Catalog Watch--Prospecting Online
To take this example one step further, consider a mailing of 500,000 catalogs with an overall response rate of 5 percent which includes Internet orders as well as catalog orders. Of course, it is unlikely that 100 percent of a cataloger's online orders are generated as a result of the catalog, as is the case in this example. Many catalogers, however, find that as many as 80 percent or 90 percent of its online orders are directly correlated to the paper catalog.
So, the 5-percent response in this example will generate 25,000 orders. If the Internet represents 15 percent of sales, then 3,750 orders were converted from the catalog to the Web. Those 3,750 orders represent almost $11,000 in lost contribution directly related to pushing customers from the catalog to the Web. The number jumps to almost $30,000 lost if you add in a $5-off offer.
Now, this DOES NOT mean that catalogers are making a mistake by pushing orders to the Web. It does mean that catalogers must understand the metrics behind the medium. For instance, AOV can be improved through site enhancements. Many catalogers have had success in matching or exceeding the catalog's AOV online by incorporating "smart" cross-sells and upsells where the software behind the e-commerce site picks related products from an inventory database and presents them to the customer at the time of checkout.
Others have improved AOV by altering the site's navigation so that getting from one product to another or from the shopping cart to more items is fast and easy. The point is that understanding what the metrics mean and how to use them is paramount to knowing if the Web is working.
Without a global evaluation of "what's going on" with the Web, catalogers—and all marketers—can take a hit at the expense of the newness and intrigue that the Internet presents. And this goes for the database too.