Whether or not you should pursue a catalog strategy is a matter that deserves careful consideration. As digital marketing becomes more complex, it can make sense to send properly designed catalogs to the right customers. For e-commerce retailers without physical stores, catalogs can effectively mimic store sensory experiences to improve customer affinity. For multi-channel retailers, by understanding the channel preferences of current customers through transactional data, multi-channel retailers can add an effective catalog marketing channel to their store channel and e-commerce strategies.
Increasingly, companies rethinking their strategies are turning to an analog method: physical paper catalogs. And it’s not just traditional retailers that are increasing their catalog investments. Even online disruptors such as Amazon, Bonobos and Wayfair have gotten into the catalog game. But does that mean every retailer should consider a direct mail strategy? If not, when does it work best?
To investigate these questions, we conducted a series of field experiments in collaboration with two large retailers – an online luxury watch retailer and a multi-channel department store chain that offers a variety of products. The results extend our previous findings on the general usefulness of catalogs into a set of specific guidelines that can help retailers leverage their existing customer data to design a targeted and effective catalog marketing strategy.
Our research led us in three directions.
First, we wanted to test whether all product categories are suitable for catalogs – if liveliness and emotional connections are key, as our previous research has shown, then theories would suggest that hedonic and experiential products will benefit more from catalogs than utility products.
Second, we wondered how consumers across different shopping mediums differ in their preferences and decision-making styles. Just as some of us prefer the sensory richness of physical stores while others prefer the convenience of e-commerce, previous research has indicated that consumers also differ in their “need to touch”. Do certain brands or certain products correspond to these consumers?
Finally, while visually stunning images can elicit strong emotion, texts can provide valuable information. So, we wondered what is the optimal balance between images and text?
Our results can help retailers who have a catalog strategy or are considering creating one, or can help retailers without a catalog weigh their merits and demerits.
Who are the catalogs intended for?
Because our first set of research predates the Covid pandemic, we were able to compare people’s responses to catalog marketing between 2019 and 2021 and study the effect of the pandemic and changing lifestyles on the response. consumers.
In the first round of field experiments with the e-commerce retailer, we sent a new catalog campaign in late 2020 to 8,600 US-based customers. Over a six-month experimental period, those who received catalogs in addition to emails resulted in a 24% increase in purchases compared to those who received only emails, indicating an increase in 870% return on investment. This ROI represents a 45% increase over the already impressive 600% ROI seen in 2019. In follow-up interviews with clients, they told us that during the pandemic, they had more time to browse catalogs and that they welcomed the distraction of screens.
This observation leads us to believe that the audience for catalogs is growing, even as the pandemic subsides. The emergence of a remote/hybrid work culture and increased consumer screen time will make analog experiences such as catalogs increasingly engaging and efficient. But should we send catalogs to everyone?
In the second set of studies, we partnered with a multi-channel department store chain that sells various product categories (hedonic and utilitarian) in its physical stores and on its website (with an annual turnover greater than 1 billion dollars). We conducted a series of field experiments to assess the customer and design factors of catalog campaigns.
The multichannel retailer’s database allowed us to first classify all customers into two groups: those who made more than 50% of their past purchases in physical stores (“physical-prone”) versus those who made more than 50% of their past purchases online (“e-commerce-prone”).
Then we sent identical catalogs to both groups. We’ve found that the ROI of catalog marketing on physical-leaning customers is 60% higher than that of e-commerce leaning customers. These results make intuitive sense – store customers have a higher preference for haptic and sensory experiences, and catalogs offer an extension of these experiences.
A picture is worth a thousand words, but only if it includes text.
With the same e-tailer, we tested two catalog designs: photos with minimal text except for the product name and photos with key product attributes and short complementary stories describing the sales opportunity. usage (e.g., “perfect for a Mediterranean summer vacation”).
Results show that while both designs are effective compared to no catalogs, designs with photos and stories are 40% more effective in terms of sales and customer engagement than designs with only photos and names of products. Customer surveys show that they keep these catalogs for 12 days in the first case instead of six days in the second case because they need to spend more time reading and digesting the documents. They also learn more about the product.
So while high-production photos are key to catalog success, the results show the importance of a design strategy that uses both photos and text for emotional appeal and informational appeal.
Catalogs should present hedonic and more expensive products.
The various product categories in our department store chain also allowed us to see which products respond best to catalog marketing. The results show that catalogs offering hedonic products have a 120% higher return on marketing investment than utilitarian products, in line with psychological theories. The higher priced products also achieved a 50% higher marketing ROI than the lower priced products.
The finding that catalog effectiveness depends on product type may help explain why, while many hedonic and experiential brands such as Birchbox and Lego implement catalog strategies, many traditional utilitarian brands such as Ikea abandoned them.
Are catalogs right for you?
Whether or not you should pursue a catalog strategy is a matter that deserves careful consideration. We don’t recommend jumping straight into catalogs just because digital marketing has become more complex. But sending properly designed catalogs to the right customers to maximize efficiency and minimize waste in terms of marketing dollars and environmental impact makes a lot of sense.
For e-commerce retailers without physical stores, catalogs can effectively mimic store sensory experiences to improve customer affinity. For multi-channel retailers, by understanding the channel preferences of current customers through transactional data, multi-channel retailers can add an effective catalog marketing channel to their store channel and e-commerce strategies.
As retailers and brands increasingly compete beyond simple performance attributes to win the hearts and minds of consumers, they need to think carefully about the aesthetic design aspects of their marketing programs. High-quality physical catalogs with stunning images combined with compelling storytelling can create sensory awe that would be hard to replicate on a digital screen. These sensory experiences can then lead to lasting impressions and stronger customer relationships, and translate to competitive advantage for the business.