If the candidate senses online is an afterthought [to the hiring company], then they are not going to work there. It’s essential the company sees ecommerce as a pie-enlarging value proposition, not just a pie-rearranging proposition. Because at the end of the day, “A” players want to go where they are going to matter.
— Harry Joiner

Harry Joiner runs a specialized recruiting firm which focuses on filling online marketing executive slots.

In this podcast, Harry shares his insights on hiring top-notch online talent, as well as how he uses online marketing techniques himself to grow his business.

Listen to podcast: http://www.rimmkaufman.com/content/Harry_Joiner_Interview.mp3

Alan Rimm-Kaufman: I’m honored to speaking with Harry Joiner of Marketing Headhunter.com. Can you tell me what you do, Harry?

Harry: Sure. I’m an e-commerce recruiter specializing in multi channel ecommerce and I have a blog at www.ecommercerecruiter.com and a job board at www.onlineretailjobs.com.

Alan: So you help e-commerce firms place senior executives, junior executives?

Harry: I do indeed. I handle VP level searches and director/manager level searches for a variety of reasons. But to use a baseball analogy, it’s kind of like the manager and director level searches are the singles and the doubles. And three or four times a year, there’s an opportunity to hit home runs there with VP level searches, so it’s a mixed bag.

Alan: I was reading some of your stuff online, and in 1997, you were trading frozen food. How did you move from trading in beef to helping people find jobs?

Harry: I am a glutton for punishment. I worked for my dad’s company. My dad owns a commodity trading company called AJC International in Atlanta, Georgia. And it’s not a small business. They’ve got half a dozen foreign offices and this year they’ll do $800 million in sales. It’s the tenth largest privately held company in the state of Georgia.

So after I graduated from business school, I went to work for my dad’s company for about seven years, and wound up working for their domestic distribution subsidiary in Chattanooga, Tennessee. While I was working up there, I had an opportunity to go into business as a marketing consultant, which appealed to me greatly.

Long story short, while I was engaged on a marketing consulting assignment for a local, interim CFO company that wanted to get into the staffing business, I discovered the recruiting and staffing business. I made them a bunch of money and had a moment of clarity about what I should be doing, so I just decided that I liked recruiting and the money was good and I would just stay doing it.

Alan: That’s interesting. You bring up your background in marketing. One of the things that I think is so cool about your recruiting practice is how heavily you use web marketing yourself. So you’re trying fill positions in web marketing, and you yourself are doing a tremendous amount of web marketing. Can you tell us how you use blogging and RSS and email, the social networks and so forth to grow your own practice?

Harry: Yes. That to me is actually like the luckiest break that I ever got, I think, in my entire career. The first search that I got when I went into business as a recruiter was for director of online retail for a company called Benchmark Brands in Atlanta.

Alan: Sure.

Harry: They run a website called Footsmart. It’s an Internet Retailer top 100 company, I think. So, I started calling around to Shop.org and DMA communities and networking with people. I knew how to speak the language of direct to consumer marketing and I think that was a little bit refreshing to them. We just started chatting about what do you do and how do you do it and do you postcard market, what’s the role of organic and paid search in the growth of your online business and all of these different things.

I just started cherry picking ideas that I thought were applicable for a recruiting business and bolting those tactics on to my own little marketing plan. For example, I’ve got a really good friend named So Young Park, who’s the Director of Online Marketing and CRM for Musician’s Friend up in Medford, Oregon.

My blog used to be called Proven Ways to Get New Customers. It was really essentially a throwback to my days as a marketing consultant. It was like a small business marketing blog. The content was good, but it wasn’t really germane to online retail. One day I was chatting with So Young and I said, “I’d really like to improve the traffic on my blog, you know. Do you have any ways that I could do that?” And she said, “Well, you could always change the name.” And I said, “To what?” And she said, “Well, what do you do?”

I said, “Well, I’m a marketing headhunter.” And she said, “Well, why don’t you just call it Marketing Headhunter?” And I said, “Well, that’s not really very exciting to me.” And she said, “Well, here’s the thing.” She said, “If you call your blog whatever it is you do and people back link to you as that thing, then when other people who need your services Google marketing headhunter and there are a bunch of sites on the internet that back link to you as that, then you become the nexus of all things marketing headhunter on the internet. Does that make sense?”

Alan: It does. So Young is a smart woman.

Harry: She is unbelievable. She said, do yourself a favor, right now, type marketing headhunter into a browser bar. And I did and I went to a website called Buy Domains.com and it was available. It was not cheap, but it was available. And she said, buy it. I said, it looks like it costs a lot of money. And she said, well, how much money do you make per search? And I said, 20% of somebody’s annual salary. And she said, the value that a domain like that will create for you over time, you know, what you would pay for it today is lost in the rounding of that number. So she said, just as a customer acquisition thing and as a branding thing, it will credibleize you in ways that you can’t possibly imagine. She said, you have got to go for it.

And I did and it worked like a charm. I talked to hundreds of really smart people, but based on that one little thing, I was able to take that concept and I bought Management Recruiter.com. I bought SEM Recruiter.com. I bought Search Engine Experts.com. I own Ecommerce Consulting.com.

I have got about 650 domains in my GoDaddy account and I get an extraordinary amount of traffic just as a result of the blogs that I have that are hosted on top of those keyword rich domains. So it works like a charm.

Alan: You mentioned domains, not to be confused with domaining, because you’re not trying to sell advertising, and so you’re actually using them to generate traffic for yourself, correct?

Harry: Yes. Some of the domains that I’ve had, worked better than others. The national domains that I’ve had worked great. For example, if you use the Aaron Wall’s SEO toolbar for Firefox, which is a lethal weapon for any of your listeners who may use that. It will tell you, I guess in connection with Google AdWords, what the keyword count is or what the search count is on a per diem basis.

So, for example, Management Recruiter, I think gets between 50 and 80 inquiries a day on Google, right? And so my blog, Management Recruiter.com is currently ranked second in the organics because of all the people that back link to it. So I mean the national domains, the ones that aren’t localized, like I own Executive Search Atlanta.com. That doesn’t work very well.

I own Executive Search Chicago, Executive Search New York, Executive Search, you know, a bunch of different cities. Those don’t work very well because of the way Google is presenting local search results. But the national ones, the way Google presents those results, the strategy works like a charm, which is lucky for me.

Alan: Can you share a little bit more about your blogging strategy?

Harry: Well, you know, here is the thing. Blogging is a means to an end. It’s not an end unto itself. So for me, blogging is not like a vanity thing. I don’t do it to express myself. I do it to get traction in search engines. And the thing of it is, when I blog at Marketing Headhunter.com. I have an editorial platform for that. I have a list, at least in my head, of things that I will blog about and things that I won’t blog about.

I won’t blog about my cat. I won’t blog about the weather, all those college football scores. But I will blog about ecommerce, about marketing, digital media, careers, and the slings and arrows of growing and developing a career in ecommerce. All that stuff I will write about.

According to, I think, Quadcast or Compete.com, 90% of my traffic right now is coming from search engines. So it’s what Quadcast calls passersby. So the trick with me is I don’t post that often, but what I do post is keyword rich, number one. I have what I hope is a teachable point of view on marketing and ecommerce and careers in those areas, and I produce stuff that people are gonna back link to. And because of that, I get a lot of traction in search engines.

Alan: Moving off the marketing and over to the recruiting, what are the positions, the level, the titles, the skillsets? What’s in the most demand today that you see?

Harry Joiner: I would say probably directors and managers, and the reason I would say that is this; It occurred to me about a year ago that there are 500 companies in the internet retailer top 500, right?

Alan: So 500 VP’s of ecommerce.

Harry: Yes. Some of those brands are so small that they don’t have a VP person there that’s a director, but for all intents and purposes, let’s just call it 500 VP’s of online retail that matter in the United States.

Alan: Sure.

Harry: And let’s say, I’m going to use round numbers that the average tenure as a VP of ecommerce is somewhere between two and three years, right? So you divide 500 by 2.5, and what you see there is that every year a certain number of chairs become available.

Alan: Sure.

Harry: And that’s not really enough to sustain the executive search activity for my industry, right? I’m just one recruiter out of hundreds out there that are trying to weasel into this space.

Alan: Yes.

Harry: So what it amounts to is that I probably get ten VP level searches a year, let’s be conservative, between eight and ten VP searches a year. Of those eight, I’ll probably close four. To pay the rest of the bills, I’ve gotta do manager and director level searches, and there’s a lot of satisfaction in those for me. And there’s a lot of demand in there for those as well.

Alan: What are the tips that you give to companies looking to hire ecommerce talent?

Harry: Well, I would say the first thing is understand that the best candidates are very business oriented. And they want to see the online channel as a means to an end, not an end unto itself, right? So the end that I’m talking about is greater customer intimacy.

So if the candidate gets a sense that the online channel is just an afterthought then they are not going to work there. Because at the end of the day “A” players want to go where they are going to matter.

