Lett Direct Inc.

Testing is the key to direct marketing success. The key, however, is knowing what, how and when to test. While testing is important, it’s not always cost-effective. This month, I’ll discuss how to structure tests, how to read the results and when it makes economic sense to do so. When creating test panels, you’ll need to weigh a number of factors. The method that’s mathematically most accurate may not be cost-effective. Conversely, the most cost-effective method may produce skewed results. And in some cases, it may not even make economic sense to test. The point is to determine the economic benefit from

As a cataloger, it’s important to focus on ways to increase response rates from the prospect lists you use. You want to increase the revenue per catalog mailed. Most likely, you adjust the common selects such as recency and dollars spent to improve results. This month, I’ll explore outside list optimization, another proven method to increase the effectiveness of your prospecting efforts. There are two ways to use list optimization: selection and suppression. Each technique usually uses 10 percent to 20 percent of a given file. Selection This method is used for pre-merge lists. With this technique, you can use a

You have a slew of choices when trying to reach prospects without paying postage, including direct response space advertising, broadcast and other channels. By Denny Hatch It is imperative to determine the lifetime value of customers by source. Robert Hackett, RRD Direct’s vice president of sales, provides the following formula: Lifetime value is a function of frequency of purchase, multiplied by the gross margin, multiplied by the duration of brand loyalty. What can you afford to pay for a new customer? To make that determination, Gary Hennerberg of the Hennerberg Group suggests you take the following steps: --Research customer lifetime value.

You have a slew of choices when trying to reach prospects without paying postage, including direct response space advertising, broadcast and other channels. By Denny Hatch It is imperative to determine the lifetime value of customers by source. Robert Hackett, RRD Direct's vice president of sales, provides the following formula: Lifetime value is a function of frequency of purchase, multiplied by the gross margin, multiplied by the duration of brand loyalty. What can you afford to pay for a new customer? To make that determination, Gary Hennerberg of the Hennerberg Group suggests you take the following steps: --Research customer lifetime value. --Calculate

Although it’s still new territory for most catalogers, e-mail marketing can work extremely well in conjunction with catalog mailing programs. This month we offer 10 tips to make the most effective use of your e-mail marketing campaigns. 1. Get registrations and opt-ins. Successful e-mail marketers concentrate on prompting prospects and customers to register their e-mail addresses for future mailings. (A common technique is to get registrations through a sweepstakes or online contest.) Once customers have registered or opted-in, the ideal number and frequency of follow-up mailings will vary by type of offer. (For more on this, see “24 Tips for E-mail Marketing Success,”

Most consumer catalogers remail the same catalog to the same people multiple times. Remailing generally involves making at least a cover change to the catalog each time the catalog is mailed, thus creating the illusion that the catalog is new and different. Obviously, a remail strategy is more cost-efficient than trying to produce a new catalog for every new mailing. Longer press runs reduce the unit cost per catalog printed. How many remails should you make, and how much of the catalog should be changed each time? The number of remails will vary among catalogers. Here’s how to evaluate your current remailing strategy.

To prospect for new buyers cost effectively, a catalog company needs to know its break-even point (BEP). I like to express breakeven on a per-catalog-mailed basis—that is, how much gross (or net) revenue must you generate per catalog mailed to hit your desired break-even target? This becomes your stake in the ground. All outside lists and housefile segments should be evaluated and measured against this break-even criteria. Two BEPs Two BEPs can be used: *an incremental (sometimes called variable) breakeven, and *a fully absorbed BEP. Mailings to prospects should be evaluated using an incremental BEP analysis. The fully absorbed BEP can

Multi-buyers, active mail-order purchasers, buy from several, often related, catalogs. But all multi-buyers aren’t created equal. This month, I’ll examine strategies for mailing and re-mailing to multi-buyers; how to maximize this group’s buying performance; the priority multi-buyers should get in your merge/purge; and more. Mailing Strategies Your service bureau identifies multi-buyers each time you perform a merge/purge (the process in which duplicate names are found on the various lists you plan to use for your upcoming mailing). A name you rent also may appear on two or more lists you rent from other list owners. Unless you have a “net-name” agreement with

As a cataloger, you want to maximize the performance of the prospect lists you use to generate new buyers. You also know that the prospecting universe for your offer may be limited. It seems the better-performing lists have too few names available for rent. Therefore, you want to do whatever you can to cause marginal outside lists to perform at break-even or above. How can you improve the performance of outside-rented lists in your next campaign? And what about the added costs of doing so? Marginal List Optimization The process of optimizing outside-rented lists, commonly called marginal list optimization, can increase response rates. One

What exactly are your customers worth to you? Calculating their lifetime value (LTV) can help you determine, among other things, the effectiveness of your marketing strategies and your chances of improved profitability down the road. LTV is measured using the revenue stream generated by a customer after the initial order, minus all of the costs associated with obtaining and fulfilling those orders. The actual formula used can vary slightly from company to company, but it generally looks something like this: 1. Take your subsequent gross revenue and add shipping income. 2. Subtract returns; shipping expense; cost of goods sold; advertising costs;