Web Buyers are Changing the Catalog World!

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Web Buyers are Changing the Catalog World!

• Jim Coogan
• Catalog Marketing Economics
• jcoogan_at_earthlink.net
• 505-986-9902
• 1328 Bishops Lodge Road
• Santa Fe, New Mexico 87506

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Web buying is the biggest trend to hit the
industry in decades.

• Some catalogs see over 50 of their orders placed
  on the Web.
• If you dont understand Web buyers, your response
  rates will decay. Period.
• Some Web buyers can be mailed. Some cant.
  Trick is knowing who to mail and who not to mail.

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Biggest trend in catalog circulation is the
influx of Web buyers.

• Two kinds of Web buyers -- catalog driven and
  pure Web buyers.
• These two kinds of Web buyers respond very
  differently to catalog mailings.
• Catalog driven Web buyers respond like
  traditional catalog buyers.
• Pure Web respond very differently than
  traditional catalog buyers.

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How do you know if your buyer file is healthy?
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How do you know the buyer file is healthy?

• Mailing 1,000,000 Web buyers _at_ 2.00/catalog
  mailed.
• Breakeven is 1.00/catalog mailed.

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• Segment Circulation /Catalog Total Sales
• Total 1,000,000 2.00 2,000,000
• Looks Healthy.

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• Segmenting your Web buyers shows that your
  circulation is not healthy.
• Segments Circulation /book Sales
• Catalog driven
• Web buyers 400,000 3.85 1,540,000
• Pure Web buyers 600,000 .77 460,000
• 60 of the circulation is well below breakeven!
• Breakeven is 1.00/catalog

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• Catalog circulation managers need good data to
  make decisions.
• Traditional catalogers are wasting circulation!
• Pure Web companies need to understand Web buyers.
  
• Pure Web merchants are leaving sales on the
  table!
• Pure Web merchants need reorders. Catalogs are
  great for getting reorders.
• The Web is not good at driving demand.

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Web buyers are different than traditional mail
order buyers.

• They order on the Web.
• They come to you without source codes.
• Web buying is really a different shopping
  experience.
• Catalogs sell products. The Web takes orders.
• Catalogs create demand and work well when
  consumers are relaxing on the couch or reading in
  bed.

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The key requirement to manage your Web buyers is
to segment buyers by channel.

• Expand traditional segmentation from RFM
  (recency / frequency / monetary) to RFM C.
• You must segment your buyers by Channel.
• Segment the Web channel into
• pure Web
• Catalog-generated Web
• multichannel buyers.
• Its not enough to just segment Web buyers from
  call center buyers.
• Segment pure Web buyers by original source.
• Price comparison engine buyers arent going to be
  very loyal to your company. They are price
  shoppers first and brand shoppers second and
  arent loyal to your store.

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How are Web buyers different?

• Web buyers will buy overwhelmingly using the Web!
• They will reorder on the Web so if you dont
  capture key codes, you will underreport results.
  Youll miss 80 or more or the sales from a Web
  segment!
• Pure Web buyers may be very unresponsive to
  catalogs or direct mail so your contact strategy
  may be much different.
• Your merchandise mix to Web buyers may be very
  different. Always look at the product winners
  (best 25 products) by channel to see where your
  Web buyers can lead you in terms of merchandise.

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Cooperative Database Tactics toManage Web Buyers

• Optimize your Web buyers.
• Segment catalog-driven Web versus pure Web and
  optimize them to find buyers to not mail!

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Optimize Your Web Buyers

• Segment Circulation /book Strategy
• Catalog Generated Web Buyers
• Opto Great 300,000 5.00/book mail more
• Opto Good 50,000 1.40/book mail the same
• Opto Poor 50,000 .80/book suppress
• Pure Web Buyers
• Opto Great 100,000 3.00/book mail more
• Opto Good 300,000 1.20/book mail less
• Opto Poor 200,000 .45/book suppress

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Which Web buyers do you optimize?

• Price comparison shoppers, search engine buyers.
• Pure Web buyers (all the Web-driven source codes)
• 1x Web buyers
• Low-ticket Web buyers
• Aging house file buyers
• Web catalog requests
• Holiday buyers
• Weak merchandise category buyers

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How do you use optimization?

