ABCs of Acquisition Analysis

Until two years ago, George Michie made his career teaching high school students the basics of economics, math, physics and government. Of his move into the catalog field, Michie says, “I was ready to do something different.” Working the analytical side of marketing seemed a logical fit for his background in numbers.

At Crutchfield, Michie was hired to help the company re-think the metrics for its customer-acquisition efforts. “We had been relying on numbers with foundations more historical than analytical,” Michie recalls.

His assignment: To figure out if these really were the numbers the company should be following? He says the ultimate question a cataloger’s metrics should answer is: “If we had another $100,000 to spend, where should the money go?”

Housefile Insights

Michie says that the first step to more effective use of Crutchfield’s marketing dollars was to better understand its customer base. Crutchfield sells car audio and home theater products. Buyers tend to be men who are willing to spend on their toys. List manager Mokrynski & Associates reports that of the 466,795 12-month buyers on the cataloger’s file, 85 percent are male, and they spend an average of $250 per order.

But there are some big differences between the two buyer groups. In fact, the average home product buyer spends $350, while the average car product buyer spends $200.

“We almost consider ourselves two separate businesses,” Michie says of the company’s dual-product focus. The car audio business, the company’s traditional stronghold, has been shrinking somewhat in recent years due to car manufacturers’ efforts to outfit luxury cars with audio equipment. “We need to zero in on the unique buyers who are interested in do-it-yourself car audio,” Michie says. That has meant tighter targeting using careful housefile analysis.

Through analysis, Michie says Crutchfield learned that, “These are information junkies who want all of the specs, who read the reviews in Consumer Reports and Stereo Review magazines. We also have found that car audio folks are do-it-yourselfers; there’s a synergy between them and, say, woodworkers.”

By pitching the merits of technical support and detailed product information in its catalogs and in other media, Crutchfield is working to keep attracting these buyers.

Prospecting to Lists

Mailing catalogs used to account for the bulk of Crutchfield’s acquisition efforts. But recent economic pressures have meant reduced, more focused catalog circulation, and, as Michie notes, “To improve efficiencies, we’ve scaled back list rental prospecting to some degree. Like a lot of folks, we’re renting fewer names. We need to be as on target as we can when we do rent a list.”

Crutchfield uses its own analytical staff and resources to perform sophisticated data analysis inhouse. Then it turns to professional list brokers and managers for ideas and input. On the brokerage end, Crutchfield works with NRL Direct. “Their expertise tells us which lists we might want to test and also informs us of any types of selects that might make the lists work better,” Michie says.

Additionally, Michie says, “We’re placing more reliance on the alliances, Abacus and Z-24, for providing us with transaction-level data. We’re finding those more successful than individual list rental right now. The ability to prospect based on a broad range of purchasing behavior, carefully modeled is very powerful.”

A Mix of Media That Works

Along with list prospecting, the Internet has grown to be an important source of new business for Crutchfield. “In the wake of the Internet boom, the Web site has gone from a mostly informational site to being a significant channel for orders and new buyers. We’re attracting a lot of new customers through the Web,” says Michie.

Still, Crutchfield has found that it pays to send catalogs to people who visit the Web site. “The site is not going to sit on someone’s coffee table,” Michie jokes. “Typically, we’ll mail prospects the full catalog, and then after, determine their mailing schedule for other [supplemental] catalogs based on other predictive factors such as recency and location.”

Some alternative print media also have worked very well for Crutchfield, and it continues to test in those media. “Traditionally, we’ve driven catalog requests via print ads, package inserts and blow-ins. There’s a great deal of synergy between the magazine ads, package inserts and Web programs we run. They feed into one another,” Michie notes.

Currently in test is a new program to sell products off-the-page. “The idea is to give folks a soupçon of what we sell, and then if they want the product, they can contact us, and we’ll put them together with the right version of that product for their needs.” Michie believes this should work well with hot products—the “new toys,” for example, XM and Sirius Satellite radio.

Tracking Is Tough but Crucial

With the multitude of media generating leads and sales, Michie admits, “It’s becoming harder and harder to track where our business is coming from. But we’re doing everything we can to track leads and orders.”

Today, the Web only complicates matters. “To the extent that we can, we’re trying to track Web usage to the catalog account shoppers use when logging onto the site. We have an account system online that encourages folks to log on so that we can make their shopping easier by remembering their car make and model, what they’ve looked at on previous shopping trips, etc.”

All of these efforts toward tracking and analysis have had benefits beyond more effective prospecting. In fact, the company launched a line of custom car accessories this summer—things beyond audio, such as lights, pedals and shifter knobs.

Michie notes, “We recognized a lot of these people also are interested in having their cars look good as well as having a great-sounding stereo system.”

Alicia Orr Suman is executive editor of Catalog Success magazine.