Measuring the Incremental Value of Catalog Mailings

How do you pick segments inside your housefile to test? Consider the following:

• Always test the marginal older segment of the housefile which is responding around breakeven. Knowing the incremental value of mailing to marginal housefile segments tells you the incremental sales coming from mailing to older house segments. If your break-even point is $1.50 per catalog, and an older segment will yield 50 cents even if you don't mail them a catalog, then you know that your breakeven sales are $2.00 when you look at the overall sales in your matchback reporting.
• Test newer house buyer segments which are responding well above breakeven. If the incremental sales from catalog mailings are substantially above breakeven, you may want to increase the frequency of mailing your best catalog buyers.
• Test those buyers who came to you from web channels or affiliate programs. These buyers may well respond poorly to incremental catalog mailings. It may dilute your results by keeping web buyers included in your traditional RFM segments.
• Test combining email with catalog mailings to both your housefile and prospecting circulation. The lift from email may allow you to expand your prospecting universe.
• Test mailing to previous prospects to better understand the sales that are coming from earlier mailings to the same prospects vs. the most recent mailings to the same prospects.
• Test marginal housefile segments over multiple mailings to understand how incremental sales decay over time when multiple catalog mailings are suppressed. This exercise will tell you how often you should be mailing your marginal segments.

Testing your catalog circulation with holdout panels allows you to measure precisely the incremental sales from putting catalogs in the mail. Understanding your incremental sales allows you to optimize your circulation to maximize profitability.