List fatigue is top of mind for many direct marketers these days. What is list fatigue, what causes it, and how can you combat it?
Reductions in catalog prospecting circulation over the past several years, in conjunction with shrinking list and co-op database universes and an overall weak economy, have led to what commonly is being referred to as “list fatigue.”
How, you may ask, can a list become fatigued? Jo Ann Alberts, vice president of list brokerage and management firm American List Counsel, Princeton, N.J., explains: “Because of extensive cutbacks in prospecting and only utilizing the top lists, mailers are exhausting the best lists by mailing only the best segments and not going deeper into the files.”
As a result, she says, “[catalogers] are constantly mailing the same customers. The same is occurring with their housefiles, which has led to customer burnout and reduced the responsiveness of those house names.”
The economy also is a determinant because it made some mailers hold off and not prospect as much, suggests Michael Grant, president of Michael Grant Direct, a database marketing consultancy in Scarsdale, N.Y. “List universes have shrunk a bit, since people didn’t mail quite as much last year. So there are fewer new buyers,” he notes.
Some strategies catalogers may have been using to avoid prospecting were reactivating older buyers and mailing deeper into their housefiles — both worthwhile strategies. But, Grant warns, neither replaces new prospecting. “You must mail both to your housefile and to prospect names in order to continue to grow your business.”
However, Grant says, the clouds seem to be lifting a bit recently. “[Catalogers] now have started to recognize that they can’t let their housefiles age indefinitely; I expect to see a change as mailers start to prospect more.”
Steve Trollinger, senior vice president of client marketing at catalog consultancy J. Schmid & Associates, concurs that flat mailing quantities led to fewer new catalog buyers. “And it netted out to 20 percent fewer names in the total buyer pool,” he says.
The Web’s Role
Also noteworthy, Trollinger says, is the transition to the Web, where more orders are being placed. “There’s a lack of closing the loop in the order cycle.”
He points to a recent study that found 85 percent of Web orders track from an e-mail or from typing in the name of a catalog. So it seems the print catalog and the catalog brand still very much play an important role in bringing in online orders.
Asking online shoppers for a promotion code can help show from where your Web sales are coming, and good catalogers do ask, but it’s still not a guarantee of closing the loop. Moreover, metrics show that with the Web, you lose some of the benefits of cross-sell and upsell opportunities.
Concerning the issue of multichannel buyers, Grant suggests, “There are no more pure catalog buyers out there. Practically all catalogs have some Internet buyers. But when you analyze those buyers, the productivity of Web buyers generally is lower than from your print catalog. The key is rolling up your sleeves and looking at the data from all sides. Carefully coding and measuring productivity with additional variables will help you track multichannel buyers.”
Following are helpful strategies from the experts on beating list fatigue — both when it comes to your housefile and rental lists.
Find New Growth in Your Housefile
If your housefile productivity is weak, you can model your customer list in order to mail only those customers who are more likely to respond to specific offers, suggests American List Counsel’s Alberts. That’s a good starting point. Here are some other ideas on how to find renewed growth within your housefile:
Tip #1: Review how you’re segmenting your housefile. For example, if you’ve been using recency, frequency, monetary (RFM) value-based segmentation, and you’ve historically looked primarily at recency and monetary values as criteria, then perhaps frequency needs to be brought into the mix, says Grant. Sometimes the best strategy simply is to change the values of what you’re modeling to take a fresh look, he says.
Tip #2: Look for opportunities in appending lifecycle information. Alberts suggests these data can be appended to a list to indicate when there’s a change in a customer’s life (e.g., income, marital status, presence of children, career change). Then these customers can be targeted with appropriate offers.
Tip #3: When it makes sense, try to reactivate previous buyers. This is sure to net at least some new activity, says Trollinger. As far as how deep into your older names to mail, he recommends letting that be dictated by the season you’re in and the response curve.
For instance, says Trollinger, “Even names as old as five or six years may give you good break-even response in some cases. Of course, you wouldn’t mail these every time out — maybe just two to three times a year.”
Tip #4: Look at your gift recipients as another pool of potential names. But first, “Allow a 12-month lag,” Trollinger advises. “You don’t want the gift recipient to get the full catalog with the prices of what he/she just received as a gift. But you could send a secondary mailing or put an insert for a specific item in the gift package to test for interest.”
New List Prospects: Potential in Places You May Not Have Considered
Recognizing that response rates are off across the board, the real question becomes: “How do you make more lists work for you?” notes Chuck Howard, president of catalog consultancy Howard Consulting. Among the places to look for solutions: list expansions, special selections, and, Howard’s favorite, your merchandising plan.
Tip #5: Analyze lists using your own criteria. As Trollinger explains, when catalogers mail outside lists, the tendency is to focus on the better selects to get better buyers. That certainly is logical.
But, he notes, “It also creates a problem where everyone is essentially mailing to the same core buyers.” Therefore, when you’re talking about list fatigue and smaller catalog list universes, he thinks each catalog marketer should look at its numbers individually. “What’s happening to your results? Is it simply that response rates are falling off? Or is it that dollars per book and average order values are down? Or, are you looking at contribution per order, which is after you take out your advertising costs?”
Tip #6: Test all available selects. Alberts suggests tapping a range of selection strategies such as the following:
• Find better selectivity by looking at all the available opportunities to expand core files.
• Take better targeted selection in secondary markets.
• Use ZIP selects on marginal files.
• Select enhancements on secondary lists.
• At pre-merge/purge levels, append demographic data to identify and mail only to a targeted universe (e.g., age, ethnicity, income).
Tip #7: Mail the “omits.”
At J. Schmid & Associates, Trollinger says he is starting to have some success “looking at certain non-traditional selects — not your obvious best selects.”
One recent example he related was the female buyer select from a catalog buyer list. Trollinger explains the strategy: “We know the typical mail-order buyer is female. J. Jill, Coldwater Creek and those sort of lists have 85-percent to 90-percent female buyer names that are identified and coded as such. Of the names that didn’t code, often that group is not selected and therefore isn’t mailed by someone renting those lists.”
Those names are, in essence, being ignored as potential buyers, he continues. “But, of those names that didn’t code, I can assume the others, the omits, are 85- to 90-percent female, as well. Then those are a pretty good bet to mail, too. You can’t tell that those are female, because they didn’t code, so you’re perhaps missing 10 percent on those lists of good-quality names every time you mail each and every one of those catalog buyer lists.”
This is the kind of opportunity that’s definitely worth testing, he concludes.
Tip #8: Bring more and better merchandise into the book so it will appeal to a broader range of potential buyers. During his many years in the catalog industry, Howard has made the following two conclusions:
• The visionary cataloger who brings a great selection of new products to every edition never has problems finding new universes of names that work.
• Those who don’t, and rely on the same old thing, always have problems finding lists.
“It really is that simple,” says Howard. One catalog client has increased its circulation by more than 40 percent this year — with increased sales/book — “a very difficult accomplishment, and all in a poor economic climate,” he notes.
In general, Howard says, most catalogers fail to recognize how closely tied merchandising and lists really are. “It’s only the very savvy catalogers who are working closely with their list professionals and talking about merchandising, not just about which lists to test,” he says. “I don’t see how you can separate the two and run a successful catalog business today.”
How you look at your merchandise statistics and then incorporate them into a workable mission is the key to future sales growth, asserts Howard. “Ask yourself, how large of a company do you want to be? What do you want to sell? You can’t sell pool cues and be a billion-dollar business. You need a long-range merchandising plan and to tie that to a logical audience, and [you need] list plans that make sense and are realistic.”
- Companies:
- J. Schmid & Assoc.