By what level you can grow your business is dependent on the increase in your 12-month buyer file, as you can see in this issue’s list of the Top 200 catalogers. If your housefile is growing, your revenue likely will increase, and vice versa.
No doubt you pay a lot of attention to your catalog’s daily and/or weekly demand report. Is it up from last year? How does it look against budget? But you probably don’t pay enough attention to the increase/decrease in your 12-month housefile. This month I’ll examine why this file is critical to your growth rate. And I’ll offer strategies to grow your file and explain what it means if you don’t.
Rule of thumb: The percentage of revenue growth will approximate the percentage increase in your 12-month housefile. This means if you grow the file by 10 percent, your revenue also should increase by about the same percentage. The change in your 12-month buyer file is a key indicator as to how well your business is doing. So if you focus on adding new buyers and bringing previous buyers forward into a more recent RFM (recency, frequency and monetary value) cell, your business will grow.
In the chart, “Consumer Catalog Housefiles”, I compare the 12-month buyer counts for 10 consumer catalog companies on Dec. 31, 2003, vs. Dec. 31, 2004. Also shown: the percentage increase in order/revenue demand for the same time period. Note the relative consistency of the growth percentage compared with the increase in number of buyers added to their files.
In the example, the 12-month buyer file increased from 65,839 to 92,844, or about 41 percent. This large increase resulted in a 35 percent growth in the order/revenue demand. (Again, these are averages from 10 companies.)
When comparing your own housefile-growth rate, it’s best to compare the same time periods if possible, thereby eliminating the seasonality factor. For example, determine the buyer count on Dec. 31, 2004, compared to Dec. 31, 2003; or Feb. 28, 2005, vs. Feb. 28, 2004. Always pull your numbers from the same point in time, if you can.