Catalog merchants need to learn the new rules for mailing Web buyers profitably to manage the flood of business coming through the Web. And pure web merchants will gain a huge advantage other Web marketers if they learn to circulate catalogs to their buyers. Here are the keys:
- Segment your Web buyers by original source code so you can measure the difference in response between price comparison engine shoppers, affiliate buyers, pay-per-click and natural search buyers, e-mail buyers, and converted Web requests for catalogs.
- Maintain original source codes on your relational database so you can track the lifetime value of Web buyers versus traditional catalog buyers and between different kinds of Web buyers. A buyer who comes to you through a price comparison engine is going to be more loyal to price than to your store, for example, and may have a low lifetime value.
- Use matchbacks to distinguish between Web buyers who received catalogs and placed their orders on the Web vs. “pure Web” buyers who’ve not received a catalog. You’ll typically see that web buyers who were driven by catalogs respond much like traditional catalog buyers and “pure Web” buyers are much less responsive to catalog mailings. With low source code capture rates on the Web, response analysis using match backs has become an essential tool to segmenting your house file.
- Closely track one-time Web buyers to see how quickly they fall below breakeven. When one-time “tryers” convert into two-time “buyers” then you have a loyal Web customer.
- Use the cooperative databases to model your Web buyers to suppress the web buyer households that don’t respond to catalogs. You can cut pure waste out of your circulation by dropping households with little or no mail order buying activity. You can test precisely how deeply you can mail into your Web buyers by having the cooperative databases rank your web buyers based on household purchase behavior from different mail order catalogs.
- Track your Web buyers by the type of merchandise purchased and don’t overmail to buyers who pick merchandise that’s away from your catalog’s merchandise strength. Be wary of Web buyers who purchased from deep discounted promotional offers; they may not respond to your everyday pricing.
- Segment low average order Web buyers to know if you can mail to them profitably. Your sales per catalog for low average buyers will inevitably lag behind the sales per catalog from higher ticket buyers.
The circulation rules for mailing to Web buyers are changing. It’s no longer enough to use recency, frequency, and monetary (RFM) to segment your house files. Circulation managers need to use match backs, original Web source codes and the power of their relational databases to optimize their Web buyers.
The basic rule of thumb is that if you have the same contact strategy for your traditional catalog buyers and your web buyers, you aren’t digging deep enough to understand how your Web buyers respond differently.
Jim Coogan is president of Santa Fe, NM-based consultancy Catalog Marketing Economics.