The struggle for incremental growth 06/19/95

In the constant struggle for business growth these days it seems everybody is trying to be something they’re not. Now, don’t get me wrong. I’m all for progress and development and new strategies. But, the scary part is, just because a given company is very successful at one business doesn’t always mean they’re likely to be remotely competent at another. But, that doesn’t seem to stop anyone from trying   retailers striving to be cataloguers, publishers aiming to be merchandisers, editors, manufacturers and distributors attempting to be direct marketers, etc. etc.

The most interesting thing to me is this: on the one hand, if these organizations were hiring new people for their core business, they would most certainly set strict criteria around the experience and skills required in the core business industry. On the other hand, they are perfectly willing to leap into an entirely new field, industry or method of doing business without a thought for the competencies and expertise that may be required to be successful in that business. Not to mention the pitfalls!

For example, let’s look at a retailer getting into the mail order catalogue business and the differences that are often overlooked.

  1. It all starts with understanding the different objectives. In catalogue it’s all about offering consumers the convenience of shopping at home (and on impulse) while retail offers selection and the “touch and feel” experience.
  1. Retail stores sell what they buy. Cataloguers buy what they sell. Look at it this way. Retailers buy their products and put them out on the shelves for sale. In the catalogue business, sales are closely tracked by SKU (stock keeping unit) and only the products that meet the profitability criteria will be bought or repeated.
  1. Inventory management is different. You see a newspaper ad for shirts and go to the store wanting a red one. The red shirts are all gone. Let’s pretend lot’s of people, like you, wanted red, however, the sales people convinced everybody to buy blue shirts. The store’s tracking system picked up lots of sales of blue shirts. And, guess what? They ship more blue shirts to the stores. The successful catalogue business captures and forecasts customer demand, not just sales.
  1. The role of the catalogue itself is most often mis-understood when retailers turn to mail order. Somehow the parallel is never drawn that the catalogue must play all the roles that the retail store performs: the front cover is the display window, the pages are the display fixtures, the copy and photos must perform better than the sales people to answer all the possible questions. That means the catalogue can’t put all the emphasis on big, beautiful pictures with the bare minimum of copy like a typical retail traffic builder. The catalogue customer needs to “read all about it” and, ideally, enjoy the experience.
  1. And then there’s the “back end”–the order form or 1-800 line, customer service, fulfillment and home delivery are much more complex than a simple visit to the cash desk, not to mention the computer system that runs it all. And yet, the assumption is that “we can do it ourselves”. So you’re good at driving a car, do you expect you can just hop into an airplane and fly it?
  1. The mail order selling proposition must be created and delivered to prospects consistently over time with a focused product selection and presentation. Not a whole new look every time. Not a once-a-year wonder.
  1. Mail order is not an “instant” business like opening a new store location or running a traffic building ad. It’s a slow build over time and to be successful on your own takes a serious investment of money and resources. Look for ways to share the costs and reduce the risks. Best Catalogue Company, a new venture by our firm, offers the opportunity to market your products via catalogue on a coalition basis by sharing the costs with the other participants and accessing our expert resources.
  1. Any conversation about mail order with retailers inevitably includes discussion about on-line and interactive systems. Once again the seduction of the “new and different” overrides common sense about the realities! Resisting any comments about lemmings at this point, I’ll simply say: you’ve got a lot to learn about selling direct to consumers period, so I suggest getting the formula right in the “old fashioned” way.

Then worry about cyberspace!

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