Turn One-time Buyers Into Multis
Avoid a one-buy-and-out by investing in long-term customers
November 2007 By Stephen R. Lett
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Catalogers spend loads of time and money acquiring one-time buyers. But there’s more you can do to get these individuals to purchase again. Typically, fewer than half of your first-time buyers make a second purchase.
With the high cost of mailing catalogs today coupled with lower response rates, most catalog companies acquire new buyers at an incremental loss. Catalogers must be willing to make an investment in acquiring a new buyer to grow, knowing the payback will come sometime in the future.
The amount of time to payback the investment — normally one year — can be reduced by developing a strategy to convert one-time buyers to two-time (or more) customers. More can be done with this large group of buyers than simply re-mailing them as part of your normal mailing cycle.
Don’t Think Short-term
I’ve always felt catalogers take a short-term view with respect to prospecting by focusing mainly on the initial results. For example, catalogers expect a particular prospect list to achieve breakeven the first time it’s mailed. Often the list or segment is dropped if it doesn’t.
But what about the lifetime value of buyers acquired from that list? How much do they return over time, and what can be done to accelerate the payback? As catalogers, be more concerned about getting one-time buyers to buy again and less concerned about your initial results.
There are too many one-time buyers on most housefiles. Or, said a different way, too many individuals buy only one time. Some move and leave no forwarding address. Others buy based on a one-time need never to buy again. Some buyers didn’t have a satisfactory buying experience with your company. Others die.
Needless to say, some reasons are in our control; others aren’t. If you can give a single buyer a reason to buy again, you’ll dramatically change the economics of prospecting as well as your bottom line.
In the accompanying table, look at the number of single buyers typically on a consumer housefile. I’ve divided this chart into 0- to 12-month buyers and 13- to 24-month buyers.
In our example, approximately 61 percent of the 0- to 24-month buyers have purchased only one time. Yet, we continue to mail the single buyers with the same frequency as the two-time-plus customers. Assuming a catalog cost in the mail of 60 cents per book and a 10-times-a-year mailing schedule, the investment in mailing these single buyers would amount to approximately $12 per buyer in two years.
With the high cost of mailing catalogs today coupled with lower response rates, most catalog companies acquire new buyers at an incremental loss. Catalogers must be willing to make an investment in acquiring a new buyer to grow, knowing the payback will come sometime in the future.
The amount of time to payback the investment — normally one year — can be reduced by developing a strategy to convert one-time buyers to two-time (or more) customers. More can be done with this large group of buyers than simply re-mailing them as part of your normal mailing cycle.
Don’t Think Short-term
I’ve always felt catalogers take a short-term view with respect to prospecting by focusing mainly on the initial results. For example, catalogers expect a particular prospect list to achieve breakeven the first time it’s mailed. Often the list or segment is dropped if it doesn’t.
But what about the lifetime value of buyers acquired from that list? How much do they return over time, and what can be done to accelerate the payback? As catalogers, be more concerned about getting one-time buyers to buy again and less concerned about your initial results.
There are too many one-time buyers on most housefiles. Or, said a different way, too many individuals buy only one time. Some move and leave no forwarding address. Others buy based on a one-time need never to buy again. Some buyers didn’t have a satisfactory buying experience with your company. Others die.
Needless to say, some reasons are in our control; others aren’t. If you can give a single buyer a reason to buy again, you’ll dramatically change the economics of prospecting as well as your bottom line.
In the accompanying table, look at the number of single buyers typically on a consumer housefile. I’ve divided this chart into 0- to 12-month buyers and 13- to 24-month buyers.
In our example, approximately 61 percent of the 0- to 24-month buyers have purchased only one time. Yet, we continue to mail the single buyers with the same frequency as the two-time-plus customers. Assuming a catalog cost in the mail of 60 cents per book and a 10-times-a-year mailing schedule, the investment in mailing these single buyers would amount to approximately $12 per buyer in two years.
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