The Migration Matrix
Recently, there’s been a push to build sophisticated regression models using the latest technologies and techniques. And rightly so! The gains in both processing speed and capacity have enabled statisticians to incorporate large amounts of catalog, retail and Internet data, as well as demographics, to generate results specifying the best names to mail.
A marketing professional is considered remiss if he or she isn’t testing a regression model with various vendors. While these analyses reflect some of every cataloger’s database marketing efforts, there are some areas that commonly are neglected. I’ll discuss one of these: measuring the success of your recent marketing efforts using available data. How do you ensure that you’re effectively managing and mailing your customer file? By looking at what I call “a migration matrix.”
Many catalogers generally look at response rates, average orders, demand per catalog and profitability. But few look beyond those things. If you use data from your marketing database, you can identify opportunities to increase demand and orders by developing programs to increase customer activity, thereby keeping buyers more recent. In the past, when catalogers wanted to increase demand, they usually increased circulation or added pages to their catalogs. Now, with frequent increases in paper and postage costs, you must be more careful about circulation increases by also focusing on retaining current customers.
In addition, mailing smarter boosts your company’s overall profitability and customer lifetime value. Successful strategies include improving your ability to convert single buyers to multi-buyers at a faster rate; increasing the rate of repeat purchases from multi-buyers; and boosting conversion rates of prospect/inquiry names into buyers.
This article will address how to measure the success of your marketing efforts by calculating how well you convert single buyers into multis — that is, how to get customers to go from first base to second.