When Should You Stop Mailing to a Customer?
As any experienced cataloger knows, it’s difficult to over-mail a housefile — at least certain segments of it — when mailing by recency, frequency and monetary (RFM) value. Catalogers generally want to maximize contribution to profit and overhead by leveraging their customer bases.
Customer-reactivation techniques make it possible to mail deeper and more often to your previous, or “older,” customers. This month, I’ll discuss some sound strategies for mailings to your own housefile.
Consider this: Today’s circulation plans include fewer new-to-file names because catalogers rely more on reactivating older segments of their housefiles in order to grow their 12-month buyer files (or housefiles) instead of renting as many outside prospecting lists as they once did. Customer-reactivation programs and promotional offers are being used more to enable catalogers to mail deeper and more frequently to older segments of their own housefiles.
While a 12-month housefile will grow as a result, the quality of names being brought forward could be in question. For many merchants, it’s less expensive to reactivate a previous buyer than it is to prospect for a new one. For example, it can cost $100 per thousand (/M) to $150/M — or more — to rent an outside prospect list. This compares with the cost of having a cooperative database run a reactivation model on your older housefile names for $45/M to $55/M.
What’s more, many of these previous buyers are being brought forward by catalogers using aggressive promotional offers such as free shipping. The lifetime value (LTV) of older names that purchase again because of a promotion can be questionable. Compare the LTV of a buyer you reactivated vs. a new name added to your file. It might be worth the list investment to acquire a new buyer compared with reactivation of an older one. Or you might want to do both, but not at the exclusion of the other.