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Before Coles stops using printed catalogues they should look to Domino’s for guidance…

13 Thursday Aug 2020

Posted by Malcolm Auld in Advertising, Branding, Digital, Digital marketing, Direct Marketing, Email marketing, Marketing, Media, retail, Sales, Sales Promotion

≈ 3 Comments

Tags

branding, catalogue marketing, digital marketing, direct mail, letterbox marketing, retail

This week a marketing clerk at Coles made the ridiculous decision to stop using one of its most powerful media channels for retailers – printed catalogues. For international readers, unaddressed catalogues distributed via letterboxes, are one of the strongest generators of retail store and online traffic in Australia.

Coles catalogues

The reasons given by the clerk were ridiculous to say the least and naively woke – and Coles has rightly copped a backlash from both consumers and industry.

There is no basis to the Coles sustainability argument around paper usage, as explained by Kellie Northwood CEO of The Real Media Collective in her comments in Mumbrella. While Simon Lane, Country Manager at Ricoh, succinctly demonstrated how consumers are behaving, in this post yesterday.

The physical is always more powerful than the virtual as I explained here years ago. After all, would you prefer a real or a virtual kiss?

The science of the emotional power of paper over digital channels has been proven. It has to do with how direct mail for example, makes the content more real to the brain and better connected to memory by engaging with its spatial memory networks. The material generated more activity in the area of the brain associated with the integration of visual and spatial information (the left and right parietals) and the processing of information in relation to the body.

You can download Millward Brown’s research on this topic here.

Though, I’ve learned through testing, that the best results come from a combination of both print and digital channels. You need to continually test to work out the best combinations.

I suspect Coles has never run a split-run test to see what media channels work best. They’ve never isolated stores and distributed a catalogue in one catchment area and not distributed a catalogue around another store, to prove the best media usage. They certainly didn’t claim so in the announcement about their decision.

Once again the marketing clerks are letting opinions not facts govern their decisions – a sad reflection on the industry.

Which brings me to Domino’s…

Don Meij is the CEO and Managing Director of Domino’s Pizza Enterprises. He is also one of the most successful business executives in Australia and one of the highest paid. I had the privilege of interviewing him for my book a couple of years ago.

He revealed that Domino’s rushed to ‘save money’ by reducing the volume of its unaddressed letterbox marketing collateral. Domino’s distributes leaflets, booklets and other printed collateral to sell pizzas. Domino’s had launched its app and wanted to migrate customers to using the app for orders.

The result of this decision was an immediate drop in sales. So Domino’s reverted to using letterbox leaflets again. Over time, the Domino’s app has changed the way many customers place their order. Instead of using the phone to talk, they use the phone to tap. And once a customer downloads the app they use it more often to place home-delivered orders. But many still use the letterbox offers before ordering.

Domino’s realised the best marketing results come from testing and using a combination of media channels. Let the market prove the media you should use – not the marketing clerks.

Interestingly, my local pizza owner – he’s from Calabria –  had to close his dine-in service during lock-down. He doesn’t have a website. So he printed a letterbox leaflet and distributed it in his catchment area. He offered a discount for pick-up. I’ve used the offer almost weekly and love chatting with the husband and wife team as I await my order. We are after all, social creatures. He said the leaflet saved his business.

And only last month Coles biggest competitor Woolworths did a mass-distribution of its loyalty cards in a clear plastic envelope in suburban letterboxes, to attract new customers.

Woolies use letterbox distribution to sell loyalty cards

In the statement about the catalogue decision, the Coles marketer said, “we are living at a time of unprecedented societal change…” and it’s true. Consider what’s happened during the pandemic:

  • Record sales of books as people have more time to read
  • Record sales of jigsaw puzzles as families return to ‘traditional’ tactile activities
  • Record sales of vegetable seedlings and chickens as families grow their own food
  • Return to direct mail communications as the personal and physical media are more trusted during these troubled times
  • Record sales of home-delivered products – because there is no other way to buy them as stores are closed

Of course, the volume of mail and unaddressed catalogues is less than a few years ago, just as radio and TV audiences have declined and digital marketing channels struggle to be successful. As consumers, we have way too many channels to use, making it harder for marketers to instinctively know what works and what doesn’t. Hence we need to go back to basics and follow the rules.

