Creating an INTEGRATED MAIL PLAN

Jan 01, 2006 10:30 PM  By

It’s time for a New Year’s resolution: Integrate your mail plan. Coming off a season in which sales were lighter than anticipated for many multichannel merchants and going into a season that will see postage and perhaps paper price increases, it behooves every mailer to take a good hard look at the plans in place and reevaluate them from a holistic stance.

An integrated mail plan does more than look at each of the channels as a larger part of the whole. It means looking at the “machine” that is your business in a broader sense to make sure that the marketing plan in place not only satisfies the customer’s need for contact with your company but also supports your company’s overall goals. The number of contacts, the page count per catalog mailed, the merchandise assortment presented online and in print, and the offers and promotions planned for customer acquisition and retention should all serve the underlying objectives of your business.

No more planning in a vacuum

The traditional catalog company worked in silos that had the marketing department building the mail plan while the creative department designed the book and the merchants picked the product. The culmination of the process was a catalog mailing. E-mail was a throw-in: Have an e-mail address, mail an e-mail address. Simple.

The integrated multichannel merchant, however, works in teams to make sure the right number of e-mail campaigns supports the right number of catalogs featuring the right product assortment in the right number of pages at the right time to the right audience. This company flights its communications to maximize response and sales while generating the greatest amount of sales and the required profits. The integrated multichannel merchant has a Website that makes order conversion top priority by creating a quick, painless online shopping experience and by building on the key branding elements of the parent business. And the integrated multichannel merchant makes every effort to capture source codes online.

An integrated mail plan is not the outcome of a team effort per se, but input from each team is critical. The goal is the common factor. Customer acquisition, customer retention, sales targets, profitability — whatever the goal, the plan must encompass all aspects to achieve it

It all starts with good data

So what data are needed to build an integrated mail plan? Plenty. But just as important as the type of data is ensuring that the data are accurately coded to your efforts.

This theme is not new. In its infancy, the Internet accounted for about 10%-15% of a cataloger’s orders. With time, catalogers came to be known as multichannel merchants. Why? Because 10%-15% blossomed into 40%-50%, and outbound e-mail campaigns started generating “real” money.

Suddenly half of a company’s orders were coming over the Web — but virtually none of them were accompanied by source codes, and tracking online became a major issue. Today entire symposiums are held to talk about methods for improving matching from the Web to the mailed catalog and to work through issues surrounding e-mail as a viable stand-alone marketing vehicle.

In an environment where half or more of the orders processed are coming without source codes, matching orders to customers and marketing efforts is critical. Without matching, merchandise analysis will yield a wildly different picture of performance than the marketing analysis will, and the two must work in concert to build the most effective plan moving forward. There is no set-in-stone industry practice for matchback analysis; the key is to have a process that works for your particular situation and to use that process consistently for each campaign.

Three fundamental analyses

Three fundamental elements drive an integrated mail plan: The first is the marketing analysis, the second is the merchandise analysis, and the third is the creative analysis. Each of these encompasses online and offline campaigns.

  1. Marketing analysis

    This entails looking at response analysis at the campaign level, the communication level, and the segment level.

    Let’s start from the broadest perspective. The campaign-level marketing analysis will tell you quickly whether or not, overall, the series of communications that made up that campaign (for instance, the fall/holiday season) met its goal. If it did meet its goal, you’ll need to know to what degree and whether there are any opportunities to contact customers more frequently. If the campaign fell short of plan, you will need to determine how short it fell and how deeply you should cut the program to achieve your profitability goal.

    At the communication level, the marketing analysis should focus on the depth of the mailing. If a single communication — a postcard, an e-mail campaign, an individual catalog mailing — generated the required level of sales to meet the overall goal for profitability, it is quite possible that you could mail the piece deeper. The objective, once you know a season was successful at meeting the overall goals, should be to isolate opportunities for deeper or more frequent mailings.

    This is where the segment-level analysis comes into play. After you’ve determined that you can communicate more, you need to identify to whom you can communicate. The type of communication is important too. A segment may accommodate an additional e-mail promotion but not another catalog mailing given the fractional cost of promoting associated with e-mail compared with the relatively high expense of mailing another book.

    Once you have determined that more communications are warranted, a response-curve analysis is in order. This will indicate where the gaps in the communication cycle are. You want to evaluate the curves to find the points at which at least 80% of the orders for a communication have been processed and where the overall profitability target for the communication has been achieved. This will indicate where you have opportunities for additional communications.

