While speaking last week at the NEMOA conference in Portland, Maine, Steve August, operational vice president of customer marketing for Brookstone, lauded the stability with which his company now can operate. That’s nice, but why? He devoted his session to explaining the Merrimack, N.H.-based housewares and electronics marketer’s “SUPER” marketing approach — SUPER being a self-coined acronym that stands for Brookstone’s new marketing campaign
The SUPER campaign encompasses a Stable modeled environment, with a known Universe, Predictable performance, growth Expansion and a Reduction in costs. In its second year, the program was tested for a full year with a single model and a single set of names prior to implementation. August believes many catalogers can follow the model.
August began by detailing Brookstone’s stable-modeled environment. The company has scrapped renting lists from outside sources in favor of a single prospecting list source, with 10 deciled list segments. The company no longer takes part in RFM exchanges. The consistency in models builds year to year, August explained, and by using just one prospecting list, Brookstone has the ability to tweak that model to best fit its demographics.
Next is the known universe. Brookstone no longer has surprises due to merge nets, August said. The known universe of names provides the company consistent year-over-year planning, 0- to 12-month mail order respondents and 100 percent modeled multibuyers.
As for predictable performance, Brookstone has a minimum performance targeted for a name. And if a name doesn’t meet that minimum, “We won’t take it,” August said. Generally, the company sets the performance by decile for planning at 20 percent or greater ROI.
August further advised that performance gains are guaranteed due to testing in deciles. The system has allowed for accurate forecasting of sales, with the company knowing within 1 percent to 2 percent what the performance will be. He boasted a decrease in back-order rates since the implementation of the new system.
As for growth, the year-over-year testing and analysis ensures universe expansion, August claimed. The year-over-year decile testing results in an aggressive universe expansion. As far as August is concerned, the increase in net costs associated with an increase in circulation is a positive. To date, Brookstone’s circulation quantities are in sync with the company-planned rates, he noted.
Naturally, Brookstone is looking to maximize profit with this marketing campaign while reducing the overall process and expenses. August pointed to the merge time being reduced from weeks to days and no offer approval necessary as two factors to help expedite the overall list process. As for cost cuts, he said the company’s rental/exchange expenses have been checked, allowing for a deeper focus on analytics rather than the list procurement process.
The path of purchase data (online, catalog, retail) is most important in Brookstone’s campaign, August said. Factors such as attributing orders and sales to the correct channel (online vs. catalog), last online referring activity, recency from the catalog mailing to purchase, promotions used (such as affiliate offers from Visa, American Express, etc.), effort allocation (if you’re mailing a lot of catalogs — determining which one book drove customers to purchase), retail and merchandise insight (crossover value), SKU presence in catalog, and daily response attribution (all channels) are monitored closely by August to determine the effectiveness of a particular catalog drop. The result for Brookstone, he said, is truer revenue reporting and a better understanding of the marketing campaign’s profitability.
August provided an example of Brookstone getting real-time customer views resulting from its marketing efforts. The company recently bought radio ads in Tampa, Fla., and Dallas for a new Brookstone product being offered. The product was available to the rest of the country, but Brookstone wanted to know how effective its ad dollars were. So the marketer tested just those two markets. Although he wouldn’t share the sales results, August said the real key was being able to find out right away how many units were sold in those cities compared to the rest of the country.
Key Questions for You
August advised other catalogers to ask the following questions of their own marketing programs:
* Are we overspending?;
* What’s the affiliate role?;
* Do we have a need for a middle man?; and
* What’s our tipping point?
He wrapped up his presentation by offering five tips to help marketing programs stay fit.
1. Understand change is possible;
2. Capture data needed — for example, path of purchase;
3. Analyze the online and offline interaction;
4. Construct an integrated P&L; and
5. Act on the data — adjust spending accordingly.
“Applying statistical methods to selecting names is the best process,” August said. Especially in today’s mailing environment with the recent postal increases, effective list and circulation management is a top priority for all catalogers.