Are SOHOs Bringing You Down?
This strategy can help you determine whether SOHOs are a source for your declining response rates. First, identify by segment the number of residential addresses on your file to see whether they’re a potential problem. Then, compare responses between residential and business addresses and begin testing whether to mail the two segments with different frequency.
Before you pull SOHO or residential segments completely from your mailings, however, analyze those segments for pockets of response.
Analyze Purchase Behavior
3. Response predictors. Once you’ve identified SOHOs and consumers on your file, analyze their purchasing behavior in terms of average order, channel and product purchase.
For example, one cataloger identified that consumers at residential addresses who made their first purchase of less than $50 worth of product online didn’t warrant catalog mailings at all. These customers made an online search for a specific product they needed for a one-time purchase. Their transactions were profitable as long as the cataloger didn’t attempt to convert these customers to two-time buyers with a catalog mailing.
Another company identified several products that when solo-purchased by a residence, regardless of channel, indicated that the customer didn’t warrant a follow-up catalog mailing.
On the reverse side, you can use the same three factors to predict repeat purchases from one-time SOHOs and consumers. This strategy can work well when you have a profitable SOHO segment of your file.
Regardless of the factors you determine to be your predictors, you’ll want to test your conclusions before making a sweeping change to your mail plan.
4. Run a simple test. An easy test is to select the segment you believe doesn’t warrant a mailing and not mail a statistically significant random select from that group. By tracking the sales from the two groups — one mailed and the other not — you can begin determining whether to mail them less frequently or to pull them from your mailings altogether.
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.