So it’s essential that the online channel really matter to the company and that they embrace it, that internally everybody is onboard with online and that they completely embrace it and want to see it succeed; and sees ecommerce as potentially a pie enlarging value proposition for the company, not just a pie rearranging composition for the company. Does that make sense?

Alan: It does. It’s interesting to hear you say lead off with meaning and strategic importance rather than cash and personal advancement. I am assuming the comp and all that needs to be in line, but I find it very, very interesting that the first thing you cite is importance to the organization.

Harry: Well, the model that I use with every candidate is; think of your career in terms of the three F’s? Fun, future, and finance. Fun is a completely arbitrary and subjective thing. The financial piece is the only part of this that we can actually quantify, so now we got to really concentrate on the future orientation or the future attractiveness and relevance of the role.

And I encourage every candidate that I work with to really get their arms around that and understand whether or not the client that they are interviewing with is sincerely interested in being an online retailer or developing greater customer intimacy using the online channel to support its other channels and also as a standalone or whether or not they’re just talking about it. There’s a very high ‘full of crap’ factor among companies that are streaming into this space.

Alan: Great perspective. I’m sure you’ve seen a lot of companies intend to hire great people, but botch it. Besides what you just shared with us about the sincerity of their commitment to the channel, what should companies be certain not to do to be sure they don’t drive away good folks?

Harry: If I could give one solid tip is have a hiring process and keep the process moving. The analogies that I used is at the end of the day I’m an elephant hunter, right? And I know where the elephants hang out, I know the elephants, I love the elephants. The elephants are awesome. And elephants like to be shot dead or left alone.

Alan: And the elephant’s the candidate or the company?

Harry: Yes, the elephant is the candidate. And they like to be shot dead and bagged or left alone, right?

Alan: Got it, yes.

Harry: And what they would not abide, Alan, is 120 day hiring process that’s like a big budget movie with a plot that goes nowhere. They don’t have the time for it. It’s frustrating too because the other thing you got to consider is that every single executive search is a zero sum game.

So if I run an executive search for William Sonoma. William Sonoma is a big client of mine and I’ve helped them find a VP of ecommerce last year and have done some director level searches successfully for them in the interim.

It’s kind of like they’ve really got to have their act together and they have got to help the candidates maintain their dignity in the process because there’s only one VP role that they’re hiring for. And so let’s say I source four or five really great candidates for them. Well, they are only going to hire one and that means that everybody else goes home with a t-shirt.

Well, that’s a problem in my business because if the people go home with a t-shirt and a bad taste in their mouth, then they’re not going to like William Sonoma and they’re probably not going to like me. So it’s absolutely critical that I help people maintain their self-esteem and treat everybody with a tremendous amount of dignity because everybody’s got a lot to offer. Everybody could conceivably solve William Sonoma’s online problems in a variety of different ways.

It’s just a question of which candidate has the relevant skill set and the best chemistry and who can contribute something lasting and meaningful to William Sonoma’s existing management mix. And the candidates that can not quite do that this year need to be treated with dignity so that they can respectfully consider the company for future opportunities.

Alan: Good stuff. If a company can not make a hiring decision with internet speed, they may not be moving their business on the line, making online decisions with internet speed as well.

Harry: Yeah, that’s my opinion.

Alan: You see a lot of online retailing. You have a very interesting perspective having placed senior executives into some of the major firms in this space. And I think a lot of us would concur the economy is tough and might even be worsening before it gets better.

If you were asked to give your opinions to leaders of ecommerce companies, what are your suggestions for the rest of the year with the economic storm clouds brewing?

Harry: Well, I would say take a good hard look at your business and try and figure out at a high level, right, back of the envelope type stuff, whether or not your business is going to survive predicated on option A, cross-selling and upselling your current customers, or option B, acquiring new customers, right? So figure out, you know, it’s kind of a Sophie’s choice kind of deal there.

Pick one of those things to be awesome at and then try and staff around that and try and motivate and measure around those things because, you know, for instance, I prefer trying to figure out frankly how to cross-sell and upsell current customers just because customer acquisition in this space is getting to be all about search engines.

And I talk to a number of different VP’s of ecommerce and they all kind of say that Google is a really cruel mistress. You can’t control it. All you can do is just try and deal with it. And so my take on this is pick one of those strategies and try and bear down as hard as you can on that artifact and just be great at it.

Alan: Great stuff. Thank you so much for your time, Harry. If folks want to find you online, what’s the best way to reach you?

Harry: Sure. I’m on the internet at www.ecommercerecruiter, all one word, .com, and I also have a job board. It’s www.onlineretailjobs.com.

Listen to podcast: http://www.rimmkaufman.com/content/Harry_Joiner_Interview.mp3

Fred Reichheld is author of The Ultimate Question: Driving Good Profits and True Growth, and a true customer loyalty expert. Much of his career has been devoted to understanding and questioning what makes successful businesses so successful? His findings don’t consist of strict “dollars and cents” accounting measures, but rather focus on the fundamentals of good business.

“The only way to grow your business long-term is through this process of turning your customers into your sales force.”
- Fred Reichheld

His Net Promoter Score (NPS) does just that. Measuring your advocacy ratings by comparing promoters to detractors can provide valuable insights into how you are viewed by your customers and what your business priorities should be.

Listen to the podcast: Fred Reichheld Interview

Fred Reichheld: Well, you know this issue of good and bad profits just comes out of my experience that most businesses, especially big businesses use accounting as their primary measurement system. It’s the only one that’s audited, the only one where people go to jail if they cheat. Or the only reliable one.

And one of the difficulties that that raises is that accounting can’t tell us the difference between good profits and bad. There are plenty of profits that are completely consistent with generally expected accounting principles, but they’re just completely bad because they’re inconsistent with Golden Rule behavior. They’re abusive, they’re misleading and they destroy growth and loyalty.

Matt Mierzejewski: Great. So getting away from the profitability, if, in your own words you could explain what the Net Promoter Score is.

Fred Reichheld: Net Promoter Score is our attempt at creating a universal system that is so simple and intuitive that eventually everyone will use it as their accounting system for customer and employee relationships. And as the need for that universal system is obvious, every single vendor in the satisfaction and market research space comes up with their own, unique ‘mine is better’ black box system, because that’s how you earn profits; buy my black box, my expertise. I think the only way we’re actually going to make progress is if we just settle on something that’s open source, everyone has access to it and it becomes an accounting system. And that, I think, should be a Net Promoter System.

Matt Mierzejewski: Makes sense. So let’s say we have our Net Promoter Score. How does one move upward or downward? Namely upward!

Fred Reichheld: It’s not so much focusing on the score. It’s focusing on the categorization process that the key to Net Promoter is I’ve go to categorize customers. Did I win their loyalty? Are they promoters? Did I fail miserably and they’re detractors? And sure, you want to keep track of did I fail just a little bit and they’re passive.

But it’s this focus of the categorization that helps you focus your management priorities and your decision-making throughout the organization so that the companies don’t forget this obvious truth that there’s just no way to grow profitably without earning the loyalty of your customers. And that’s a vague idea but it’s a very crisp idea to say I need more promoters and fewer detractors. And I can measure progress along those dimensions.

Matt Mierzejewski: And for many of our online retailers, any specific tips?

Fred Reichheld: Yeah, make the categorization crisp and straightforward. Make sure everyone in your chain, your front line employees, your vendors and suppliers understand it and start making the appropriate investment to improve. The only way to grow your business long-term is through this process of turning your customers into your sales force. And once again, that’s a really nice sounding but vague idea. But the power of a crisp measurement process, you can actually drive that through your business.

Matt Mierzejewski: What advice would you give to management in conveying this to kind of the front line employees and how important that is?

Fred Reichheld: I think one of the challenges for top management is convincing them this is not just a slight improvement on the dozen historic failed processes that sounded good but never delivered anything on satisfaction. This is a core, hard process just like an engineer would design for minimizing error rates or failure rates. And it has to be understood as a hard core business process, an operational process and not as a research program, nice to check on every quarter when we have time.

Matt Mierzejewski: Fred, we appreciate the time today and good luck in your further customer loyalty expertise and we’ll look forward to reading some more of your stuff.

Fred Reichheld: Well, The Ultimate Question is still awfully relevant and I’m beginning work on the follow-up to that. This idea of you’ve got to get more promoters and fewer detractors is spreading very quickly and I’m feeling very hopeful we’ll see great progress over the next few years.

Matt Mierzejewski: Well, we’re big believers as well. Thanks for your time.

Fred Reichheld: Bye-bye.

– Chuck Teller, CatalogChoice

Chuck Teller is Executive Director of CatalogChoice.org , a rapidly growing catalog do-not-mail service. In this podcast, Chuck discusses his non-profit organization and how it impacts the catalog world.

Listen to podcast: Chuck_Teller_Interview.mp3

Alan Rimm-Kaufman: This is Alan Rimm-Kaufman and it’s great to be here with Chuck Teller of Catalog Choice.

Chuck Teller: Hi, Alan.

