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Challenges Facing Catalogers In a Tech-Savvy Economy
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By Paul Imbierowicz

Are you about to go through another season of not knowing if your marketing dollars are being allocated to the right medium? If you are, youīre not alone. This is the reality for over 95 percent of multi-channel retailers who say they engage in multi-channel marketing according to the recent DMA 2001 Interactive Industry Report. In addition, BCG and Accenture 2000/2001 reports reveal respectively that over 75 percent of these retailers cannot effectively track customer behavior across channels and 76 percent of marketing executives say their company is unable to measure a marketing campaignīs ROI. Further challenges arise with the fact that catalogers generally wait at least 3 months for a standardized matchback analysis to analyze results.
Whatīs more, the market is set to grow tremendously for the interactive direct marketing business. Sales revenues attributed to U.S. direct and interactive marketers are forecasted to exceed .86 trillion by the end of the year, representing a 9 percent increase over 2000 sales, according to the DMAīs 2001 Economic Impact Report. As a result, multi-channel retailers increasingly need to understand how to accurately allocate marketing dollars across multiple channels enabling more precise circulation, list and promotion decisions. In addition, they must understand how and where consumers are spending on and offline and tailor their plans accordingly.

The issue is that multi-channel retailers are not seeing all of the demand that their marketing programs are driving across multiple order channels. This leads them to make decisions based on a narrow view of the world. In fact, looking at results across retailers from multiple industry segments, weīve seen that multi-channel retailers are realizing only about 50-70% of demand by looking at one channel only. When all channels were taken into account, the actual demand generated across all channels ranged from 132% to 200% difference than what was visible to the client through the catalog channel alone!

Multi-Channel retailers need to understand where and how consumers are spending Retailers need to integrate their channels in order for their customers to have consistent interaction with the brand from any point. A study conducted by J.C. Williams Group and BizRate.com found that more than two-thirds of online shoppers look for and purchase items online they previously saw in the same retailerīs catalog. In addition, the report found that the Internet is the most effective pre-purchase influencer among all channels.

The study also identified the "Super" multi-channel shopper who is more likely to be a customer of all three channels and purchase four times more frequently than the average online shopper. Super Shoppers purchase from a retailerīs store 70 percent more frequently than the average store customer and 110 percent more frequently from the retailerīs catalog. The basic message of the report is clear – retailers that do not support their online channel face big risks.

As customers continue to buy across channels, email has become a compelling offer channel that savvy multi-channel retailers should take advantage of. Email has a faster response time, itīs cheaper thanks to its cost per unit and itīs an effective means to maintain an ongoing dialog with customers. A recent NFO study found that over 88 percent of daily Web users report they have made a purchase as a result of a permission-based email campaign. The study revealed that email is critical to increasing repeat purchases and therefore lifetime customer value. Nearly 80 percent of consumers want to receive special offers from online merchants on a weekly basis.

Multi-Channel retailers need to emphasize the link between multiple channels Retailers need to do a better job of informing their customers about available multi-channel options. The current problem is lack of information about their channel integration and most importantly lack of true integration among their channels internally. Retailers should take note of a recent Shop.org study which states that shoppers who use multiple channels -- store, catalog, online -- tend to spend more and be more loyal. The highest incidences of tri-channel shopping are in the electronics and clothing markets.

In addition, advanced multi-channel retailers need to evaluate the way they examine ROI. These retailers must look at more intangible metrics such as brand equity gains as well. ABizRate.com study found that a number of multi-channel retailers look at ROI in a narrow sense. They use only traditional metrics such as direct sales, which may not show the role that Internet plays on purchases through a catalog or made in a store. The report also found that the move towards becoming truly multichannel involves integrating data from all order channels. In addition, the study found that 30 percent of multi-channel retailers have no customer data integration.

The fact of the matter is that multi-channel retail excellence remains elusive. As marketing budgets are being slashed across the industry, now more than ever, savvy multi-channel retailers must move towards building an integrated marketing strategy to understand true ROI. They can no longer deliver "everything to everyone, everywhere." In order to refine future marketing programs, retailers need to measure results across channels. Furthermore, these retailers need to create an organization that facilitates centralized, or at least coordinated decision making based on cross channel data. An integrated strategy can deliver a truly successful customer experience by sending the right offers to the right customers through the right channels.

Article courtesey of Family Business Strategies.

About the author: Paul Imbierowicz can be reached at http://www.doubleclick.net. Paul Imbierowicz is the Product General Manager for Abacus, a division of DoubleClick Inc.

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