Circulation Strategies That Measure Up

Four critical components can help you create business-to-business (b-to-b) circulation strategies that measure up. While each may not apply to all b-to-b catalogers, they are: a goal, a tracking plan, good metrics and benchmarks, and buy-in.

A cataloger’s ultimate goal is to establish a driving force behind a successful contact strategy. Are you striving to grow the buyer file, generate more leads, increase profits or drive up revenues? Each will have a different path.

Housefile growth typically means you’ll prospect more, focus more on inquiry conversions and be more aggressive with reactivation strategies. You also may try new acquisition methods such as space ads, card decks or insert programs. And file growth almost certainly means greater expenses and smaller profits.

Profit growth means narrowly focusing efforts on the best buyers in your database with more frequent mailings (e.g., catalogs, e-mails, postcards) and keeping prospecting efforts to a profitable minimum.

Of course, housefile growth and profit growth can be achieved simultaneously — though one should get priority.

A good contact strategy ultimately will result from solid data-driven analysis. The only way to get the quality data you need is through detailed tracking.

B-to-b marketers have as hard a time as any capturing comprehensive transactional data. Selling cycles may be longer than for consumer offerings; the buying process may be disjointed (i.e., the decision maker, the purchaser and the end user may be in different locations); and the systems simply may not be in place to capture data that can easily be accessed and manipulated. But good tracking is critical. Without it, you’re simply guessing.

It’s also true that many b-to-b catalogers who coordinate mailed efforts with outbound telemarketing, e-mail campaigns and sales calls will have more difficulty applying orders to the correct channel without conflict among managers. Salespeople will want credit for as many sales as possible, as will your catalog managers. And don’t forget your Internet manager whose business will grow even if he or she does nothing. You need a plan for categorizing sales prior to mailings. Stick with the plan to the end.

Also, use match keys and back-end matching techniques to classify as many unknown orders as possible. Look at the parameters of your business model to determine if it makes sense to allocate, on a prorated basis by segment, any uncoded orders that don’t hit on a matchback.

Strive for the most comprehensive picture of response and purchase data possible. All the decisions you make will be derived from these data based on your efforts.

Your tracking efforts will afford you the benchmark data needed to forecast response rates, average order values, campaign costs, acquisition costs and breakeven, as well as give you all the data you need to perform necessary metrics during the contact strategy planning phase.

Finally, if you’re a b-to-b cataloger who incorporates a sales force, you must have buy-in. A sales team that doesn’t see the value of your direct marketing efforts can cripple results through misuse — or non-use — of the materials.

Build From the Plan

Once you establish your goal, set up tracking procedures, put your metrics in place and get ready to build the plan. Start by evaluating the goal, and determine what must happen to get you there.

If you want to grow the housefile by 10,000 names and you typically get a 0.5 percent response on prospecting efforts, you would have to mail 2 million names. Is your prospect universe that large? Know if your goal is achievable prior to building the plan.

Next, gather the data you’ll need to build the plan. Here’s what’s essential:
- an accurate housefile inventory;
- a good break-even target;
- a known cost to acquire a customer;
- a solid understanding of your business’s response curves and any seasonality issues; and
- a known universe for any prospecting efforts you may be planning.

The house list inventory — an up-to-date reflection of your housefile segmentation and available counts — can show you where your customers are in the file. The size of the 12-month file can affect profitability; the number of inactive buyers indicates reactivation opportunities; and housefile prospects represent qualified hand-raisers. The counts become the launching pad for your contact strategy.

Understanding your break-even target is critical as well. How deep you mail depends on your profitable performance. Use a 12-month payback on new customer acquisition as opposed to full lifetime value analysis (which can be difficult to complete for business buyers) to establish a benchmark for how deep your mail prospecting efforts should be. Knowing that you can afford a loss by earning it back in the first 12 months should open more prospecting channels than trying to prospect to a pure breakeven.

The Blueprint

Developing a contact strategy for marketing to customers and prospects gives you a blueprint for reaching your goals. A defined contact strategy forces you to identify your segments, define your plan and set forth a program for customer communications and prospecting campaigns.

In the b-to-b environment, customer and prospect contacts come in all shapes and sizes. Big book mailings, spin-offs or small-version catalogs, postcards, e-mails, trade shows, sales calls, and outbound telemarketing are all methods for contacting customers and prospects. Each applicable method should be considered in conjunction with the others when building an overall plan. How will the media work together to support one another and to achieve the overall goal?

Much success has been gained through remails of big-book catalogs, for example. But many business catalogers shy away from big-book remails because of the cost. Plus, they assume the original first-run big book has been kept — that it isn’t at the bottom of a drawer or stuffed somewhere on a shelf. Testing a remail may yield big results, but it’s essential to target your best buyers first.

Take advantage of what you know about customer behavior; this will help you build a better contact strategy. Try mailing smaller books that feature targeted, seasonal product assortments.

Also consider how alternative media can facilitate new customer acquisition. Space ads, especially run at remnant or run-of-press rates, can be effective for generating catalog requests and qualified leads, or for driving traffic to a trade show booth at an upcoming event.

Put your contact strategy together so that as one mailing or contact is completing its order cycle and has reached profitability (or the desired ROI) another contact is reaching customers’ hands. An e-mail announcing that a catalog is coming, followed by the catalog itself, followed by an e-mail reminder of a promotion’s expiration is a great combination to maximize the customer contact. The plan in total, though, should look at every channel and contact as part of a master strategy.

Now Execute the Plan

Once in place, your ability to execute the plan from a mailing standpoint — and ultimately track and analyze the data — is crucial. If your contact strategy has you in customers’ hands every four weeks but your execution has you in their hands every six weeks, you’ll effectively lose four to five contacts during the course of the year, which could have a substantial impact on your ability to meet your stated goals.

If you miss dates, rework your contact strategy and forecasts to reflect the changes so you’re not disappointed when numbers fall short. Diligent tracking and even the most fundamental analysis (e.g., response rates, average order values, dollars per piece mailed, contribution per order, ROI) will tell you how your plan is working and shed light on opportunities to add or subtract contacts for the most efficient plans moving forward.

Steve Trollinger is senior vice president of client marketing at J. Schmid & Associates, a Shawnee Mission, Kan.-based consultancy. He can be reached at (913) 236-8988 or via e-mail: stevet@jschmid.com.