According to the Catalog Age Benchmark Report on Lists and Databases, geographic selects are becoming more popular among list owners and renters alike. Among the catalogers participating in the 2002 Benchmark Report (March 1 issue), 76% offered selects of their lists by geographic region. In comparison, just 47% of participants in the 2000 Benchmark Report had offered them. And 28% of mailers polled for the 2002 report said they at least sometimes rent only those names on a list that are within a specific state or zip code area, compared with 21% two years earlier.
With prospecting growing ever more expensive with each postal rate increase, catalogers are looking to improve response from rented lists by going beyond recency/frequency/monetary (RFM) segmentation. Zip modeling is a way to try to improve response, says Dan Harding, marketing consultant for New York-based List Technology Systems.
“A simple zip model takes all the zip codes in the country and determines which ones are better for a particular cataloger,” Harding says. The model would factor in the demographic and geographic traits of your best customers for an effective comparison.
“Then for the best names you add other select factors, such as RFM, and use more liberal selects to get the most names,” Harding explains. “In the worst zips, you still mail to them, but you become more selective, choosing, for instance, only high-ticket respondents.”
By adding a zip code select to a particular rental list on top of other more common selects, such as RFM, “you add incremental value,” says Pete Bather, vice president of marketing for bedding and home decor catalog The Company Store. When testing lists, The Company Store selects only zip codes that have performed well in the past. “If the list works well, we’ll then take the select off and expand the mailing,” Bather says.
The growth of multichannel marketing has also contributed to the increasing popularity of geo selects. San Francisco-based high-tech gadgets marketer The Sharper Image, for instance, most frequently uses them when opening a store in a particular area. “We’ll penetrate that area about 20% more deeply with the catalog than we’d normally do to introduce a new store and drive traffic into it,” says Julie Hopkins, director of direct marketing and advertising.
The Sharper Image typically mails heavier to addresses within a 15-mile radius of the store, sending prospects a postcard, an e-mail, and at least one catalog during the first three or four months that the store is open. The catalogs mailed to areas with new stores have special ink-jet messages on the back. A dot whack on the front cover also promotes the store opening, Hopkins says.
Even after its store-opening advertising blitz subsides, The Sharper Image will continue mailing a geo select “if it’s performing well,” Hopkins says. Beginning this summer, the company also plans to increase its use of geo selects to lift response to its mainstream mail order catalog mailings. “We’ll get more sophisticated based on customer purchasing behavior — unrelated to store regions,” Hopkins says.