Strategy: A Primer in the Basics of Catalog Circulation

A circulation strategy accounts for up to 70 percent of any mailing’s success. No doubt, we can all use a refresher when it comes to circulation planning and execution based on the importance of getting it right. So, this month, I felt it appropriate to review the basics and factors that are critical to any mailing campaign’s success.

Consider the following key elements: housefile selections, prospecting and plan execution.

Housefile Selections

Balance mailings to your housefile with the desired level of prospecting. About half of your circulation should be going to your housefile. Most catalogers use some form of recency, frequency, monetary (RFM) value classification, which flags all customers with a three-place identifier based on the recency, frequency and total monetary value of their previous purchases. The data are based on customer information in your housefile.

Identify Unprofitable Mailings

A 3-D RFM designator cube, divided into levels along the recency, frequency and monetary axes, is useful for locating each customer within a “cell” relative to other customers. Each customer’s name resides in a given cell according to similar purchasing characteristics to allow you to identify which cells contribute the most to your profit and overhead expenses, while helping you set a catalog mailing schedule.

To maximize revenue per catalog (RPC) mailed, send catalogs to customers within designated cells. RFM analysis can help your company minimize the waste of direct selling dollars by identifying unprofitable mailings to less frequent and inactive customers.

Here are the critical steps to take when planning your housefile selections.

Step 1. Take the basic mailing information at the segment level: quantity mailed, orders received and gross sales for the year prior to the one you’re planning. Calculate the performance measures — percent response, average order and dollars per book.