Now is when catalogers should cautiously increase their prospecting efforts. After all, as we emerge from the recession, those companies who continue marketing and mining for new buyers will be in a much better position to take advantage of the rebound.
Of course, there is a cost associated with acquiring a new buyer. How much you're willing to pay for a new buyer depends on what you can afford to spend, how fast you want to grow and the life-time-value of the buyers being acquired. Two big variables in prospecting for catalogers are the performance of cooperative databases and rented lists.
Cooperative Database
As you begin to prospect more, resist the temptation to pull out of your current cooperative databases in favor of others. Performance is only one factor that a cataloger looks at when deciding which coops they will use. Another is contribution of names. If a cataloger feels they are supplying "x" amount of buyers to a coop but only taking less than "x" amount of prospect names from the database, they feel the contribution is not in their favor and that particular cooperative database should be dropped.
But how does this effect models and prospecting names overall within the databases? Even within the same product category, certain coops work well for some catalogers but not others. However, the names shared by all are still required to build an effective model and supply the best prospecting names. In order for catalogers to keep their prospect names at their highest level to get through these tough times, it is imperative that everyone continues to stay within all cooperative databases they have been using.
Outside List Performance
Maximizing outside list performance can be accomplished by either increasing the response rate or the average order size or both. I prefer to focus on improving the response rate because it will yield a great number of new buyers, thus growing your 12-month buyer file faster. Select outside lists based on the recency of last purchase. Maximize rollouts before testing new lists. Double the usage each time (assuming there are enough names in the list universe). After maximizing list continuations, fill-in with the lists you want to test. Looking for buyers who have purchased multiple times recently is also a good way to improve response rates.
When prospecting in back-to-back mailings four to six weeks apart, should previously used names from an outside list or coop model be eliminated? For example, if an outside list or coop segment is mailed a catalog on Aug. 28, should the same list or database segment be mailed again on Sept. 25?
There will be duplicate names but I do not recommend omitting previous usage. On outside list rentals, any omits would mean a zero balance, unless older names are mailed that most likely will not perform as well. There is the option to replace some of the prospecting quantity with lists that are not already being used. However, the prospecting universe is substantially reduced if previous names are eliminated from a given list. What's more, if the results support mailing the same list consecutive times, why not mail them?
As for coop database prospect models, thee duplication rate between mailings depends on a number of factors—product category, which months the models are run, how different the customers are between the various mailings, number of names being taken.
Also, duplication is higher in top segments than it is in lower segments. A model is designed by building a profile of customers and selecting prospects from the database that look like those customers being modeled. If the customers for one mailing and for the next mailing are pretty much the same the profile will look the same. If the models are built in August and September, for example, the database does not change much. Since the profile and databases do not change, the model will pull many of the same names. For the most part, our analysis has indicated names receiving both catalogs tend to perform better than those that receive only one catalog.
Stephen R. Lett ([email protected]) is president of Lett Direct Inc.
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