Matchbacks and the Evolving Science of Attribution
In what seems like a generation ago — before the internet — catalog orders came in one of two ways: via the mail or phone. Source code capture rates of 85 percent were the norm and it was easy to read the results from each mailing list. Then along came the internet and measuring catalog response rates became complicated. The percentage of online orders continues to grow, making the attribution of orders very complicated. Consumers receive catalogs, emails, online ads and many more advertisements. Knowing which marketing vehicle should get credit for an order is a challenge.
A matchback is the process of matching the mail file from a catalog against the orders received during the life of that catalog. If you purchased from a catalog you were mailed, all orders you placed during the life of that catalog are credited to that mail piece.
Testing has shown that a certain segment of consumers will order whether they receive a catalog or not. And a certain segment of housefile buyers are responding to both online ads and emails. A solution to this overallocation is to set up a mail/no-mail test panel to measure the sales that a housefile segment generates if it's not mailed a catalog vs. the same segment’s sales when it is mailed a catalog.
Sales from rented lists that have never ordered from your catalog are typically under-reported because matching the names mailed against orders received omits catalogs that were passed along and used by consumers at different addresses. Pass-along orders could easily top 20 percent of reported sales from a prospecting mailing list.
The default methodology for matchback allocation has been to attribute catalog orders to the last catalog mailed. But marketers are also using multiple campaign order curves to allocate orders between campaigns when several catalogs overlap. The best example for order curve allocation is when a retailer mails two or three holiday catalogs in November and knows it shouldn't allocate all December sales to the last catalog mailed.
Matchback methodology typically includes the ability to extract all orders with promotional codes for emails, web promotions, online ads, etc. If a customer uses an online promotion requiring a source code, then that promotion gets full credit for the sale and the catalog mailing list gets no credit.
Online ads get credited if the customer clicks all the way through and makes a purchase. Online ad providers typically cookie a catalog merchant's web traffic and claim some percentage credit of the sales from that household. Only testing can zero in on the correct attribution percentage — i.e., whether online ads should get 5 percent, 10 percent, 30 percent or more of the credit from households that have had multiple touches with both catalogs and your website.
Matchbacks also show the number of orders not matched to a mail file. This gives you a good indication of the demand that's coming strictly from the web. Cross-channel retailers are seeing that orders that can’t be matched to a mail file are growing as a percentage of their total sales as the web creates a larger portion of the total demand.
Can you estimate web sales from promotions that don’t use promotional codes for tracking? Review the increase in web traffic and sales in the days after an email blast or web promotion. If you see a spike in sales, allocate a reasonable percentage of those sales to that promotion.
Mail/no-mail holdout panels are becoming a more accurate measurement of the incremental sales coming via a catalog. Mail/no-mail holdout panels can also paint a more accurate picture of sales coming from all varieties of web promotions, from online ads to emails to multichannel campaigns.
Know that if multiple channels are claiming more credit for sales than the total for all sales, double counting is occurring. Your web and catalog teams can’t claim full credit for the same order. Drill down to the order level and see where the overlap occurs, then set business rules to allocate credit for orders claimed by more than one channel or promotion.
Look closely at where your new-to-file customers are coming from. Online ads have proven successful lately at finding new customers. Know which web programs can profitably acquire new customers.
The internet is a great vehicle for harvesting demand and getting incremental sales from your housefile, but catalogs are still typically the main driver of sales and most cost-effective method to acquire new customers.
It's critical that retailers understand matchback tools, their limitations and all the metrics available to measure web traffic to help them accurately allocate credit for orders in a multichannel world. Order allocation will only get more complicated as more and more profitable web programs evolve and are layered on top of catalogs, your website and emails.
Understanding the impact, profitability and interaction of a variety of offline and online marketing programs is the key to maximizing profitability.
Jim Coogan is president of Catalog Marketing Economics, a consulting firm focused on catalog circulation planning. Reach Jim at (505) 986-9902 or jcoogan@earthlink.net.