There are two simple rules to success in marketing:

Rule 1 – Always Test

Rule 2 – See Rule 1

The pandemic has revealed some massive weaknesses in marketing – with poor quality decisions being made by unqualified marketing clerks.

Let’s hope the ‘new normal‘ brings back a semblance of commonsense and let the facts, not woke virtue signaling, drive marketing decisions…

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Will electronic payments and selfish humans eliminate small retail businesses?

21 Thursday Feb 2019

Posted by Malcolm Auld in Advertising, Digital marketing, Marketing, retail

≈ 3 Comments

Tags

digital marketing, online retail, retail, small business

If you’re like most of the population dear reader, you’re probably using less cash these days to pay for goods at your local retail stores. I certainly am. Apparently here in Oz, we’re one of the highest per capita users of electronic “tap n go” payments. Cash is declining rapidly.

This is causing problems for local retail stores, particularly those for which a website is not essential for business – dry cleaners, cafes, bakers, butchers, clothing stores and the like.

Now before the trolls attack me for claiming a retail store doesn’t need a website, what I’m saying is that online sales are not a major part of the revenue for these businesses. If they have one, it’s purpose is more for customer service, providing information and in some cases selling products.

These businesses make most of their money from passing foot traffic, not from customers driving from distant suburbs to buy their wares, or ordering goods remotely. I’m not going to order a coffee online and have it delivered by a bloke on a bike. I’ll go to the café and sit there to enjoy my cuppa and company.

I’ve owned and worked in a local family supermarket (many years ago) and a travel agency (only a couple of years ago), so have some hands-on experience. I’ve even been robbed of our weekly cash takings, which is not a nice experience.

One reason small business owners work the long hours they do – both at the store and after hours with stock and bookkeeping – is the undeclared cash they take from the business. Quite simply, if small business owners had to declare all their income, they might as well get a job working for someone else, as they lose too much in company and personal tax. The hourly rate of return is just not worth the effort. The less tangible reason for owning a small business is the “joy” of being your own boss.

One of my mates is the son of Greek migrants who moved to Australia after WW11. They fled the oppression of post-war Europe and opened one of the first espresso coffee shops in Sydney. My mate said his parents didn’t trust banks after their experiences back in the old country. When he was growing up, he thought everybody was like his family – when they wanted cash, they went to the garbage bags stored in the roof cavity of their home. That’s where his parents stored the financial takings from their café in which they worked 7 days a week.

Am going shopping will just get some cash from the roof…

I’ve recently been talking with retailers about the cash, or should that be, cashless issue. Another mate of mine owns a surf clothing store and is about to close its doors. He has spent a lifetime of more than 50 years in the rag trade. He said the reason for shutting up shop is threefold. It’s a perfect storm – lower cash income, online discounting and human nature.

The human nature is interesting. He said it is astonishing the number of people who use the store as a catalogue, trying on clothes, then photographing them and going online to buy them cheaper. Just confirms the old adage that people only care about one thing – themselves. This is why those two words “You” and “FREE” are still the most powerful words you can use in marketing communications.

I’ll see if I can buy this online – bugger the shopkeeper…

He is smart – he owns his building. So he has an asset he can sell or rent for income. But as he said, “every retailer used to carry a wad of cash in their pocket. Suppliers would always offer deals for cash, particularly if they wanted to offload remainder or excess stock. This made it easy for the retailer to make a decent profit on those goods, or throw in a bonus to loyal customers.”

His store has a website, but it is not as good as it could be and like all retail websites, is not cheap to update and maintain. Yes, it generates additional revenue, but it also adds costs that didn’t exist previously in the P & L. It doesn’t pay for itself. So the more his business has moved to cashless payments, the less it is worth to him.

I suspect this small business closure trend will continue and the side effect will be the loss of convenience stores and other local retailers. Either that, or we will accept paying more for goods. Recent research revealed that humans pay more per item and spend more frequently when they use electronic payment devices, than when they use cash. Apparently we value cash more.