Alan: Hi Chuck. Can you tell me a little bit about Catalog Choice? Where do you come from, what are you doing?

Chuck: Sure. I’ll just start with the history of how it started. The concept for Catalog Choice came out of the Overbrook Foundation, a family foundation that provides grants in various areas of environmental aspects. The sustainable production and consumption group within Overbrook had been funding areas around sustainable wood and paper production and consumption.

One of the board members came up with the notion: what if we looked at the beginning of the “pipe”, around reduction, rather than simply the end of the pipe around recycling and look at the area actually about catalogs and specifically unwanted catalogs.

So they went and did some research about just trying to understand if I was a consumer, you know, how straightforward is it for me to request that I no longer receive a catalog in the mail and part of that research, they found that it really was not very straightforward.

We rarely found options on merchants’ Web sites to facilitate this communication and so, you know, they reached out to some resources and said, you know, “How can we make this work?”

We actually also looked around in the marketplace and we found that there was a couple of companies who were offering the service for a fee to consumers, that they would go through the process of facilitating the opt-out request and we thought that it really should be free.

You don’t pay to get on a list, so why should you pay $20.00 or something to get off of the list?

Alan: Sure.

Chuck: So that was the the start of the project in ’06, early “07. We did a lot of research in ’07, put together a team of skilled software developers, looked at the business process around the whole merge-purge and built a software application that is unique in the aspect that it’s for consumers, that allows consumers to come in and in a straightforward way kind of set forward this request.

But I also decided that you really need to build something for the merchant community for the industry so it’s straightforward for them to accept those requests and to feed it into this merge-purge process, so we built a free service for consumers as well as a free service for merchants to facilitate this communication.

Alan: How many consumers have opted out of one or more catalogs with you?

Chuck: We actually publish that statistic on the front page of our site. Today there are 683,000 registered users at this moment. Those users have made 8.9 million opt-out requests to date.

We launched this October 9 of 2007. Here we are in late March. What we’ve seen is that there really is a pretty significant pent up demand for this type of service.

Alan: Gaining two-thirds of a million names in five months is dramatic growth.

Chuck: Yes, and we don’t do any advertising. We basically put the service out there. The blogosphere, in fact, has been a tremendous areas for the promotion for the service.

Yahoo! has this service that will let you look back at how many links come to your site. The last time I looked a couple of weeks ago, there were over 32,000 backlinks to Catalog Choice.

We’re seeing the bloggers on a regular basis, once they discover the site, write about it ’cause they think it’s a great thing.

Alan: There’s a parallel to the Do Not Call list, which was quickly adopted because it met a need in the population.

Chuck: Let me just comment on that because it’s really important. I think that this is much more complicated. There was a kind of viral growth around that. One thing that I just want to stress is that we built the service around the whole notion of unwanted catalogs.

For my household, your household and many throughout America, there are many catalogs that people want to receive and continue to receive. We’ve heard from users over and over again that they specifically are just making these requests for those catalogs that they don’t want. The ones that they do want, they leave alone.

Alan: Two weeks ago at the NEMOA conference, most of the folks in the room were catalogers. One of your colleagues was there representing you guys. There was a little bit of Q&A with a speaker from Williams-Sonoma which got a bit heated.

The room wasn’t receptive. How would you describe Catalog Choice’s relationship with the catalog industry?

Chuck: Catalog Choice is striving to have a collaborative relationship with the industry. We work hard every day reaching out and having discussions with merchants.

There are over 150 merchants who have actually signed up for the service, who are accepting the names, working it into their overall process. We have active conversations with many, many other merchants. So, on one side, it’s positive.

On the other side, there are some merchants who, for various reasons, don’t like the service that we’re providing and are really kind of voiceful about that.

What we hope that the tension, if you could say, is a byproduct of a lack of understanding and a lack of knowledge and we’re trying our best to truly communicate on a daily basis what our mission is, what our objectives are, what our priorities are.

To the degree that merchants come up with ideas or have comments about how we can improve the service, we rapidly push those into our product. We put new releases of this product out every week.

A couple weeks ago, we updated a whole bunch of the copy on the site. We rolled out a service this past week that allows you to upload a PDF or a link to a rich media component of your catalog.

So I think that with time we’d hope that more and more merchants will understand that we provide a way for the merchant community to really communicate with the consumer community and to meet the consumers at the spot where they want to be met, which is many consumers do not want to receive a paper catalog in the mail. We provide them a way to kind of set forth that request.

Alan: I recently moved. Using my old address as a test, I opted out of some catalogs that I may or may not have been receiving at my old address. Does CatalogChoice follow these requests through NCOA?

Chuck: To the degree that you fill out an NCOA request, that will be taken care of.

Alan: So you are running list hygiene against your list? By opting out at my old address, I might have opted out at my new address?

Chuck: Let me be clear. We don’t have access to the NCOA list. We provide the name and address as you enter it in to the merchants and the merchant. To the degree that the merchant takes your name and address and run it through NCOA and find that you’ve moved, then they can make that request.

Alan: But CatalogChoice doesn’t NCOA.

Chuck: Right. We look to the merchants. We provide the request to the merchants and then the list flows into NCOA.

Alan: As I opted out of these catalogs, I did see there was a space for a key code or a customer number. That’s reassuring. If I have that catalog in front of my with a key code, it’s pretty clear I received it.

How do you know that the person’s actually the person – that I’m not unsubscribing my neighbor or some such thing?

Chuck: Well, I think there’s two questions there.

Many consumers are using the site with the catalog in hand.

That’s the way we actually encourage everybody to use the site. Some are going in and making the requests, like as you just did, for catalogs that you believe that you’ve received, you’re being honest about your request there and you may not want to get it.

So when we send the list on to Catalog X and you’ve actually made this opt-out request, if you haven’t received it, simply you’re saying to them that as a prospect you do not want to receive this. We do not facilitate a blanket opt-out request.

We actually encourage you to go over to the DMA and put your name on the mail preference service that they run if that’s what you want, if you do not want to be mailed ever as a prospect. What we’re focused on is a title-by-title approach.

Alan: But to the case of where I am opting out a neighbor…

Chuck: Right. So let me answer your second question. It’s one thing for you to go in and say, “I used to live at this address and it’s my name and I want to make an opt-out request.”

The second question I think you’re saying is: what about the condition about Alan coming into the service and entering Chuck Teller’s name and my mailing address and making this opt-out request? That’s against our terms of service and that kind of activity is not tolerated.

To the degree that that type of activity is identified, we have the right to delete the account, the user who’s doing that type of stuff. We could block their IP address in all sorts of ways so they cannot engage in fraud. That’s illegal. We do our best to track these kinds of things.

To the degree that users have multiple names and multiple addresses inside their account, we do monitor those to some degree looking for these kinds of conditions.

It is difficult to identify at its surface, so we look to the merchants to assist us in identifying what might be patterns that are unusual.

I think the real area that people have a concern about is not if you make an opt-out request for me and something that I don’t receive.

What I’ve heard is a situation where a merchant is concerned that a competitor would come in and make these requests on behalf of the competitor’s best customers assuming that the competitor’s best customers may be good customers of a given catalog. Is that the scenario that people are focused on here?

Alan: That concern was raised at NEMOA.

Chuck: Clearly, Alan, that’s fraud to do that and it’s against our terms of service. We do monitor IP addresses looking for these kinds of things. To the degree that these kinds of practices are identified, we can easily reverse the request inside of our service and move forward.

One things is to recognize is that in order for a request to be forwarded from our service on to the merchant, the user needs to complete a round-trip email verification. You sign up for the service. We send you an email to your given email address and you need to click back through and verify that you are who you are and you’re accepting the whole terms of service.

To the degree that people would go in create fake email addresses to do this, they are breaking the terms of service. That’s against the law.

That’s the approach we take. We would hope that an industry would not kind of go back and forth against each other in that way, because I don’t see – we don’t have any indications that consumers are doing this in spite to their neighbors.

Alan: What’s your relationship with the list co-ops and the list management houses?

Chuck: That’s a good question. We actually have had limited interaction with the list co-ops. Prior to the launch of Catalog Choice, we did some interviews with some of them and talked about the service we were designing and they were intrigued by the service.

We don’t have any formal relationships with them. We are focused at this point in time that the mail preference decision is really between the consumer and merchant and – but to the degree that the relationships mature within the industry, we think that we can have some really positive relationships with list co-ops.

Alan: You should. You should be talking to the co-ops.

Chuck: We have reached out to them in some degree. It really starts with the merchant. They’re service providers to the merchant, so we really need to come to them with merchants in hand. We are building those relationships vis-à-vis the merchant relationship.

Alan: I’m really glad you guys capture key code. I’ve spoken to several mailers who have worked with you guys, who have received files from you guys, and processed those files. When you provide a name, address and key code, it’s pretty clear that the opt-outs is someone’s intent.

Some mailers I spoke with, round numbers, half of the Catalog Choice inbound file to the merchant matched to acquisition names, non-housefile names.

