September 07, 2011

How Do You Deal With The Organic Percentage?

In many of my projects, there are two significant outcomes.
  1. You have customers that you are actually under-circulating ... the 55+ rural audience comes to mind.
  2. You have the majority of your customer base that you are significantly over-circulating.
At this point, you have choices.
  1. You can pocket the additional profit, but your business will shrink, because you were spending unprofitable ad-dollars to prop-up your twelve-month buyer file.
  2. You can re-invest the profit in new customer acquisition.  Often, it's better to acquire a new customer at a $20 profit loss per newbie than it is to reactivate a lapsed housefile buyer at a $20 profit loss per customer, because in the newbie instance, you have two customers on your file instead of just one.
  3. You can re-calibrate your catalog contact strategy.
Point #3 is an important one.  As your organic percentage increases, you will find yourself needing to mail fewer and fewer catalogs.  This will frustrate your catalog marketing team, as they will feel like their contribution to the business is being de-emphasized, and trust me, they don't want to feel like they are being de-emphasized!!

As the organic percentage increases, you'll learn that your page counts will be driven down.  You'll get by with 64 pages instead of 124.

Your printer is going to fight you on this.  They're going to tell you that you achieve "efficiencies" at higher page counts, so they will push you bigger, even though your customer is pushing you to a smaller page count.

Always listen to your customer first, your printer second.  Profit is going to be harder to come by in 2012 and beyond.  The entire delivery infrastructure of our business model is literally crumbling under decreasing volumes and increasing expenses.  We need to do what is right for our customers, not what is right for a crumbling delivery infrastructure.

Remember, as your organic percentage increases, your page counts are going to be driven down.

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