Mining Your Customer Files
Many catalogers, especially smaller and medium-sized ones, are seriously challenged when it comes to developing a stronger revenue and profit stream from their customer lists. The following challenges are endemic to all catalogers in working their customer lists:
Knowing which are the best customers (i.e., the ones with the highest lifetime value (LTV) and those most likely to respond to the next mailing);
Knowing how to build customer loyalty without having to buy it with discounts, premiums or extensive (and expensive) point programs;
Knowing when and how to reactivate those once-loyal customers who you haven’t heard from in some time;
Knowing how to reduce customer attrition and turnover; and
Knowing how to use technology to build personalized communications aimed at targeted segments of the customer list.
Whether you prefer to call it loyalty marketing, relationship marketing, one-to-one marketing or personalized marketing, understanding your housefile customer list and maximizing sales and profits depends on your ability to segment and manage the list, as well as to build a customer contact strategy.
ALL CUSTOMERS ARE NOT CREATED EQUAL
As a generality, the customer list will outperform a list of non-buyers or rented names by a factor of 2x, 4x or as much as 10x. The chart on the opposite page helps explain the tremendous leverage that the buyer list exerts on catalog economics. Most catalogers understand that prospecting costs money, while the buyer list produces profits to pay shareholders, finance the growth of the business, and pay overhead and general and administrative costs.
Buyers have varying degrees of loyalty and some are more apt to be repeat purchasers from the catalog. In general, you can expect higher response rates and higher average order values (AOVs) from this group, especially if they are recent and repeat buyers.