By nature, humans are lazy creatures – we prefer the path of least resistance. If the easiest way to buy something is to do so electronically with a swipe or tap, we will do it that way. Nothing new here:

Interestingly, a café I frequent in Brisbane still offers a discount for cash payment, while many restaurants in Chinatown only take cash. To save my teenagers carting cash around (and losing it) they now carry debit cards. My bride and I control the amount on the cards. My teens use them in the school canteen, or when out with friends at the beach, mall or movies.

But now one of the most frequent requests I get, both verbally and by text message is, “how much do I have on my card?” These “notifications” force me to check the accounts and top-up as required. And you guessed it, my teens relish the habit of “tap n go” and are spending more using these cards than if we restricted them to cash-only. Not sure I’ve done the right thing here?

Have to go now – need to top-up my daughter’s card so she can buy something like sushi rolls for lunch. It’s a long way from my once-a-fortnight vanilla slice treat when I was in high school…

Mmmmm, vanilla slice…

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If the shoe fits, sell it to your database…

25 Wednesday Sep 2013

Posted by Malcolm Auld in BIG DATA, Branding, Customer Service, Direct Marketing, Marketing

≈ 3 Comments

Tags

BIG data, branding, customer service, database marketing, direct marketing, marketing, retail

I’m cleaning out old files and came across some sample catalogues of a client of ours at O & M Direct.

In 1973 Peter Sheppard opend his first shoe store. He offered a unique range of brands from Europe and other parts. But his secret weapon was his mail-order business – his database. It was built mainly through his retail store(s).

PSSWeb_logo

In the 1980’s our agency wrote and designed his catalogue and mailings. The catalogue was called “Shop at Home” – he was way ahead of his time in the virtual shopping world. Not only did the catalogues offer deals on shoes, but also special offers from complementary third parties such as Sportscraft, David Cardigan, Gilchrist & Soames and others. Customers could shop from the comfort of their home, or visit a store.

He mailed two seasonal catalogues a year, usually at least 1 month before the retail season started. The reason was simple. The mail-order sales determined what shoes he should stock in his retail store. The brands and styles that sold well via mail, became the shoes that were featured in-store. This ensured good sales volume and minimal overstock of unpopular lines. It also meant he would have the right shoes on display as the new season started.

Peter Sheppard 2

His mailings followed all the rules. They were packed with multiple pages to make them tactile and encourage involvement by the recipient – now known in these digi-days as customer engagement. The mailings included a catalogue, inserts with special offers, extra order forms, introduce-a-friend offers, even a free calendar with its own special offer printed on the cover in the Christmas mailing.

Peter Sheppard 1

Peter Sheppard 3

I looked at his site today – it still follows the classic rules of direct marketing, has a digital catalogue, shoe bling and a mail-order service amongst other things. Online retailing is just a remote ordering service that delivers the products by mail or courier. The Peter Sheppard site is simply an evolution of its original offline mail-order business.

The site even has a separate brand www.slippersdirect.com.au so you can have your comfy foot warmers delivered direct to your door.

If you work in retail your customer database is your most valuable asset. It took Amazon years to make money, but once it had a sizable customer database it became profitable – because it’s cheaper and easier to sell to someone you know (your customer) than someone you don’t know. Repeat business is now the lifeblood of Amazon.

Their database drives repeat purchase

Their database drives repeat purchase

Through testing, your database can reveal insights that can mean the difference between profit and loss. And that goes for physical retail stores with online businesses, as well as pure online businesses that only sell via websites and other digital channels like email and social media.

The problem for many retailers is they don’t have a database of their customers – it’s stuck in the POS system, or the accounts software. And they rarely use their website to capture data and gain knowledge about their customers – even though it’s easy to do so.

These are often the businesses with managers complaining about sales or the economy. Yet if they just invested some time and money into creating a customer database they’d be in much better financial shape and minimise the peaks and troughs in their trade. And it only needs to be little data – not BIG data.

Peter Sheppard has been thriving for 40 years through smart use of customer data. And by adapting to technological changes he has continued to enhance his personal service. His business is still a hard core retail one and it still uses the way of direct marketing to succeed, even in the digital world.

What’s that adage again – what’s old is new again…again?

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