A CEO’s Guide To Catalog Circulation ’08 (Part 1 of 3)
Fast-forward to this past year, which represented an inflection point. For many catalogers, online sales surpassed 50 percent of total sales. CFOs began to ask tough questions, challenging whether catalog marketing was needed to drive the large portion of online sales that now dominates many catalog businesses.
Catalog CEOs find themselves at a disadvantage these days. They have the classic circulation tools and strategies from the pre-Internet era, as well as the modern-day matchback algorithm to confirm that catalogs drive sales to other channels. But they don’t have the context to create a catalog marketing strategies that meet or exceed the needs of a diverse audience that now responds to myriad marketing strategies.
Identify Different Audiences
We’ve been told that “multichannel customers are the best customers.” This may have been true early in the multichannel era, but some catalogers have observed that once catalog customers shift their purchases online, customer behavior changes.
First, customers become much less likely to use the telephone or mail channels to order. Once customers are comfortable buying online, they tend to remain online. This becomes a “mystery moment” for catalogers. The belief is, these customers continue to order merchandise online because catalogs continue to be mailed to them.
Most catalogers continue to mail “multichannel” and “online-only” customers. This can become a self-fulfilling prophesy, however. Matchback analysis confirms that online orders occur among an audience that’s been mailed. Catalogs drive online orders. All is good ... or is it?
Many catalogers fail to execute “mail/holdout” tests, which are the only way to truly know whether catalogs drive online sales. One group receives the catalog, one does not. After 12 weeks, you tabulate sales results from the mail, phone and online channels. By subtracting the holdout group from the mailed group, you can identify the “incremental” difference, which is the true amount of value generated by catalog mailings.