Special Report Lists

By Alicia Orr Suman

The Causes of List Fatigue

... and eight tips on how to beat it

List fatigue is top of mind for many direct marketers these days. What is list fatigue, what causes it, and how can you combat it?

Reductions in catalog prospecting circulation over the past several years, in conjunction with shrinking list and co-op database universes and an overall weak economy, have led to what commonly is being referred to as "list fatigue."

How, you may ask, can a list become fatigued? Jo Ann Alberts, vice president of list brokerage and management firm American List Counsel, Princeton, N.J., explains: "Because of extensive cutbacks in prospecting and only utilizing the top lists, mailers are exhausting the best lists by mailing only the best segments and not going deeper into the files."

As a result, she says, "[catalogers] are constantly mailing the same customers. The same is occurring with their housefiles, which has led to customer burnout and reduced the responsiveness of those house names."

The economy also is a determinant because it made some mailers hold off and not prospect as much, suggests Michael Grant, president of Michael Grant Direct, a database marketing consultancy in Scarsdale, N.Y. "List universes have shrunk a bit, since people didn't mail quite as much last year. So there are fewer new buyers," he notes.

Some strategies catalogers may have been using to avoid prospecting were reactivating older buyers and mailing deeper into their housefiles — both worthwhile strategies. But, Grant warns, neither replaces new prospecting. "You must mail both to your housefile and to prospect names in order to continue to grow your business."

However, Grant says, the clouds seem to be lifting a bit recently. "[Catalogers] now have started to recognize that they can't let their housefiles age indefinitely; I expect to see a change as mailers start to prospect more."

Steve Trollinger, senior vice president of client marketing at catalog consultancy J. Schmid & Associates, concurs that flat mailing quantities led to fewer new catalog buyers. "And it netted out to 20 percent fewer names in the total buyer pool," he says.

The Web's Role

Also noteworthy, Trollinger says, is the transition to the Web, where more orders are being placed. "There's a lack of closing the loop in the order cycle."

He points to a recent study that found 85 percent of Web orders track from an e-mail or from typing in the name of a catalog. So it seems the print catalog and the catalog brand still very much play an important role in bringing in online orders.

Asking online shoppers for a promotion code can help show from where your Web sales are coming, and good catalogers do ask, but it's still not a guarantee of closing the loop. Moreover, metrics show that with the Web, you lose some of the benefits of cross-sell and upsell opportunities.

Concerning the issue of multichannel buyers, Grant suggests, "There are no more pure catalog buyers out there. Practically all catalogs have some Internet buyers. But when you analyze those buyers, the productivity of Web buyers generally is lower than from your print catalog. The key is rolling up your sleeves and looking at the data from all sides. Carefully coding and measuring productivity with additional variables will help you track multichannel buyers."

Following are helpful strategies from the experts on beating list fatigue — both when it comes to your housefile and rental lists.

Find New Growth in Your Housefile

If your housefile productivity is weak, you can model your customer list in order to mail only those customers who are more likely to respond to specific offers, suggests American List Counsel's Alberts. That's a good starting point. Here are some other ideas on how to find renewed growth within your housefile:

Tip #1: Review how you're segmenting your housefile. For example, if you've been using recency, frequency, monetary (RFM) value-based segmentation, and you've historically looked primarily at recency and monetary values as criteria, then perhaps frequency needs to be brought into the mix, says Grant. Sometimes the best strategy simply is to change the values of what you're modeling to take a fresh look, he says.

Tip #2: Look for opportunities in appending lifecycle information. Alberts suggests these data can be appended to a list to indicate when there's a change in a customer's life (e.g., income, marital status, presence of children, career change). Then these customers can be targeted with appropriate offers.

Tip #3: When it makes sense, try to reactivate previous buyers. This is sure to net at least some new activity, says Trollinger. As far as how deep into your older names to mail, he recommends letting that be dictated by the season you're in and the response curve.

For instance, says Trollinger, "Even names as old as five or six years may give you good break-even response in some cases. Of course, you wouldn't mail these every time out — maybe just two to three times a year."