• Drop the Web buyers who show little or no mail
  order.
• Find your breakeven points in the optimization
  and suppress those buyers below breakeven.
• Change your contact frequency for Web versus
  non-Web.
• Segment your Web buyers and requests before the
  optimization youll get better breakdown between
  profitable and poor responding segments.
• Contact the poor performing segments less with
  catalogs and more with e-mails.
• Consider solos, e-mails and postcards to your low
  LTV buyers.
• Always segment Pure Web versus Catalog Driven Web
  Buyers.

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Measuring response without source codes isnt
easy. Without matchbacks, it may be impossible.
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Is your circulation plan healthy when you dont
capture source codes on Web orders?

• Segment Circulation /Book
• 0-3m catalog orders 50,000 4.00/catalog profit
• 0-3m Web orders 25,000 .65/catalog loss
• 4-6m catalog orders 35,000 3.25/catalog profit
• 4-6m Web orders 12,000 .48/catalog loss
• What are the true responses after matchback?
• Segment Circulation /Book
• 0-3m catalog orders 50,000 4.00/catalog profit
• 0-3m Web orders 25,000 2.27/catalog profit
• 4-6m catalog orders 35,000 3.25/catalog profit
• 4-6m Web orders 12,000 1.68/catalog profit

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How do you segment the Web buyers?

• If you are doing matchbacks, you can segment the
  pure Web buyers by default. All the buyers who
  dont match your mail file can be pure Web
  buyers.
• Segment by key code. Flag using pure Web
  source codes.
• Capture source codes every way you can.
  Capturing original source codes is vital.

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Are Web buyers buying because they got a catalog?

• Always run a mail versus no-mail test.
• Measure the incremental sales from receiving a
  catalog.
• 20,000 Web buyers get a catalog. 20,000 Web
  buyers get no mailing.
• Incremental sales are a key metric.

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Model your Web buyers at the co-op databases.

• If you model your pure Web buyers, youll
  understand how they are different than your
  traditional catalog buyers.
• You may find incremental prospecting list
  universes. If the Web buyers are different,
  youll find fresh prospecting name models and
  list universes.

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Tactics for Web Buyers

• Change the mix of contacts and send Web buyers
  more e-mails and less traditional mail.
• Segment 1x tryers from 2x buyers. One time
  Web buyers may be a huge profit drain. Optimize
  or reactivate them.
• Segment low ticket Web buyers. If your lowest
  dollar segmentation is now 0-50, divide that
  into 0-25 and 26-50 and measure those low
  ticket orders. Low ticket Web orders are another
  profit drain.
• Suppress holiday Web buyers during the
  non-holiday season. Segment your buyers into
  November December holiday buyers so you can
  read your holiday buyers.
• Holiday buying for Web buyers starts later and
  later every year. Cyber Monday is the Monday
  after Thanksgiving so dont expect to drive it
  with an October in-home date mailing. Mail your
  best Web buyers to arrive the week of
  Thanksgiving. Give them e-mail blasts in early
  December.

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More Tactics for Mailing Web Buyers

• Web buyers are promotion driven. Give them
  ink-jet messages with promotional offers.
• Web buyers love Clearance, Overstock and
  Closeout. Drive them to those landing pages
  using your catalogs.
• Consider mailing fewer catalog pages to Web
  buyers.

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Converting Web Catalog Requests The rules have
changed!

• Do send the catalog immediately. First class
  mail or expedited delivery (Mail Group or DHL).
• Send a thank you e-mail within an hour of getting
  the request!
• Give them a promotional deal to order with the
  first e-mail. Convert them at birth.
• Send a stream of follow-up e-mails.
• Dont hope you can mail a Web request more than
  one or two catalogs before they fall below
  breakeven.
• Optimize your requests at a co-op database and
  dump the tire kickers.
• Segment by reader service, Web request, phone-in
  request.
• Convert them in a day or a week. You dont have
  3 months to convert them anymore.

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New Metrics for Managing Web Buyers

• Force your organization to be channel agnostic.
  Measure on-line and traditional direct mail using
  same financial measurements -- breakeven and cost
  per order.
• Measure total sales coming from each channel.
  Measure channel shift.
• Measure new-to-file names by channel. Where are
  your new customers coming from?

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Keys To Managing Web Buyers

• Segment by channel
• Use Matchbacks to get true results
• Optimize your Web buyers at the co-op databases
• Measure the incremental sales from mailing Web
  buyers.