That made sense, as these particular mailers were mailing about 50 percent prospects. These are consumers saying, “Retailer X, you sent me a book and I’m not interested in that.”

The really interesting thing from my point of view is when you had 12-month house file names, active house-file names, of people that the catalog would consider active, loyal, best buyers and these folks with a key code in hand (so it’s 99 percent probably they legitimate), and these consumers are saying, “Don’t send me the book,”.

Catalogers will say, “We don’t want to mail folks who don’t want our book.”

And I think what they really mean is “we don’t want to mail people who won’t order from our book”.

There’s this huge, huge fascinating issue of people who respond to catalogs, are profitable for the catalogers, respond at a 1 or 2 percent response rate, but yet they don’t want the book.

Can you comment on the implications to catalogers when a six-month active buyer tells the mailer they want to opt out, using your service?

Chuck: I think you framed that correctly. There’s a mix of users, many are prospects, someone who has high recency, frequency and monetary value gets a lot of prospecting, right?

Alan: If they have recency, they’re on the house-file.

Chuck: Well, you know, right. People get a lot of prospect catalogs and they’re coming and using the site on a regular basis to opt out of those.

To get to the point of your question is “What about the active buyer?”

We’ve focused on the desires of the consumers to set forth their interests. We’re only promoting the notion of opting out of unwanted catalogs.

We actually promote a series of paperless shopping approaches –whether it is a link to the merchant’s site, or the uploading of a PDF version of a catalog pointing to your rich media version of the catalog.

We’re making these options available, so to the degree that you’ve got someone who for whatever reason that consumer is making, they don’t want to have this mailed to them, they now have an account. The relationship remains and they can come and make their choice.

They never really had those options before and in fact if they went to the merchant’s site or called the customer support line and said, “Please don’t send me a catalog,” the relationship is actually kind of totally broken.

Here, at least, there remains a connection with that relationship. We let you take notes about a given catalog. We’re considering a whole bunch of other features that will help you organize those catalogs that you actually like to buy from.

Alan: Fast forward five years. Is the catalog industry as we know it today dead?

Chuck: I don’t think that it’s a black and white situation, but my answer to that would be no. There are many people who like getting a catalog and our site continues to support the notion of people choosing the ones that they want to get.

In fact, we will be very shortly adding the ability to opt in to a catalog should you want it.

At the same time, there are many people who don’t want to receive them.

What we’re about is really supporting choice and respecting the consumer’s right to say, “This is what I want to receive in the mail and this is what I don’t want.”

So we’re really focused only on unwanted catalogs and if you look at this and I mean you know better than I about the size of the mailings of some of these organizations. You know, I believe some of them are, you know, mailing millions of catalogs…

Alan: Tens of millions.

Chuck: …tens of millions for any given merchant that we have in our service. We’re talking about, you know, for the vast majority of merchants, you know, a couple of 1,000, 10,000, 20,000 names. That is a high number for many of these merchants of consumer who have requested to please not send me this catalog.

Some of these opt-outs are deceased. Some of them are receiving more than one catalog. Some of them are saying, “I only want to shop online with you.” Some of them are saying, “I don’t like your products.” And some of them are saying, “I’m making a choice as a consumer that I don’t want to receive this catalog because of my environmental ethics.”

And each and every one of those options are truly legitimate and we believe that they should be respected.

So to answer the question, no, cataloging is not dead, but choice is alive. We see choice all over the world.

Alan: Choice is alive. I like that. It truly is.

Chuck: It is. Choice is alive It’s alive in the way you watch television today. You don’t have to sit there and wait for the TV Guide to find out exactly when the show shows up. You could put it on TiVo if you have that service.

Alan: Choice is alive and advertising is dead. You can TiVo out the marketing.

Chuck: That’s one, but even more importantly where advertising is truly alive is on the Internet where you watch TV.

You can go to YouTube or you can go to various video channels throughout the Internet where advertising is alive as it could be but where consumers can decide when they want to watch something and what they want to watch.

And it really is about choice and it’s really about a choice that can drive respect from the consumer standpoint, efficiency into the marketplace, so I think if we understand and embrace choice, this can be a good thing for everybody.

Alan: Something discussed at NEMOA was some concept of a Catalog Choice widget that retailers might be able to put on their site to have that third-party opt-out. Is that something that’s under consideration?

Chuck: Yeah, very good question, so one of the pushbacks – and we heard this specifically from Williams-Sonoma and so very early on in my discussions with Pat Connolly – that they, the merchant, wants to be where the communication is going on between the consumer and the merchant, that the opt-out request is occurring in the context of the merchant’s site.

So what we have done is done the work to white label or provide a hosted service of the mail preference request, so we can publish the various fields that are in our mail preference service but wrap it with your branding, your navigation, your header and your footer.

So the consumer comes to your site. There’d be a link on the bottom in your footer that’s next to the one that says “request a catalog.” There’d be another one that says “mail preference.” You can click that.

You could come in and walk through a wizard much like what we’ve already built in our site that says, “Tell me your name, your address, your customer number and what is your mail preference request. Do you not want it? Do you only want email?”

To the degree that we can get to a notion of frequency, we would love to get there too. We understand frequency is quite complicated, but let all that entire transaction occur in the context of the merchant’s site.

Our backend engine will go and deliver the roundtrip email confirmation and take care of registering this request. It all happens in your context.

Alan: Having been in the catalog industry, I know so many books are mailed, and sometimes a small number of mistakes are made on the margin. There will always be cases where people will say, “I opted out and I didn’t – you didn’t honor me.”

I’m wondering if you folks have considered that if a retailer using your service if they could come into some kind of a white hat or white list notion where you would go to bat for them if someone felt that their request wasn’t being honored.

I’m envisioning some sort of “Catalog Choice-certified, good guy merchant seal” such that if someone says, “Hey, I tried to opt out of Sonoma and they didn’t listen to me,” Catalog Choice could defend the mailer, and say “Well, actually, they do listen and maybe it’s a maiden name, maybe the catalog wasn’t to you but was to your daughter,” yada, yada, yada.

Would you ever consider a service where you would go-to-bat for catalogers that are playing by your rules?

Chuck: Sure. We have a whole process in place where we can facilitate the investigation of subsequent mailings. The consumer can come to us – that’s what’s actually so kind of beautiful about the site that we’ve built.

We focused on design and usability and recording each of these requests, so we can tell you exactly what day under what name, address pair you made this request. What happens often is they get a new catalog. The name, address pair doesn’t match. Then they could come in and make a new request.

Clearly, we will be happy to a group that would help facilitate this conversation and investigate these issues to the degree that they need to be figured out, be a way for the merchant to kind of pass a note back to the consumer and inquire about, you know, are there really two of these people at this household or not.

So there’s a whole kinda communication notion that can go on. We’re happy to be a site that helps facilitate that, all towards the mission of improving efficiency and reducing unwanted catalogs.

Alan: On your Catalog Choice for Merchants’ page where merchants can sign up, there’s a little piece of copy that suggests Catalog Choice can be used to acquire customers, a little bit of marketing language there.

Do you guys see yourself as an environmental organization?

Or is there a business angle where you end up helping catalogers acquire names?

Chuck: Well, so our mission is very clear. We’re about reducing unwanted catalogs and improving efficiency in the process.

If improving efficiency means that someone makes a request for a catalog so that they can get it mailed to them and they can make a purchase and that’s the most efficient, environmentally conscious way to make that purchase, that’s all within our mission.

We started our focus as an environmental organization because we wanted to help reduce the waste of unwanted catalogs.

As we’ve moved forward in the several months, we’ve also seen ourselves really as a consumer rights organization where we’re trying represent the rights of consumers to make these requests and have these requests fulfilled.

We don’t see ourselves as a marketing organization.

But to the degree that a consumer or a merchant can come together and form a relationship through our site, that’s where we’re wide open to having that happen.

Alan: As an entity, are you a for-profit corporation or a not-for-profit?

Chuck: We are a not for profit, 501(c)(3).

Catalog Choice is a sponsored project of the Ecology Center. The Ecology Center is a 30‑year‑old, nonprofit organization based in Berkeley, California that’s focused on direct services.

The Ecology Center runs the curbside recycling program in the city of Berkeley and surrounding communities. We have trucks that go around every day picking up recycling.

We would much rather reduce the amount of waste that enters the cycle by letting consumers kind of make these requests.

Alan: That’s 501(c)(3) is comforting.

Looking at other people in the space, for example, ProQuo, they’re a venture-backed entity. If you go to their job pages and look at the type of folks they’re hiring, you can see they’re much headed into profiling, data compilation, very different direction, taking a for-profit marketing angle.

Nothing wrong with a marketing angle. That’s the industry I’m in, but it seems that if a company had those two missions at once, that there’s kind of a split personality going on. It’s pleasant to hear that you guys are a not-for-profit entity.

Chuck: Right. We are a not-for-profit entity. We’ve been funded by a series of foundations. To make it clear, we do have an imperative to have the site be, you know, self sustaining over time.

