Making Outside Lists Work Harder in a Multichannel Economy A C
By Dennis Bissig
This article was the 2005 Lists Web Community Spotlight feature.
Up until very recently, a company's marketing plan and planned housefile list growth would start with a yearly schedule of catalog mailings broken down into various customer, housefile and outside lists. Sales would be estimated based on the prior year's mail and phone sales, modified by any creative, merchandising, promotional, page count or other changes. The marketing plan then was developed as a direct outgrowth of these mailings, as was housefile growth.
Now, this "circulation plan" comprises only one part, albeit a large and important part, of a company's annual marketing plan and household list growth. A marketer now needs to include a complete customer e-mail program; sales and costs associated with affiliate marketing efforts; and orders resulting from search engine optimization and paid search marketing programs. The marketer's customer file will be very different in its makeup and in how it performs in a housefile mailing and as a rental file for other mailers.
Many direct marketers now are beginning to look strategically at how this plethora of customer and prospect marketing opportunities has changed their world. It's no longer enough just to add each of these media into their plan and devise the corresponding budgets. They need to approach this new marketing world completely differently if they're to make the most of all of these opportunities.This new approach includes:
- understanding changes in prospect and customer behavior as they continue to evolve;
- developing prospecting plans that capitalize on all of the customer acquisition options now available to direct marketers; and
- devising a customer contact strategy that recognizes the varied sources from which these customers have been acquired.
One thing hasn't changed, and that is the continual need to prospect for new customers. And one very important component of prospecting is making sure that direct marketers get the best performance from outside lists, which remain for most catalogers the single, largest source of new customers.
The composition of outside lists themselves, however, has changed greatly during the last five years:
Many of the names on these outside lists have been acquired via online prospecting sources—the average list contains about 30 percent online buyers (and can include up to 75 percent).
There are fewer new-to-file names, largely due to reduced prospecting in prior years and a greater reliance on reactivating older housefile names.
The lists are more promotional, given many marketers' greater reliance on offers such as free shipping.
Recognizing and responding to these changes now becomes an important part of maximizing the performance of rented names. A few key steps will help ensure you're making the most of these lists:
1. Know the composition of the list and make your selections accordingly.
If a list is 75 percent online sourced, be prepared for a large percentage of the sales to come in online, and make sure you're matching back the Web sales to the mailings.
2. If your company has a retail component, try to estimate the retail sales generated by these lists as well.
3. If your business is not as Web-oriented as the list in question, you may want to omit the Web-only buyers. Your broker should be able to advise you when this is possible.
4. Make sure you're segmenting customers according to the channel in which they ordered, e.g., Web-only, catalog-only and combo buyers. These customers will respond very differently to online and offline promotions.
5. Conduct contact-strategy testing to ascertain the most productive way to market to these customers after you've acquired them.
6. Analyze the future value of customers based on the channel of their initial purchase. For most companies, a one-year period from date of acquisition works best.
7. Establish individual cost- or profit-per-customer benchmarks for each of these segments based on the in future value calculation.
8. Develop a promotion strategy for your business that integrates all of the media available.
In prior years, the catalog circulation plan flowed directly from a company's annual goals and formed the basis of its marketing plans. Now, the circulation plan is just one piece of a multifaceted marketing program, and can't be approached until you have begun to address all program issues.
Following these procedures will ensure that you're getting the most out of every outside list. Equally important, it will help ensure that you're allocating your marketing dollars effectively across all of your prospecting media; marketing to your customers most effectively; and growing sales in all marketing channels.
Catalog/Web companies have enthusiastically embraced the many possibilities of the Web to grow their businesses. Now it's time to integrate all these strategies fully into our thinking, to develop the most efficient multichannel, multisource, prospecting plan for your company.
Dennis Bissig is president of Mokrynskidirect a Hackensack, N.J.-based provider of customer acquisition programs and marketing services for businesses that target consumers. He can be reached at (201) 488-5656, ext. 406, or via email at email@example.com.