Database Marketing

The B-to-B Mailer’s Rules of the Road
July 1, 2000

“Compared to the business-to-business arena, consumer direct marketing is a no-brainer.” —Lee Kroll, Kroll Direct Marketing Many will disagree with Lee Kroll’s statement. But I, for one, think he’s dead on. Read on, consider all of the challenges the b-to-b marketer faces when it comes to lists, and decide for yourself. Consumer Direct Marketing The universe has roughly 110 million households. Most receive mail in a box or through a slot in the front door. They answer their own telephones. True, in the words of Chicago freelancer Lea Pierce, “All mail is opened over the wastebasket.” But, chances are pretty good that if you

Lifetime Value: Acquisition Costs Across Different Media
June 1, 2000

Two things are common to many database marketers. First, they can measure acquisition cost well (what it takes to turn a prospect into a customer), but they don’t employ a sound method of judging lifetime value (LTV). Second, they emphasize prospecting rather than retention/cross-selling/upselling. The combination of these two traits, measuring acquisition but not LTV and concentrating on prospecting rather than retention, often leads to profitability problems when testing new media. For a “traditional” cataloger, who sells only through direct mail and prospects only with rented lists, there can be a major difference in the long-term profitability of buyers from different sources. For

Continuity Marketing: Pleasures and Pitfalls
May 1, 2000

Several years ago I went to Peter, my doctor, for a routine checkup and saw some colorful boxes on the end of the counter. Patricia, the office manager and Peter’s wife, said they were dietary supplements for people over the age of 50. “Should I get them?” I asked. “I take them and I feel wonderful,” she said. “Do you and Peter get a piece of the action?” She said she did, which I had no problem with. So I ordered LifePak Prime for my wife Peggy and myself—60 little cellophane packages, each with four horse pills to be taken twice a day with

Developing a Turnaround Plan
January 1, 2000

The holiday season is over. Those record orders and sales days have finally come to an end. You are feeling optimistic about the season ending but then—reality sets in! You now find your company very short on cash. What do you do? Where do you turn? How can your company continue to operate? Welcome to the dilemmas of the mail order catalog business! Post-holiday rush is the time of year that many catalogers find they need to implement a turnaround plan to ease under-capitalization. Under-capitalization is a common problem among small- to medium-sized catalog companies, especially in times of low activity when

Going Global
October 1, 1999

Although Peruvian Connection didn’t launch its first international catalog until 1994, CEO and Co-founder Annie Hurlbut maintains the cataloger was an international company long before its first foray into the global market. As its name suggests, the Peruvian Connection has shared its history with the country and mountain people of Peru. Peruvian Connection began as a “happenstance” when Annie Hurlbut came home for her mother Biddy’s 50th birthday at Christmastime in 1976. At the time she was conducting research in Peru in pursuit of a doctoral degree in anthropology. As a gift she gave her mother an alpaca sweater she found in a Peruvian

The Mathematics of Circulation Analysis
October 1, 1999

Any discussion of catalog circulation and analysis requires a look at three very important topics: 1. Determining your break-even point on an incremental and fully absorbed basis; 2. Calculating how much you can afford to spend for a new buyer; and 3. Determining key ratios and the best format for your profit and loss statement. Finding Your Break-Even Point Break-even points are either incremental or fully absorbed. It is important to make a distinction between the two because not all mailings can be measured, as is commonly thought, strictly on an incremental basis. The incremental break-even point includes direct costs only, and

The Iron Rule of RFM
October 1, 1999

Few rules of thumb are so deeply embedded in our thoughts that we’re surprised to recall that they’re really just rules of thumb, not scientifically proven facts. And for many, that’s the case for this month’s rule of thumb: the rule of recency, frequency, monetary value (shortened to RFM). As catalogers we use RFM constantly, almost without thinking about it, not because psychologists have proved to us that it should work, but because as marketers we know that it simply does work, day in and day out, and has been working since the earliest days of cataloging. As with most everyday things though, a

Managing Your Company’s Housefile
August 1, 1999

The “house file” is the most valuable asset of any mail-order catalog company. It is a file containing the names of all previous mail-order buyers—that is, people who have actually made a purchase from your catalog. In maintaining your database, it is important to separate previous buyers from general inquiries, as each group requires a very different mailing strategy. It is also necessary to make a clear distinction between a buyer and a customer. I prefer to think of a buyer as a person who has made only one purchase and a customer as a person who has made repeat purchases. Obviously, customers must

Mining Your Customer Files
May 1, 1999

Many catalogers, especially smaller and medium-sized ones, are seriously challenged when it comes to developing a stronger revenue and profit stream from their customer lists. The following challenges are endemic to all catalogers in working their customer lists: Knowing which are the best customers (i.e., the ones with the highest lifetime value (LTV) and those most likely to respond to the next mailing); Knowing how to build customer loyalty without having to buy it with discounts, premiums or extensive (and expensive) point programs; Knowing when and how to reactivate those once-loyal customers who you haven’t heard from in some time; Knowing how to