By Steve Trollinger
Most multichannel marketers, particularly those with catalogs at the heart of their business, understand the importance of direct mail and its role in generating retail traffic. But not all brick and mortar retailers have embraced direct mail's potential as a way to drum up more in-store business.
This month's column focuses on distance as an important factor in the improved success of retail-focused direct mail campaigns. Certainly the creative used, the merchandise offered and the company's overall brand promise and in-store experience are tremendously important to the success of any campaign, but I'm speaking here about how to understand and use distance to make your mailings more efficient and more productive.
Most retail mailers that either aren't big enough or sophisticated enough for a customer file model will employ some form of recency, frequency and monetary (RFM) segmentation when setting up their file for mailings. Using RFM segmentation allows mailers to target audiences for campaigns based on the most important transactional attributes—when they last made a purchase, how much they typically spend, and how many times they have ever purchased. For retailers, segmenting and mailing based on a customer's distance from a retail location often will enhance performance and may even be a greater predictor of response than frequency or monetary value, particularly if the retailer experiences peak and non-peak seasons.
The ability to segment by these variables is predicated on the retailer's ability to capture good data in the first place. This brings up an issue that underlies the entire topic of retail-based direct mail: Even the most sophisticated campaign management software and most skillfully executed mailings will fail to produce actionable results if the people at the registers don't buy into and understand what you're trying to accomplish with direct mail. I can't remember how many times I've been asked for my phone number or ZIP code at a retail register—or how many times I haven't been asked when I know I should have. If the systems and personnel aren't in place to track the campaigns you put together, don't bother adding distance to your segmentation criteria because you probably won't know if it worked anyway. If you can track though, read on.