Database Marketing

It costs money to add new buyers to your housefile. In fact, very few catalogers can prospect at breakeven (which we will define shortly). Therefore, new buyers are added to your housefile at an incremental loss to your bottom line. Prospecting for new buyers must be cost justified based on their lifetime value. For purposes of definition, it is important to understand the difference between a buyer and a customer. A buyer is someone who has purchased one time only. A customer has made more than one purchase. Obviously, you have to have buyers before you can have customers. While it is important to

Marketing online is cataloging in reverse. Instead of mailing to your housefile, you use it to lure prospects to your Web site. Using high-speed automated databases, Web sites can make judgment calls about what products to offer to which consumer and can treat valued customers differently than prospects. That’s because you have a mix of customers who know you and customers who don’t, so changing your Web site to suit each customer is just as important as versioning your catalog or knowing which products will appeal most to a certain consumer. Tailoring the online offer to the shopper increases the chances of purchase.

We all know that the lifeblood of any catalog company is the housefile. Previous catalog buyers are the most valuable asset of any company and should be cared for to insure their maximum loyalty to your company. Now is a good time to assess the performance of your customer database. Are you maximizing the potential of your housefile? Are your customers satisfied with your services and products? What can you do to get the most out of your housefile? Customer service is the ultimate key to customer retention, and an overall healthy housefile depends on how well you take care of your customers. There

“Compared to the business-to-business arena, consumer direct marketing is a no-brainer.” —Lee Kroll, Kroll Direct Marketing Many will disagree with Lee Kroll’s statement. But I, for one, think he’s dead on. Read on, consider all of the challenges the b-to-b marketer faces when it comes to lists, and decide for yourself. Consumer Direct Marketing The universe has roughly 110 million households. Most receive mail in a box or through a slot in the front door. They answer their own telephones. True, in the words of Chicago freelancer Lea Pierce, “All mail is opened over the wastebasket.” But, chances are pretty good that if you

Two things are common to many database marketers. First, they can measure acquisition cost well (what it takes to turn a prospect into a customer), but they don’t employ a sound method of judging lifetime value (LTV). Second, they emphasize prospecting rather than retention/cross-selling/upselling. The combination of these two traits, measuring acquisition but not LTV and concentrating on prospecting rather than retention, often leads to profitability problems when testing new media. For a “traditional” cataloger, who sells only through direct mail and prospects only with rented lists, there can be a major difference in the long-term profitability of buyers from different sources. For

Several years ago I went to Peter, my doctor, for a routine checkup and saw some colorful boxes on the end of the counter. Patricia, the office manager and Peter’s wife, said they were dietary supplements for people over the age of 50. “Should I get them?” I asked. “I take them and I feel wonderful,” she said. “Do you and Peter get a piece of the action?” She said she did, which I had no problem with. So I ordered LifePak Prime for my wife Peggy and myself—60 little cellophane packages, each with four horse pills to be taken twice a day with

The holiday season is over. Those record orders and sales days have finally come to an end. You are feeling optimistic about the season ending but then—reality sets in! You now find your company very short on cash. What do you do? Where do you turn? How can your company continue to operate? Welcome to the dilemmas of the mail order catalog business! Post-holiday rush is the time of year that many catalogers find they need to implement a turnaround plan to ease under-capitalization. Under-capitalization is a common problem among small- to medium-sized catalog companies, especially in times of low activity when

Few rules of thumb are so deeply embedded in our thoughts that we’re surprised to recall that they’re really just rules of thumb, not scientifically proven facts. And for many, that’s the case for this month’s rule of thumb: the rule of recency, frequency, monetary value (shortened to RFM). As catalogers we use RFM constantly, almost without thinking about it, not because psychologists have proved to us that it should work, but because as marketers we know that it simply does work, day in and day out, and has been working since the earliest days of cataloging. As with most everyday things though, a

Although Peruvian Connection didn’t launch its first international catalog until 1994, CEO and Co-founder Annie Hurlbut maintains the cataloger was an international company long before its first foray into the global market. As its name suggests, the Peruvian Connection has shared its history with the country and mountain people of Peru. Peruvian Connection began as a “happenstance” when Annie Hurlbut came home for her mother Biddy’s 50th birthday at Christmastime in 1976. At the time she was conducting research in Peru in pursuit of a doctoral degree in anthropology. As a gift she gave her mother an alpaca sweater she found in a Peruvian

Any discussion of catalog circulation and analysis requires a look at three very important topics: 1. Determining your break-even point on an incremental and fully absorbed basis; 2. Calculating how much you can afford to spend for a new buyer; and 3. Determining key ratios and the best format for your profit and loss statement. Finding Your Break-Even Point Break-even points are either incremental or fully absorbed. It is important to make a distinction between the two because not all mailings can be measured, as is commonly thought, strictly on an incremental basis. The incremental break-even point includes direct costs only, and