B-to-B Cataloging: Jump-Start Your Segmentation Strategy

Because business-to-business (b-to-b) catalogers often deal with multiple contacts at a customer’s company, traditional recency, frequency and monetary (RFM) segmentation can present a challenge. How do you segment your housefile when some contacts regularly request catalogs, but never purchase, while other contacts make purchases without a catalog request? Alternative segmentation strategies outside RFM are possible solutions.

Gina Valentino, catalog consultant and owner of Hemisphere Marketing, a Kansas City, Mo.-based catalog consultancy, offers the following tips to jump-start your segmentation strategy if RFM hasn’t proven reliable.

¥ Analyze your inquiry pool and first-time buyers. First discern where most of your inquiries and catalog requests originate, Valentino says. These are people who’ve raised their hands because they’re interested in what you have to offer.

Do these inquiries come from trade shows, cold calls or space ads? Rank which sources are converting inquiries to first-time buyers, how long each conversion took, and which sources yield the most valuable first-time buyers, Valentino recommends.

These “gold” customers are determined by what your company values most, says Valentino. Do you value customers who order more frequently, have higher average order values, or make more big-ticket purchases or some combination thereof? Armed with this knowledge, you can prospect more efficiently, knowing which inquiries are likely to respond to future mailings and how quickly, she notes.

¥ Examine your multibuyers. While knowing where to generate more customers is valuable, sustaining your business also means understanding how first-time buyers convert to multibuyers, states Valentino. Customers who buy expendable items such as office supplies might make additional purchases quickly to replace depleted inventory, whereas buyers who make large capital purchases or durable goods purchases, such as network servers, may not convert as easily.

Look at customers on your housefile who’ve made capital purchases and have converted to multibuyers in a few months. What was their second purchase? Was it a service agreement, upgrade or accessories? Try marketing these items to other first-time buyers who’ve made similar capital purchases. The end result might be the conversion to multibuyer sooner than you think, says Valentino.

¥ Talk to your sales staff. Anecdotal information from your sales and customer service staff about your customers can be invaluable, since they can offer insight on customer behavior you may have overlooked, says Valentino. These insights can provide the basis for alternative segmentation strategies. Do certain types of customers place more orders at a particular time of year? Has your sales staff noticed that customers who buy a certain product follow up with a related purchase in subsequent months?

If you want to know the role each customer contact at a company plays in making purchases, your staff may even be able to point to the decision makers and end-users within those customer organizations. “You need to use these insights to pull apart your database to see what segmentation is best for you,” she states.

¥ Use your database to its fullest potential. “As databases become more agile, more nimble, a cataloger can increase the number of fields in his database,” Valentino says. Use your database as a decision-making tool that allows you to see not only how often and how much companies buy from you, but what products they buy and where within their organizations these products are sent.”Each cataloger should have different fields that are relevant to their organization. And that’s the critical thing about segmentation,” she adds.

Valentino can be reached at (816) 444-5439 or via e-mail at gina@hemispheremarketing.com.