How Organic Demand Plays Out

Once you've executed your mail/holdout groups, you'll realize what your organic percentage is.

Let's take an example where a business sends 12 catalogs a year, and after matchback, believes that it generates $30.00 across the twelve catalogs.  Assuming zero to fifteen possible contacts, here's what catalog demand actually looks like:

Catalog Demand Table
		Organic Percentage
Catalogs	20%	40%	60%	80%
0	$0.00	$0.00	$0.00	$0.00
1	$4.21	$3.16	$2.11	$1.05
2	$6.85	$5.14	$3.42	$1.71
3	$9.09	$6.82	$4.55	$2.27
4	$11.12	$8.34	$5.56	$2.78
5	$13.00	$9.75	$6.50	$3.25
6	$14.77	$11.08	$7.39	$3.69
7	$16.46	$12.34	$8.23	$4.11
8	$18.07	$13.55	$9.03	$4.52
9	$19.62	$14.72	$9.81	$4.91
10	$21.12	$15.84	$10.56	$5.28
11	$22.58	$16.94	$11.29	$5.65
12	$24.00	$18.00	$12.00	$6.00
13	$25.38	$19.04	$12.69	$6.35
14	$26.73	$20.05	$13.37	$6.68
15	$28.06	$21.04	$14.03	$7.01

Here's what organic demand actually looks like:

Non-Catalog Demand Table
		Organic Percentage
Catalogs	20%	40%	60%	80%
0	$6.00	$12.00	$18.00	$24.00
1	$6.00	$12.00	$18.00	$24.00
2	$6.00	$12.00	$18.00	$24.00
3	$6.00	$12.00	$18.00	$24.00
4	$6.00	$12.00	$18.00	$24.00
5	$6.00	$12.00	$18.00	$24.00
6	$6.00	$12.00	$18.00	$24.00
7	$6.00	$12.00	$18.00	$24.00
8	$6.00	$12.00	$18.00	$24.00
9	$6.00	$12.00	$18.00	$24.00
10	$6.00	$12.00	$18.00	$24.00
11	$6.00	$12.00	$18.00	$24.00
12	$6.00	$12.00	$18.00	$24.00
13	$6.00	$12.00	$18.00	$24.00
14	$6.00	$12.00	$18.00	$24.00
15	$6.00	$12.00	$18.00	$24.00

Make sense?

Here's what total demand looks like:

Total Demand Table
		Organic Percentage
Catalogs	20%	40%	60%	80%
0	$6.00	$12.00	$18.00	$24.00
1	$10.21	$15.16	$20.11	$25.05
2	$12.85	$17.14	$21.42	$25.71
3	$15.09	$18.82	$22.55	$26.27
4	$17.12	$20.34	$23.56	$26.78
5	$19.00	$21.75	$24.50	$27.25
6	$20.77	$23.08	$25.39	$27.69
7	$22.46	$24.34	$26.23	$28.11
8	$24.07	$25.55	$27.03	$28.52
9	$25.62	$26.72	$27.81	$28.91
10	$27.12	$27.84	$28.56	$29.28
11	$28.58	$28.94	$29.29	$29.65
12	$30.00	$30.00	$30.00	$30.00
13	$31.38	$31.04	$30.69	$30.35
14	$32.73	$32.05	$31.37	$30.68
15	$34.06	$33.04	$32.03	$31.01

And finally, here's what total profit looks like:

Total Profit Table
		Organic Percentage
Catalogs	20%	40%	60%	80%
0	$2.10	$4.20	$6.30	$8.40
1	$3.08	$4.81	$6.54	$8.27
2	$3.50	$5.00	$6.50	$8.00
3	$3.78	$5.09	$6.39	$7.70
4	$3.99	$5.12	$6.25	$7.37
5	$4.15	$5.11	$6.08	$7.04
6	$4.27	$5.08	$5.89	$6.69
7	$4.36	$5.02	$5.68	$6.34
8	$4.42	$4.94	$5.46	$5.98
9	$4.47	$4.85	$5.23	$5.62
10	$4.49	$4.75	$5.00	$5.25
11	$4.50	$4.63	$4.75	$4.88
12	$4.50	$4.50	$4.50	$4.50
13	$4.48	$4.36	$4.24	$4.12
14	$4.46	$4.22	$3.98	$3.74
15	$4.42	$4.07	$3.71	$3.36

If, for a given customer, the organic percentage is 20%, then 12 catalogs is the right number to send to the customer.

If, for a given customer, the organic percentage is 40%, then just 4 catalogs is the right number to send to the customer.

If, for a given customer, the organic percentage is 60%, then just 1 catalog maximizes profitability.

And if, for a given customer, the organic percentage is 80%, then you are better off not mailing any catalogs to the customer.

Can you see how you end up dramatically over-circulating to your housefile when you believe in your matchback analytics?

On Thursday, we'll talk a bit about what you do with the money you save when you learn how significant an impact the organic percentage has on your business.