Prospecting: Teach an Old Trade New (and Not so New) Tricks

Imagine copying the names of doctors and lawyers from the phone book and mailing them a crude, black-and-white catalog. John Figi, founder of gift food cataloger Figi’s, did just this —and was rewarded with a response in excess of 10 percent! That was in the 1940s, when Americans were starved for retail options.

Fast-forward to 2007. Companies have more than 20 square feet of retail space per capita. Customers and prospects have thousands of Web sites from which to order, as well as about 10 to 20 catalogs delivered weekly. Naturally, it’s small wonder that prospecting response rates are declining.

So, just what techniques work today, and which ones don’t?

List Rental, Merge/Purge

Working: Using outside names to help “prospect” in your housefile. A nice byproduct of renting names is the ability to “mark” your database with outside list information. It makes excellent fodder for housefile modeling.

Working: Negotiating with co-op databases. If you mail to a lot of names, you may be in a position to negotiate “off rate card.” The greater the portion of your business with any one player, the better the deal the co-op is likely to offer.

Brookstone has made Abacus its single source for prospecting. “We’ve cut our merge/purge cycle time by two-and-a-half to three weeks,” says Brookstone’s Operational Vice President of Customer Marketing Steve August, “and have been able to expand our holiday mailing by 40 percent with minimal degradation in response.” Another impetus for this trend is the desire to avoid wasteful duplication among outside lists.

NOT Working: Treating all prospect “singles” the same. Ever-escalating postage costs mean you probably can’t afford to mail the weakest names that survive the dupe-elimination portion of your merge/purge, regardless of how much you paid for them.

Generally, multis are strong enough to be mailed on their own, but smart mailers are finding ways to eliminate the least profitable names from the unique output. You should avoid mailing uncodable/non-ZIP + 4 names or those that can’t be delivery-point-verified. Postage for these names is significantly higher. You can cull the best singles via modeling. And further downstream, use singles from your weaker lists when they contribute to carrier route qualification.

Prospecting Online

Working: Three- and four-word paid search terms. The term “long tail” may suffer from overexposure, but it’s true that many catalogers are able to tap efficiently into these very specific but less frequently searched terms.

Since major retailers and manufacturers tend to overlook them, hyperspecific terms often are a bargain. If you don’t have thousands of terms on each of the major search engines, you may be leaving money on the table.

Working: Customizing copy for your Web site. Dropping existing catalog copy into your Web site is no longer good enough. Since copy length on your site isn’t constrained by square-inch costs, it’s easy to feed the search engines plenty of relevant keywords.

Think of all the different names for each product and sprinkle them into the copy. This effort can be a hyperefficient investment in prospecting since buyers who arrive via organic (free) search usually are new-to-file.

“We carry several thousand SKUs,” says Craig Flax, vice president of marketing at art supplies cataloger FLAX art & design. “So we concentrate our efforts on the most important products. Done right, optimization of the copy is subtle enough not to look obvious or to upset its selling ability.”

NOT Working: Set ’em and forget ’em affiliate programs. Put half a dozen catalogers in a room and you can start a fight over whether affiliate programs are worthwhile. But even the most fervent advocates insist that you must keep a close eye on your program. Otherwise, it’s quite possible that a subset of your affiliates will be bidding on your brand keywords, posing as your company or even sending spam e-mails.

On the flip side, favor those affiliates that bring in truly incremental sales. Treat them as partners in business, and you’ll both benefit.

NOT Working: Giving away the farm. In the rush to keep up with online retailers, catalogers have become much more promotional, sometimes without evaluating the economics. Even if the numbers work on the front end, promotion-generated customers may be more fickle, with lower lifetime values.

Meanwhile, outbound freight costs have risen dramatically. So the break-even lift for a “free shipping” offer is higher than it was a year ago. Evaluate both front- and back-end numbers carefully before rolling out free shipping or other promotional offers.

Inserts, DRTV, Space Ads, Etc.

Working: Lead generation with DRTV and DR radio. Catalog/multichannel marketers like Doctors Foster & Smith, Vermont Teddy Bear and 1-800-FLOWERS.COM successfully have generated new prospects via DRTV and DR radio spots. Television provides opportunities for exposure to a huge audience; responders call or visit Web sites to request catalogs or place first orders.

Back-end performance of these customers tends to be comparable to that of other sources. DRTV tends to lift overall response to your other catalog, Internet and retail efforts.

Working: Attention-grabbing space ads. Space advertising still works for catalogers as long as you develop unique, attention-grabbing ads. Take the time to test various headlines, sizes and ad approaches (such as advertorial format vs. traditional direct response ads).

Cushman’s Fruit Co. successfully uses alternative media in prospecting, including newspaper ads and freestanding inserts. Cushman’s Director of Marketing Eileen Schlagenhaft shares, “Space works well for us; we’ve developed a very strong ad for our flagship product, Cushman HoneyBells.”

Cushman’s ad contains a strong headline that captures curiosity and attention. What’s more, it’s a compelling, fun story about how Ed Cushman discovered HoneyBells. Combine that with a strong offer of limited supply, and you have a good call to action.

NOT Working: Inserts with simple “free catalog” offers. Many catalogers used to depend on a two-step acquisition process in which package inserts simply offered a free catalog. According to Linda Callahan, senior vice president of list firm Leon Henry Inc., the days of free catalog inserts largely are over.

“To cut through the clutter today,” Callahan says, “a catalog request ad should offer something more, such as a free ‘how-to’ booklet, a discount off the first order or a free gift. Catalogers now are picking up on the kinds of tactics that continuity marketers have used for years.”

Prospecting at Potpourri Group

Jon Fleischman, CEO of multi-title cataloger Potpourri Group, shares his expertise on the company’s prospecting strategies. Potpourri mails Catalog Favorites, NorthStyle, Expressions, The Stitchery, Nature’s Jewelry, The Pyramid Collection, In The Company of Dogs, Back in the Saddle, Serengeti, Young Explorers and Whatever Works.

Catalog Success: Explain your prospect mailing strategy.
Jon Fleischman: We take a disciplined approach. For each catalog title, we calculate breakevens by season and maintain models of short- and mid-term customer value. We then determine, based in part on risk, an acceptable cut off for each source. These values are continually adjusted. We run the same analysis, whether we’re looking at prospects from one of our catalogs or from an outside source.

CS: Explain how seasonality figures in.
JF: A customer who comes on file in the spring has a higher 12-month value than a buyer acquired in the holiday season. This is due to different buying habits, as well as the fact that customers contribute most dramatically in the short term. In the case of the spring buyer, this happens to be the very strong holiday shopping season.

CS: What else is working for you today?
JF: Lots of co-mailing — and as a multi-title mailer, we’ve been doing it for 14 years. We’re also doing more versioning, often with different page counts, to optimize the offer made to each segment. We’re very cautious with promotions, though, given the potential for lower lifetime value.

Finally, I’m excited about our participation in [co-op database] ALEXA, as a relatively new prospecting tool. When it reaches critical mass, overlaying ALEXA RFM and demographic data onto list-specific selections should prove valuable.

Shari Altman is president of Altman Dedicated Direct, a direct marketing consultancy specializing in acquisition, continuity, DRTV and loyalty marketing. You can reach her at (336) 969-9538 or saltman@altmandedicateddirect.com.

Mark Lee is president of The Mark Lee Group LLC., a Charlottesville, Va.-based catalog consulting firm. Previously, he was vice president of sales and marketing for International Auto Parts and senior vice president of marketing at Crutchfield. You can reach him at (434) 825-9739 or mark@themarkleegroup.com.