Contributions to Profit: Plan for 2007, Part III
Editor’s note: This will be Jim’s final Contributions to Profit column. In October, CatalogSuccess.com launched his blog, Profitable Cataloging. He posts a new entry every Tuesday, and based on reader comments, responds throughout the week. Visit CatalogSuccess.com/blogs/JimGilbert.bsp, and post your questions or comments about catalog marketing.
In addition to being my final print column, this also is the third in a three-part series on the hierarchy of customer status. A quick review: I’ve defined the behavioral groupings of prospects and customers as suspects, prospects, triers, buyers and advocates. Then I discussed strategies to turn prospects into single buyers (triers). Now, onto the next step: conversion.
1. Profitability: getting the second order. Once customers place a second order with you, a psychological change takes place. With each purchase, a customer becomes increasingly loyal to your brand. In the catalog business, it’s normal for the cost of acquiring customers to exceed the income generated from their initial orders. As for P&L, converting single buyers to multis is critical to your return on investment. Multibuyer revenue drives profitability in the catalog business.
2. Set up two orders at once. I came across a catalog recently that contained a money-off offer (good on an initial purchase), plus a second offer good for the customer’s next purchase.
Other conversion methods can be simple, such as placing a bounceback catalog in the product shipment (it always works) or elaborate, e.g., sending “thank you for your order” letters with an incentive for the next order to first-time buyers. Measure your results carefully by splitting a segment of your new customers in half. Send half the customer segment a letter with an offer, and do nothing for the other half. Study the reorder rates of each group. Make sure the sales increase isn’t outweighed on a P&L basis by the additional cost of sending the letter that generated that order.
You can also place a welcome letter/offer in your product shipment in conjunction with your bounceback catalog. Or try including multiple product inserts for individual products. Tip: Gang print all your inserts to reduce expenses.
3. Bind it in. Bind a card with a coupon into the catalog between pages 2 and 3, or 4 and 5. You also get another great benefit, because the way the insert gets bound leaves a “tail” sticking out the other side of the catalog. So what? This is another great spot to place or reinforce an offer.
4. Blast it out. Another great place to stimulate future business is via e-mail. Try adding an offer to your order confirmation e-mails.
I recently purchased some software for my computer and got three separate receipt, shipping and delivery confirmation e-mails. A great opportunity to present a cross-sell offer was missed by providing only this confirmation information. They easily could have put a complimentary product offer in these e-mails. That same company has a music download division that always offers me three cross-sell choices—based on my purchase behavior—with my e-mail receipt. Maybe the software and the music division should compare notes.
5. Teasers and chasers. Postcards and e-mails can be used before and after a catalog mailing to stimulate business. Test these to see if you can get a response boost from your catalogs. Send a special offer before a catalog mails to your customers. Get more mileage out of a catalog mailing by sending an offer a few weeks after the catalog has hit and the order curve is on a downward trajectory.
6. Loyalty programs and differentiation. Loyalty programs have become the norm in the catalog business. If you don’t have one, create one now. The easiest loyalty program to develop is points-based—the more items your customers purchase, the more points they receive toward future purchases.
Tip: Ink-jet, along with their names and addresses, the number of points your customers need to reach the next reward plateau.
7. Conclusion. Your catalog mailings are there to generate future business. Solid circulation analysis and planning help you determine how often and how many catalogs to mail to a particular buyer group. Look at each group and do the math to determine your ROI.
Jim Gilbert is president of Gilbert Direct Marketing, and professor of direct marketing at Miami International University of Art and Design. Reach him at email@example.com.
Jim Gilbert has had a storied career in direct and digital marketing resulting in a burning desire to tell stories that educate, inform, and inspire marketers to new heights of success.
After years of marketing consulting, Jim decided it was time to “put his money where his mouth was" and build his own e-commerce company, Premo Natural Products, with its flagship product, Premo Guard Bed Bug & Mite Sprays. Premo in its second year is poised to eclipse 100 percent growth.
Jim has been writing for Target Marketing Group since 2006, first on the pages of Catalog Success Magazine, then as the first blogger for its online division. Jim continues to write for Total Retail.
Along the way, Jim has led the Florida Direct Marketing Association as their Marketing Chair and then three-term President, been an Adjunct Professor of Direct and Digital marketing for Miami International University, and created a lecture series, “The 9 Immutable Laws of Social Media Marketing,” which he has presented across the country at conferences and universities.