Strategy: The Best Mailing Practice for Web-Only Buyers

When you look at your source code report, it may appear that your Web-only buyers don’t perform well. Therefore, it’s logical to assume these buyers shouldn’t be mailed catalogs, or at least shouldn’t be mailed as often as catalog buyers who fall within the same RFM housefile segments. But, is this really the case?

Catalogers often think Web buyers don’t need to be mailed at all, but they aren’t always clear on what drives the business. As a result, they tend to overallocate and give a disproportionate amount of credit to the Web to reinforce the “no mail” conclusion. Before you jump to such a conclusion, consider the following points.

Conduct a Matchback
It’s easy to simply not mail Internet buyers as a way to save money by circulating fewer catalogs. Before you come to any conclusion regarding Internet buyers and whether they should or shouldn’t be mailed, have your service bureau do a matchback. To prove my point, I did the split and created a holdout panel. I found that it absolutely paid to mail catalogs to Internet buyers.

I created two panels of roughly 25,000 each. One panel was mailed seven times, the other only once. The net contribution for the group mailed seven times was approximately 55 percent greater than the group mailed once. The additional mailing expense was more than justified.

The matchback helps us understand Web and catalog buyer results by showing that 50 percent to 75 percent of Internet results should be allocated to the housefile — our own customers.

Another 10 percent to 20 percent of these results should be allocated to outside rented lists; this varies based on how much prospecting a company does. 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, matchbacks keep you on track and provide the level of confidence in your results needed to make sound judgments.

Please take a look at the chart accompanying this article. It clearly documents the revenue per catalog (RPC) for Web-only buyers before and after a matchback. The RPC before matchback is extremely low. The conclusion might be to not mail these customers. But wait a minute — the results (in this chart’s scenario) after the matchback 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). But it would be a risk not to mail catalogs to these buyers, because the catalog is the biggest single driver of traffic to the Web.

Separate your Web-only buyers from catalog buyers. Then, segment your Web-only buyers by RFM, just like you segment and mail catalog buyers. Evaluate the results after a matchback, then make your mail vs. no mail decisions on a segment-by-segment basis — both catalog and Web-only buyers. You might find Web-only buyers don’t need to be mailed as often or as “deep.”

Pay particular attention to the one-time Web-only buyers. Note the results of the two one-time Web-only buyer segments in the chart. Often, these buyer segments shop the Web to find particular items or gifts.

Circ planning is much more complicated today, and it’s much more difficult to trace results to a particular source code. It’s not like the old days when catalogs could trace 80 percent 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. Then establish a contact strategy to maximize your results cost effectively.

Stephen R. Lett is president of Lett Direct, a catalog consultancy specializing in circ planning, forecasting and analysis. Reach him at (302) 539-7257 or steve@lettdirect.com.