Are SOHOs Bringing You Down?
AB-to-B catalog marketing staff had a problem. Its housefile count was experiencing double-digit growth, but its response numbers were shrinking. How can these two metric trends coexist?
Internet-savvy consumers, who often operate small, home-based businesses, buy product via this cataloger’s Web site. These small office/home office (SOHO) businesses didn’t need to repurchase the way this cataloger’s traditional business customers typically did. So, housefile response fell, while marketing expenses went up.
If you suspect this is happening to you, here’s how to fix the problem, improve your response and reduce marketing costs. Begin by analyzing your housefile for SOHOs and consumers. Then follow these steps:
1. Run address identification. Many B-to-B catalogers rely on one of two techniques to identify consumers and SOHOs on their file. Perhaps the most common technique is simply asking these customers about the nature of their business, although without follow-up questions, the responses can be misleading.
When you ask whether a purchase is for personal or business use, a SOHO will answer “business.” Without a follow-up question regarding the nature of the business, such as number of employees or some other enlightening piece of data, the customer may unintentionally mislead you. A straight consumer could easily fudge the answer, thinking you wouldn’t sell to individuals. Realize that self-reported data — customers’ answers to specific questions — often is unreliable.
2. Select the business name field of your database. This helps identify consumers, but hardly helps identify SOHOs because they often have business names.
Fortunately, you have some additional tools at your disposal. Your service bureau can run the U.S. Postal Service’s delivery sequence file (DSF) or a similar product against both your housefile and prospects to identify addresses as business or residential. You then can further segment each of your mail-file selects based on this identification and append the identification to your housefile for future use.
A columnist for Retail Online Integration, George founded HAGUEdirect, a marketing agency. Previously he was a member of the Shawnee Mission, Kan.-based consulting and creative agency J. Schmid & Assoc. He has more than 10 years of experience in circulation, advertising, consulting and financial strategy in the catalog/retail industry. George's expertise includes circulation strategy, mailing execution, response analysis and financial planning. Before joining J. Schmid, George worked as catalog marketing director at Dynamic Resource Group, where he was responsible for marketing and merchandising for the Annie's Attic Needlecraft catalog, the Clotilde Sewing Notions catalog, the House of White Birches Quilter's catalog and three book clubs. George also worked on corporate acquisitions.
