About ten years ago, there was a movement in the catalog industry to reduce mail volume. It seemed like a good idea. Customers were increasingly migrating to websites to place their orders. Segmented sales were down. Order processing costs were significantly lower for web orders when compared to the call center. Why spend the money to mail catalogs when people were ordering online?
Some companies took the time to test their new strategy. Others took the leap and only mailed their top performing segments. The first few mailing were wonderful. Costs were down and the orders continued to flow. Sales dropped a little, but the savings more than compensated for them.
Until the sky fell…
Catalogs are a backend business. Every campaign builds on previous mailings and contributes to future ones. We were measuring long tails decades before Chris Anderson coined the phrase (and yes, we were calling it that because the sales curve looked like the picture below.)
Sales trickle in the first few days and then climb rapidly as the catalogs arrive in mailboxes. They then drop quickly as the impulse buys are completed. This is the point where the tail begins. The shelf life of the catalog is determined by the content. For example, Williams-Sonoma does an excellent job of increasing the shelf life by including recipes in their catalogs. The tail of a catalog can go for years. When you add more mailings, the residual revenue increases.
Lessons learned the hard way…
The first lessons learned by the catalogers who stopped mailing were that catalogs trigger sales and orders placed online are less traceable (You don’t have that friendly voice saying, “please turn to the back of your catalog and give me the code in the blue box.”)
Smart catalogers learned even more. They realized that channels are not equal. Some generate more revenue. Others reduce costs. Some increase customer loyalty. Others attract more prospects. Using the strengths of one channel to offset the weakness of another allows you to strategically leverage them to maximize your growth and profitability.
Do It Yourself
The first step is to find the strengths and weaknesses of your channels. They may vary from other companies. Once you know how customers and prospects use your channels and which ones are the most effectives for sales and savings, you can develop a strategy that fits your business.
For example, you may find that orders placed online significantly reduce operating costs, but incoming calls generate higher average orders. Which works best for your business? Point your customers in that direction.
You may also find that one channel attracts more prospects than another one. Are they good prospects that are convertible into long-term customers? Or, do they turn into hit-&-run customers, here today and gone tomorrow? When you know who you are attracting and how they cross channels, you can adapt your marketing to provide the best for your prospects, customers, and company.
Don’t expect an easy solution where you point all customers in one direction and all prospects in another. You can do it that way, but it won’t maximize your return. Continuously fine-tune the process until you have a custom path from “hello” to the marketing loop for every customer and prospect.
