Database Marketing

Customer Lifetime-Value Equation
July 1, 2001

What exactly are your customers worth to you? Calculating their lifetime value (LTV) can help you determine, among other things, the effectiveness of your marketing strategies and your chances of improved profitability down the road. LTV is measured using the revenue stream generated by a customer after the initial order, minus all of the costs associated with obtaining and fulfilling those orders. The actual formula used can vary slightly from company to company, but it generally looks something like this: 1. Take your subsequent gross revenue and add shipping income. 2. Subtract returns; shipping expense; cost of goods sold; advertising costs;

Create A Successful Circulation Plan
June 1, 2001

Circulation planning is the lifeblood of a catalog. A catalog simply can’t exist without it, and a good detailed plan makes for much easier and quicker implementation. There are two approaches to circulation planning: top-down or bottom-up. We’ll examine the difference. There also can be different goals or objectives. The most common goals are to increase sales, market share, growth and profits. It’s not unusual to have the goal be some combination, such as “increase sales 10 percent while holding profits even with last year as a percent of sales.” In top-down planning, upper management determines what the desired change will be, compared

Testing Your Way to a Breakthrough
June 1, 2001

There are breakthroughs lurking in all of our businesses. They are in the mind of someone in your organization and are just dying to get out there to be tested. One of the things I love about being in the direct marketing industry is the relative ease and low cost of testing. As responsible catalogers, we should test something in every mailing. “Test, test, test” is my mantra for catalogers. By testing you might find ways to cut expenses, achieve incremental revenue or dramatically alter the course and performance of your business. But to find ‘em, you gotta test ‘em. In this

Lists: Behavior Matters Most
February 1, 2001

Early in my freelance copywriting career, I was hired by The Bradford Exchange to launch Plate World, a magazine for collectors of limited-edition plates. Started by J. Roderick MacArthur, son of John D. and Catherine T. MacArthur (as in the foundation that bears their name and the people who made zillions selling mail order life insurance), the concept of The Bradford Exchange was to create a kind of stock exchange for collectors’ plates. It persuaded collectors that if they bought plates at the issue price, they stood a chance of making money in the so-called Secondary Market, which is pretty lucrative with some

Building Bandwidtch Means Building Everything
February 1, 2001

Sergio Zyman and Scott Miller echo something I’ve been saying for a while: “It’s no different in the world of clicks than in the world of bricks-and-mortar. It’s business. It’s about selling stuff and making money. Brands today and tomorrow will be built the way they were yesterday: They will be built on the basics.” Amen. So why should catalogers read “Building Brandwidth: Closing the Sale Online?” At first glance it appears Zyman, consultant and former chief marketing officer at Coca Cola, and fellow co-author and business partner Miller wrote this book primarily for the dot-coms. But “Building Brandwidth: Closing the Sale Online”

Alternative Prospecting Methods
January 1, 2001

It is no surprise that catalogers rely primarily on the use of outside rented names to grow their housefiles—the most proven and fastest way to generate new buyers. But there are other cost-effective prospecting methods that can be used to supplement traditional ways of generating new buyers. It’s easy to stick with using outside rented names and cooperative databases for new buyers. Why should a cataloger consider alternative methods that take time to set-up and cost money to implement? Increase the Prospecting Universe Through the use of alternative prospecting methods, a cataloger can identify and attract a wider variety of prospects

CRM: Tapping Into the Power of Your Database
December 1, 2000

The smart technology designed to help marketers with customer relationship management (CRM) can get confusing pretty quickly. Direct marketing, database marketing and CRM are all overapplied terms, which, in many cases, have overlapping meanings. In order to run a successful catalog business, you must understand the fundamentals of targeted marketing—that means building and using a database of all your customers and inquiries. “First off, I would caution anybody from jumping right in and looking at tools,” says Katie Cole, director of analysis and learning at Quris, an electronic touch communication consultancy. “Tools are just a relatively small part of a much larger process. The

The Rule of Lists
September 1, 2000

One of the legendary Bob Stone’s “Timeless Direct Marketing Principles” is this: Maximizing direct mail success depends first upon the lists you use, second upon the offers you make and third upon the copy and graphics you create. Over the years, I’ve seen many variations on Stone’s principle, such as “60 percent lists, 30 percent offer, 10 percent creative” or “40 percent lists, 30 percent offer, 30 percent creative,” and so on. But no matter what the variation, all experts basically agree that lists are king, and everything else is secondary. So that’s how I’ll phrase my “Rule of Lists” for this

Alternate Media Other Catalogers Use and Why
September 1, 2000

Producing and mailing a catalog can be a most expensive undertaking. With alternate media you can achieve some of the same goals as with a print catalog: Testing, driving customers (new or existing) to your e--commerce site and building awareness/loyalty. Speaking at the Annual Catalog Conference in June, Kevin Kotowski, of Olson Kotowski & Co. in Los Angeles, named some top reasons catalogers use alternate media, or “non-catalog pieces:” 1) cheaper prospecting than with full-sized catalog drops, since most alternate media are cheaper to produce and mail; 2) building and strengthening your customer relationships with name and product awareness; 3)

Learn to Prospect Efficiently
September 1, 2000

It costs money to add new buyers to your housefile. In fact, very few catalogers can prospect at breakeven (which we will define shortly). Therefore, new buyers are added to your housefile at an incremental loss to your bottom line. Prospecting for new buyers must be cost justified based on their lifetime value. For purposes of definition, it is important to understand the difference between a buyer and a customer. A buyer is someone who has purchased one time only. A customer has made more than one purchase. Obviously, you have to have buyers before you can have customers. While it is important to