Eckler’s Approach to 3-Year Planning Puts Customer Data, History to Work

Catalogers develop three-year plans for at least three reasons: to map out growth and customer acquisition plans; to develop financial goals; and because their bosses, investors or company-owning banks want to see such data. The theme of a session during the recent ACCM conference, held May19-22 in Kissimmee, Fla., on three-year planning centered primarily around speaker Charis Gaines, director, marketing planning and analysis for car parts cataloger Eckler Industries, who led the session along with consultant Gina Valentino of Hemisphere Marketing.

Gaines shared her three-year planning process at Eckler, which focuses on putting customer data to work when putting such plans together. Specifically, it focuses on the following:

* housefile health;
* segmentation;
* prospecting; and
* acquisition.

In examining your housefile, determine how deeply you’ll profitably mail your file, Gaines said, and which of your requesters and prospects have the greatest propensity to respond to your offers. To get to this point, it’s best to know who your buyers, requesters and prospects are and how they respond to your offers.

Measurable Segmentation
As for segmentation, Gaines and Valentino recommended the following good/better/best scenario.

Good: divide your file into measurable buckets;
Better: use RFM to segment your file and measure the performance of buyers, prospects and requesters; and
Best: use RFM and other data, such as modeling, optimization or product purchase attributes, to further determine the best records to contact over the course of a year.

“Once you’ve started segmenting,” Gaines said, “you can use tools like RFM. At Eckler’s, when I first got there, we were divided into zero to three months and six-month buyers. This worked for years, but response [ultimately] went down. So we started doing more RFM, looking at buyers by segmenting, and started to see which segments we could drop out, because they weren’t profitable.”

As for three-year planning on customer acquisition, Gaines and Valentino outlined another good/better/best scenario.

Good: have a well-publicized catalog request program via magazine ads, Web site and trade shows;
Better: compare requesters to active buyers to determine your true requester rate and response; and
Best: optimize your requester file to see who has the greatest propensity to respond to your offer.

“If you look at a spreadsheet from a good/better/best standpoint,” Valentino said, “you can look at additional data, such as retention rates. Look at historical data, so when you acquire customers, you can determine how many from the original group made purchases in year two and year three. Looking at that from a retention standpoint, all the bells go off. So you track this, and find some trends” when putting a three-year customer acquisition plan together.