MeritDirect Event Panel Heading Back to the Future, Part 2

In a no-holds-barred, all-telling session during last week's MeritDirect Business Mailers Co-op in White Plains, N.Y., four B-to-B mailers discussed how they’re surviving the current economic malaise and their plans for emerging from it once the economy turns around.

In the first installment of this recap last week, we showed how they’re holding up. Here’s how they responded to other questions from session moderator Terry Jukes, president of e-commerce software provider Ability Commerce. Jukes asked what they’re doing to prepare for better times ahead.

The panelists included Bob Runke, president of Barco Products Co.; Mike Faith, CEO & president of Headsets.com, and a member of the All About ROI editorial advisory board; Neil Sexton, president/COO of Northern Safety; and Dick Nelson, CEO of MARCO Promotional Products.

Sexton: We’re not making bold prognostications. We’re preparing for the worst and hoping for the best. We’re investing in a brand-new system, which is the one decision we can’t get wrong. We have focused teams working on it.

We’ve usually been early to go in recessionary times and early to get out of them, so we want to get a foot on the accelerator for when things get better. We’re trying to plow into our marketing budget, and our profits are up this year. But stuff that’s worked extremely well for 25 years isn’t anymore. We can’t do things we want to do over the next 10 years without making an investment in a platform.

Runke: This recovery is going to take two to three years. The single best thing to do, and we’ve been doing this religiously all along, is make sure to have the best customer RFM data available. I have 41 separate reports published every month that dig into customers by segment, individual buying patterns and all sorts of things.

The challenge I see now is our customers who buy picnic tables and park benches: Their buying behaviors are changing, and I don’t think this is temporary — it’ll be longer haul. We have to stay close to data and get it faster.

Nelson: We installed a new system in 2006, which created an opportunity for us to get better data than before and a greater ability to analyze it. So we embarked on a project to dive deeper into our data to figure out where to spend our next marketing dollar. As we start to increase our marketing media spend, we want to know where to put it: in catalogs, pay per click (PPC) and other media.

We’re almost finished with our data warehouse analytics project and are going to take the information, turn it over to MeritDirect and ask how to find people like these. If this is the new “normal,” we need to learn to be profitable now.

Faith: As soon as we feel we’re out of this, we’ll market. We’re waiting. Then we’ll market very fast.

Jukes: Where are you with your prospecting and mailing plans?

Nelson: We send promotional products you can stick in an envelope to announce a new product. We’ll be more selective with that, but one of the things coming out of our analysis is the difference between lifetime value (LTV) [between traditional catalog customers and web customers]. We’ll probably pull back on our PPC investment and increase our catalog investment.

Even though our PPC customers are profitable, we know their lifetime value is significantly less [than catalog LTV], so we’ll probably change how we allocate our money. We came to PPC late, in 2006. Some areas it works; others it doesn’t.

Runke: Prior to 2008, we looked at our circulation plan as mail customers, housefile, then prospects. Separating customers and prospects specifically yields us a lot of good information as to who’s getting the catalog and how often.

The issue of how we analyze our online traffic and paper-based or telephone-driven traffic is something we need to get an answer on. Sixty-five percent to 75 percent of all online transactions we close have the catalog involved somewhere.

We do have customers who only buy through our catalog. They only want the catalog; they pick up the phone, like to talk to customer service people, and never go on the web. But not many of our customers are pure web buyers — only 5 percent to 8 percent. Then there’s the mix in the middle where you have the transaction finished on the web and started in the catalog, or started on the web and finished on the phone.

The LTV of web customers is about one-third that of catalog customers. I don’t think that changes much. You can waste a lot of catalog sources with one-time buyers from the web.

Sexton: Mail will still drive the bus for us. It’s a mailers’ market now. You have hungry printers, hungry paper sellers, motivated list owners who are willing to negotiate reciprocal discounts — and a postage sale. We have to put pieces in the mail at a cost we couldn’t get 20 to 25 years ago. The question is: Can we find some people to mail to? We’re going deeper into reactivation efforts. We were kind of late with PPC, but then we went crazy with it. Then we invested in Omniture and in capturing more data.

Faith: We reduced our PPC budget more than we did for mail. If you analyze online vs. catalog buyers, the lifetime of catalog buyers is a lot stronger. We’re one-third online, and that third is less profitable. We’re moving more [money] off of our PPC budget to our catalog budget.

Check back next week for the final part of this three-part series.