| Phil Minix is Executive Vice President
and General Manager of J.Schmid & Assoc., Inc. of Shawnee Mission,
Kansas, close to Kansas City.
I don't know Phil ... I do know Jack Schmid and the KC DMA group. Fine
folks.
Phil wrote an article ... published a couple of times elsewhere - now
here. I liked it so much I asked Phil if I could share it with you.
He agreed. Here goes.
Determining how many
times to contact
your customers and prospects
is the most common question to which
marketers are seeking an answer.
This question, or a version of this question, should be asked, tested,
and answered by every marketer on a continual basis. And with the methods
of customer and prospect contacts continuing to increase, this question
becomes even more complex. It's not as simple as how many times to contact
customers and prospects, but how many times and when with a catalog,
a postcard, a phone call, an e-mail, a space ad, a direct mail package,
etc. If you have never performed a contact strategy test or haven't
updated yours in several years, now is as good a time as any to get
a good answer to the question.
The three elements of a good contact strategy
are:
- How Often?
- When?
- With What?
The answers to these questions will vary with prospects and customers.
How
Often
If you plan your customer contact strategy correctly, you can optimize
your revenues and costs. In other words, you'll find that sweet spot
where you continue to get marginal revenue at an acceptable cost. Once
you cross that line, however, every dollar you get in revenue will cost
too much and will drive down your profitability. So the key to optimizing
contacts comes first in understanding your revenue and profit objectives.
Then you can determine if additional contacts will drive enough revenue
or profit to make them fit into your plans.
In order to determine your optimum contacts, you must test. Performing
an effective contact strategy test takes time and effort, so make sure
you start now and make room in your plans for tracking the results.
You'll need at least a year and several segments of at least 5,000 to
10,000 names each. For example, if you are currently mailing a book
every 8 weeks, you will need a segment to mail every 6 six weeks, perhaps
every 5 weeks and another every 10 weeks. You should make sure that
you create test segments in each of your major RFM categories so you
can determine if there are different optimum numbers of contacts for
different segments.
The reason you need to test for at least one year is to determine the
cumulative effect of your actions. If you increase your frequency and
begin mailing too frequently, it may take a few mailings for these results
to begin to show measurably. Remember, if you know your revenue and
profit objectives, it will be easy to determine how many contacts are
right for you once you have these test results.
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When
Knowing when to mail is a first cousin to knowing how often. With
the correct testing, you will probably determine that the "how
often" will change with the "when." In other words, you
might mail every 4 weeks in the latter part of the year, but only be
able to justify mailing every 10 weeks in the middle of the year and
every 6 weeks in the beginning of the year. Depending on the category
of products you sell, your timing for being in-home can dramatically
effect your results.
Even before you test, you can make a good guess about your timing given
the types of products you are selling, whether they have any occasional
gift giving appeal and looking at the seasonality of consumers in general
for purchasing that product category. If you are a member of a co-op
database, there will be reporting available that will show you when
customers are buying in major categories across the industry. This can
be very helpful in determining your best times for prospecting, for
additional contacts to customers, etc.
We often find that an overlooked time of the year for many marketers
is right after the December holidays. It's counter-intuitive because
most people believe that consumers are "shopped out" after
the 4th quarter holidays. However, in direct mail, January is a very
responsive month – usually the 2nd or 3rd most responsive of the
year for many categories.
Also, when you are thinking about how often and when to contact your
customers, it is important to remember that you are contacting people
in groups of thousands of names. And since you are only getting 1% to
5% response rates, over 95% of the people contacted were not ready to
buy, didn't find anything they wanted at that time, or didn't even open
your catalog. We often think about the 5% that purchased and ask ourselves
if they would be ready to purchase again so soon. Instead, that additional
contact is really geared to the 95% that didn't purchase last time.
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With
What
Now that we have thought about how often and when we should contact
customers and prospects, we need to begin thinking about with what kind
of vehicle. If you are a cataloger, there are many other ways that you
might consider making a contact to customers: a post card, a mini-catalog
(trim size or page count), a direct mail package, an outbound phone
call, or an outbound e-mail.