    Many small and midsize multichannel merchants will find that 80% of the orders from a given catalog mailing, for instance, will come within four to six weeks, even though the next catalog might not mail for six to eight weeks. That two- to four-week gap multiplied over the course of the year could yield 10-12 weeks of in-the-mail time lost.

    The challenge for multichannel merchants is to find, and fill, those gaps with communications that can generate the necessary response and average order value to meet the required profitability threshold. For certain, it’s one of many multichannel challenges, but a good integrated marketing analysis plan will help you test into those opportunities accordingly.

  2. Merchandise analysis

    Like the marketing analysis, the merchandise analysis should consist of at least three phases. You’ll need to conduct a comprehensive analysis by page, by category, and by price point.

    A page analysis answers what may be the most important merchandising question: How many pages should this catalog optimally be? By evaluating page count in terms of “success” (success being the achievement of a minimal profitability goal by page) you can determine the ideal page count using a series of rules of thumb.

    If the catalog is at least 70% successful — in other words, if at least 70% of the selling pages are generating the required profit percentage — you should probably increase the overall page count to the point where 70% of the pages would be successful given your current winners. For example, if you currently mail a 48-page catalog with 44 “selling” pages, and 32 of the selling pages are successful (72%) you probably have an optimized catalog. If 40 pages are successful, however — a 91% success rate — you likely have room to optimize the page count to increase sales while still hitting your profitability goal. A good page count under the above scenario might be 58 or so selling pages plus the four nonselling pages, for an overall page count of 62 pages.

    If your current page count is between 50% and 70% successful, the rule of thumb is to hold page count or cut pages toward the lower end of the range. Below 50% successful, you should absolutely find pages to cut.

    But what would you cut? Where would you grow? This is where category analysis comes in. By evaluating the product assortment in terms of categories (using the same rules for success and adding/cutting) you’ll find those areas that should be grown to support page increases or cut to accommodate page decreases.

    Once you’ve completed the category analysis, you can evaluate price points within each category to learn how much customers want to spend within categories compared with what you’re offering (known as average price offered vs. average price sold). Applying these data will allow you to increase the number of items in key categories at price points palatable to your customer while edging up average order value at the same time.

    Likewise, a merchandise analysis tied to e-mail campaigns will tell you which product and categories garner the highest online response. Even if a product is not the campaign’s driver (if, say, the campaign is promotional in nature across all products in the line), the featured merchandise can play a significant role in fostering traffic to the site. From there, the site has the job of converting the visitor to a buyer.

    Going back to an earlier point: The merchandise analysis and the marketing analysis should be based on the same level of sales data from the same sales sources. If your marketing analysis folds in allocated unmatched orders, so should your merchandise analysis. An examination of $20 million of marketing data and $40 million of merchandise data, for example, does not an integrated plan make.

  3. Creative analysis

    This analysis or critique is the last piece of the integrated plan puzzle. Creative is a crucial component, as a marked-up catalog or Website page is still one of the most important tools available in a comprehensive program analysis. Seeing the merchandise on the page — online and offline — next to sales data will always provide that tangible, real-world component regarding how customers interacted with the image and words presented to them.

    The creative review can call attention to key ideas on theme development and overall catalog/Website presentation. It’s not just about how it looks but also about how it works. You may find that the creative analysis can bring to light factors such as problems with Website navigation. In fact, every online creative review should seek to answer the question “What was the number-one exit page and navigation path in our Website?” If the top exit page isn’t your checkout confirmation page, something’s wrong.

    In short, the creative review should provide your company with insights for pagination, creative presentation, Website navigation, keyword look-up results, and featured merchandise on the home page and print catalog covers.

    The integrated planning outcome? The right number of e-mail campaigns supporting the right number of catalogs featuring the right product assortment in the right number of pages at the right time to the right audience. Any strategy that helps you get all components of a campaign right is likely to improve response and sales. It’s true that New Year’s resolutions aren’t always easy to keep, but if you resolve to integrate your mail plan this year, you will see a payoff.

Steve Trollinger is senior vice president, client marketing, for J. Schmid & Associates, a catalog marketing agency/consultancy based in Mission, KS.

EDITOR’S NOTE Welcome to the first in a new series, Multichannel Challenge. Throughout the year the team at J. Schmid & Associates, an award-winning direct marketing agency/consultancy, will present solutions to some of the greatest challenges facing multichannel merchants.