So we’re looking at ways where we can supplement the foundation revenue we get with other forms of revenue that clearly meet our mission of reducing unwanted catalogs.

Alan: But there’s no VC money floating around? No sister for-profit company that’s operating with the team? Again, you are really an environmentally organization at the root.

Chuck: Yes. The way it is right now is we have a series of foundations who have funded us to get it to this point. Our mission is clear. Our mission is straightforward. It hasn’t changed and it won’t change going forward.

Alan: Giving you the last word, Chuck, if consumers or merchants want to learn more, what should they do next?

Chuck: So if they want to learn more, go the site, catalogchoice.org. Take a look at it.

If merchants want to learn more, you can contact us at merchantservice@catalogchoice.org or you can contact April Smith, who is our project manager from a merchant perspective. April can be contacted at 802‑496‑5547.

Our goal is to work in collaboration with the merchant community so that together we can make this work for the merchants and for the consumers. It’s in our interest that together we use kind of a market-based approach to do this rather than other approaches.

We think that this will be the best approach for the industry and for the consumers in the long run so that consumers can set their mail preferences and receive the catalogs that they do want and not receive the ones that they don’t want.

Listen to podcast: Chuck_Teller_Interview.mp3

The majority of catalogers are mailing too many catalogs to web customers.
– Kevin Hillstrom, MineThatData

Kevin Hillstrom is one of the leading thinkers in the area of multichannel marketing analysis. Here’s a transcript and a podcast of an enjoyable conversation we shared last week.

Listen to podcast: RKGblog_Interview_Kevin_Hillstrom.mp3

Alan Rimm-Kaufman: It’s a tremendous pleasure to be speaking today with Kevin Hillstrom, president of MineThatData.

Kevin is a virtuoso of database marketing, with deep work experience at Nordstrom, Eddie Bauer and Lands’ End.

Kevin, could you start off by telling us about your background and what you’re doing today?

Kevin: Sure. I started off as a lowly statistician. I got a statistics degree from the University of Wisconsin. I spent a couple of years in my first job analyzing corn and sorghum hybrids for a little company out in Iowa, and learned basically how to do SAS and SPSS programming in that job.

That helped me transition into a job at Lands’ End, where I was a statistical analyst, and I figured out who should receive catalogs for Lands’ End.

That progressed into a job at Eddie Bauer, where I was the director of circulation.

That became a job at Nordstrom, where I was vice president of database marketing, and spent a lot of time at Nordstrom understanding how channels interacted with each other.

That kind of gave me the impetus to want to start my own business, focusing on helping people understand how channels fit together. That’s how I arrived here at what’s now called MineThatData, my own business where I basically help CEO’s figure out how customers are interacting with all the different channels.

Alan: How customers interact with all the different channels — that is the billion-dollar question in our industry. Collectively, we are all figuring out the relationship between catalog and web and store.

Kevin: Yeah. It’s the big question right now.

Alan: You came out with a tremendous book. It’s bright yellow, and has a beautiful flower or shell on the cover. It’s called, Multichannel Forensics. I very much enjoyed reading it.

In your book — jump in and correct me if I’m getting this wrong — you take a corporation and break it up into business units. Web, store, catalog, and so on.You look at the annual retention rate of each business unit. And you bucket those rates into low, medium and high.

Then you look at the migration between the business units. You suggest four different migration states.

So there are three different retention states, and four migration states.

In kind of an RFM kind of way, you get 3 x 4 = 12 unique combinations of those.

The real beauty of the book is you say that once you know which cell each channel falls, you know how to manage that business unit.

Did I get that right? Can dropping each business unit into 1 of 12 bins provide that much insight?

Kevin: I think you are on target with that.

Basically, I make the premise that as a business, you’re gonna keep either a lot of your customers from last year, or you’re not gonna keep a lot of customers, and that’s generally not good or bad.

For instance, a lot of multichannel retail businesses will keep 75 to 80 percent of last year’s customers this year. A lot of catalogers and online businesses might keep 40, or 35 or 30 percent of last year’s customers. Knowing that, first of all, is really important, especially if you’re an online business or a cataloger, because it tells you what kind of customer acquisition activity you have to do.

For a catalog or online business, you find more often than not that customer acquisition plays a disproportionate role in driving the future and health of that business.

Then, there are migration states, that you mentioned, that I like to look at, as well. This is what’s really important, is want to understand if customers are willing to switch between channels, or if they’re just going to stay focused on one channel and that’s all they’re going to do.

Basically, I look at people who are stuck, and they’re never going to move in channels, and I call that Isolation.

I have customers who might be willing to try different channels. They’ll dip their toe in and try buying something on the Web, or might go into a store, or a Web customer might try to buy something out of a catalog. That’s called Equilibrium.

Then, the most interesting dynamic of all is called Transfer, and that’s when customers switch. They go from one channel to another, and then they stay in that channel in the future. In some instances, you have customers that switch back and forth. I call that Oscillation.

You basically end up, like you described, with an RFM scheme, with 12 different cells.

If you’re an executive, knowing these 12 different cells tells you what you do with your business.

I’ll give you an example.

In our time at Nordstrom, we realized that our Web site wasn’t really great at holding onto customers. It was great at acquiring customers, especially in new markets or places where we didn’t have stores. What we found was those customers over time switched their loyalty to our store. Once they bought in the store, that’s where they stayed and they didn’t go back to the Web site anymore. Within that framework, you look at your Web site very differently, and you say, “My Web site is a place to get new customers, and then I want to make that experience great for them so that they can have a good in-store shopping experience.” It changed how we look at the business.

You don’t focus anymore as much on conversion rates and things like that, the traditional metrics, because you want the customer to migrate through that process. It then gives the Web site a role within the business, and you realize that without the Web site, we knew that our sales would decrease by a certain percent each year. It basically gave that channel a role.

It also told us, because our retail customers wouldn’t convert back to the Web site very easily, that we really couldn’t do a lot to basically get a store customer to convert back to the Web, so we didn’t try as hard at that because it wasn’t in the customer’s natural inclination to do so.

At Nordstrom, it helped us figure out what that process would look like.

For catalogers, we have a very similar kind of situation now, where customers receive a catalog but they order something on the Web. We need to figure out do we mail those customers more in the future, or do we not mail those customers in the future? This framework can help you understand what role a catalog plays at growing a long-term, healthy online business.

Alan: You’re on the road a lot, helping different companies and getting to seeing a lot of different companies’ results across the industry.

Today, how far off-base is it to just treat the web, catalog, and store channels as independent?

Kevin: There are some results that are kind of mixed. I break things up into more channels than the client thinks they have.

Alan: I How so?

Kevin: For instance, a client of mine might have customers who receive a catalog and send their order in through the mail, like you would back in 1975, and they include a check in their envelope.

Then you’ve got customers who receive a catalog, and they order over the telephone.

You have customers who receive a catalog, and enter a key code on the Web sites, and place their order on a Web site.

You have customers who receive a catalog, and don’t tell you anything on the Web site about the fact that they got a catalog; they just order something.

Then, you’ve got customers who use paid search and other online advertising forums to order online.

At the end of the continuum, you’ve got customers who just love ordering online that really don’t need advertising. Within that framework, you’ve got really six or seven channels. Customers who are early in that process, either mailing in their orders or ordering over the phone, you’re not going to get them to switch over and buy on the Web and doing a lot of referrals from paid search, as an example.

If a customer is further down that path, they might be likely to do that.

What I find is that a lot of my catalog clients right now are right in the middle of that process, where their customers receive a catalog, and they order using a key code, or they order and through a matchback analysis, we find out that at least the catalog was mailed during the past 30 or 60 days.

Catalogers are at this big inflection point, where they could eventually spend too much money on catalog mailings, or their customers are going shift online really rapidly, and they’re not going to be ready from a Web site standpoint to handle this migration of customer behavior. Most of the catalog clients we work with are kind of right in that middle stage.

Alan: Do you think that catalogers typically are still over-mailing and relying too much on the book? Or are doing it about right, perhaps not mailing the Web folks enough?

Kevin: I would say that the majority of the folks I run into are mailing too many catalogs to the Web customers.

Alan: You had an interesting blog post describing your time at Lands’ End, where each business unit mailed their very best customers, and as a result, each customer got every single Lands’ End book.

That’s reminiscent of what might be going on today with mailing Web buyers, perhaps?

Kevin: It’s very similar.

Most of my clients are in a position where the catalog is their heritage. That’s what they love. They really want to believe that the catalog is what’s driving those orders.

They’re mailing these Web customers a lot of their catalogs, hoping that Web customer will just keep buying as a result of those catalogs.

At the same time, they’re also sending those customers emails, and those customers are also kind of self-serving themselves.

They’re going out on the internet and finding the information they want. There’s kind of this little bit of a trap, where you get customers, your very best people, the ones who like to shop across the multiple channels, but you end up, from a marketing standpoint, spending a lot of money on them.

As a result, they end up being actually a little bit less profitable.