Tip #4: Look at your gift recipients as another pool of potential names. But first, "Allow a 12-month lag," Trollinger advises. "You don't want the gift recipient to get the full catalog with the prices of what he/she just received as a gift. But you could send a secondary mailing or put an insert for a specific item in the gift package to test for interest."

New List Prospects: Potential in Places You May Not Have Considered

Recognizing that response rates are off across the board, the real question becomes: "How do you make more lists work for you?" notes Chuck Howard, president of catalog consultancy Howard Consulting. Among the places to look for solutions: list expansions, special selections, and, Howard's favorite, your merchandising plan.

Tip #5: Analyze lists using your own criteria. As Trollinger explains, when catalogers mail outside lists, the tendency is to focus on the better selects to get better buyers. That certainly is logical.

But, he notes, "It also creates a problem where everyone is essentially mailing to the same core buyers." Therefore, when you're talking about list fatigue and smaller catalog list universes, he thinks each catalog marketer should look at its numbers individually. "What's happening to your results? Is it simply that response rates are falling off? Or is it that dollars per book and average order values are down? Or, are you looking at contribution per order, which is after you take out your advertising costs?"

Tip #6: Test all available selects. Alberts suggests tapping a range of selection strategies such as the following:

- Find better selectivity by looking at all the available opportunities to expand core files.

- Take better targeted selection in secondary markets.

- Use ZIP selects on marginal files.

- Select enhancements on secondary lists.

- At pre-merge/purge levels, append demographic data to identify and mail only to a targeted universe (e.g., age, ethnicity, income).

Tip #7: Mail the "omits." At J. Schmid & Associates, Trollinger says he is starting to have some success "looking at certain non-traditional selects — not your obvious best selects."

One recent example he related was the female buyer select from a catalog buyer list. Trollinger explains the strategy: "We know the typical mail-order buyer is female. J. Jill, Coldwater Creek and those sort of lists have 85-percent to 90-percent female buyer names that are identified and coded as such. Of the names that didn't code, often that group is not selected and therefore isn't mailed by someone renting those lists."

Those names are, in essence, being ignored as potential buyers, he continues. "But, of those names that didn't code, I can assume the others, the omits, are 85- to 90-percent female, as well. Then those are a pretty good bet to mail, too. You can't tell that those are female, because they didn't code, so you're perhaps missing 10 percent on those lists of good-quality names every time you mail each and every one of those catalog buyer lists."

This is the kind of opportunity that's definitely worth testing, he concludes.

Tip #8: Bring more and better merchandise into the book so it will appeal to a broader range of potential buyers. During his many years in the catalog industry, Howard has made the following two conclusions:

- The visionary cataloger who brings a great selection of new products to every edition never has problems finding new universes of names that work.

- Those who don't, and rely on the same old thing, always have problems finding lists.

"It really is that simple," says Howard. One catalog client has increased its circulation by more than 40 percent this year — with increased sales/book — "a very difficult accomplishment, and all in a poor economic climate," he notes.

In general, Howard says, most catalogers fail to recognize how closely tied merchandising and lists really are. "It's only the very savvy catalogers who are working closely with their list professionals and talking about merchandising, not just about which lists to test," he says. "I don't see how you can separate the two and run a successful catalog business today."

How you look at your merchandise statistics and then incorporate them into a workable mission is the key to future sales growth, asserts Howard. "Ask yourself, how large of a company do you want to be? What do you want to sell? You can't sell pool cues and be a billion-dollar business. You need a long-range merchandising plan and to tie that to a logical audience, and [you need] list plans that make sense and are realistic."

Predictive Tactics

Five database modeling strategies to try

If you think you've done all you can to improve the success rate of your list selections, you should stop reading right here. But if you suspect there's more to be done, try database modeling. It's a tool that can benefit nearly every catalog in terms of fine-tuning list selections — both on housefiles and outside lists.

Here are five tactics to consider for boosting the effectiveness of modeling:

Tactic #1: Recognize which kind of models can be most useful for you and will give you the biggest bang for the buck.

According to Bryce Connors, director of the Consulting Services division for Unica, a Lincoln, Mass.-based provider of enterprise marketing management solutions, four types of models are most applicable to catalogers:

- customer segmentation models, which break out customers based on their similar characteristics (e.g., behavior, demographics);

- response models, which predict who in the database is likely to respond to certain types of mailings and offers;

- models with cross-selling capability that predict which next product a customer likely will buy based on his or her past purchases; and

- lifetime value, which examines customers' past behaviors and looks forward to predict who may be the most valuable customers in terms of sales over time.

