6 Questions to Ask When Cutting Catalog Circ, Part 2

This week, in the second installment of this three-part series on how to effectively and profitably cut catalog circulation, I continue with my list of six questions to help ensure your business is going about this process the right way. In particular, I examine how best to segment "pure" Web buyers, as well as identifying where you obtain e-mail addresses.

(Here are questions 4 and 5 from the list. For part 1 and questions 1 through 3, click here.)

4. Have you separated “pure” Web buyers who responded to you without ever having received a catalog? When doing a matchback, you have three groups of buyers: buyers who gave a source code to either your call center or shopping cart; online buyers who didn't give you a source code but received catalogs; and buyers who ordered but didn't receive catalogs. Smart catalogers now flag these buyers who didn’t receive catalogs as “pure” Web buyers and segment them separately because they respond very differently to catalog mailings.

But “pure” Web buyers may not be able to replace traditional prospecting circ. Consider the following before cutting circ:

• Web buyers coming from pure Web traffic, affiliate programs, paid or natural search, or price comparison engines will prove less responsive to frequent buyer remails. And a large portion of your Web buyers won’t be responsive at all. Web buyers will respond much less to catalogs than traditional catalog buyers with the same RFM.
• Web buyers may be as expensive to acquire as buyers acquired via catalog mailings. The acquisition cost of Web buyers needs to be compared to traditional prospecting costs. It’s hard to know the cost of acquiring a buyer via the Web.
• The list universe of profitable prospecting circ is well-tested for most catalogs. How much prospecting circ a catalog has that's responded above breakeven is a metric most catalogers know in detail. The Web prospecting universe is typically a more difficult one to measure. It's more difficult to know the sales and costs for prospecting using the Web. Catalogers must obtain all the buyers they can prospect for profitably on the Web.
• Flag your Web buyers at birth so you can tell the difference between Web buyers who originated from online traffic and Web buyers who received mail order catalogs and then ordered online.

So before switching your circ plans to focus on increasing the number of Web buyers, know the following:

• The cost to acquire Web buyers.
• The potential to build up your housefile with Web buyers. Will your business scale based on new buyers coming via the Web?
• Whether you can mail Web buyers frequent follow-up mailings and have them respond like traditional catalog buyers with the same RFM. (Hint: We know that Web buyers won’t respond as well.)

5. Where are you getting your e-mail addresses? It used to be a maxim in the catalog industry that your mailing list of buyers was your most important business asset. Now e-mail addresses rank right up there with your buyer file as your most important business asset. You need to know where your e-mail addresses originate from.

Are you getting them primarily from customers placing orders on your Web site? Do you collect them on your homepage? Do you have a program to collect them though different touchpoints in your Web marketing? Do you append e-mail addresses to your customer records? E-mail addresses are gold. Know where you're getting yours and how you can collect more of them.

In the final part of this three-part series in the April 7 issue of Catalog Success: Tactics & Tips, I'll take a look at several ways to effectively allocate sales and costs across the multiple channels in which you interact with your customers.

Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. You can reach him at (505) 986-9902 or jcoogan@earthlink.net.