Evaluating Web-Generated Names

(Multichannel Merchant) Traditional catalog-oriented direct marketers have always been suspicious of customers acquired via the Internet. “They are not loyal,” some reasoned. “It takes a promotion to acquire them, and it takes further promotion to keep them,” others said. Simply put, marketing managers agree that Web-originating buyers are “distinctly different” from those acquired through more traditional sources.

And, in fact, the data show that customers acquired via the Internet generally have equivalent acquisition costs but lower average order values and, more important, lower lifetime value.

But are all Web-generated customers the same? Before you assume that all Internet customers are of lower value than customers from other channels, try these multichannel marketing strategies:

* Differentiate customers acquired via “branded” search vs. “nonbranded” search. Those customers who come to your Website as a result of a brand-specific search have much higher matchback-to-catalog-mailing rates. Also, results analyses show that true new-to-file buyers whose initial purchase can be credited to a search on your company name or brand have average order values and subsequent lifetime values as high as those customers acquired through more-traditional prospecting sources (excluding catalog requester programs).

* Isolate Web-originated customers who do not match back to catalog mail tapes. More often than not, it is this group of customers who have significantly lower average order values and, subsequently, lower lifetime values. Once you complete a matchback, have your service bureau flag those customers who did not match to catalog mailings. Retain this flag on your customer database, and reduce your expectations for future return on investment accordingly.

* Evaluate customers based on the specificity of their search terms. The more esoteric or specific the term, the higher the customer value. Take a company that sells guitars and other stringed instruments: The term “guitar” might garner significantly more hits to your Website than, say, “dell’arte selmer pigalle gypsy guitar.” But the conversion rates (the percentage of orders to hits) for the more esoteric term are likely to be much higher than for the general term “guitar.”

Todd Miller is director of circulation, business-to-business markets, at San Rafael, CA-based catalog consultancy Lenser.