November 14, 2007

United Kingdom: Catalog Driving 70-80% Of Online Orders?

Jim Fulton points us to this article, authored by the Catalogue Exchange in the UK. The article suggests that catalogers, using traditional matchback algorithms, are driving 70% to 80% of their online orders via catalog mailings.

The UK online market is a lot like the US online market five years ago. We read a lot of these articles in the US five years ago.

Early in the maturity of the online channel, catalogs are going to be the primary driver of online volume. Most likely, the study is directionally accurate.

Things get very interesting once the customer is trained to shop online, and decides she no longer needs the catalog to shop online. For some brands, this change in behavior never happens. For others, this happens very quickly. I lived through this change at Nordstrom --- folks with a traditional catalog mindset, very bright folks, don't understand the phenomenon when I describe it to them.

If you're reading this in the UK, here's a checklist for you:

  • This study was published by a group of individuals with a vested interest in promoting catalog marketing. Just keep that fact in mind.
  • Multichannel Forensics represent another way of understanding the long-term impact of catalog advertising, across all channels.
  • Matchback analyses are highly biased. Want to learn how biased they are?
    • Identify who you were going to mail your next catalog to.
    • Take a sample of the audience.
    • Split that sample in half.
    • One half receives your next catalog.
    • One half does not receive the next catalog.
    • After twelve weeks, do a matchback analysis on the sample that received the catalog.
    • After twelve weeks, do a matchback analysis on the sample that did not receive a catalog --- just don't tell your matchback vendor that they didn't receive the catalog.
      • In this group, zero (0) customers ordered online because of the catalog --- they didn't receive the catalog!! If you matchback vendor tells you that online orders happened because the catalog was mailed, you've identified the magnitude of your matchback bias.
    • Subtract the difference between matchback results in the mailed and not-mailed group. This is the true number of orders your catalog drove to the online channel.