Best Mailing Strategy to Web Only Buyers

by Stephen Lett

There is a tendency to think web buyers don’t need to be mailed at all. Or, not as much as catalog buyers regardless of their R-F-M. It is easy to jump to the conclusion not to mail web buyers as a way to save money by circulating fewer catalogs. I feel there is a tendency within catalog companies to over allocate and to give a disproportional amount of credit to the web in order to reinforce the “no mail” conclusion.  Catalogers want to mail less and use the Internet more. Yet, catalogers are not always clear on what’s really driving the business.

When you look at your source code report it may appear that the web only buyers do not perform well. Therefore, it is logical to assume these buyers should not be mailed a catalog or at least not mailed as frequently as catalog buyers who fall within the same R-F-M housefile segments. But, is this really the case? Before you come to any conclusion regarding Internet buyers and whether they should or should not be mailed, be sure to have your service bureau do a match-back first. To prove my point, I did the split and created a hold out panel and found that it absolutely paid to mail the Internet buyers a catalog. I created two panels of roughly 25,000 each. One panel was mailed seven times the other only one time.  The net contribution for the group mailed seven times was approximately 55% higher than the group that was only mailed once. The additional mailing expense was more than justified.

Why is the match-back so important to understanding the web and catalog buyer results? This is the process where your order file is “matched-back” against your recent mail tapes in order to give credit to the proper source code. This will tell you where the business is coming from and which key codes should be given credit for the sale, even web orders. The match-back tells us that 50% to 75% of the Internet results should be allocated to the housefile... our own customers. Another 10% to 20% of these results should be allocated to outside rented lists (this varies based on how much prospecting a company is doing). Without truly knowing the level of performance of all segments mailed, you could be led to some false conclusions that influence your marketing strategy.  Although not a perfect system, a match-back will keep you on track and give you the level of confidence in the results needed to make sound judgments.

I have put together the following chart which clearly documents the RPC (Revenue per Catalog) for the web only buyers before and after the match-back. The RPC before match-back is extremely low. The conclusion might be to not mail these customers. But wait a minute...

LETT Direct, Inc. WEB ONLY BUYERS
HOUSEFILE SEGMENTS
RPC *
BEFORE M-B **
RPC *
AFTER M-B **
Internet Hotline Buyers
$0.35
$3.75
0-6 Month Web Only Buyers 1X
$0.23
$1.55
0-6 Month Web Only Buyers 2X+
$0.28
$2.25
7-12 Month Web Only Buyers 1X
$0.09
$1.17
7-12 Month Web Only Buyers 2X+
$0.15
$2.28
* Revenue Per Catalog.
** Match-Back
   

The results after the match-back are much different. Some of these sales have been driven through e-mail campaigns (catalog mailings being the source of most of these e-mail addresses). However, it would be a risk not to mail catalogs to these buyers. We know the catalog is the biggest single driver of traffic to the web period!

Suggestions... Separate your web only buyers from your catalog buyers. Then, segment your web only buyers by R-F-M just like you segment and mail your catalog buyers.  Evaluate the results after match-back and then make your mail vs. no mail decisions on a segment-by-segment basis; both catalog and web only buyers. You might find that your web only buyers do not need to be mailed as often or as “deep”. Pay particular attention to the 1x web only buyers. For example, note the results of the two 1x web only buyer segments in the chart. Often, these buyer segments are shopping the web to find a particular item or gift.

Circulation planning is much more complicated today. And, it’s much more difficult to trace results to a particular source code. Not like the old days when catalogs could trace 80% of their orders to a specific key code! Much can be learned about the differences between web only and catalog buyers. The secret is to know the differences in buying patterns between the two groups and establishing a contact strategy to maximize your results cost effectively.