When Will Response Rates Recover?
At a recent catalog/multichannel industry conference I attended, all the talk seemed to revolve around the same issue: When will response rates recover? Attendees’ prospecting quantities were almost universally down, and their focus had shifted to forecasting how consumers will respond in the second half of this year — especially the all-important holiday fourth quarter.
Brian DeLaite, executive vice president at the list firm Belardi/Ostroy ALC, said he heard some (slightly) positive feedback. “My sense of it is that business will pick up a bit in quarter three and quarter four. How much is anyone's guess.”
“There's pent-up demand out there,” he continued. “There seem to be some positive indicators popping up in the economy. We seem to have bottomed and started a recovery — even if slightly. All of this means that at some point soon this will likely trickle down into our industry, causing clients to mail more and consumers to spend more. So it's quite possible that this holiday, mailers/retailers could see significant improvement over last year … leading into a very strong 2010.”
Co-op database firm Abacus recently released a study of direct marketing circulation that shows mail volume for the first quarter of 2009 decreased 19 percent vs. last year's first quarter. While both housefile and prospecting circ were down — 13 percent and 28 percent, respectively — a higher percentage of circ shifted to housefile, the report revealed.
Consider the following: In the first quarter of 2007, 54 percent of circ was devoted to housefile. That percentage swelled to 61 percent in the first quarter of 2008 and 65 percent in this year's first quarter.
Vertical lists appear to be taking a greater hit in response compared to prospecting lists from co-op databases. Of course, co-op databases have the advantages of being able to find households and people who've recently bought, and also to suppress those households that have effectively closed up their wallets.
How can you tell if response rates have stopped falling? Start by examining the following:
- Look at your most recent response rates by campaign and list to see how they compare to your historical response rates for that list segment. The most powerful piece of data you have is your most recent response rates for an individual list.
- How are your monthly, weekly and daily sales holding up compared to last year? Your monthly sales vs. last year's monthly sales are a good indicator of how your overall catalog sales are trending.
- Talk to your list broker, list manager and merge/purge service bureau to get their takes on response rates. Network with industry peers, and ask how their response rates are holding up for their housefiles and prospecting. Does anyone see signs of improving response rates?
- Review your competitors' offers. Are your competitors making strong offers via email, ink-jet messages or on the covers of their catalogs? How hard are your competitors pushing the promotion button?
In part two of this multipart series coming out in a couple of weeks, I'll discuss some of the circ trends that have emerged from multichannel marketers as they attempt to weather the economic storm. In addition, I'll provide some more tips to help you optimize your circ for increased sales during the holiday season.
Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. Reach Jim at (505) 986-9902 or jcoogan@earthlink.net.
