Managing Pandemic Catalog Buyers
Many catalog mailers are seeing large increases in revenue and growth in their new-to-file buyers because of the surge in pandemic-driven online purchases. However, with the growth in the number of buyers comes lots of uncertainty. Are these new buyers different than buyers pre-pandemic?
The business issue with the significant influx of pandemic buyers is whether they will convert into loyal customers and respond profitably to future catalog mailings.
Response rates for pandemic buyers can be quickly tested to know if they are the same or different from the existing base of buyers. The new-to-file buyers can be broken out with precision. Segmenting should be straightforward.
The first segmentation should be the date range of the pandemic; March 2020 until the present.
The second segmentation is to divide these pandemic buyers into one-time new-to-file vs. two-time buyers who had ordered before the pandemic or one-time buyers pre-pandemic and one-time buyers post-pandemic. The co-ops are reporting that pre- and post-pandemic one-time buyers aren’t significantly different in either demographic makeup or response rate.
Segmentation and testing pandemic buyers is the first step to understanding their future value. The second step is scoring the buyers at one of the cooperative databases. The tactics for scoring include the following:
- Finding those households that are active mail order households. This is the most common way to rank the buyers, from most responsive to least responsive.
- Scoring for suppression of those buyers who may be only one-time buyers. An example would be to suppress those buyers with very few mail order purchases, or very few purchases within your merchandise category or customers who only purchase during the holiday gifting season.
- Scoring to find buyers with recent purchases. For example, households with two or more catalog purchases in the last 60 days. Co-ops report that a 60-day recency flag has been resulting in a huge lift. If the pandemic buyers were all polluted data, you would see suppression, not selection opportunities.
The cooperative databases have become very savvy at segmenting and scoring these streams of new buyers. They bring to bear a set of best practices to the analysis, planning and control of your new buyers. Working with your cooperative databases will prove very useful.
Some new buyers are proving suspect. For example, Amazon.com buyers who purchase based simply on price for products with a UPC code are notorious for low buyer repeat rates. Customers who buy mail order or from your catalog simply because retail is closed or a preferred vendor has supply chain issues also have suspect long-term loyalty to your brand.
Catalogers also need to know that the names they get for prospecting for new customers are going to respond like past prospect universes from the same list sources.
How do you protect your prospecting universes from the “watering the whiskey” issue of your merchandise category being flooded with lots of low-value pandemic buyers? It's a similar issue to the dilution of prospect universes with Amazon or retail or other poor quality prospects. The difference is that the pandemic buyers can be a mixed bag of some very good quality prospects ranging down to prospects which won’t respond to your catalog at all.
- The first tactic to ensure the quality of your prospecting universes is to take relatively small segment sizes. Small sample sizes allow visibility into prospecting universe depth, and when and where response rates start to decay.
- The second step is to watch results carefully to see if response rates decay.
- The third key tactic is to simply talk with the cooperative databases about potential quality issues with prospects.
Catalogers will need to measure the behavior of new customers as the world opens back up. Are the gains permanent or will foot traffic retail shoppers return to their old patterns and habits? Some of the gains will no doubt be permanent as that's the general trajectory of shopping.
Understanding your pandemic buyers is critical. This pivot toward online shopping is one of the biggest trends to hit the direct marketing world in decades. Don’t waste this crisis! Do the analysis to figure out where these pandemic buyers are driving your business.
Jim Coogan is the founder and president of Catalog Marketing Economics, a consulting firm focused on catalog circulation planning.