Managing The Flood Of Web Buyers, Part 1
If you don’t understand your Web buyers, your response rates will decay, period. This is the biggest point we need to understand. There’s a potentially bad and hidden group of buyers creeping into buyer files, and these Web buyers are dragging down response rates.
Not all Web buyers can be mailed. The trick is knowing who to mail. Here are some keys to identifying who to mail:
* Segment your housefile into pure Web and catalog-driven Web buyers;
* Use matchbacks to get true response results to your mailings;
* Use the co-op databases to optimize your housefile so you’re not wasting circulation to Web buyers who won’t respond to snail mail; and
* Have test panels in place to measure the incremental sales coming from Web buyers when you mail them a catalog.
You don’t want upper management questioning you with, “Wouldn’t we have gotten the same sales from our Web buyers even if we hadn’t mailed them a catalog?”
Here’s a circulation example. A cataloger mails 1 million buyers a catalog and gets $2 million in overall sales. Breakeven is $1 a catalog so my circulation seems healthy. But when you segment your Web buyers, you can see that your circulation is not healthy: 600,000 of your buyers are responding at 77 cents per catalog, which is below your breakeven. That circulation is costing you profitability. (See the chart at the bottom of the page.)
The key is to segment your buyers by channel and expand the traditional segmentation from RFM to RFM&C (channel). And it’s not enough to just segment your buyers by how they ordered; you must segment into pure Web buyers and catalog-driven Web buyers.
You should have four segments by channel:
1. Pure Web buyers;
2. Catalog-driven Web buyers;
3. Traditional call center/mail order buyers; and