Measuring the Incremental Value of Catalog Mailings
A catalog's buyer file is the company's most valuable asset. In this omnichannel world, your catalog buyers are getting many layers of marketing messages from you. Buyers receive catalogs, emails, digital ads, paid search ads, etc., on a regular basis. Measuring the incremental sales and profits from catalog mailings is necessary in order to set the optimum housefile circulation.
Catalog marketing is a simple economic model: profits are maximized when you mail all circulation that exceeds your break-even point. However, knowing the incremental sales and profits that come from a catalog drop is complicated because your customers are receiving so many multichannel messages from you. Marketers are spending a lot of time and resources trying to determine how to allocate or attribute sales to the various marketing channels.
A reliable method to determine the incremental sales from housefile buyer segments is to run mail vs. no-mail tests. These tests enable you to measure the difference in sales to holdout panels by dividing housefile segments, mailing a portion of the list and not mailing another portion of the same segment, then measuring the difference in sales.
By comparing how the group receiving the catalog does vs. the holdout panel, you can see the effect the catalog has on sales. For the holdout test, withhold mailing the catalog so that the two groups receive all the other marketing messages. After running a holdout test, the response rates and dollars per catalog are compared in your matchback processing. For example, if the holdout group yields $1.00 in sales during the life of the catalog's order history and the group receiving the catalog yields $2.50 in sales, then the incremental lift is $1.50. With all other variables held constant, the incremental lift represents the sales that your catalog mailing added to the overall marketing mix.