The response model is the most basic, and therefore would likely be a starting point for many catalogers, Connors says. "This model gives you, the mailer, answers on whom to mail or not mail so you can narrow your audience, reduce costs and trim circulation. The mail vs. no mail — zero or 1 — outcome you learn from this type of model will give you the biggest bang for your initial modeling investment. You'll see a difference right away in your response levels and reduced costs."

Tactic #2: Use a model to help refine your mailing strategy to cut unwanted circulation.

Printing and postage are big cost outlays for a catalog. A model can help you cut such costs by reducing unwanted or unnecessary circulation.

WearGuard-Crest, a large business-to-business (b-to-b) mailer in the uniforms supply industry, was able to do just that using Unica's Affinium Model, part of the Affinium Suite for Enterprise Marketing Management. WearGuard-Crest has used Affinium to build what it calls "response-spend likelihood" models, which help it to target only those individuals likely to buy from a catalog. It's based on past purchases, region and other demographics. The cataloger reduced its direct mail costs by $2 million last year without a reduction in response volumes, says Kelly Fiedler, director of product marketing at Unica.

Use modeling to help refine your housefile mailing strategy and guide your decision on how far to go into your file to maximize profitability. Depending on your goals, mail strategies and frequency, you could vary the mail depth accordingly, Fiedler says.

Tactic #3: Use "what-if" analyses to help you focus on the most profitable portions of your housefile or other portions of your mail file.

This is especially effective when dealing with, say, gift recipients and catalog requestors. Says Connors, "We already know these are potential buyers, and we know where they live. They have a good likelihood of being profitable customers. So by comparing them to your housefile we can look for the most similar, and therefore most likely to be profitable, segments of those groups to mail first, then next and so on."

The same strategy can help you find new profits in your database of former buyers. Says Connors, "Look at the back of the database: your 48-month names. There's a chance to reactivate them."

Of course, you don't want to mail the whole group at once, he says. It's a tactic you test into from the model. "After you find what looks like a sweet spot, a glimmer, then test it. Then you mail a little more."

Tactic #4: Use information gleaned from the model to help you better target your catalog creative and marketing offers.

Using predictive modeling you can extrapolate the results of version-tests of creative (e.g., different covers) to identify the best target customers for each creative tested. There's also the potential, if you have the data at your fingertips, to do other interesting things, such as identify key customers and print specially targeted offers on catalogs using print-on-demand techniques.

"We all appreciate that the catalog-planning cycle is long, and you can't always do things on the fly like test creative," says Connors. "With the right data there are things you can do that you couldn't do before and that are of real importance for long-term customer value." For instance, he says, "You can look at value-tier migrations, and extending an offer to upper- and mid-tier customers to keep them at those higher buying levels so they don't become lower-value customers. That kind of creative needs data [to back it up]."

Fiedler says other applications include examining when is the best time to make an offer and what's the best week to mail. "For example, when should Customer A get your big book? This may differ depending on when they came into the buying cycle, what business they're in, if they're a b-to-b customer, or on other factors like seasonality."

Tactic #5: Analyze data from your models to see if they lead to new or different merchandising directions.

"Supplying more data and analyzing those data open up other possibilities: from identifying new cross-sell opportunities to uncovering the idea for a new specialty catalog for a certain customer subsegment," Fiedler says. "It's customer analysis using a combination of data mining and predictive modeling."

Connors adds that by using a combination of types of models, you can look at customer segments to find new homogeneous groups of customers. You may have had preconceived notions of who your customers are, he notes. "It becomes a cycle where this is supported by the mailing of only those segments and those kinds of outside lists."

Fiedler concludes: "Being able to analyze different types of customers and what they buy helps uncover trends in customer behavior."

15-minute Interview

Don Mokrynski, chairman of Mokrynski & Associates and this year's List Leader of the Year, talks about trends to watch in catalog lists and database marketing

It's been 26 years since Don Mokrynski founded the Hackensack, N.J.-based list brokerage and management company that bears his name, and he is one who has remained at the forefront of his industry every step of the way. Indeed, The Direct Marketing Association's List and Database Council recently presented Mokrynski with its DMA List Leader of the Year Award.

