January 15, 2019

The Math Behind Bifurcated Customers Who Have "Moved On" From Catalogs

Yesterday we talked about a classic, outstanding catalog customer ... and how that customer needed MORE mailings on an annual basis.

Presented today is the exact same quality of customer - expected to spend the same $150 in the next year ... but instead of a 20% organic percentage this customer has a modern 75% organic percentage.

In other words, the old-school catalog-centric buyer will spend 20% of future demand outside of catalogs ... while the modern e-commerce buyer will spend 75% of future demand outside of catalogs.

The 20% organic percentage buyer needed fifty (50) mailings per year (or more).

What does our optimization table say about the modern e-commerce buyer?
  • Five (5) mailings per year optimizes total annual profit.
These two customers are IDENTICAL in terms of future value ($150 demand to be spent in the next year).

And yet, one customer deserves fifty (50) mailings per year ... while the other buyer deserves five (5) mailings per year.

This bifurcation is happening at all catalog brands in 2019. This is the biggest story of 2019 ... and you won't hear your vendors talking about it ... and that's absolutely ridiculous because your paper reps and printers should absolutely LOVE the fact that some customers need fifty (50) mailings per year.

Do you understand the ramifications of this issue?

This means you are employing the absolute wrong contact strategy. You need two strategies.
  1. A strategy to optimize 50 mailings per year (i.e. your printer can help you dynamically create a weekly mailing for best customers based on what best customers previously purchased ... featuring a ton of new merchandise).
  2. A strategy for the 80%+ of your customer file that has maybe four mailings per year ... one featuring winning merchandise that raises catalog productivity to a point where you can circulate deeply.
More on (1) and (2) above tomorrow and Friday, ok?

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