eCommerce Analytics

Many customers have asked us to help them better understand the effect marketing messages have on their customer base. Almost everyone we know uses multi-channel marketing in one form or another - whether it’s email and web ads or email, web ads, and direct mail - most companies are using more than one medium to get their message out to new and existing customers. The problem many companies have is determining how and when to target each customer with the appropriate message.

Read Multi-Channel Marketing and the Zone of Influence »

Multichannel retailers are reluctant to stop sending catalogs to customers who primarily order online. There is a good reason for this. The catalog is undoubtedly the impetus that drives many buyers to order online, even if those customers don’t enter a catalog code. But even so, catalogs are not as critical as matchback analysis suggests. Why?

Because no matter the date, most high value customers just received a catalog.

High value buyers are frequent buyers and, as a result, they spend most of their time in the 0-12 month customer file. Customers in the 0-12 month file generally receive around one catalog per month.

At the same time, matchback analysis attributes all online sales to the catalog if the customer received a catalog in the preceding two or three weeks. That leaves little time each month in which an online sale could not possibly be attributed to a catalog. Yet there must be cases in which a received a catalog within the past three weeks but the catalog did not spur the order. Matchback analysis has no way of identifying these cases, which I suspect are pretty common.

Clearly this methodology is faulty, so why does it continue to be used? Call me cynical, but I suspect it has a lot to do with the fact that list vendors have a vested interest in promoting catalogs as a marketing vehicle. Also, it provides some comfort to catalogers with large house files who want to believe their big circulation numbers give them a strategic advantage over internet only retailers. In this way, matchback becomes a fantasy in which the sensibilities of the traditional direct marketer are reaffirmed.

To truly understand how many online purchases are being driven by catalogs, we can explore a different technique: holdout testing. I’ll explain more in my next post.

In RRW Consulting’s Direct Marketing Blog, Nancy Arter mentions that, in order to properly embrace Green Marketing, direct marketers need to “prove it” to their consumers via their business practices. Otherwise, she says, a green message rings hollow. As an example, Arter states that catalogs and coupons need to be printed on recycled paper as proof to the consumer that your company practices what it preaches.

Well, I’ll take it three steps further. I would argue that Green Marketing means sending as few catalogs as possible to achieve the same revenue targets, regardless of what type of paper those catalogs are printed on. So am I advocating that catalogers move all of their operations online? Hardly. That would be fiscally irresponsible. Catalog sales, after all, are still going strong. And there are demographics that ecommerce will never reach; demographics that include catalog devtoees who will not soon, if ever, buy from the web.

But the shrewd direct marketer should see the greening of marketing as an opportunity to prune their mailing list by using customer data best practices. Current data mining techniques make it possible to predict which customers will never buy from you again, regardless of what types of advertisements and enticements you send them. So why send those customers catalogs at all? We recently ran a study and found that we could save a multi-channel retailer a projected $47,000 a year by using customer models to identify the customers unlikely to buy again. Our recommendation: save the recycled paper by pruning those customers from the mailing list.

Direct marketers who parse their catalog lists using the powerful data mining capabilities available can make a solid case that they are listening to consumer opinion while trimming their own fat. Now, more than ever, direct marketers have the tools at their disposal to send less catalogs while still achieving the same marketing lift. And they can tout their sustainable practices back to their customers. Now that’s a marketing organization that will see green.

I feel like June is always a great time to take a look back at the forecasts and predictions made at the end of the previous year to figure out what’s living up to the hype and what has yet to catch on. Many internet retail trends have yet to meet expectations - virtual world advertising (i.e. Second Life) and YouTube marketing are still in their infancy while other marketing areas like personalization and one-on-one marketing are just starting to gain mainstream buy-in. One trend that we believed in at the end of last year that is now being implementing at major retailers across the country is the integration of online and offline marketing campaigns to maximize the effectiveness of cross-channel sales.

Of course, the question is always how best to judge the effectiveness of a campaign that generates sales in multiple channels. Unfortunately, this is not just difficult, it’s becoming harder as many customers are increasingly using one channel to research information about a product while purchasing the product in a different channel. As an example, the number of customers that receive a product catalog and then choose to purchase via the phone or mail has dropped significantly over the past five years. While it may seem like this would make the case for discontinuing expensive catalog mailers, the truth is that catalogs still drive a substantial amount of purchases - customers are using catalogs to inform their decisions about web purchases.
Back in February, eMarketer came out with a great report that showed the inverse is also true. In his “Multi-Channel Retailing” article, Jeffrey Grau writes about how buyers are increasingly using the web to research a product that they intend to purchase in a retail store. In fact, the article estimates that for every $1 that is generated from online sales, nearly $4 is generated from in-store purchases that are driven by online research. Additionally, over 90% of consumers that purchase online with some frequency have used the internet to inform themselves about items they later bought in-store.
So why is this important? Well, first, if you’re selling across more than one channel, it’s important to recognize that even simple marketing decisions may have a greater effect on your customers than you anticipate. One less catalog a year may seem like a good idea to someone with floundering mail order sales, but unless you can determine which of your customers is using the catalog to purchase online, you may be effecting more than just your mail order business. Second, no matter how your organization is structured - whether your online sales site is run as a separate division or if all marketing is a centralized in one department - the only way to truly judge the effectiveness of your marketing campaigns is to carefully track and, more importantly, analyze the data from all marketing related activities in one place (that means using everything from Google analytics to catalog match-backs). Last, while many internet retail trends that were forecast to happen in 2008 may have several years before becoming mainstream, the recent rise in postage and supply costs means we’ll be seeing more and more retailers looking to get the most out of their multi-channel marketing dollar in the coming year.