PRESIDENT'S CORNER FEATURE ARTICLE CASE STUDY CIRCULATION TIP CREATIVE TIP multichannel TIP CLIENT HIGHLIGHT—BLUESTONE PERENNIALS PARTNER SPOTLIGHT—MITCH SIEGLER
PRESIDENT'S CORNER I am very pleased to announce that LENSER is launching a new relational database solution that will allow our clients improved marketing to their customers. Until now, such databases have been beyond the means of most direct marketers; however, the LENSER solution—developed with the support of premier database management company Creative Automation—is affordable for our clients, provides a wealth of information, and will drive a variety of advanced marketing programs. To support this effort, Chris Ramser has joined LENSER as Director of Database and E-Commerce Services. Chris has an extensive background in database services, previously as a member of the Triplex Direct Marketing team, and most recently at Direct Partners. Why do you need a database solution? Most marketers maintain a flat-file database of their customers in-house as part of their order processing system, using that database and some transaction data to develop lists for promotions and emailing. Unfortunately, most in-house databases are not set up to handle the requirements of the increasingly competitive and complicated multichannel marketplace. LENSER has developed a database solution that is designed specifically around multichannel marketing. It is intended to help marketers move beyond the limits of their internal systems and:
The LENSER Database Solution brings the database, merge/purge, and matchbacks all under the same roof so that data can be efficiently moved between the processes and appended to the database. For example, prospect files that come out of the merge/purge are added to the database to create the basis for later matchbacks and non-responder files. Furthermore, data resulting from the matchback which shows customer origin can be appended to the customer’s record in the database. We are constantly looking toward the future and developing new ideas to improve our clients’ multichannel marketing efforts. In future months, we will be announcing a variety of new services and products that are a natural extension of our current consulting and contact management services. As your partners, we would like to be part of an ongoing dialogue with you to determine how to best meet your needs with cutting-edge multichannel marketing concepts and technology. To learn more about the LENSER Database Solution, please contact any of the LENSER partners or Chris Ramser at 415.446.2500 or via email at chris.ramser@lenser.com.FEATURE ARTICLE Groucho Marx used to tell a joke about a guy standing on a street corner and repeatedly hitting himself over the head with a hammer. A fellow comes along and asks him why he’s doing such a terrible thing to himself, to which he replies, “Because it feels so good when I stop.” I wonder how many developers, mortgage brokers, and Wall Street traders are now giving this trick a try? Currently, the financial markets can best be described as chaotic and tumultuous. The fallout is visible in Washington, D.C. and ripples are also appearing on Main Street, with declining same store sales from retailers and dramatically reduced consumer confidence. The latest ABC/Washington Post Consumer Comfort Index plunged 9 points to negative 20—the biggest one-week drop since the index began in 1985. Consider these recent news headlines: Subprime mortgage volume is down more than 50% during the first six months of 2007 compared with the prior year, according to National Mortgage News. In early 2006, just as the housing industry began a major slide, Orange County, California boasted four of the nation’s top 10 subprime lenders. American Home filed for bankruptcy and has been swamped by margin calls. Impac Mortgage has stopped funding Alt-A loans, those just a notch above subprime; its stock was quoted at $1.69 per share, 83% off its 52-week high, at press time. Home Bank filed for bankruptcy and sold its branches to Countrywide. And what of Countrywide, the largest U.S. home lender, with $245 billion in mortgages in the first six months of 2007? Its stock price is down 50% since mid-July, Moody’s has downgraded its bonds to “junk” status, and there is speculation that the company could file bankruptcy. One bit of good news arrived in late August with an announcement that Bank of America was making a $2 billion investment in the lender. 37 high-rise, luxury condominium towers—comprising more than 20,000 units—are currently under construction in and around downtown Miami. To date, just one building has been completed and sales have been below expectations. A total of 717 hedge funds closed their doors in 2006, leaving about 9,800 in business, according to Chicago-based Hedge Fund Research Inc. In August, Bear Stearns had to shutter one bankrupt hedge fund and infuse several billion dollars into another to keep it afloat. Experts say credit-market declines may force half of all hedge funds to close in the next five years. Bloomberg reports that a host of large companies including ServiceMaster, Kia Motors, and KKR canceled more than $4 billion in bond offerings in August when skittish investors wouldn’t buy the bonds. Treasury Secretary Henry Paulson said