Building Your House File Through Promotions

Offering promotions to customers can increase orders and revenue, says Bethany Beach, DE-based catalog consultant Steve Lett. Promotional offers to prospects can help build your house file, because they tend to increase response rates. As catalogers try to do what they can to generate more business, promotions are becoming more popular.

Free shipping and handling is perhaps the most popular offer: According to Greenwich, CT-based list firm Direct Media, nearly 40% of consumer catalogs offered free shipping during this past holiday season. Offering a dollar amount off the order or a percentage off the order are also widely used promotions. A free gift is typically the least effective offer, Lett says, “but it can work.”

As with any marketing strategy, you’ll want to test what promotions work best for you. When setting a test, Lett advises following these basic rules:

1) Test only one variable at a time. 2) Always test against a control group. 3) Make sure test panels are selected from the same list universe. 4) Keep mail dates the same for all test panels. 5) Set a minimum dollar amount close to the average order size. 6) Always give the offer an expiration date.

You must be able to read the results accurately, and every variable introduced will influence the outcome, Lett says. “If you are testing two different offers against each other and against a control group, you need to make sure that all variables and conditions are the same for each test group.” So you should mail the same catalog to all test panels on the same date, and promote the offer in the exact same way.

For instance, if the offer appears on the front cover for one test panel, keep it on the cover for the other test panel rather than moving it to another spot, such as the inside order form. While copy is likely to vary by the offer, keep the design of the promotion the same for each group. Run tests in the same mail stream as the control through selective or demo binding. This helps maintain a better postal qualification level and insures that the test and control are delivered in the same condition with the same timing.

Promotions can be highly effective, but Lett warns that you must monitor the lifetime value of prospects that have come onto your file as a result of a promotional offer. Some may have responded only because of the promotion and they may not continue to buy over time without a special offer or discount.

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