Strategy: Catalog Circ Planning Will Never Be the Same Again

Catalog circulation planning has changed forever, and knowing how to use your marketing database across all channels is the key to success. In today’s multichannel marketing world, contact strategy is the way to the promised land, while planning channels in isolation is the wrong approach. So how can you adapt to changing multichannel tactics efficiently and affordably?

Your Challenges
Significant changes have occurred that make planning circ now more difficult than ever, and many once-proven methods are no longer effective:

1. Tracing source codes. Catalog nontraceable factors have increased 20 percent to 60 percent or more, creating the need for regular matchbacks.

2. Internet factors. We’ve progressed from catalog marketing programs to multichannel marketing programs, necessitating a contact strategy approach to marketing planning.

3. Lower response rates. There’s no question response rates have declined due, primarily, to increased competition on the Web and dependence on prospect names selected from one of six co-op databases. This necessitates aggressive promotions, such as “free shipping,” which impact costs and profit margins.

4. Increased marketing costs. Paper prices have increased more than 30 percent in 18 months. Postage costs, which skyrocketed a year and a half ago, continue to rise. Increased expenses are eroding the bottom line, all of which creates a need to use the Internet more.

The New Database
Traditional catalog company operators who know how to use their databases effectively across all channels will be successful. Customers of multichannel marketers spend an estimated 30 percent more than those of single-channel sellers. The one-message-fits-all-channels approach no longer works. Relational databases must be designed to incorporate and allow analysis of data from multiple channels because each channel presents different opportunities and challenges. Tailor your message to the medium.

One way to test a channel-specific theory is a contact strategy test. This helps you determine if your Internet-only buyers should be mailed, and if so, how often. This test takes place over a three- to six-month mailing cycle; therefore, you won’t know your results immediately.

Create three or more test panels of Internet-only buyers. In your first mailing (drop one), mail to all three groups. In drop two, only mail to a panel, A. In drop three, mail to panels A and B. If mailings are sent every six weeks, it’ll take 18 weeks to complete all drops and even longer to read the results.

One group of housefile names to pay particular attention to is the one-time-only Web buyer group. This group comes onto the file as recent buyers, and these buyers typically are included in the recency, frequency, monetary (RFM) mailing cycle just like new catalog buyers. They might be single-item buyers rather than shoppers, per se. Often, they purchase because they’re searching for specific items online, so there’s very little lifetime value. Yet, if you mail 10 or 12 times a year using RFM, these buyers are included, and the ROI could be extremely low.

Segment one-time-only buyers as a group to track their results over time. Do postal mailings drive them to the Web to order? Can e-mail campaigns be just as effective? This is all part of determining the most cost-effective contact strategy.

Tune In Message Channels
Channel-specific messaging is a must. Web site homepage content must be carefully designed to optimize search engine results. Content pages and other landing pages also must be designed for search engine optimization — Web site designers aren’t always good about optimizing code for search engines.

In terms of e-mail campaigns, use your marketing database to target products to customers. Personalized e-mails are ideal in most instances. Coordinate your e-mail promotions with your print catalog mailings. If you can, write to the individual customer. In the subject line, include your name or something you know is of interest to the customer. Target your message and test your subject lines for effectiveness. The importance of segmented e-mail testing cannot be overemphasized.

Previously proven methods of circ and marketing may no longer be effective. For example, RFM mailing strategies may have to use a more channel-specific approach. Daily and weekly source code reports may be worthless without matchbacks.

Simply put, we can no longer think of the Internet as a single entity. Instead, recognize and optimize separate elements and Web-based technologies in conjunction with, and in some cases in lieu of, the catalog. The Web site can’t merely be an online version of the catalog. E-mails can’t be limited to generic blasts. There’s a growing need for other content on your Web site — videos, how-tos, customer reviews and other tools. Try to target the message to the purchase history and other profile information about the customer.

The Web is not a “Field of Dreams” — i.e., you build it and they will come. The catalog is still the big driver. If Web sales are flat or down, you’re probably not investing enough in traditional prospecting. Cut catalog circulation and you’ll reduce Web business. Paid and organic search can supplement buyer acquisition, but they can’t replace proven methods.

Put It Together
The secret to success today is knowing how to use your marketing database across all channels. That requires the right contact strategy and a proper balance between catalog mailings and e-mail communications.

Online retailers must structure their databases to accommodate tracking of every aspect of individual customers’ experiences: what they purchase (item, category, color, size, etc.), when they purchase (including season, day of week, time of day, so forth) and how they purchase (phone, catalog, mail, Web, e-mail response, call center). If it was a Web purchase, how did the customer get to the ordering page? Via track links, keywords or site referrals?

Coupling customer database information with the analytic data from Internet sites (Google, Yahoo and others) should provide some direction to best structure and communicate with customers. Talk with customers the way they want to talk with you.

Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He’s also the author of “Strategic Catalog Marketing,” and can be reached at (302) 539-7257 or by e-mail at steve@lettdirect.com.