the turmoil “will extract a penalty on the growth rate” of the U.S. economy, but he expressed optimism that “the economy and the markets are strong enough to absorb the losses” without bringing on a recession. J.C. Penney’s net income rose 1.7% in the second quarter but the retailer said it expects the bulk of its second-half profit to come later than expected, raising fears about fierce price competition among department stores this fall. Penney’s direct-to-consumer sales also declined 2.3%. Penney’s is not alone; retail bellwethers Wal-Mart, Target, Home Depot, and Kohl’s have seen their stock prices decline 20% to 30% from recent highs. Even high-end retailers Tiffany & Co. and Sotheby’s, largely immune to recent economic events, have seen their stock prices decline more than 20% from recent highs amid fears of a slowdown in discretionary spending. Could the consumer finally be cutting back? How will all of this affect Main Street, U.S.A. and the real people who produce and sell real products? And why should you care about complex structured-finance products designed to generate a gazillion dollars in fees while keeping the Wall Street bankers who sell them out of the hoosegow? Because losses in one area have a way of showing up in other areas and in times of extreme volatility. And risk is a four-letter word. We’ve enjoyed a five-year stock market boom, as well as an unprecedented run-up in residential real estate values, culminating in a prolonged period during which U.S. consumers literally used their homes as ATM machines to finance the purchase of home remodels, fancy consumer electronics, luxury cars, and extravagant vacations. While the good times may keep on rolling, it is wise to employ defensive strategies to protect your business’s flanks. My crystal ball is a bit foggy, but here are eight strategies for operating in what’s sure to be a volatile business environment:
Many direct marketers spend 15% to 30% of sales on marketing and promotional expenses. For a $10 to $20 million company, marketing costs may run $1.5 million to $6.0 million. Generally, the vast majority of these expenditures relate to paper, printing, and postage expenses, and a small amount—usually just 5% to 10% of total marketing costs—goes toward creative. It’s rare when we can’t help a client leverage marketing efficiency by making its catalog “harder working” through improved creative execution—better photography, copywriting, layout, design, and pagination. The return on investment from such harder-working creative can be—in the words of my 12-year-old—ginormous.
Bankers move around frequently and it’s uncomfortable—to say the least—to learn that your banker has left and you haven’t built relationships with others in the organization. Bank audits, visits from the bank regulators, and quarter-end/year-end results can cause banks to “rethink” their exposure to certain industries, like retail.
Identify those perennial best sellers in your line and talk with your suppliers about special deals if you make a “spot buy,” draw down additional inventory, or make a larger purchase commitment now for products you have confidence in being able to sell later. If the extra margin you can earn offsets the risk and carrying cost, it may be a good move.
Nobody knows whether Wall Street’s cold will lead to a flu—or worse—on Main Street. If history is a guide, periods of uncertainty often present opportunities for forward-thinking businesses to increase their market share and for management to galvanize the troops to encourage them to make the extra contributions that may be required. Regardless of where the economy heads in the near-term, there’s no downside in employing these eight strategies for managing smarter. Credits: Wall Street Journal, Bloomberg Financial, Agora Financial, Orange County Register, and Washington Post.CASE STUDY Just as you must decide how many catalogs to mail for a specific marketing effort, it is crucial to determine if you can actually mail certain customers or prospects more often than others. While there is no golden rule, a carefully orchestrated horizontal mailing test can help guide you in the right direction. At LENSER we often set up horizontal mailing tests for our clients; below is a summary of one that was run this past spring. This particular mailer sends out a deep mailing directly following Christmas (Spring 1), and follows it up with a second drop in mid-February (Spring 2), and a small drop toward the end of March (Spring 3). The main questions that prompted this test were:
To set this test up, a group of buyers who would normally qualify to receive all three of the catalogs were randomly divided into four groups and offered different treatments throughout the season. The control group received only the Spring 1 catalog, Test Group A received all three of the Spring catalogs, Test Group B received the first two Spring catalogs, and Test Group C received Spring 1 and Spring 3. (See the chart below.)
By setting the test up in this manner, we could observe not only what the effect of mailing the second and then the third catalogs were to this particular group of buyers, but also whether Spring 2 or Spring 3 had a strongly different impact on the tail of the first mailing. Below is a summary of the results.
