For most multichannel retailers, developing marketing plans and budgets for 2010 is a daunting task. After two years of tough economic climates that meant sales reductions and downsizing for many, now’s the time to build a plan for another — perhaps better, yet uncertain — year.
John Lenser
For many years, the recency/frequency/monetary value (RFM) formula has been the cornerstone of catalog circulation plan segmentation. But what if this is no longer true? What if recent customers actually respond to your catalog mailings at a lower rate than older customers, frequent customers at an even lower rate, and higher spending customers even lower? No, I’m not kidding. This is happening right now and you may not be aware of it. A brief review of the age-old formula is in order. First, recency. It’s been the most powerful predictor of the likelihood of a customer placing another order. For example, for one typical
Multibuyers usually provide substantially higher response than names unique to one list. But with multiple lists containing many of the same names, especially those generated by the cooperative databases, so many multis are produced that it’s become challenging to use all the mailing rights to which you’re entitled. During a recent consulting assignment, I observed a catalog mailer was creating more than a million multibuyers a year that were never mailed, with a value in excess of $100,000. Increasingly, we’re seeing varying degrees of such waste in most circulation plans we evaluate, particularly those from larger companies. This particular client was
Expert evaluation of catalog mailings was problematic in the past, but mostly just for those few catalogers who had retail stores. That’s not the case anymore. Now virtually every catalog company is multichannel as customers increasingly use the Internet to place orders. The result often is a haphazard online collection of key codes. In this article, we’ll examine the problems with traditional campaign analysis and how you can use a matchback between orders and mail files to substantially overcome these issues. The Problems With Traditional Factored Allocations While unattributable orders usually have been in the range of 10 percent to 20 percent, now
