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Question: How can you know if you're mailing the optimal catalog circulation if you're a multichannel marketer and are contacting/interacting with your customers via multiple touchpoints?
A three-part answer: This week, in the first of a three-part series on techniques to effectively and profitably cut catalog circulation, I provide a checklist of questions to ask yourself when going about this process. Here are questions one through three; the rest to come in the following weeks.
1. Are all of your house and prospecting segments responding above breakeven? Most marketers begin with the business rule of mailing only the circ that responds above breakeven. Marketers want to turn a profit on each segment mailed.
Some mature mailers may dip below breakeven when they know that the lifetime value of their customers can pay for prospecting for new customers below breakeven. But as a general rule, the thing most circ managers want to know is whether all the segments mailed are responding above breakeven.
2. Are you doing a matchback to capture orders that should be allocated back to a catalog mailing? With the growth of the online shopping cart as the preferred way to order, match back orders to the catalog mail files when measuring response. Shopping carts aren’t designed to mandate the capture of source codes. So results from catalog mailings are typically underreported to the extent that Web orders are taken without source codes.
A matchback simply allocates all the orders without source codes back to the most recent mail file where that household was mailed a catalog. With a matchback, you have the baseline sales for each segment of your circ, and you can read which segments responded above breakeven vs. those segments that responded below breakeven.
3. Have you calculated your break-even sales per catalog for your housefile and prospecting circ? Costs for printing and postage have risen dramatically over the past 18 months, changing everyone’s breakeven. Break-even costs rose in 2007 due to the huge increase in postage and again last year based on a series of paper cost increases.
Marketers need to know their current break-even costs when mailing catalogs. Make certain your cost calculation includes costs to print and mail your catalog, merchandise costs, and the variable costs to take and fulfill orders. With an up-to-date breakeven and a matchback analysis of results, you can tell which segments are responding above and below breakeven.
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