A Five-Step Media Plan for Catalogers (1,027 words)
One of the major challenges faced by catalogers is building the customer or buyer file. There is a lot of misunderstanding on how important this process is. For example:
• Start-up catalogers are impatient and want to make money in the first year or at the latest, the second year. But they haven't built a buyer list of any size.
• Many veteran catalogers do a poor job of measuring what it costs to get a customer and prioritizing the various lists and outside media used in prospecting.
• Few catalogs measure the lifetime value (LTV) of their buyers (by media) that can be used to change their list, space or other methods of customer acquisition
• Most catalogs dwell on list rentals as the only way to build their buyer files.
Their rationale is simple:
Lists have historically done well and have been the medium of choice for catalog customer acquisition.
Mailing lists have traditionally had greater repeat buyer and lifetime value than other media.
All of these habits can be challenged and don't represent, what in my judgment will be the new customer acquisition paradigm of the next millennium.
A 5-STEP APPROACH TO BUILDING A NEW MEDIA PLAN
Here are five solid steps to building a new media, customer acquisition plan for your catalog.
1. Start with your database. Before you jump right into the circulation planning, take a step back and do some major analysis of your customer list and see what it tells you. Ask yourself the following questions:
• How much can you afford to spend to get a customer?
• Which lists and other media gave you the best cost per name in the last year's campaigns?
• What is the LTV of customer segments from the lists and other media you've used over the past three years?
• How did catalog requesters perform during the past year? Does it look like the promotion of catalog requests (sometimes called two-step customer acquisition) should be continued?
• What is the source of the best list or media segments that you wish to emulate? The source of a problem list or media segments that you wish to avoid?
It is amazing how much a database history can help you with future customer acquisition strategies.
2. If you don't have good tracking or database history, make it a #1 priority. I am amazed how poor the tracking is with many solid, well-run catalogs. If you're not tracking at least 90 percent of your list and media source codes, you need to fix that problem first. Business mailers complain that tracking is and always has been a problem. There are no valid excuses! Just get some help and make a commitment to do better. You will never improve your new customer acquisition efforts without adequate tracking and measurement. Start now!
3. Make certain to look at your merchandise results from new customers. Many catalogs develop a separate book for prospecting from the customer catalog. If you have a separate prospecting catalog, make certain to look at what first-time customers are buying—NOT what all customers are buying. Look at the winning product categories and items from your last mailings and see if you need to change your merchandise selection and pagination. While this is a bit removed from the media plan, the analysis will prove worthwhile if you can increase response rates and average order values (AOV) by offering the right products and categories.
4. Brainstorm and test front-end offers. We have seen special offers make a tremendous difference with prospective customers. Don't assume that just putting out a pretty catalog will be enough to motivate a new customer to action. Just think of all the reasons not to buy. For example, your prospects may:
• Already have good suppliers.
• Be satisfied with existing service and price.
• Prefer to shop at retail.
• Be creatures of habit going to existing catalog or retail vendors.
• Experience inertia for making a change.
It is no wonder that for many mailings, 99 percent of people don't respond.
5. Break out of the box by testing alternative media.The challenging question that all catalogers need to ask themselves is: "If lists aren't working or even coming close for new customer acquisition, do I still have a business?" There is an alternative—in fact lots of them—called alternative media. The last paradigm shift that all catalogers—business, consumer and retail—need to commit themselves to is to put some of the new customer acquisition budget into new media. The list of new media that are working for catalogers is impressive. But the name of the game is "test, test and test some more." Just look at the types of new media that are available:
• The Internet, both catalog request and direct product selling
• Space advertising in magazines or newspapers—also appropriate for one-step, direct selling of a product or two-step (generating a catalog request and following-up with a catalog)
• Public relations
• Customer referrals
• Card decks
• Package inserts
• Credit card inserts
• Catalogs of catalogs like Shop At Home or World's Best Catalogs
• Television and radio
• Trade shows
• Retail store sign-ups
The list goes on and on. Here's a challenge for you. Sit down with your internal marketing, creative and merchandising people and see how innovative you can be in finding new, non-traditional ways for getting prospective customers to ask for a catalog. You will be pleasantly surprised at how good the results can be, and you should be able to convert 20 percent to 25 percent of the people to buyers.
But don't forget to measure their LTV! New media buyers have got to perform in the longer term or you still have a major problem.
While these five steps are no panacea, they may be a way of breaking out of the "total reliance on list rental" syndrome that seems to have gripped the catalog industry.
JACK SCHMID is president of J.Schmid & Associates, a catalog consultancy located in Shawnee Mission, KS. He can be reached by e-mail at jacks@jschmid.com or by phone at (913) 385-0220.
- People:
- Jack Schmid
- Places:
- Mission, KS.
- Shawnee