March 22, 2012

Fixing The Jasmine Problem: A Five Year View

Every catalog business has a "Jasmine Problem".

You know this is true, you just don't know how to deal with it.  You have customers who order online, who you can't attribute to any form of traditional advertising.  You throw 2-3 catalogs in the outgoing package, you throw them a hotline catalog or two, and then you pummel her with 18 catalogs in the next year.  At the end of the year, your segmentation scheme suggests that "online customers aren't profitable", assuming your segmentation strategy accounts for channel preference.

For so many catalogers, this is the end of the road.  The online customer isn't profitable, so we stop trying to grow the e-commerce side of the business.

Here's the thing, folks.  There's no law on the books, as best I can tell, that says you ever have to mail a customer a single catalog.

I've analyzed a lot of tests in my life.  In a typical catalog mailing, it's not surprising to observe the following:
  • If you don't mail Judy, 20% of the demand remains, with 80% disappearing.
  • If you don't mail Jennifer, 45% of the demand remains, with 55% disappearing.
  • If you don't mail Jasmine, 70% of the demand remains, with 30% disappearing.
And in the case of Jasmine, the amount of demand generated is frequently small, as her interests and loyalty are different than observed with Judy or Jennifer.

So, why do we even bother to mail Jasmine anything?

Next week, we'll explore what happens to a business, long-term, that changes strategy with folks like Jasmine.

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