May 17, 2011

But How Do You Know What The Organic Percentage Will Be?

By analyzing more mail/holdout tests than I care to mention, I have a really good idea how catalog marketing drives demand to (or cannibalizes) other channels.

You might observe, for instance, that 40% of all search purchases were caused by catalog marketing (not matched back, mind you, but caused as measured in a mail/holdout test).

And you might observe that 90% of telephone orders were caused by catalog marketing.

Well, then you have something, don't you?

You can take a segment of customers at the start of 2010, and you can measure the percentage of demand spent during 2010 by channel.  Take 40% of search, 90% of telephone orders, get the picture?  That's your organic demand.  As a percentage of total, you have your organic percentage!

Now, I use more sophisticated methods than that ... I do this stuff at a customer level, with models that combine prior channel preference with Digital Profiles and the like.  I have time-honored and tested tricks that cause the outcome to be more robust.  

But in general, it's that simple!

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...