In light of the economy, numerous catalogers are scaling back on their prospecting to focus more heavily on customer reactivation. And in light of rising distribution costs — namely postal rates — many marketers are turning to e-mail as a reactivation tool.
“Printing, postal, and paper costs have had a direct impact on many catalogers’ ability to require and retain customers,” says Al DiGuido, CEO of New York-based e-mail services provider Bigfoot Interactive. “They’re looking for cost-effective ways of acquiring or reactivating customers.
And e-mail is significantly cheaper than print postage. Respondents to last year’s Catalog Age Benchmark Report on Print and Production (October 2000 issue) spent a mean $1.00 a book for printing and binding — and that doesn’t include postage costs. According to DiGuido, those same catalogers can spend just $0.02-$0.04 for each e-mail they send. “You can e-mail that customer three, four, or five times” and still spend less than on a print mailing, he says.
Van Nuys, CA-based auto products cataloger Performance Products in September rolled out its first e-mail buyer reactivation program. While at press time it was too soon for the company to measure results, director of Internet operations Neil Levitt says the cost of sending the e-mails was minimal, though he would not disclose specifics.
“We do everything inhouse — we mine our database in minutes, have our copywriter write the e-mail, and blast it out,” Levitt says. “If we did this in print format, we would have the same basic costs associated with paying our inhouse staff do those tasks, but then printing and postage would cost much more.” Performance Products has about 1 million e-mail addresses in its house file; the first reactivation campaign was sent to approximately 70,000 former buyers.
At general merchandise cataloger Spiegel, “we reach out to customers whether they are recent or not so recent, or whether they are registered users who haven’t yet purchased from us,” says Christian Feuer, senior vice president of marketing for the Downers Grove, IL-based company.
Spiegel sends four types of messages to its e-mail house file: “Merchandise” e-mails promote new products and product lines; “event” messages advertise sale or holiday promotions; “participation” messages ask customers for feedback on product lines; and “incentive” messages are “specifically for our buyers that we’re trying to reactivate,” Feuer says. “If a customer hasn’t bought from us in a while, we will give him a discount or other incentive to shop from us.”
Some catalogers opt out
Not all catalogers reach out to their buyers — current and otherwise — via e-mail. Multititle mailer Blair Corp., for one, does not have a plan in place to reactivate buyers via e-mail. “I think we’re able to attract former buyers via the extensive clearance items and incentives on our site,” says Jeff Parnell, vice president/general manager of e-commerce for the Warren, PA-based cataloger.
Dodgeville, WI-based Lands’ End’s lack of an e-mail reactivation plan is a matter of privacy. The apparel and home goods cataloger doesn’t contact customers by e-mail at all, except for sending a newsletter to customers who opted in for it, says spokesperson Andrea Stephenson. “We don’t want to violate the trust of our customers.”
Lands’ End is wise to be concerned about trust and privacy. When e-mailing inactive customers, you may have to rely on outside lists to acquire their most recent e-mail addresses.
“Depending on how, when, and where customer data is collected, it’s tricky when a cataloger tries to marry offline customer data with an e-mail address,” says Jay Schwedelson, corporate vice president of Boca Raton, FL-based list services company Worldata/WebConnect. “We recommend catalogers do a litmus test, in which they take a small portion of their file — say, 5% or 10% of 100,000 addresses — and send an e-mail to them. If they receive severe negative feedback from customers asking where the company obtained their e-mail addresses, then they should abandon their plan to e-mail. But if negative response is minimal, they can roll it out.”
In any e-mail campaign, Schwedelson suggests that catalogers not abandon an e-mail address the first time a message bounces back. “Let it bounce three times before you consider it dead,” he says. Many times catalogers are mailing to customers’ addresses at work, and those e-mail servers can be down or experiencing a myriad of technical problems. “If they resend one or two more times, they can capture as much as an additional 10% more responses.”
How far back should a cataloger go to retrieve names in its database? Performance Products, for one, goes back for at least four years. Levitt says the cataloger has specific information about the buyers for whom it has e-mail addresses, such as the make, model, and year of their vehicles. After four years, there’s a good chance the customer doesn’t have the same car anymore, Levitt says. But even then, he adds, the customer may respond to the e-mail to let Performance know that his vehicle has changed.
As when mailing catalogs to less-recent buyers, though, the older the names, the lower you should project response. “You’re playing with fire if you go back beyond 24 months,” says Geoff Smith, director of client programs for ClickAction, an e-mail services provider based in Palo Alto, CA. “Response rates go down dramatically after that, because people no longer associate the company’s brand with the product it sells.”
Hidden Costs
The expense of sending an e-mail to a former buyer could exceed the few cents it costs to simply transmit the message, cautions consultant Robin Lebo, president of Charlottesville, VA-based Lebo Direct. “It’s definitely cheaper to reactivate buyers by e-mail” than via print, she says, but if you outsource data mining, copywriting, or other services, your expenses will climb.
For example, Palo Alto, CA-based e-mail services provider ClickAction offers a new service that matches offline names from data provider Acxiom’s files to online information it has from clients’ house files. According to Geoff Smith, director of client programs, catalogers pay $0.75 per match. The company doesn’t charge a start-up fee, but it requires a $2,500 minimum order.
“For many catalogers it costs more than that, because they will try to match as much as, or more than, 100,000 names,” Smith says. And the cost may be more than some want to pay. “Now that we’re implementing the program, we’ve received feedback that the price point is a bit high for what they’re used to paying for offline name acquisition, which could cost $0.50 a name.”
— MC