Consider the Source: Web-Generated vs. Mail-Generated Buyers

By now, most true multichannel merchants are segmenting their buyer files by channel of origin. By “true multichannel retailer,” I mean a company in which more than 25% of its orders are Web generated.

I am not simply talking about orders placed on the Web — rather Web generated. As in, when a matchback is completed, more than 25% of a company’s business is coming in via the Internet and does not match back to catalog mail tapes.

Up until recently, many catalogers were segmenting their buyer files by order channel, not by channel of origin. For some, especially those companies whose regular catalog customers quickly adopted the Internet as their channel of choice for placing orders, segmenting by order channel never proved to be a significant variable in predicting future response. The logical step toward segmenting buyers by channel of origin, interestingly enough, was popularized not by traditional catalog retailers but by companies that began as Internet pure-plays.

For the most part, the lifetime value of customers acquired via the Internet (through natural search, paid search, links from other sites, banner advertisements) is lower than that of customers acquired through more-traditional sources (phone, fax, catalog prospecting). New customers who discover your product offer online more often than not have a specific purchase in mind: With rare exceptions, most shoppers use the Internet for research, price comparisons, and expediting the ordering process, not for browsing and familiarizing oneself with a company’s full product offer. (Just check those Web analytics reports, specifically the average time elapsed and the average number of page views per session, and you will know what I am talking about.)

Many online customers, too, are enticed to buy from the barrage of promotional e-mails they receive on a daily — no, hourly — basis. The combination of lower average orders and lower margins garnered from Internet customers’ orders is certainly not ideal — it is not uncommon for the profits gained from one traditionally acquired customer to equal that of two acquired via the Web!

Prospects who interact with your entire product offer via a print catalog, on the other hand, are far more likely to consider future purchases as they are placing their initial orders. More important, they are likely receiving your catalog because they have already shown a propensity to buy through the mail. Some Internet shoppers may already be avid mail order buyers, but certainly not all. The front-loaded costs of traditional catalog customer acquisition are almost always higher, but the return on investment in the form of lifetime value is greater.

The last activity/last purchase date is a more significant variable for customers originating on the Web than for those who come to you via traditional sources. A couple of years ago, a speaker at an online marketing conference said, “In catalog marketing, ‘hotline’ means 30 days. However, with Internet marketing, ‘hotline’ means 30 seconds!”

Although our own observations have not been that extreme, it has been noted that when all other variables are equal, older Internet-generated buyers do not perform as well as older traditionally generated buyers. Typically the comparative falloff becomes pronounced at 12 months, and from there, the disparity accelerates.

Ironically and unfortunately, it seems the observations made pertaining to a customer’s growing age also applies to a customer’s burgeoning youth. Hotline Internet-generated buyers, we have found, are occasionally less likely to respond to immediate follow-up catalog offers than regular hotline buyers. I would like to emphasize the word “occasionally” here, because our data are somewhat inconsistent. Nonetheless, it is worth testing with your own e-mail, Web, and catalog offers.

It may seem counterintuitive to hold out an nth select of your most recent buyers in subsequent catalog campaigns, but you may be surprised to find that the incremental sales gained by mailing to hotline Internet-generated buyers is marginal. Could it be that e-mail campaigns are the most effective hotline Internet buyer follow-up? I would conduct your own trial and let the jury decide.

Todd Miller is senior circulation manager for San Rafael, CA-based direct marketing consultancy Lenser.

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