Preparing for the 2006 Postage Increase? Here are Two Missteps to Avoid
Postage rates are expected to increase from 13 percent to 20 percent in 2006, marking the first increase since mid-2002. It’s important to spend the next 12 months preparing to absorb this increase. Don’t wait until the increase is in effect before deciding what to do. Now is the time to begin making adjustments.
Often catalogers make cuts in the wrong places. Their intentions are good, but the actions taken aren’t always the best in the long run. Here are two actions not to take when preparing for the postage increase.
1. Don’t stop mailing to Web-only buyers.
When you look at your source code report, it may appear that results from Web-only buyers fall considerably below breakeven. Even the results from the most recent Web buyers may not look too exciting. It’s logical to conclude, then, that you should stop mailing such buyers to save money. But in recent matchback studies, Web-only buyers are performing at more than acceptable levels.
For most catalogs, Web buyers rank in the bottom 10 cells for housefile when reported by key code. But after doing a matchback, they rank in the top 10 cells. The clearest example of this is in a recent holiday mailing we did. There were no Web cells in the top five when ranked. But after the matchback, there were three in the top five.
Web buyers are very strong responders. They get a catalog, order on the Web, and yet there’s no way to trace them. The bottom line: We know Web buyers respond to the catalog, and we know the catalog is a big driver of traffic to the Web.
Early this year we did a split test and created a hold-out panel. We found it absolutely paid to mail Web buyers a catalog. We created two panels of roughly 25,000 names. One panel was mailed seven times, the other only once. The net contribution for the seven-time group was $169,089 compared with the one-time group of $109,318. The Web buyers who were mailed all seven times generated a contribution to profit and overhead (after all selling expenses) of $169,089.