August 16, 2016

Answer to the Matchback Question

August 10 Question:  Your catalog matchback provider tells you that $10,000,000 of total sales are matched back to those who received a catalog. Your A/B testing strategy of not mailing catalogs to customers tells you that of the $10,000,000 total ... $4,000,000 are driven by the catalog and $6,000,000 will happen anyway. Which set of numbers do you trust, and how would you communicate your recommended direction to your Chief Financial Officer and Chief Executive Officer?

This is the most important question for a catalog professional to answer. No question about it. The. Most. Important.

The "Best Practice" answer is to match orders from all channels back to the catalog mailed, and if the customer received a catalog within "x" days, the order is credited back to the catalog.

If an interview candidate gives you this answer, stop the interview on the spot. Ask the candidate to wait in your office, head down to Human Resources, ask your HR Director for a $75 coupon for a steak or seafood or vegetarian meal at the best restaurant in town, and then deliver the coupon to the candidate as you walk the candidate out of the building.

Matchbacks are appropriate for customer acquisition efforts.

Mail/Holdout tests are appropriate for housefile customers. At a segment level, you sum the demand generated by the customers mailed the catalog ... you sum the demand generated by the customers not mailed the catalog ... divide each by the number of customers in the sub-segment ... calculate profit ... subtract the difference between mail/holdout ... and then determine if you should or should not mail that segment next year based on the incremental lift you generate.

In other words, you must believe the $4,000,000 figure driven by the catalog via mail/holdout testing, and you must reject the $10,000,000 figure from matchbacks ... or you wouldn't be reading this in the first place, right? RIGHT?!

It is at this point that 90% of the catalog professional audience becomes agitated, and for good reason.

You have to hire an independent and objective thinker who knows what the "organic percentage" is. This person wants to do what is right for your business, and what is right for your business is a push into the future, not the over-statement of the importance of a catalog using technology that is 15 years old and is hopelessly flawed.

Who wants you to rely upon catalog matchbacks instead of mail/holdout test methodology?
  1. Your paper rep.
  2. Your printer.
  3. Your co-op, or the four co-ops you use.
  4. Your list brand.
  5. Your boutique vendor who has cozy relationships (often pushing money back-and-forth) with the four entities listed above.
  6. Your favorite trade journal, who is "sponsored" by 1/2/3/4/5 above.
  7. Your favorite conference, a group of individuals "sponsored" by 1/2/3/4/5 above.
Who wants you to rely upon mail/holdout test methodology?
  1. Your Chief Financial Officer.
You can immediately see who a catalog professional sides with, based on this answer. If the individual sides with 1/2/3/4/5/6/7, they'll use matchbacks and will cost their company a fortune and not care in the least bit about costing their company a fortune, because the individual is part of a catalog community that believes in doing what is best for 1/2/3/4/5/6/7.

How do I know this?

I've performed optimization projects for more than fifty brands, outlining more than one hundred million dollars in annual profit opportunity. Yes, the number is that big! The numbers are staggering, the kind of numbers any CFO will instantly demand the catalog professional implement at once.

And yet, only a third of my projects result in implementation.


1/2/3/4/5/6/7 listed above.

Catalog vendors need catalogers to mail more often, or catalog vendors lose sales. So 1/2/3/4/5/6/7 dig in and tell clients not to honor mail/holdout results. It's at this point that the catalog professional has to pick ... support 1/2/3/4/5/6/7 ... or support the co-worker, the CFO, the owner, the company profit and loss statement.

Because you read this, you are on the organic percentage / mail-holdout side of the ledger. You get it. You can see the common-sense framework being outlined, you recognize it is more important to generate profit for the company you work for than for the vendors who work for you.

But the majority of the catalog industry?

Not so much.

So when your interview candidate sides with 1/2/3/4/5/6/7 and tells you to go down the matchback route, go find another interview candidate ... and keep looking until you find an independent thinker who wants to do what is best for your brand and your co-workers and your profit and loss statement.

Make sense?

Ok, tell me why I'm wrong ... here's my email address ...