Improve Name Selection & Profits in Your Housefile (1263 words)
Tip #1: Consider your segmentation criteria and methodology each time you mail.
In cataloging it's common to see the same segmentation strategy followed every year. Marketers may update transactional activity after each mailing, which changes the values for RFM and product purchase information. But how often do you revisit the stratification capability of the variables used in segmentation? Is the top-to-bottom-segment ratio still as great as it was on last season's campaign? Should new behavioral characteristics that would help differentiate between good- and poor-performing groups of names be considered?
Today, you can rebuild segmentation and name selection with each mailing to take advantage of newly discovered predictive characteristics. Dynamic segmentation of this sort reveals profit opportunities that easily exceed the cost of analysis and implementation.
Tip #2: Look forward with your segmentation to the offer you're about to make.
As a cataloger, you typically consider pagination, product mix, product price and major product category variations when you do roll-up marketing forecasts. That's all right, but there's money left on the table if a segmentation scheme fails to account for the next offer's specifics.
Ask profit-driving questions before settling into a familiar marketing pattern. Are you actually using the contents of the next offer to drive name selection outside the bounds of a standard housefile-segmentation methodology? Should you re-rank names for selection because of shifts in product mix? Should you re-set monetary breaks for new and higher-price-point offers?
Many offers contain only subtle variations on merchandising, in which case the effect is minimal on the characteristics that determine segmentation. However, as the merchandise or offer mix changes, or as you introduce new product categories, failing to modify segmentation parameters may mean you miss your best new buyers.
Tip #3: Don't lock into a single methodology for segmentation.