Catalog Success contributing writer Alicia Orr Suman spoke to Mokrynski a few days before he accepted the award to get his thoughts on the trends and issues in lists and database marketing as they relate to the catalog industry today.

Catalog Success: How does the catalog list landscape compare to several years ago? Are we dealing with basically the same issues, or are there new issues and opportunities?

Don Mokrynski: Since 2000, we've been seeing a decline in response rates as we've come out of what we realize was a tech bubble in the late '90s. This has resulted in catalogers relying more on housefiles. There are fewer new-to-file names, and that's led to more modeling, more offers of free shipping and more online promotions.

The online area is, on average, representing about 30 percent of a cataloger's business across the board — lower in some cases and higher in others, of course. And that's great news, because the Web is giving consumers another choice for doing business with catalogers.

But it's important to recognize that the online business still is being driven primarily by the mail. The Internet also has fostered more e-mail activity on top of the regular mail. But the mailed catalog is still the engine that's driving sales in this business.

CS: Is there a way to successfully step outside of the box and find truly new names, new buyers?

Mokrynski: If I didn't think so, I wouldn't be in the list business. But the fact is that the business has changed — for mailers and for list brokers. We now must go far beyond traditional list usage to keep buyer files growing.

In my own company, we've significantly broadened the scope of the services we offer our clients to include e-mail deployment and other e-commerce services; consumer research such as surveys and focus groups; ongoing industry surveys covering acquisition strategies and promotional tools; and high level analytics like customer lifetime value, competitive analysis and long-range sales planning.

Of course, we're also helping them with the fundamentals — to increase their use of their best lists on additional mail dates; to improve their customer contact strategy; and more accurately track their Web sales on a list-by-list basis to make better list decisions.

As I mentioned earlier, we're seeing increased use of Web-based acquisition techniques. One tool that shows particular promise is paid search. Based on our experience, this can produce the highest ROI of any Web prospecting medium.

CS: What kind of fall/holiday mailing season do you anticipate from catalogers? Do you think circulation plans will be conservative, essentially remaining flat, or are people stepping up and mailing more?

Mokrynski: The catalog/aonline market appeared to be in recovery mode earlier this year. Hard goods had a good last December. July was the beginning of the fall mail season, and so far things look OK. Most catalogers' plans are still on the conservative side, meaning that prospecting is relatively flat so far, or at about 2 to 4 percent growth.

But it's important to note that in the past few years catalogs have been shifting to a later holiday selling season, with the strongest months in October and November and even selling straight into late December, with overnight delivery now guaranteed. So we'll have to wait and see about how we come through the holidays.

CS: For those catalogers who are mailing more, what kinds of lists are they looking to add?

Mokrynski: Everyone would love to have their best list double in size. But that's not going to happen.

So the question becomes, how do I get the most mileage out of those lists I do mail? One way is to go deeper into the performance history of those lists. Then extend the number of selections you'll test on those lists to see if you can make a broader base of names work.

Try modeling and list optimization on those same best lists, and see if that makes them continue to work for you.

CS: What impact do you see the Internet having on the catalog field and on mail plans?

Mokrynski: Naturally, e-mail communication is going to increase. We're seeing increased outbound customer e-mails; in some cases, catalogers are e-mailing one time each week. But we also are seeing more catalogers experimenting with paid and organic Web searches, affiliate marketing, and in some cases even e-mail list rentals. You have to be willing to test these things.

CS: What do you see as your greatest contributions to the catalog industry?

Mokrynski: I always try to operate in a manner of consultation and work to learn about the whole business before making any list selections. Some may think that's overkill. But to me it has always made good business sense to get more information about my clients before I start making recommendations.

Also, I've learned from working with so many catalogers that they are true students of the business in which they work. I've never seen an industry where people are so willing to share ideas with friends, associates and competitors, and to talk openly. It's their work and their passion, and that's inspiring to me.

Alicia Orr Suman is a freelance writer covering the direct marketing and catalog industries. Contact her at aorrsuman@aol.com.