The top section is simply a summary of the actual results; you can see that while the control group received only one catalog (circulation of 10.5K), the response rate and $/book were dramatically higher than for the groups receiving two or more catalogs. Test Groups B and C had higher $/book levels than Group A (two catalogs vs. all three). This however is not the full story. The chart below shows the total test circulation and $/book on the left, and the incremental catalogs mailed with $/book on the right. Based on the incremental $/book, it appears that the wise choice for this mailer would be to continue to mail all three catalogs to this particular group of buyers. Another observation involves the comparison of Test Groups B and C, the groups receiving two catalogs. Test Group C, the group receiving Spring 1 and Spring 3, had a 9% higher $/book than test group B, the group receiving Spring 1 and Spring 2. This information might be useful if one were considering adding a drop for a group of customers. For example, if this test result were for best buyers, and we were considering a two-way horizontal test for a group of lower performing buyers, it would make sense to set up the test using Spring 1 and Spring 3 as opposed to Spring 1 and Spring 2 for better results.
Below are a few important things to consider both when setting up a horizontal mail test and when reading the results:
CIRCULATION TIP First, you don’t always know why the customer is asking that their record be flagged as "Do Not Mail." The CSR will usually just take the information and then add the DNM suppression flag. Even if the person contacting us does tell us why, that information is not usually kept in any actionable form. And to make matters more complicated, you really don't even know who requested you not mail to that address. Is it your customer? Or is it the new occupant of their old house? Often you just get an envelope with a bunch of address labels and DO NOT MAIL scribbled on them. Another scenario that has occurred numerous times over the years is a direct result of bad data entry and variations in both the merge process and in the strictness of the NCOA match logic. When a customer or prospect receives multiple catalogs with slight variations in the address or name—but enough to not be caught by some merge systems—the customer will request that you do not mail to all of the ones that are incorrect. In a future merge you employ more sophisticated match logic and the next thing you know, you are suppressing your own buyers and hot prospects. Yet another example is when the caller asks to suppress their old rural route address because they've been converted to a locatable street address. So your well-meaning operator complies. Then you process all the files through NCOA and LACS (Locatable Address Change System), changing the suppression record to the new address and oops, the new address now gets suppressed by the changed suppression record. It is important to remember that people who call or write to have a record removed from the mailing list may or may not be your customer—they could be a prospect, or just the person who now lives where someone else (your buyer or prospect) used to live. And very often, they don’t really understand what they’re asking for. They just don't want any mail to the particular address they’re giving you. It’s left completely up to your CSRs to try to interpret what needs to be done and take appropriate action. Therefore, the wisest course of action is to NOT put any Do Not Mail suppression records through any type of corrective standardization or address integrity products, including NCOA, LACS, Cognitive Data's IntelliDress, Group 1, Right 1, or anything else except straight format conversion. To do so is to make assumptions on behalf of the requester that are not necessarily correct, and could be incorrect…with disastrous consequences. You should always maintain the suppression record exactly as the customer gave it to you.CREATIVE TIP So, what if you only have the budget for a nice painted cloth background? Back to that air filter—once I had to shoot one on a tight budget, and we used my faithful Westie as a ‘prop,’ since everyone has a pretty good idea of how big a West Highland white terrier is. Without that sense of scale, it could have been anything from brick-sized to desk-sized. And for the air filter, we got double the benefit since people who buy such filters are often trying to clear the air of pet dander. Not that my doggie had any of that. 4. Be truthful, but tell a great story: You can’t just open up a product that’s been packed for traveling and have it look its best. Cosmetics opened up and left as-is for a shot don’t look nearly as luxurious as those you’ve enhanced with the turn of a small spoon or a brush. Drapes must be ironed and steamed off the window, and then carefully manipulated by expert hands after they’re hung up to look their best. An employee having his or her photo taken for a spread on customer service shouldn’t be photographed without a makeup stylist and hair stylist working their magic. Our audience has become much more visually sophisticated than they were a decade or two ago. Every person they see on TV has perfect, white teeth, like little Chiclets! They see perfectly styled items all the time on TV and in the movies, and that’s what their eyes have gotten used to. Thinking like a salesman when it comes to showing your products will make a huge difference in customer perception, not only of your product, but of your company as a resource for buying that product. The