I suspect many of you are now familiar with The Long Tail strategy first coined by Chris Anderson in 2004. Essentially, the notion suggests “selling less of more.” I view it as the 80/20 rule in reverse, and it’s often the topic of heated discussion between direct marketers and their accountants.
The strategy focuses on the inherent competitive advantage of a B-to-B (or B-to-C, for that matter) catalog company stocking as many items as it can in order to compete with retail stores or “net gnats,” who pick off your best-selling items and sell them online at a discount. A retail store’s space is limited, but a catalog business’s is not — at least relatively. Of course, the debate comes when the margin gained on unique — some might say obscure — items don’t pay for their carrying and promotion costs. The accountants would say, “Get rid of them.” The smart marketer, however, knows to look at other criteria before that decision is made. For example, consider the power of those rarely sold items to gain new customers who in turn go on to provide a high lifetime value.
Another consideration is the strategy’s contribution to the brand. When it come to books or movies, for example, would anyone think that Barnes and Noble or Borders has greater selection than Amazon? Or would Home Depot have a better selection of safety items than Northern Safety?
The Long Tail strategy also comes into play when you’re purchasing or managing keywords in organic search. Essentially, the thinking here is that keywords or phrases that are more specific may produce less traffic, but are likely to be more highly qualified, more productive and less expensive. If you sell guitars, for example, you’ll pay dearly for that keyword and get a high volume of search traffic. However, if your main product is a Jimi Hendrix-autographed electric guitar, a longer, more descriptive phrase or combination of relevant words might provide better return.
The notion is that you’re selecting keywords that produce 20 percent of the traffic, rather than 80 percent. When you graph response (i.e., traffic) in this Hendrix guitar example by keyword, the high volume of traffic (80 percent) happens with the keyword “guitar.” The smaller volume, or long tail, comes as the response curve or graph moves to the right.
One more consideration: When it comes to obscure SKUs or very specific key phrases, the transaction needs to be automated in order for it to work. With low purchase volumes, your normal customer service costs can’t be justified. This is why you see Google selling ad words online, automated. Or why catalogers can justify stocking and selling an item they may only sell once or twice a year, if they sell it online.
Think about the benefits of being in the long tail. Read about it. It just might be your future.
Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fl., that services clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at email@example.com or (954) 383-5221 (direct line).
Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221
Comments or questions are welcome.