August 29, 2010

Dear Catalog CEOs: Matchback Magic

Dear Catalog CEOs:

Here's a tidbit to help you determine if your matchback analytics are failing you.

Have your analysts freeze the customer file as of 8/15/2009. Take some random RFM segment from four years ago (46-48 month, 1x, $100 AOV). Measure online demand generated without catalog mailings, and generated via catalog mailings as identified in your matchback process. Calculate the percentage of demand generated online by catalogs (say 50%).

Now, have your analyst pull the 0-3 month, 2x+, $100 AOV (or any other high-value recent segment). Measure online demand generated without catalog mailings, and generated via catalog mailings as identified in your matchback process. Calculate the percentage of demand generated online by catalogs (say 80%).

The difference in these two metrics (50% for non-recent buyers ... 80% for high-value buyers) is highly correlated with how much your matchback analytics are over-stating the importance of the catalog.

Once you know the value of the two metrics, remove the 30% excess (in this example) from your catalog p&l at a segment level, and then calculate subsequent circulation plans based on this analysis.

Then hide your head in your hands and duck, because you won't like it when you see just how much your are over-circulating, benefiting every vendor in the catalog ecosystem, while hurting your shareholders/owner.

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