There are going to be ways here over the next couple of years to optimize that relationship and that spend that you do, so that maybe you cut back some of the catalogs, and you maybe invest a little bit more in paid search. Over time, then, you kind of push the customer a little bit toward her helping herself, if you will.

Alan: Do you think catalogers are at a disadvantage because of their emotional connection to their heritage?

Kevin: Absolutely. Absolutely. I was at a conference earlier this week, meeting with a group of CEO’s and every single one of them loved their catalog. They all brought their catalogs to the conference. They were passing them around and showing everybody.

Alan: Like pictures of the children.

Kevin: Exactly. They weren’t showing pictures of the Web site, you know? Yet, over half of their business on average was happening on the Web site. There’s definitely this emotional attachment to how they’ve marketed to customers over time.

Alan: Interesting! For folks interested in these issues, I highly recommend your new book to all the folks listening to this podcast.

For 2008, what would be your top tips for retailers navigating the multichannel waters this year?

Kevin: I think we’ve touched on a couple, and then there’s a couple of additional ones.

When I’m meeting with clients or I’m talking at conferences, I’m talking about this continuum, where people think they have a telephone channel and a Web channel, or a catalog channel and a Web channel.

Realistically, they’ve got many more channels than that, and the customers start revolving through these. If a customer is still ordering over the phone, that customer is still going to need to receive catalogs. If you have a customer who’s purchasing, and you’ve seen that referring URL, that it’s a paid search or it’s any kind of search engine optimization activity that’s driving that customer, that’s a customer you treat a little bit differently, and so to kind of look at things across that large continuum, as opposed to just thinking, “I need to mail all my customers.”

I think another thing that’s important is Matchback analyses.

I think the best way to describe this is in a matchback analysis, you find out that you drove a lot of orders to the Web site by mailing of a catalog. You can take another group of customers and not mail them a catalog, and then 30 days later or 60 days later, submit them into the matchback analytics process and see how many orders the process suggests were caused by a catalog.

What I mean by this is you know you didn’t mail the catalog to the customer, and yet the matchback process will say that some orders were driven by catalogs. That tells you kind of what happens organically. That organic thing is the thing you really want to learn, because that tells you, “If I don’t have a catalog business, how much of my business is going to be protected?” That truly tells you what your strategy should be from a catalog-mailing standpoint, so I think that’s a big deal.

Another thing that I think we will have to, as an industry, do over the next few years is link visits to the Web sites to purchases in other channels. Right now, for instance, in cataloging, we look at the fact that a catalog drove 20 percent of all the orders in the Web site during a certain period of time. We would look at a cataloging very differently if we said it drove 70 percent of the visits to the Web site during that period of time.

The Web has a responsibility of converting a customer to order something. I have clients who maybe have a six percent conversion rate on their Web site, and they see that they do a really good job of having catalogs drive business to the Web. I’ve got other clients that have a three percent Web site conversion rate, and they say their catalogs don’t work as well at driving business to the Web. But it’s really the Web site that’s causing that effectiveness to either happen or not happen.

Alan: Interesting.

Kevin: There’s going to be this process, where linking Web visitation behavior to marketing activities at the purchases is going become increasingly important. At Nordstrom, we knew, for instance, that during the course of a month, a multichannel customer would visit the Web site three times, would visit a store twice, and buy something once, and they would use any channel to buy. It told you how integrated everything really was for our best customers, so I think that’s going to be a big deal.

I’d say the last point is really for catalogers to have a vision for where their business is going to head over the next five years, and the same thing for retailers.

Earlier this week, I was meeting with executives, and we were trying to see where the business is heading. With prospecting challenges in cataloging, and with catalog choice slowly gaining momentum as a way for customers to not receive catalogs, you want to look ahead to what your business might look like in five years. And then decide what your marketing strategy should be over the next five years to get you to a place that’s positive.

I’d say those are the things that database folks and catalogers, in particular, are going to be looking at.

Alan: Excellent. Thanks for all your time today, Kevin.

Kevin: No problem. Thank you!

Listen to podcast: RKGblog_Interview_Kevin_Hillstrom.mp3

Earlier this week I caught up with Hamilton Davison, ACMA’s Executive Director. Check out the podcast for some of the good things for catalogers Hamilton and his team are stirring up on Capitol Hill.

Listen to podcast: rkgblog_interview_Hamilton_Davison.mp3

ACMA member list: current-members-2008-02-02.pdf

Alan Rimm-Kaufman: I’m here with Hamilton Davison, the Executive Director of the very new trade association, the American Catalog Mailers Association. How’s it going, Hamilton?

Hamilton Davison: It’s going great, Alan. Thanks.

Alan: Just what is the American Catalog Mailers Association?

Hamilton: We are a new 501 (c) 6 trade association registered in Washington DC, created in April of 2007.

We provide advocacy for catalog companies and any supplier that has a significant economic interest in the future of catalog mailing and catalog success generally.

Alan: Why do the catalogers need our own trade association? There’s the National Retail Federation and the Direct Marketing Association — what’s new and different about AMCA?

Hamilton: Well, there are some great associations that have catalogers among their members.

But all of them are broad based associations that can’t focus on catalog specific issues.

And sometimes there are issues or opportunities that come up that need advocacy on behalf of catalogs that really are opposed, in some cases diametrically opposed, to the selfish best interests of other membership groups of those broad based existing organizations. It’s pretty hard for them to take a strong position when they have different membership interests in different camps.

Alan: You guys have been pretty busy since your founding, it looks like from your newsletter.

Can you describe some of the things that the ACMA has accomplished for catalogers so far?

Hamilton: It has been a very intense time. We have established our operations and our association and all the back office departments. We have built our membership to 60 companies strong, and it’s continuing to grow.

We have established ourselves as a credible voice in the national postal policy debate meeting with a number of people at the US Postal Service including the Post Master General, who I had a great visit with about a month and a half ago, and the Postal Regulatory Commission, who actually spent an entire day with us touring through a catalog operation and learning about the catalog business model.

And testifying in front of Congress, as we described in another newsletter. We testified in front of the House Oversight Committee, which is the group that is in charge of postal matters in Washington.

Alan: And what was the bottom line impact of all these meetings and all these conversations?

Hamilton: Well, there was just an announcement of a rate adjustment by the USPS, which was to our consent very favorable to catalogers. It was about half the rate levied on everyone else. It was placed on catalogers, which I think is in important signal to the catalogers that the USPS understands the economic duress that they’re under right now.

As a matter of fact, I specifically asked Jack Potter to send the catalog industry a strong signal in this next rate adjustment.

And while I fully appreciate that it doesn’t begin to address the magnitude of the horrendous increase that we got effective 2007, it is a good start and things are starting to come together within the Postal Service to understand that they need to manager our segment of mail differently if they’re going to keep us going in the mail.

And you know, we’ve actually been a huge component of their volume growth over the past ten years or so.

And the USPS desperately needs additional growth so it’s a good alignment between the catalogers and the Postal Service.

But they’ve got to manage us in a different way than we’ve been managed here to fore.

Alan: That’s interesting. You send out a really great email of what your trade association’s doing. In that February 14th email, you had an interesting quote where you said, “Most see rate setting – postal rate setting as a zero sum game.” What do you mean by that?

Hamilton: Well, each mailing interest has historically participated in dialog with the Postal Service and until recently in litigation before the PRC, the former Postal Rate Commission, now called the Postal Regulatory Commission. To try to carve up the pie of the USPS overhead to different rate classes. The United State Postal Service is 70 to 80% fixed cost or fixed overhead, as you would say in the business community. In postal speak it’s called “institutional costs.”

And it’s always a bit of a contention as to where those institutional costs are going to be allocated.

Does first class pay the freight?

Do the catalogers pay the freight?

Does standard mail in general pay the freight?

So each group of mailing interests, and there must be 30 or 40 of them, has historically gotten involved to advocate for their class of mail and make an argument that the greater share of institutional costs should be born by other mailers and other mail groups.

So in postal rate setting it’s been historically a zero sum game.

Some have thought that with the passage of postal reform or the postal accountability and enhancement act that was passed in December of 2006, that that would no longer be the case.

That rates would be only governed by market factors, but there’s still a very strong cost component.

The law says that each class of mail must bear it’s own costs, its direct costs as well as its fair portion of the institutional costs.

So we still have a little bit of a vestige of a zero sum game plus there’s certainly opportunity to get services and enhancements and policies and technical regulations that are favorable to catalog mailers or for that matter any other mail group.

Alan: I think it’s fantastic that you and your association are up on the Hill fighting for catalog postage rates. I feel like for decades the catalog industry in specific has rolled over on its belly and let postal rate setting folks just trash catalogers. Our industry hasn’t been as well represented as some of the other types of mailers.

Beyond postage though, what’s ACMA doing in other areas of cataloging?

What about Catalog Choice and the industry wide opt-out organizations?

Hamilton: We’ve been very active in do-not-mail.

About 60 or 90 days ago our board of directors asked us to form a task force to study do not mail from the cataloger perspective.

