August 22, 2022

Big Difference

Aside from the industry telling you that catalogs have a 100% open rate because you have to touch them to throw them away, there is science involved in determining "who" should receive a catalog.

Here we have three customers who are identical in terms of corporate value ... each is expected to spend $50 in the next year. Exactly equal / identical customers.

However ...

... the first customer will spend 80% of next year's revenue "because" of catalog mailings, the second customer will spend 50% of next year's revenue "because" of catalog mailings, and the third customer will spend 20% of next year's revenue "because" of catalog mailings.

Let's look at the optimal strategy for each customer ... going from 20% organic first to 50% organic second to 80% organic in the final table.




Tell me what you observe?

20% organic rate:  14 catalogs is optimal. $53.20 in sales, $14.14 in profit.

50% organic rate:    5 catalogs is optimal. $41.41 in sales, $15.01 in profit.

80% organic rate:    1 catalog is optimal. $42.89 in sales, $18.60 in profit.

Yeah, your mailing decisions are fully dependent upon accurate measurement of the organic percentage. And you cannot possibly know your organic percentage if your focus is on "matchback analytics". You have to execute frequency tests and mail/holdout tests to get there, and you're best off to execute frequency tests in combination with email marketing frequency tests (and to be honest, with market-based paid search on/off tests and display on/off tests etc.).

Ask your favorite vendor if they produce the three tables (above) for every single customer when they are scoring your customer file. If the answer is yes (I know of one vendor who does this routinely), consider yourself blessed. If the answer is no, email me now (kevinh@minethatdata.com).







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