10 Ways to Put More Zing in Your Prospecting With Alternative Media

One of cataloging’s hottest buzz phrases this past year has been alternative media. List brokers hate the trend, but most savvy catalogers are not only embracing alternative media, they are having enough success with it to build on.

Historically catalogers have relied on list rentals to build their customer files. And it worked. Lists proved to be productive and had excellent persistency or lifetime value over time. So why complain or switch from something that’s working? The answer is an economic one. The winning lists of yesteryear are just not responding as well as they did in the past.

When I started in cataloging many years ago, you could expect that outside lists, especially response lists, would consistently pull 2 percent. While average order values were lower than today, it only took a $50 order to come near the magic $1 sales per catalog to break even. Look what’s happened to the economics of cataloging as a result of two trends.

First trend: Postage and printing costs keep rising. It now takes greater sales per catalog mailed to break even. The old standard of $1 has risen to $1.25 or even $1.50.

Second trend: As cataloging has grown, more catalogs are being mailed. There’s greater competition in the mailbox and the office in-box. Response rates have deteriorated. The good old standard of 2 percent is seldom achieved unless the catalog is highly niched and highly targeted. Today the standard is more like 1 percent (and sometimes even lower).

Unless you can boost the average order value to $100 (or more), you are faced with a number of major dilemmas:

• A shortfall in the number of first-time buyers

• A greatly increased customer acquisition cost

• A need to look elsewhere to find new names, especially ones that can be reasonably acquired.

So What Is Alternative Media?

The list of alternative ways to build the customer list is endless, or at least limited only by how imaginative the group is doing the prospecting. Here is a checklist of what a good deal of smart catalogers are turning to in building their customer lists:

1. Referrals from your best customers

2. The Internet

3. Package insert programs

4. Space advertising (either selling a product or

generating a catalog request)

5. Co-op mailings, card decks and marriage mail

6. Catalogs of catalogs

7. Magazine catalog sections

8. Trade shows

9. Television

10. Radio

11. Credit card or billing inserts

12. Public relations

13. Doctors’ and dentists’ offices

14. Backs of cereal boxes

15. Store catalog sign-ups

16. Supermarket “take-ones”

And the list goes on! The challenge is to find ways to build your catalog buyer list with names that everyone else is not using—to create a unique, new group of buyers.

10 Ways to Use Alternative Media More Effectively

While this article is about alternative media, it is not about which is best or which media will be most cost-effective. This article is about ways to make alternative media a regular part of your thinking, strategizing and budget.

Tip #1: Don’t wait—do it now!

This is like the Nike slogan of a few years back—”Just Do It.” There is no better time to get started in planning, testing and measuring alternative media than right now. Commit yourself or your team to planning, brainstorming and prioritizing what might work for your company.

Tip #2: Allocate some of your prospecting budget to alternative media.

This also has some urgency to it. A sure way to make certain new media planning takes place is to push it through the budgeting process. Start by determining what your entire new customer acquisition budget is and then allocate 10 percent to 20 percent to new media. You won’t be disappointed.

Tip #3: Get your team together and brainstorm.

Use the checklist above as a starting point and then let everyone contribute. Brainstorming has NO wrong answers. Get everyone to think outside the box. You will be amazed how successful you will be in coming up with innovative ideas.

Tip #4: Prioritize your ideas and your dollars.

You now have a list of exciting means that might be used to attract new customers. It is critical that you sort, prioritize and have a consensus of which media to start with based on which will produce the best results. Then it’s up to you to verify that information with testing. Do your homework and determine how much money needs to be spent to effectively test alternative new media.

Tip #5: Start with the Internet.

Cataloging is moving from a printed age to a digital age and changes are coming fast. If you don’t have your toe in the water with your own home page or Internet site, start first with that as a priority. Your catalog’s Web site might only be there to generate a catalog request. That’s fine. Eventually your site can sell a few products and ultimately the entire catalog can be online.

Tip #6: Get some professional help in any media you choose.

If you are not a specialist in the Internet, space advertising or television, by all means go to the pros who specialize in your media of choice. It’s amazing how dollar foolish we all get sometimes when approaching new ideas. If you can avoid just one or two serious pitfalls, the help you get (and the dollars spent) will be for good use.

Tip #7: Track results as if your life depends on it.

It makes very little sense to do any media testing if you don’t have a good handle on tracking. List testing is quite simple. We rent a list, give it a special source code and capture that code for every new buyer. Alternative media is no different. Every space ad, Internet offer or billing stuffer must have a unique source code that is captured. If you are not able to identify the source of at least 85 percent of transactions, forget about testing new media and fix your fulfillment system.

Tip #8: Test, test and test some more.

Some media lend themselves to testing better than others. Package inserts are much like lists and are easy to test, although they take time to read. Television and radio are fast and readable. Space advertising forces a lot of decisions in testing (e.g., one-step or two-step; small space or large space; and black and white or four-color). I tend to favor those media that can be tested before committing to larger, roll-out dollars.

Tip #9: Always compare your alternative media results against list rentals.

Think of list rentals, even though they may show sagging results, as the benchmark by which to compare alternative media. Cost to acquire a new name (a buyer) is still the standard by which all prospecting needs to be measured. With decent tracking, you can compare new-media acquisition costs against your historic list-rental standards.

Tip #10: Lifetime value (LTV) drives alternative media.

Here’s where sound database management becomes a real asset. To effectively judge the longer-term value of names acquired by various media, careful building of a customer’s purchase history is necessary. We like to look at new names (and enough to be statistically reliable) over a three-year period. You will be surprised at how this can refocus your prospecting budget dollars. By comparing new media to list rentals over time, you will find out if you are allocating your budget dollars in the right manner.

Now is the time to rethink your entire prospecting strategy. If you’re not totally satisfied with your response rates and cost per new customer, it’s high time that you make some changes. Good hunting!

Jack Schmid is president of J. Schmid & Associates, a catalog consulting firm in Shawnee Mission, KS. He can be reached at (913) 385-0220