And while there’s lots of people out there active in that issue on behalf of the mailing industry, nobody was really taking a cataloger only focus or cut at what some of the issues are.

And I think that’s been no more dramatically highlighted than by the incredibly rapid growth of this group called Catalog Choice.

We decided we were going to first study all of the people, all the major players that were in the space.

We’ve had extensive discussions with DMA and Mail Moves America, but we’ve also had a lot of discussions with Catalog Choice.

We want to know who they are, what they’re trying to accomplish, what their source of funding is, what the technology is, and start understanding some of the messages that they’re sending out to the consumer community.

Alan: What have you learned?

Hamilton: If you’ve been following the blogs it’s been very vociferous.

There’s lots of internet posts about Catalog Choice and the direct marketing industry.

What we’ve learned is that the DMA “just say no to third party” suppression position is not a sustainable one from the catalogers’ perspective.

As a matter of fact, it puts catalogers squarely in the middle because it Catalog Choice doesn’t get a catalog merchant to opt out according to the members that have registered for Catalog Choice and that consumer continues to receive a particular title. That consumer isn’t gonna be mad at DMA, is not gonna be mad at Catalog Choice or ACMA. That consumer is gonna be mad and take it out on that catalog title and catalog brand. And that represents the potential for real declines in revenue as groups of consumers start to get active and vote with their wallet.

Alan: And when you say that you’ve spent time researching this issue, my sense is you guys move pretty quickly. That wasn’t a two-year study or a year-long study, was it?

Hamilton: No, no, no. We actually have come to some conclusions and we’re actively involved in trying to get a resolution that suits the entire industry.

And I’m not going comment publicly on what that is right now, but I am cautiously optimistic that we’re going to be able to resolve this in a business like and reasonable manner.

We think that the approach of everyone can be brought together to find a realistic solution. Catalogers don’t want to see consumers get catalogs that consumers don’t want to receive.

We think it is reasonable to try to work to eliminate the waste of unwanted catalogs out of the system. But we also are concerned about some of the messaging and some of the public relations postures that are being taken by a variety of groups.

We want to see that moderated because we can win the battle of do not mail and lose the war in the court of public opinion for the hearts and souls and wallets of the American consumer. And nobody’s out there telling the story about the positive environmental impact of cataloging.

The national warehouse direct to end user is a very ecologically sound business model. The fact that catalog paper is able to be recycled six or seven additional times before it’s landfilled as tissue paper is not being told. The fact that catalogers have done a lot including the reduction of the basis weight of their paper and other things to reduce their carbon footprint in the environment. None of these things are being told. And the dialogue out there is really one-sided and that concerns us.

Alan: I applaud you guys for getting involved and moving so quickly. I think speed is really of essence. If you look at how quickly the national Do-Not-Call list was adopted and became basically universal — in a matter of months if not weeks — that shows that we have to support nimble organizations that can actually speak for the industry and do so quickly.

You guys got a really nice endorsement from NEMOA, the New England Mail Order Association, recently.

Hamilton: Yes, we did.

We were very appreciative of NEMOA’s time and attention.

They have, as a board, been actively following what we’re doing. Actually some of our members and even a director or two are in common with NEMOA. So they’ve had a good opportunity to have a bird’s eye view on our work and what we’re trying to accomplish.

And the NEMOA endorsement was an important one for us. It gave us an opportunity to point to a third party who had done due diligence and could certify that our intent is honest and our work to date is effective. There are a number of NEMOA members that are not ACMA members and we’re hoping that their endorsement will change that.

NEMOA does a lot of great work in education and outreach and networking.

But NEMOA clearly is not in the advocacy arena and as indicated they don’t plan to get in the advocacy arena. And their board has come to the conclusion that catalogers really need an advocacy organization that is out there looking after them.

Alan: Okay. So give us the pitch. If catalogers are listening out there and they want to get involved with ACMA, what do they do first?

Hamilton: Well, all they need is to fill out our membership form and sign up. Soon on our website they’ll be able to put a credit card in. Today we’ll need to get a check from them.

And the cost of membership amounts to one quarter of 1% of their 2006 postage spent.

This most recent rate case decision from the USPS that we had a great deal to do to influence represents at least, for all catalogers, at least a 1% improvement on the rates that they would have otherwise gotten.

So my calculation is that joining ACMA better than a 30% internal rate of return on the dues investment. And we’re just getting started!

We have the ability to affect the environment that controls cataloger bottom lines, but we must have the industry support to be able to continue that aggressive work.

Alan: 0.25% of your postage bill — that’s a tremendous pricing model.

And the url is catalogmailers.org if folks want to check you out.

Hamilton, thanks so much for taking the time today. Keep fighting the good fight.

Hamilton: Well Alan, thanks for your support and interest and we look forward to talking to you again.

Listen to podcast: rkgblog_interview_Hamilton_Davison.mp3

ACMA member list: current-members-2008-02-02.pdf

Every little moment where you interact with a customer, that’s a chance to be remarkable.
– Andy Sernovitz

Andy Sernowitz gave a great keynote at the last Shop.org conference on word of mouth marketing.

He graciously shared more of his thoughts during a phone interview last week.

Listen to podcast: rkgblog_Interview_Andy_Sernovitz.mp3

Alan Rimm-Kaufman: I’m honored to speaking today with Andy Sernovitz. Andy is President Emeritus of the Word of Mouth Marketing Association, teaches at Northwestern, blogs at Damn!IWishI’dThoughtOfThat, and is now with GasPedal. Hey, Andy, thanks for joining us today!

Andy Sernovitz: Glad to be here!

Alan: You’ve written a fantastic book, Word of Mouth Marketing: How Smart Companies Get People Talking. So, what is “Word of Mouth”?

Andy: Word of Mouth is this thing that we’ve known about forever, this idea of people telling folks about stuff they like.

What’s new and interesting is this idea of word of mouth marketing; how do you understand the conversations, how do you help it along, how do you encourage people to say good things about your company.

The basics of thinking about great word of mouth are two things; it’s number one, giving people a reason to talk about your stuff, and number two, making it easier for the conversation to take place.

So giving people a reason to talk is all these things we hear about being remarkable and the purple cow .

How do you create a business where people just love to tell their friends?

This is Starbucks.

This is Google.

This is the original Krispy Kreme, where everybody was just dying to show their friends the hot donut.

The second part are all the tactics.

You’ve got fans, you’ve got customers, you’ve got people who love you, can you use email and YouTube and MySpace and blogs and free samples and postcards so that those folks who really like what you’re doing have the tools to further extend the conversation and talk to more people.

Alan: You mentioned some great brands, Krispy Kreme and Google and so forth.

Can you give examples of retailer doing word of mouth successfully?

Andy: There’s a ton of them.

The two retailers that are top of mind right now to me are Target and Starbucks.

We love to talk about Target because they keep doing these little remarkable things. In a lot of ways they sell the same stuff as everybody else. There’s a little more stylish, it’s a little more fun, there’s always some creativity to it, and you tell people, “Hey, I went and saw something at Target.”

Starbucks now has plenty of competitors that sell the same stuff, but it has just become part of our everyday conversation. I don’t think it has to be, you don’t have to be one of these mega-wonderful brands to use word of mouth on a day-to-day basis. It’s a lot of simpler stuff.

Old Navy has their annual 4th of July commemorative T-shirt, and every year 100,000 people go buy a special T-shirt and tell their friends about the special Old Navy experience they just had.

There’s just story after story of these kinds of things happening.

Alan: So you talked about being remarkable and then letting that remarkableness spread.

What if folks have the misfortune to be at a brand that might be kind of average or mediocre, that isn’t a remarkable place to begin with?

Andy: Every little moment where you interact with a customer, there’s a chance to be remarkable. When you have that customer service phone call there is this special opportunity, we think, “What is this person going to say when they get on the phone?” And a call center operator can change the entire word of mouth experience of a company by just saying please and thank you and going the extra mile.

A lot of word of mouth is service. A lot of word of mouth is done by individuals. We are earning that tiny little extra bit of respect.

Alan: Good stuff.

Andy: Yeah, I think about some great examples, in my web hosting company, which is Media Temple, every time I get off the phone with a customer service request they send me a written copy of what they did and how they fixed my problem, which I inevitably forward to a couple of friends who are hosting somewhere and say, “Here’s the solution to your problem.” They put an email in my hands that I can share with somebody.

The Potbelly Sandwich chain, which is big here in Chicago. Potbelly is opening up restaurants in Austin, Texas, and it’s a good sandwich chain and people like it.

They rented a mailing list of folks who had moved from Chicago to Austin, and send them a letter saying, “Hey, do you miss us? We’d like to buy a sandwich for you and all your friends. Here’s a stack of coupons for your friends. Take then to the new Potbelly in Austin.”

Alan: Coupons for the friends, not just for the movers.

Andy: That’s right. Not for you, for the friends.

So that subtlety of a coupon for you versus a coupon for your friends is such an easy to do and fundamentally gets people talking and starts conversations.

