Catalog Circulation Never The Same Again
by Stephen Lett
Catalog circulation planning has changed forever. Significant changes have occurred making it more difficult to plan. Previous proven methods may no longer be effective. It is all about multichannel marketing today. The key to success is knowing how to use your marketing database across all channels. Contact strategy is the way to the Promised Land. Planning channels in isolation of each other is not the right approach. This month, I want to discuss how you can adopt to changing multichannel marketing tactics efficiently and affordably.
Here are a few of the significant changes that have occurred:
- Tracing by Source Code – Catalog non-traceable factors have increased from 20% to 60% or more. This has created the need for regular match-backs.
- Internet Factors – We have progressed from catalog marketing programs to multichannel marketing programs. This has created the need for a contact strategy approach to marketing planning.
- Lower Response Rates – There is no question that response rates have declined. This is due primarily to increased competition (primarily on the Web) and to a dependence on prospect names selected from one of six cooperative databases. This has created the need for aggressive promotions such as “free shipping” which has affected costs and profit margins.
- Increased Marketing Costs – Paper prices have increased more than 30% in the past 18 months. Postage costs continue to increase. Catalog selling expenses have certainly increased causing an erosion of the bottom-line. This has created the need to use the Internet more.
The Marketing Database
Those traditional catalog companies who know how to use their database effectively across all channels will be successful. Customers of multichannel marketers spend an estimated 30% more than those of single channel sellers. The one-message-fits-all-channels approach no longer works. The relational database must be designed to incorporate and to allow analysis of data from multichannel sources. That’s because each channel presents different opportunities and challenges. It is important to tailor your message to the medium, i.e., format, type of info you send, etc.
One way to test a channel-specific theory is to set-up a contact strategy test. This will help you determine if your Internet only buyers should be mailed and if so, how often. This test will need to take place over a three to six mailing cycle therefore results will not be known immediately. Simply create three (or more) test panels of Internet Only Buyers. In mailing or drop #1, all three groups in my example get mailed. In drop #2, only panel “A” is mailed. And, in drop #3, two of the panels, “A” and “B” are mailed. If mailings are being made every six weeks, it will take eighteen weeks to complete all drops and even longer to read the results. A typical test matrix might look like this:
|PANEL||DROP #1||DROP #2||DROP #3|
For the group getting two books, it’s probably best to spread them out every-other mailing. For the group getting one contact, I would recommend giving them the drop with the strongest historical results.
One group of housefile names to pay particular attention to are the one-time only Web buyers. These buyers come onto the file as recent buyers and they are typically included in the R-F-M mailing cycle just like a new catalog buyer. However, these Internet only one-time buyers might be “item” buyers, not “shoppers”. Often times, they purchase because they are searching for a specific item on-line. It might be an Irish gift for St. Patrick’s Day or a special item not easily found, etc. Point is, they have very little life-time-value. Yet, if you mail ten or twelve times a year using R-F-M these buyers will be included but the return on investment could be extremely low. I recommend segmenting the one-time only buyers as a group so that you can track their results over time. For example, does mailing this group a catalog drives them to the Web to order? Or, can e-mail campaigns be just as effective to these one-time only Web buyers? Again, this is all part of determining the most cost effective contact strategy for your database.
More channel specific messaging is a must. With regard to a Website, the home page must contain carefully designed content that will optimize search engine results. Content pages and other landing pages must also be designed for optimal search results. Website designers are not always good about optimal coding for search engines. In terms of e-mail campaigns, use your marketing database to target products to customers. Personalizing the e-mails is ideal in most instances. It is important to coordinate your e-mail promotions with your print catalog mailings. If you can, write to the individual customer. In the subject line, for example, include your name or something you know will be of interest to the customer. Target your message and test your subject lines for effectiveness. The importance of segmented e-mail testing cannot be overemphasized.
Previously proven methods of circulation and marketing may no longer be effective. For example, R-F-M mailing strategies may have to change using a more channel specific approach. Daily and weekly source code reports may no longer be of value without the aid of match-backs. Simply put, we can no longer think of the Internet as a single entity. Rather, we need to recognize and optimize our use of separate elements and web-based technologies in conjunction with and in some cases in lieu of the catalog. The Website cannot merely be an online version of the catalog. And, e-mails cannot be limited to traditional generic blasts. There is a growing need for other content on your Website, i.e., videos, “how-to’s”, customer reviews, etc. Try to target the message to the purchase history and to other profile information about the customer.
The Web is not a “Field of Dreams,” i.e., you build it and they will come. The catalog is still the big driver. If you’re Web sales are flat or even down, you are probably not spending or investing enough in traditional outside list prospecting. If you cut catalog circulation, you will reduce your Web business. Paid and organic search can certainly add to and even supplement buyer acquisition but it cannot replace proven methods.
Here are 10 ideas for your consideration:
- Segment your 1X web only buyers separately to track results.
- Test “flat” shipping as a promotion to drive traffic to the web.
- Test an order minimum threshold against no minimum.
- Use an e-mail append program every six months.
- Add more content to your website.
- Matchback quarterly or by season.
- Time e-mail blasts to hit a week after catalogs are in-home.
- Try more channel specific messaging.
- Mail your web only buyers.
- Use web only promotions to drive traffic to the Internet.
The secret to success knows how to use your marketing database across all channels, i.e., catalog and Internet. What are needed are the right contact strategy and the proper balance between catalog mailings to your customers vs. e-mail communications. Online retailers must start structuring their databases to accommodate tracking of EVERY aspect of an individual customer’s experience: For example, what they purchase (item, category, color, size, etc.), when they purchase (including season, day of week, time of day, etc.) and how they purchase (phone, catalog, mail, web, e-mail response, call center, etc.), if it was a web purchase, how did they get to the ordering page (track links, keywords or site referrals as possible before the purchase). Coupling the customer database info with the analytic data from the Internet sites (Google, Yahoo and others) should provide some direction as to how they can best structure and communicate with the customer. Communicate with customers the way they want to communicate with you.