Saving Money on Catalog Circulation

You’ve wrapped up your budget for 2009, but not without a lot of scrutiny. Now it's time to execute your business plan. Fortunately, there are many opportunities to save money on your catalog circulation efforts, especially when it comes to targeting different customer segments.

Traditional multichannel cataloging focuses on customers who order over the phone or online. Never has this distinction been more important than it is now. The phone customer is generally older (say 50-plus) and receptive to catalog advertising, so this isn't the place to focus a lot of effort on reducing marketing expenses.

Online Needs Differ
Online customers have very different needs. Online, you segment customers based on the microchannels they're sourced from.

Some online customers use catalog key codes. This is a great place to test different contact strategies, especially among customers who have valid e-mail addresses. Customers often spend more on e-mail marketing when fewer catalogs are mailed. If possible, segment online customers who use search engines, and treat these customers in a different manner.

Savvy Search Customers
Search engine shoppers are savvy online users and unlikely to use the phone to place future orders. These customers also may use catalog marketing for comparison shopping on the Web; your catalog marketing efforts actually may benefit from the competition.

Pay close attention to repeat online shoppers who don't use catalog key codes and don't order during the two weeks following catalog in-home dates. I’ve run multichannel forensics studies on these customers, and they're frequently the ones most likely to become “organic” customers. Organic customers purchase from your brand without the aid of catalogs, representing a cost-savings opportunity.

Analyze 'Social Shoppers'
If your database stores the information, analyze what I call “social shoppers.” These are customers who are referred to your site via Twitter, Facebook or blogs. Not surprisingly, these customers behave differently than catalog or search customers.

Increasingly, catalog marketing success happens in rural areas. Rural and exurban ZIP codes in the Rocky Mountain states and New England perform well; these people are likely to order over the phone. Suburban ZIP code customers are likely to be the fabled “multichannel” customers we all crave. Urban ZIP code customers tend to prefer retail stores. Among lapsed customers that are at or below breakeven, filter out unproductive ZIP codes.

Finally, it's a good idea to segment any customer who took advantage of free or reduced shipping offers. These customers tend to be very responsive, especially when offered comparable promotions in the future. Catalog circulation expenses can be saved by not mailing as frequently to these customers when you don't plan to offer free shipping or percentage-off promotions.

Modern catalog circulation is all about identifying “microchannels,” small advertising channels that provide insight into future response behavior. There's no need to overcomplicate this process given the amount of cost savings that can be realized via simple analysis.

Kevin Hillstrom is president of MineThatData, a database marketing consultancy. He can be reached at kevinh@minethatdata.com.