Find and Target Multi-Buyers

Multi-buyers, active mail-order purchasers, buy from several, often related, catalogs. But all multi-buyers aren’t created equal.

This month, I’ll examine strategies for mailing and re-mailing to multi-buyers; how to maximize this group’s buying performance; the priority multi-buyers should get in your merge/purge; and more.

Mailing Strategies

Your service bureau identifies multi-buyers each time you perform a merge/purge (the process in which duplicate names are found on the various lists you plan to use for your upcoming mailing). A name you rent also may appear on two or more lists you rent from other list owners.

Unless you have a “net-name” agreement with a list owner, you’ll have to pay for the name every time it appears on a rented list. Net agreements usually are against the housefile and don’t include other outside lists you’re renting. In addition, such agreements traditionally are negotiated only on large quantities, such as 100,000 or more names, rented at one time.

So, if a catalog buyer found on outside List A also appears on rented List B and rented List C, you must pay all three list owners, in this example, for that particular name. However, you’re also entitled to mail that name three times, since you paid these list owners separately for their customer names. A buyer appearing on three outside rented lists is considered a three-time multi-buyer.

To summarize, you’re entitled to mail an outside rented name however many times it appears as a duplicate against the outside rented names you use for your mailing campaign.From the output of the merge/purge, you’ll have more two- than three-time multi-buyers, more three- than four-time multi-buyers and so on. The chart below shows the actual counts from a recent merge/purge. The gross number of outside names input into this merge/purge was 422,125.

Multi-buyer counts Multi
20,659 2X
3,052 3X
465 4X
65 5X
7 6X

This cataloger can mail all 20,659, two-time, multi-buyer names twice; the 3,052, three-time, multi-buyers three times; and so on.

The Value of Key-Codes

Let’s take the two-time multi-buyers shown on the chart. Typically, you’d randomly allocate back and mail all 20,659 multi-buyer names within their respective lists. Let’s assume you want to mail the two-time multi-buyers for a second time four weeks later. This time, these multi-buyer names will be key-coded as two-time multis and mailed as a group.

If we segment the multi-buyers on the first drop from the individual lists where the names appeared, the performance of that list will be less than if the multi-buyers are included as part of that list key-code.

But some marketers prefer to mail all multis under a multi-buyer key-code, leaving only unique individuals to be mailed with the actual rented list key-codes. In this scenario, you measure the rented lists on unique names only.

Another option is to add a digit to the original list key-code indicating it’s a multi-buyer name. By doing this, you can measure the performance of the unique rented names and the multi-buyer names separately. You also can combine the two key-codes to determine how well a particular list performed with the multi-buyers included.

Some mailers with large housefiles bring the entire housefile into the merge/purge and “flag,” or identify, the hits to the rented lists. They keep this information in their databases and use it when deciding which older housefile names to mail in later drops.

However, the ethics of this are questionable. Appending information to your housefile without the written consent of the list owner certainly is not recommended.

Some catalogers find it difficult to get multi-buyers to respond when they mail these names in different seasons. For example, multis coming out of a holiday merge may not respond to a spring mailing. This is particularly true when mailers rent different lists for the holiday season than they use for spring.

For an added cost, an Abacus identifier can help flag the multis who are best mailed in the off-season. In the example of the holiday multi-buyers mailed again in spring, Abacus can flag the multis whose entire purchase history has been during the holiday season only. Such multi-buyer names would be suppressed from the spring mailing, reducing the number of multi-buyer names you mail, while increasing the revenue per catalog mailed—a win-win strategy.

Another technique larger mailers use is to create different classes of multi-buyers based on what lists are matched. For example, a household that matches against two apparel lists might be treated differently from one that matched two gift lists. That is, you might decide to mail the matches against the apparel lists and not mail the matches against the gift lists.

This method is used to increase the performance of the multis, since, again, all multi-buyers are not created equal.

Priorities

In the merge/purge, what priority should you give the outside rented names when cooperative databases (e.g., Abacus, Z-24,

I-behavior, Prefer Network) are used? (Many co-ops, like Abacus, aren’t a list in themselves but rather a collection, a co-op, of many lists.)

Obviously, your housefile always will have the highest priority in the merge. Prospect names you get from cooperative databases should be net of your housefile names.

At this point, some catalogers put the co-ops into the merge on the same priority basis as the outside rented names, which gives all prospect names an equal chance of working.

Others suggest giving the prospect names from the cooperative databases a higher priority than the outside rented lists. Why? The names you rent from the co-ops cost only about $70/M (vs. $100 to $120/M and more for names rented directly from list owners). Since co-op names cost less to rent, you want more of them to survive the merge/purge.

Understand that giving the co-ops a higher priority in the merge will skew the results in favor of these lists. The best prospects (i.e., multi-buyers) will survive on the co-op lists and not on the other lists you rent. In other words, the priority you assign to the various outside lists you use will make a difference in the performance of each individual list you use.

If your mailing includes a mixture of small and large lists, consider giving the small lists a higher priority to ensure there are enough survivors on the smaller lists to effectively measure the results. The higher priority a particular list is given in the merge, the greater the number of multi-buyers identified on that list.

Some suggest that mailers avoid using a co-op to create multi-buyers. Rather, they advise using the co-op to add unique multi-buyer names only on the back-end (post-merge).

I suggest you pull the names that hit against the co-op. Find the true multis who hit on one or more rented lists, and key-code these names separately from the multis created from the co-op lists.

A proven strategy is to identify and key-code multi-buyers. Segmenting multis into different groups can help you identify which ones should be mailed in the future.

By following this procedure, you may conclude that some of the multi-buyer segments shouldn’t be mailed. Suggestion: Key-code your multis based on where they come from as follows:

• multis created by two outside rented lists;
• those created by a co-op list and one other outside rented list;
• multis created by two co-op lists.

Key-code the three-time or four-time multis separately (if quantities are large enough).

This key-coding strategy enables you to know which segment(s) of multi-buyers are worth being included in the mailing. It’s just as important to know whom not to include in your mailing.

It’s also a good idea to include your inactive housefile, any non-converting inquiries and gift recipients (from ship-to addresses) in the merge/purge. These are names you’re probably not planning to mail using RFM (recency, frequency and monetary) value criteria. This allows names you rent and/or catalog requestors to survive on your housefile.

When you find a match, mail the name as part of your housefile and drop the name, since it’s a dupe against an outside list. The non-matches to the outside lists will be omitted or dropped from the final output of the merge and not mailed.

When putting multis back into the merge for your next catalog drop, consider sending the prior multi-buyers to Abacus (and to the other co-ops you’re using) to utilize as a suppression file for the next round of models. This prevents co-ops from creating four-time multi-buyers from three-time multis.

If the quantity is large enough (100,000 or more), you also can use Abacus or DTABC (Z-24 co-op) to rank the two-time multis and suppress the bottom performers. This also is a way to get more out of the multis to which you mail.

Different strategies produce myriad results. Testing is the key to knowing what works best for your mailing campaign.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (317) 844-8228 or through the Web site: www.lettdirect.com.