Managing the Flood of Web Buyers, Part 4
In the fourth and final installment of my four-part series on how the growing trend of consumers buying via the Internet has affected catalog circulation practices, this week let’s look at the viability of testing incremental sales and mailing Web buyers.
For starters, identify how much revenue in incremental sales you’re generating when you mail catalogs to your Web buyers. Nearly all catalogers anticipate they’ll get some sales even if they don’t mail their buyers, because their customers will instinctively keep coming back to them, providing some volume of orders. The trick is to know how much additional business you’ll get if you mail them a catalog. So set up a simple test with control panels of Web buyers. Mail half of the group a catalog and don’t mail the other half. Measure the difference in response.
Management inevitably asks, “Wouldn’t we have gotten the sales even if we didn’t mail these Web buyers a catalog?” When you have a mail/no-mail test in place, you can answer this question easily. You also can set the break-even point threshold for mailing Web buyers. If your breakeven on mailing a catalog is $1.50/catalog in sales and your testing shows you can get 50 cents from each buyer when you don’t mail them, then you can raise your true breakeven from $1.50 to $2 and only mail those housefile segments that’ll respond above $2 per catalog mailed.
Next, test the incremental sales and profitability of mailing Web buyers once or twice during a season. Web buyers often can be mailed profitably if they’re mailed less frequently than you would mail traditional catalog buyers with the same RFM characteristics.
Try the following:
* Take a buyer file segment of Web buyers with at least 10,000 names;
* Divide this segment in half, mailing half of the buyers once and the other half of the buyers twice in the same season;