Managing The Flood Of Web Buyers, Part 1
In the first of a four-part series assessing the ever-increasing number of Web buyers, I’ll focus on what this trend has meant for catalog circulation.
It’s no secret that the rules of catalog circulation have changed. Catalogers need to understand how Web buyers are affecting the dynamics of catalog circulation and what changes to their own circ planning are needed to ensure the best results possible within the new rules of the game.
There are four keys tactics to managing the flood of Web buyers. Employing these tactics will help you gain control of catalog circulation. They include:
1. Segmenting your buyers by channel and RFM;
2. Optimizing your Web buyers at a co-op database to find the households that respond to catalogs;
3. Using matchbacks to measure true response to mailings; and
4. Testing incremental sales from Web buyer segments to measure sales and breakeven from Web buyers.
Distinguish from Two Types of Web Buyers
Not enough circulation planners distinguish between the two kinds of Web buyers: pure Web buyers and catalog-driven Web buyers. Pure Web buyers come from Web traffic and haven’t received a catalog from you. Catalog-driven Web buyers received your catalog and simply placed their order using your Web site. For pure Web buyers, the demand was created on the Web and the order was taken on the Web. As for catalog-driven Web buyers, the demand was created by your catalog and the order was taken at your shopping cart.
They’re very different kinds of Web buyers, so don’t combine them when you’re segmenting your housefile.
Catalog-driven Web buyers respond like traditional call center or mail order buyers. They have similar response rates and demographics, and can be mailed at about the same frequency as your traditional mail order buyers.
Pure Web buyers are likely to be very different than your legacy mail order buyers. Their response rates and average orders tend to be less. Their order curve doesn’t last as long. You should mail them less frequently.
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
4. Multichannel buyers.
Segment your pure Web buyers by first flagging buyers by their original source — affiliates, paid and natural search, price comparison engines, etc. We all know, for example, that price comparison shoppers aren’t very loyal to your catalog because the competition is just one click away.
In the second part of this series next week, I’ll discuss ways to incorporate the co-op databases into your Web/catalog efforts.
Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. You can reach him at (505) 986-9902 or jcoogan@earthlink.net .
- People:
- Jim Coogan
- Places:
- Santa Fe, N.M.