Data Driven : Ignore the Org Chart

How circulation planning has become contact planning

Circulation planning used to be a print-channel-only exercise, independent of Web and/or storefront marketing initiatives. Likewise, Web traffic management was purely the function of the Web marketing team. It was the exception to the rule that the different marketing teams would coordinate on any kind of a common approach. However, to survive our new economy and the way customers make decisions today requires a new way of thinking and an updated approach to how you contact them.

This two-part column series explores how a coordinated multichannel approach can lower the cost to obtain a customer, while increasing sales, retention rates and profit margins. This month's column explores this concept from a customer acquisition perspective, while November's column will define contact planning as related to customer retention.

One question being asked is —with the explosion of e-commerce—is traditional direct mail even necessary anymore? Recent and upcoming USPS actions certainly beg the question. Decreased response rates combined with increases in postage, paper and printing costs have magnified the cost of acquiring a customer and the time needed for a customer to become profitable. But looking at direct mail from a customer acquisition standpoint, the answer remains yes.

The Best of All Acquisition Worlds
Using industry averages from comScores's 2007 multichannel Direct Mail Study and The Direct Marketing Association's 2010 Response Rate Trend Report, the average cost of acquiring a new customer is more than twice as expensive through paid search than direct mail. In addition, other studies have found that the retention rates of customers acquired through direct mail are higher than those acquired online. A mailed piece in the mailbox compels a prospect to react, even if the decision is to simply throw it away. But it's a conscious decision that e-mails cannot replicate. Twenty percent of e-mails never reach the intended prospect.

When you combine a higher average order value, greater conversion of one-time customers to two-time customers, and a historically stronger lifetime value of direct mail customers, the easy answer is that mailers would be foolish not to have some direct mail acquisition efforts as part of their overall prospecting mix.

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