time and thought invested in your shots will set you apart from your competitors. Look your best and they’ll want to get to know you better. multichannel TIP When the catalog is in the proofing stage, review the key products, names, and copy blocks. Then check the internet site to make sure the internet titles and descriptions are keyword-rich and written to support the catalog. Internal site searches for products should yield a match to the product in the catalog. Similarly, natural search results for these items will also help drive sales over time. Finally, key products for the season should be reviewed in conjunction with your search engine marketing or paid search program. Specifically, you may wish to add seasonal keywords and phrases—especially those appearing in the catalog—to your ad words to further drive results for these key products.CLIENT HIGHLIGHT—BLUESTONE PERENNIALS Rapid growth followed over the next decade—the need for enough space was a constant problem. The search was on for a permanent site for the business. So in 1978, Rich bought a vegetable farm in Madison, Ohio, and the business moved to its current location. Fifty acres of fertile ground provided the room so desperately needed. At its inception, Rich’s son Bill began helping out with plant production after school and on weekends. By high school he was involved with shipping and office duties, too. In 1993, armed with an engineering degree and three years of industry experience, Bill joined the firm full-time. A ten-year training period ensued, with father mentoring son in every facet of the business. The mantle was passed in 1993 with Bill becoming president and majority owner. While officially retired, Rich still keeps active in the business, plus a lot of golf, gardening, and fishing, too. What sets Bluestone apart? “We are one of the few mail order nurseries that both grow and ship our own plants,” notes Bill. “And we base all our decisions on what is best for our customers; not what is convenient or easiest for us. Multiple order changes with multiple methods of payment—we’ll find a way. Choose the day of your shipment—no problem. Redeem a mail order promotion at our garden center—done. We strive to be an easy company to do business with. We empower our employees to solve a customer’s problem during that first contact.” It is these core customer beliefs that make Bluestone Perennials a wonderful place to shop. As a long-time member of the Mailorder Gardening Association, Bill had listened to John Lenser speak, and had read his articles in trade magazines for years. “During our initial discussions about working together, it was evident that he understood our business,” Bill says. “We’ve been impressed by everyone we’ve worked with at LENSER—they’ve all been in the trenches and understand the impact their recommendations will have on our entire operation. Whether we’re talking catalog production, long-term planning, or shipping techniques, they’ve been there, done that. They know what it is like to sweat Friday’s payroll. It’s that experience and understanding that has been so valuable to our business as a client.” As a family-run and closely held company, they are planning for steady to moderate growth in the next several years, and LENSER plans to help them get there. To learn more about Bluestone Perennials or to buy some fabulous plants, please visit their website at www.bluestoneperennials.com.PARTNER SPOTLIGHT—MITCH SIEGLER And it was from those conversations that Mitch reached out to John about outsourcing marketing/circulation activities to a consultant. “It made great sense that for a small cost, we received highly sophisticated and cutting-edge circulation techniques that we just couldn’t do ourselves.” Through the years, Mitch kept the business relationship intact as he followed the growth and progress of LENSER. “I have great respect for John, and he has assembled an outstanding team of professionals and built a first-class group of clients.” For John, fostering collaborative business relationships has been critical to his and his firm’s success. “When I made a decision to bring on another partner, Mitch was my first choice,” notes John. “Mitch brings with him many years in the trenches and understands from a personal standpoint the trials and tribulations that many of our clients experience.” As founder and entrepreneur of Siegler & Co., Treasures from a Bygone Era, and Sovietski Collection, Mitch has a keen understanding of the many facets of running a business. Those skills and resources benefit many clients Mitch now works with. He says, “It’s amazing just how many niches still exist in business. Notwithstanding the more than 10,000 catalog companies and the intense competition in many sectors, many of our clients enjoy highly successful and tremendously profitable businesses by virtue of their willingness to ‘zag’ when others around them ‘zig’.” Moreover, Mitch enjoys the interesting methods and the diverse approaches and management styles he sees companies using for successful operations. He expands, “I enjoy the variety of personalities and the opportunity to learn something new every day from clients and co-workers.” When not spending his time working and traveling, Mitch can be found enjoying the company of his wife, Elizabeth, and their two children, Jacob, 12, and Rebecca, 7, possibly in one of a variety of family favorite outdoor activities like surfing, skiing, climbing, or camping. To learn more about Mitch and his background, please visit his bio.NEWS BRIEF
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