Retailers, pure-plays, and other marketers tend to view catalogers as leaders in database marketing. And at first glance, catalogers do seem to be database savvy. According to Catalog Age’s exclusive 2001 Benchmark on Databases, more than nine-tenths of catalogers maintain a customer database. And catalogers appear to have increased their database expenditures since last year, both in terms of the percentage of their budget allotted to their database and in terms of dollars spent on data and consultants.
On the flip side, however, fewer than half of the catalogers who participated in the benchmark survey perform database modeling. Only about one-third use their databases to ferret out upselling and cross-selling opportunities. And more than two-thirds of respondents don’t even bother offering customers any sort of loyalty program.
The percentage of survey respondents whose companies maintain databases has crept upward since last year. Nearly 92% say they maintain a database, including 90% of the consumer catalogers and 96% of the business-to-business respondents. Among last year’s participants, 89% — including nearly 87% of the consumer catalogers and 90% of the b-to-bers — did so.
The mean percentage of the total budget allocated for database maintenance or development also increased slightly from last year. This year’s respondents set aside an estimated mean 1.6% of their budget for their database, compared with a mean 1.0% among last year’s respondents. Among this year’s consumer catalog participants, the mean was 1.3%, vs. 1.7% for this year’s b-to-bers.
But this year’s respondents are less likely to increase their budget allocations next year. Only 44% say they plan to up the percentage allotted to database next year, down from 48% of those surveyed in 2000. And while none of last year’s survey participants expected to decrease their budget allotment the following year, 3% of this year’s respondents did. Keep in mind that the survey was conducted in January, just as many marketers began feeling the effects of the economic slowdown.
In terms of dollars spent, respondents on average spend more on data than on database software or consultants. The estimated mean spent annually per cataloger on data for appending or reverse-appending is $7,910. In contrast, respondents spend a mean $5,060 on database software and a mean $3,950 on database consultants.
The consumer catalog respondents outspent the b-to-bers on database software: a mean $5,160 vs. $4,600. But the b-to-b respondents spent more on data (a mean $7,840 vs. $7,290 among the consumer mailers) and on database consultants (a mean $4,030 vs. $3,650 among the consumers).
|Data for appending/reverse appending||$7,910||$5,300||34%|
|Annual sales of less than $1.0 million||1.2%|
|Annual sales of $1 million-$9.9 million||1.5%|
|Annual sales of $10 million-$49.9 million||2.2%|
|Annual sales of at least $50 million||2.2%|
When it comes to the type of data that catalogers maintain, P (product) trumps RFM (recency/frequency/monetary), though just barely. Eighty-three percent of respondents keep product purchase history in their database, while 82% maintain dollar purchase history, and 68% maintain recency/frequency data. The only other data maintained by a majority of respondents was source of customer acquisition, which 67% keep on file.
Consumer catalog and b-to-b respondents vary somewhat regarding the type of customer data they store. For instance, although 40% of the b-to-bers maintain information obtained through surveys or overlays, only 18% of consumer respondents do. Conversely, 60% of consumer respondents maintain customers’ Internet purchase history, compared with just 34% of b-to-b respondents. And — no surprise here — while 29% of the b-to-bers maintain customers’ Standard Industrial Classification (SIC) codes, only 9% of consumer respondents do.
There are also a few differences between the largest and smallest catalogers regarding the type of customer information maintained. Eighty-two percent of respondents with annual sales of at least $50 million maintain data regarding the source of a customer acquisition. But that decreases to 69% of companies with annual sales of $10 million-$49.9 million, and 67% of those with sales of $1 million-$9.9 million. Among respondents with annual sales of less than $1 million, only 53% store data about the sources of new customers.
Similarly, 79% of the largest respondents maintain Internet purchase history, compared with 55% of those with annual sales of $10 million-$49.9 million and 42% of those with sales of $1 million-$9.9 million. Among the smallest catalogers (less than $1 million in annual sales), the portion of those maintaining online purchase history falls to 26%. And while 18% of the largest catalogers maintain Census demographics based on predetermined clusters (such as PRIZM), just 3% of those with sales of $1 million-$49.9 million, and none of the smallest catalogers, do.
|Lifestyle data from consumer questionnaires||2%|
|Census demographics based on predetermined clusters||5%|
|Lifestyle data based on cataloger’s questionnaires||12%|
|Census demographics based on zip codes||18%|
How respondents use their databases depends a great deal on whether they are consumer or business catalogers. While the top function among consumer respondents is to determine which customers should receive promotions (73%), the top function among b-to-bers is to provide client information to telephone reps (73%).
Consumer catalogers are much more likely to use their databases to customize offers (69%, vs. 45% of b-to-bers). At the same time, while 51% of consumer respondents use their databases to generate list-rental revenue, just 24% of the b-to-b respondents do. Both groups are equally likely to use their database to locate cross-selling opportunities (40%).
More than two-thirds of survey respondents (68%) don’t offer customers any sort of loyalty programs. At least that’s down from the 77% of last year’s respondents. While 54% of the consumer catalog respondents fail to provide continuity programs, frequent-buyer clubs, and the like, among b-to-b respondents the figure climbs to 84%. Seventy-nine percent of overall respondents with annual sales of less than $1 million do not offer loyalty programs, vs. 40% of those with annual sales of at least $50 million.
Interestingly — and discouragingly — fewer than half of the survey participants use their databases for modeling. Fifty-four percent don’t model — the same percentage as the previous year. That includes 78% of respondents with annual sales of less than $1 million, 79% of those with sales of $1 million-$9.9 million, 38% of those with sales of $10 million-$49.9 million, and 11% of those with sales of at least $50 million. Sixty-three percent of the b-to-b respondents don’t use modeling, compared with 48% of the consumer catalogers.
Among those respondents who do use modeling, RFM is far and away the most popular: 87% use it. The second most popular modeling method, weighted (WLS) regression analysis, is used by only 26% of the respondents who use modeling.
As for who has access to the database, the marketing department does at a full three-quarters of the companies surveyed. The marketing department also controls the database at 46% of the catalog companies surveyed. The president/CEO/owner has access at 73% of the companies, including 92% of those with annual sales of less than $1 million but only 36% of those with sales of at least $50 million. He or she controls the database at 48% of the catalog companies. The MIS department has access at 51% of the participating catalog companies, including 82% of those with annual sales of at least $50 million. MIS is in charge of the database of 29% of the companies.
|Determining promotions recipients||50%|
|Providing client data to phone reps||29%|
|Locating upselling opportunities||27%|
|Determining promotions recipients||93%|
|Locating cross-selling opportunities||64%|
|Generating list-rental revenue||61%|
In January 2001, the Catalog Age subscriber file was sorted to select 1,000 subscribers indicating job function as president, vice president, or list management. These subscribers received a letter of explanation, a 20-question survey, a $1 incentive, and a postage-paid envelope in which to return the survey. Of the 989 deliverable surveys, 170 usable surveys were returned, for an effective response rate of 17%.
|Annual sales of less than $1 million||87%|
|Annual sales of $1 million-$9.9 million||54%|
|Annual sales of $10 million-$49.9 million||24%|
|Annual sales of at least $50 million||7%|
|Proprietary credit card||17%|