August 07, 2011

Dear Catalog CEOs: Knowns And Unknowns

Dear Catalog CEOs:

Have you looked at your contact strategy lately?
  • An email campaign every Monday and Wednesday.
  • Four new seasonal catalogs every year.
  • Twelve remails of seasonal catalogs.
For many, this has been the contact strategy since 2001.  A full decade.

We do this because the outcome is "known".  We simply attempt to improve upon a known.

Unknowns are risky.  I can present the opportunity for a business to shift from sixteen known catalogs that yield $30,000,000 per year to maybe twelve unknown catalogs that should yield $40,000,000 per year, and expect a 5% chance that the business will shift from a known to an unknown, even if the unknown is expected to produce a 50% increase in profit.

We all do this.  We take a pass on the Angus burger at McDonalds because we know that the Quarter Pounder with Cheese is a reliable, calorie-infused delight.  We don't visit the neighborhood espresso emporium because there are four Starbucks on our block.

However, we have to ask ourselves a question ... how is the "known" working for us?

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...