To Mail or Not To Mail...
by Sandy Wolstencroft
To Mail, Or Not To Mail? This is a question that many direct marketing professionals ask, and we have written articles on this topic in the past. Since this is such a prevalent topic, we would like to share our most current study with you. Before there was an influence from web, this was a very easy question to answer. If a segment performed about breakeven, mail it. Today, there are so many additional touch points we have with our customers, this question is not as simple to answer. Many feel that mailing to customers is not necessary, because a customer will repurchase without the influence of a mailing. However, we have found that the benefit of mailing to customers clearly outweighs the cost to do so. One way to test this is to create hold out panels. One panel will receive mailings and all other touch points, and the other panel will not be mailed but will receive all other touch points. To read the results, capture all sales activity for the period, and calculate performance rates and contribution for each panel. Caution; if you are already mailing to your housefile, the risk of testing this is pretty high. Before moving forward with this test, do a quick calculation to determine how much demand dollars are at stake by not mailing a portion of your housefile. We do not advocate hold out testing, especially on high performing housefile segments. On the other hand, if you are not already mailing your housefile, the risk of NOT testing is high.
There is an enormous opportunity to increase orders, demand and profitability by sending mailings to your housefile. In the case study below we isolated three customer groups; high, mid and low value segments (based on the performance rates by; Recency, Frequency, Monetary and Channel segmentation). We “nthed” out a portion from each customer group and created mailed panels and non-mailed panels. This test was run over a 6-month period and results were based on all sales activity for that period. Below is a summary of the results from this test. [supsystic-tables id=2] You will see from the above that mailing to your Mid Tier and Top Tier segments results in increased orders, demand and contribution. There is no question that mailing these housefile segments will positively impact your bottom line and help keep your buyer file healthy. The Low Tier Housefile has a positive contribution when mailed. But, the contribution is lower than when not mailed. In this case, we would suggest that you use modeling to select the best subset of this customer group, include a promotion for this customer group to improve results and/or continue to mail this group, but less frequently.
For all Tiers, orders and demand were higher when mailed vs when not mailed. There is great value in keeping your housefile actively buying, even beyond what these figures show. Having your mail piece in the hands of your customer, helps keep your brand in your customers mind, rather than on your competition. Every order is an opportunity to strengthen the bond between you and your customers. If you are not mailing your housefile, we strongly suggest testing. If you are already mailing your housefile, rest easy. Your mailing efforts have great value.
Sandy Wolstencroft, Vice President Catalog Group Lett Direct, Inc.