And it’s more than just, “Here’s a coupon for your friend,” it’s this idea that you, the recommender, look really good, that you suddenly are hooked up. You know, the restaurant back in your old hometown actually thought enough of you to send you a gift, and now you’re buying lunch for everybody in the office.

There’s a really strong word of mouth experience around that little tiny bit of coupons.

Alan: It’s a great story, to be able to treat people to what the mover experienced when they were eating back in Chicago, before moving to Texas.

Andy: Yes. What are the cost to them — a handful of sandwiches?

Alan: Great stuff.

What are some of those other tactics that sort of the new web environment facilitate?

Andy: I think we over-think some of this social media. It’s very easy to talk about YouTube, MySpace and Twitter and you’ve got to do all these things. And if you don’t do all these things then your company is not hip.

Alan: Yes.

Andy: They’re all really important tools, but no company should feel pressure to do all of them. If you’ve got a bunch of fans and customers who would like to talk about you, they are already talking about you somewhere.

So the trick is figure out where the conversation is happening and then you jump in and you participate.

So if you are Levenger and you sell pens then there tons of fountain pen discussion boards and blogs, that is where you should be, and FaceBook doesn’t really matter to you.

And if you are dealing with a bunch of teenagers, MySpace is the place to be.

And if you’ve got a product that looks cool in video, YouTube should be the place to be.

What’s interesting is you get a lot of old school ad agencies who have strength in TV advertising telling clients, “be on YouTube” because we’re good at making 30-second videos, so we’re going to take a TV commercial, jam it onto the social media platform and tell you you’re now a social media marketer.”

Which is basically the premise of Meatball Sundae, Seth Godin’s new book, which is you can put fancy new media frosting or social media frosting on a mismatched product. You find what works and you do those kinds of things.

Alan: You keynote at the last shop.org conference, you talked about just having someone in the organization troll through the blogosphere and say, “Thanks,” for good things or say, “Hey, can we help?” for bad things.

You said that had highest return of any marketing activity that folks could be doing.

Andy: Yes, I think there’s incredible economic benefit to getting out there and joining these conversations, that we spend so much of our lives in a company solving problems.

Every time someone comes to your call center or calls in and says, “I have xyz problem,” you’ve gotta go fix it.

You fix it and it’s fine and it cost you some money, and no one ever knows that phone call happened, just that one customer got taken care of.

If you find the exact same person who has written in their blog, boy, such and such went wrong with this company and you run out there and you say, “I’m sorry, let’s fix it,” and you have that conversation in writing on the blog, that exact same customer service cost now permanently changes how people see your company.

Because you still felt the problem but now you did it in a way that it’s on that web page forever, and then has value in terms of brand reputation and other goodwill-type values, but more important, they’re real links back to your web site, and there’s somebody writing and saying, “Oh, this company helped me out.”

And you’ll have a few customer service reps spending a couple of days on the phone solving problems on blogs, you’re putting out, let’s say you put out 20 problems you solve every day in writing of people on blogs and message boards instead of on the phone, that is 7,000 new web pages permanently linking back to your site.

And from a search engine marketing perspective that is a hell of a good benefit.

Alan: You also point out that the blogs run with that most frequent posts on top, so the good news of the resolution trumps out all the crappy complaining at the beginning.

Andy: That’s the real fun do blogging relations.

A lot of companies fear negative blog posts, but if negative blog posts are out there, they’re out there.

It’s a pre-existing condition. Obviously you should do things so people don’t write bad things, but if people are writing bad things about you the only way to make them go away is go to that blogger, post a comment, say, “Let me fix it,” and then you’ll have a little discussion back and forth.

You’ll go there and say, “I’m sorry about the problem,” and the blogger will say, “I hate your guts. You’re an evil corporation,” and you say, “Well, let me try.” And you go back and forth. And as these comments happen, the conversation ends in one of two ways, it either ends with, “Oh my God, this is the most wonderful company in the world. I can’t believe they read my post, they solved my problem, they’re great.” Or it says this, “I blogged about this horrible company, they couldn’t fix it, but I’ve gotta tell you, I can’t believe they came to my blog and they heard my complaint and they tried to fix it and I give them points for trying.”

Either way, the last post is what’s on top and the last post is what shows up first in Google.

And what you end up with is the end of a conversation saying, “This is a smart corporation,” that this is people who get it, and all the Google searches are the happy resolution instead of the awkward beginning.

Alan: Great stuff. As we close up, what would be your top marketing tips for online retailers going into 2008?

Andy: Put a sign in every department, on the conference room wall, that says, “Would anybody tell a friend about this?”

It’s a magic question that raises the bar across the organization and development.

When you see the sign that says, “would anybody tell a friend about this?” you look at the product, you think, “It’s fine. It’s good,” but no one is picking up the phone and saying, “You’ve gotta try this,” and if people aren’t going to talk about it, you’re going to have to advertise it, and that’s expensive and complicated.

And so, find some way to get people to talk.

If you put that sign in the marketing department and you’re about to design an ad and you’re going to run ads across the web or in traditional media, you look at that ad and say, “Is anyone going to tell a friend ‘Hey, did you see that ad?’” And if they’re not going to say that, if it isn’t worth it then make a better ad, raise the bar.

And you see that sign in customer service, you keep asking the question, “How do we earn a recommendation? How do we earn a conversation?” and this keeps pushing news forward and it turns out into real solid marketing benefit.

Alan: Andy, great stuff. And your book, Word of Mouth Marketing: How Smart Companies Get People Talking, is fantastic, with fun yellow cover and great content. Thanks for the conversation!

Andy: Thanks for the opportunity!

Listen to podcast: rkgblog_Interview_Andy_Sernovitz.mp3

Too often we focus on the risk rather than its upside.

When I ride my mountain bike across a skinny log, I find myself looking at the drop, looking at the place that I don’t want to go. Inevitably, you go to the place you’re looking.

I think it’s the same thing in business and life. If you focus on what you fear the most, you’re gonna end up right there.

– Missy Park, Title9

Missy Park is CEO of Title Nine, a web/catalog/store retailer of women’s athletic gear she founded in 1989.

Title9 sells great stuff, has a tremendous brand, and creates fiercely loyal customers. I should know: my wife is one of them.

The company name refers to Title IX of the Education Amendments of 1972, which among other things, prohibits discrimination based on sex in high school and collegiate athletics.

Here’s a neat conversation with Missy about risk, branding, and Title Nine’s transition to retail.

The direct business is a control freak’s dream job and retail is a control freak’s nightmare.
– Missy Park

Listen to podcast: rkgblog_interview_Missy_Park.mp3

Alan Rimm-Kaufman: I’m honored to be here today with Missy Park, founder and CEO of Title Nine. Hello, Missy!

Missy Park: Hey Alan, how are ya?

Alan: I am doing great. Thanks so much for taking the time to speak with me today.

Missy: Oh, no problem.

Alan: For folks that aren’t familiar with Title Nine, could you give a little bit of the company history?

Missy: Well, we are a multi-channel retailer and we focus primarily on women’s athletic apparel and sportswear. One of the things we like to say is that we try and bring the functional, athletic apparel to every day use. The comfort of those athletic fabrics and features that we all enjoy when we’re playing sports but also bring those into the workplace and the weekend.

Alan: And you founded the company yourself?

Missy: Yeah, I did. I started the company back in 1989 out of my house and had our inventory in the garage and it was something that only a 26 year old who didn’t know better would do.

Alan: I’ve heard that your first catalog mailing generate a total of 3 orders?

Missy: Yeah, maybe three or four. I think the more important statistic is that there was only maybe one from someone I didn’t know.

Alan: You’ve said that 30% of the response to your first catalog came from your Mom.

Missy: Yeah, exactly.

Alan: But you’ve stuck to it and the business has grown beyond those humble starts. You have stores now, you’ve got the catalog, the website. Can you tell us a little bit about those?

Missy: Well, I think we obviously have gone off in a lot of different directions. I think I’m getting re-acquainted with my naïve 26 year old again. We have moved off into retail, the bricks and mortar side of the business as well as the web to me is just the next generation of a paper catalog so, people talk about that as multi channel and I just see, this is evolution, it goes on.

So we see retail as a way, we sort of see that as our brand billboard, our brand come to life both in the kinds of backers that we have there and what, how we can interact with our customers on a personal and three dimensional basis and we see the web as, quite honestly, the next generation of catalogs.

Alan: You brought up brand. My sense of Title Nine is you have an incredibly strong brand from the models to the choice of the way you describe products to how you answer your phones. Is that something that you’ve worked on?

Missy: Yeah, you might say that. I think for me the brand is a very personal brand. The people here, all of our buyers are product users, the folks on the phone are product users and basically it’s important to us that we be able to speak authentically about what we’re selling so the brand is awesome, we are the brand and that’s for good or ill. I often say if we don’t hear from our customers it might be because we’ve put her to sleep.

So we’ll often, we’ll say things that not everybody likes and certain