customer.  Some even relegate this task to a printer along with inkjet formatting and addressing.  Do not choose your service bureau based on price or sweet talk.  Do a complete audit of their processing from start to finish and do not hesitate to test them head-to-head with the incumbent or the competition.

At LENSER, we believe that the quality and detail of the work done at the service bureau can make—or break—the success of your mail campaign.  We work hard to design and implement the very best mailing strategies for our clients and we demand the highest service level and technical standards from the data service bureaus that we work with—from list conversion, advanced address integrity, flexibility and sophistication in the merge process, duplicate identification, post-merge selections, postal presort enhancements, and even matchback response analysis.

One of the best we work with is CompuTech Direct.  They are rock-solid on all of the base-line competencies in providing accurate, state-of-the-art, on-time data processing solutions.  Execution is done with uncommon care and concern with over 400 quality control checks along the process.  They are leaders in merge-purge processing, application of advanced address hygiene, postal presort optimization, and matchback analysis, as well as channel integration.

Is this what differentiates them from the pack?  In part, of course, but what really sets them above the rest is that they never just accept the status quo—they are continually in pursuit of technological innovation to help our clients achieve their goals—a philosophy very much in line with our own.   Our client’s success is our success so we partner with the best to bring you the best.

Watch for new merge strategies and technologies coming soon from CompuTech Direct to enhance mailing selection, deliverability, and ultimately your response!

As we continue to strengthen our breadth of services, LENSER has identified and carefully screened key vendors to support its clients, representing the best in their areas of expertise.  As part of the LENSER promise, each of these companies will keep its fees competitive and "always go the extra mile" for LENSER clients.

NEWS BRIEF

• The LENSER Summit is just around the corner and over 100 people have already signed up for this enlightening, educational, and fun event.
  
  This year’s Summit centers on integrating e-commerce with your catalog marketing program. The highlight will be a five-part presentation entitled, “Incorporating Your multichannel Marketing Programs Effectively,” led by LENSER Partners Michelle Farabaugh, Al Bessin, Carol Worthington-Levy and Vice President of Circulation and Client Services,Michelle Houston.  Attendees will learn the benefits of building multichannel marketing strategies, effectively incorporating consistent brand messaging in creative, and understanding different channel challenges, all of which will transform your business model—and increase profits.

  And there’s more! John Lenser, President, and Bill Nicolai, Senior Partner, will offer presentations on many of the major issues you will face in the next year.  On day two, LENSER PartnerGeoff Wolf will present “Merchandising: The Secrets of Power Vendor Negotiations,” followed by twelve roundtables covering subjects such as internet marketing, creative strategy, fulfillment systems, business-to-business issues, merchandising, and operations.

  We’ll end the conference with a bang as Liz Goodgold, President of The Nuancing Group, helps marketers demystify and understand the nuances of branding.  With over 25 years of marketing and sales experience, Liz brings proven recommendations to her audience.  From her work with Arco Oil to Times Mirror to Quaker Oats, she has learned firsthand the strategies that perform for both customers and consumers alike.

  Liz is a popular speaker on marketing-related topics, and her views can be found in Inc. Magazine, The New York Times, The Los Angeles Times, Brandweek, and other print, broadcast, and Internet media.  She is also the marketing columnist for Entrepreneur magazine, where she shares her expertise and whip-smart branding techniques with over one million monthly readers.

  For more details, please contact Michele Salmon at 415.446.2500, ext 211 or email her at michele.salmon@lenser.com.