All of these additional methods of contacting customers and prospects
should be planned into your "overlap" of contact strategies.
Especially with the advent of low cost e-mail marketing, it is important
to fit those e-mails into your overall contact strategy. Let's look
at a few contact options and consider the pros and cons of each. But
remember – test before you rollout!
Postcard
A postcard is obviously easy and quick to create and produce and will
generally cost less to put into the mail than your catalog. And if it's
designed well, it can stand out in the mailbox. However, the postcard
does not have nearly the ability to generate revenue as a catalog would.
So, the postcard must work really hard to affect a behavior or have
a lasting impact on a customer such that future behavior is affected.
Again, this can only be known with testing. We recommend testing postcards
as web and retail traffic generating devices and as a way to announce
a special event such as a sale or a new catalog arriving. But remember
you must get the necessary lift to pay for the post card program.
Mini Catalogs
Smaller trim catalogs or lower page count catalogs can also be great
for additional customer contacts. Again, the cost in the mail is generally
less than your traditional catalog and if designed correctly, they can
garner impressive dollar-per-catalog numbers. They also can work well
as a web or retail traffic generator and might not cost that much more
in the mail than a postcard, although the creative production costs
will be higher.
Using smaller catalogs for prospects is generally not a good idea unless
your main catalog is an extremely large page count book. In this case
the smaller book might be more focused and easier to process for prospects.
But in most cases, the smaller size doesn't develop the credibility
or offer enough assortment to attract first-time buyers.
Direct Mail Packages
Many catalogers effectively use a direct mail package in off seasons
or as an additional contact to customers. For example, Omaha Steaks
only mails its catalog in the 4th quarter. The rest of the year they
use direct mail packages and e-mails to contact their customers. The
direct mail package works well if you have a few signature products
that lend themselves to a single (or limited multi-) presentation format.
If your brand positioning is all about assortment and choice, a direct
mail package is probably not for you. The costs of this package will
most likely be comparable to your catalog, so testing will reveal if
the results merit this method in your strategy. Sometimes just hitting
your customers with something different will "jar" them into
purchasing.
Outbound Phone Calls
Depending on your type of business, your customers and your product
offering, outbound phone calls might really increase the effectiveness
of your mailings or generate additional income between mailings –
especially if you are a B-to-B cataloger. Don't be afraid to call your
customers to ask for the sale, but make sure you've got something compelling
to offer them – a reason for making the call.
Outbound E-mails
We all know about this new and exciting marketing tool. If you are
not already testing outbound emails to your customers, you should be.
Many catalogers are getting impressive results from these campaigns.
Make sure that when you develop your strategy for an outbound campaign
that you have something exciting to contact customers about. Each e-mail
campaign should have a reason: a sale or other offer, a new product,
an announcement of a catalog arriving, etc. Unlike customers being pleased
to get the latest catalog in the mail just because it is "that
time," e-mail customers want to know quickly why you are contacting
them and what you want them to do.
In addition to tracking the results of each specific e-mail campaign,
make sure you are analyzing the results of those same e-mail recipients
to your other forms of marketing. Perhaps the results of your e-mail
campaigns are not quite what you would like them to be, but those same
people are performing 10% better when they receive the catalog. Or worse,
perhaps the e-mail results look good, but you are cannibalizing the
catalog results and the net effect is something less than what you had
before. You'll need to know this so you can manage it effectively.
Developing and managing your contact strategy is imperative to achieving
effective and optimal results for your catalog. Make sure you take into
account all the complexities of frequency, timing and the methods of
contact. Plan your contacts well in advance and don't forget the most
important and fun part of our industry –test, test, test! (Phil
Minix can be reached by phone at 913-236-2408. His E-mail address is
pminix@reimanpub.com.)
For more information about Ray Jutkins, visit http://www.rayjutkins.com/.
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