I spotted a news item in the Wall Street Journal recently about Williams-Sonoma using zip code data to reduce catalog circulation. At first glance the idea is to use residential real estate and income data to predict the probability of prospects and reactivations buying from a catalog. This pricked my curiosity and lead me to listen to the webcast of the 8th Annual Oppenheimer Consumer Growth Conference held July 9th in which Pat Connelly, EVP and CMO for Williams-Sonoma explained the unique marketing strategy that justifies the company’s positive guidance to the investment community.
I listened to Mr. Connelly present at the ACCM Executive Summit two years ago and respect his marketing savvy. The marketing strategy he described is focused on efficiency, profitability and reduced cost during this difficult economic environment. First of all, there is the 1st mile/final mile element designed to reduce returns, replacements and damaged-in-shipment goods. This post will not go into detail on this aspect other than to say I know first hand that the damage to the customer experience caused by using wrong vendors, misplaced or non-existent quality control and high return rates will snuff out most all other gains in company growth.
The second marketing cost reduction strategy is what Mr. Connelly labeled “marketing optimization.” In lay terms this means they have figured out who will or will not buy, resulting in a 10-15% reduction in circulation in toto across their various brands. Using their database of 58 million households, each carrying up to 678 data elements, Williams-Sonoma is able to version smaller catalogs specific to the retail, internet and prospect segments. For instance, 30% of Pottery Barn’s catalogs are versioned. The two versions carry 108 and 172 pages, respectively. For Pottery Barn Kids, 25% of the catalogs are the smaller 80 page version, versus the “main” book carrying 124 pages.
Consequently, using data elements such as zip code-real estate dynamics (external) with retail-internet-prospect segmentation (internal) and profitability models for versioned sales forecasts, Williams-Sonoma is able to forecast a circulation reduction of 15%, a total page reduction of 20% and a significant reduction in returns, replacements and damaged goods – all in a deteriorated economic environment.
The 32. 31 minute webcast will be available online for about two more months and I highly recommend all serious catalogers and multichannel merchants listen to it by going to http://www.veracast.com/webcasts/opco/consumer08/63202261.cfm
