Four steps toward successful contact strategy
By Steve Trollinger
One of the frequent questions asked at conferences and in meetings is, "How many times should we mail to our customers?" It's a fair question and a legitimate issue, but there is no set answer. What we know is that most catalogers fail to communicate with customers as often as they should.
The number of times you communicate with your housefile should be driven by several guidelines, including:
> your break-even threshold;
> profitability requirements;
> capital availability (it does, of course, cost more to contact customers more frequently); and
> buyer behaviors.
The short answer to, "How many times should we mail?" is, "Until you break even." In a perfect world, you would mail each segment until it neither makes nor loses money in the final mailing of a season, campaign or year—the point where the segment breaks even. At that point, you theoretically have tapped that segment for all of its potential, and maximized revenue, response and profits over an accumulated period of time.
Profitability requirements may limit your ability to mail to the break-even threshold, though. If your company requires you to sustain a given profitability level for each individual campaign, it will be impossible to mail to the level of breaking even.
Customer behaviors, specifically when customers buy (response) and how much they spend (average order value), should also play a part in determining the optimal contact strategy. Through testing, you can ascertain the effects of greater mailing frequency by assigning cohort groups (people who were acquired by the same promotion) that are always mailed together—with some groups contacted more frequently than others. Analysis of the groups' collective performance would show how customers responded to more mailings over a period of time. Did revenue increase enough to accommodate the incremental cost of more mailings? Did customers buy more often? If so, did they spend more or less than when they were being mailed less frequently?