Tactics > getting set for Christmas
Nothing makes a greater difference to the profitability of a company than getting the correct product range in place.
complaints was to stop answering the telephone. For some reason there was a somewhat muted response to its next catalogue and it was saved the bother of answering the phones in the future. But let’s not linger over that. In most fourth-
quarter companies this is the time to make the most of the housefile. The trick to getting the most out of it at this time of year is by recognising two things. First, that a customer’s previous behaviour dictates how you should communicate with him now, and second, if you don’t have an outcome in mind for a mailing to a segment of your housefile, it is very difficult to know if you have succeeded or not. Taking the first point, someone who bought from you once two years ago has very different requirements from someone who has bought from you twice every year for the last five years. The first needs some form of inducement to reorder, the second is pretty happy with you and probably only needs a word of thanks. It is sad to say but loyal customers need less from you than those who contribute more to your wealth. If you did start giving them big discounts you would be subsidising existing behaviour. What they need is recognition, thanks and status. So softer values work with them. Give them special phone lines, previews—particularly important if you sell items of limited supply—and highlight the amount of time they have been a customer. Earlier I mentioned outcomes. You don’t want
to fall into the trap of a “hit and hope” kind of mailing. What you need to do is decide what sort of improvement you are looking for from each segment. So, for instance, you may wish to reactivate buyers who have bought longer than 24 months ago. You may want to improve the spend of low-spending customers or increase the retention rates of new customers.
In order to do this you should create segment-
specific promotions designed to produce the outcome you desire. So for lapsed customers try a tempting discount or for low spenders a gift above a relevant spend. Interestingly enough it is amongst the low
spenders where you may get the biggest bang for your buck. One reason for this is that you will have more low-spending customers than high ones. In fact, the majority of your database will be spending less than your average order value—low-spending customers are where the volume is in your database. Therefore there is more money to be made by getting these people to spend more than getting your high-spending customers to do so. Another reason is that most of the promotions
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that you see in catalogues these days are geared to the average order value. These are completely irrelevant to people who spent half that. They will have no effect on their behaviour at all. However, a personalised promotion geared to people’s actual spend level with a reasonable increase in spend to qualify can prove enormously effective. All very well for catalogues and outbound emails but what happens to customers recruited online? There is no reason at all why rewards at various spend levels cannot be incorporated into
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tiered promotions as long as it doesn’t get too complicated. This would cater for customers coming from online sources. What would help a great deal if you have the time to implement it before the Christmas rush are promotion- proximity alerts on your site. This informs the customer of how much more he has to spend to qualify for a promotion every time he adds something to his basket. So who else will be coming to your
Christmas? Well, the people you recruit now. Here, early action can bring you great benefits. Test lists early against a known quantity list—usually one of the top segments of one of the co-ops—so you can benchmark their performance. If you test these in your early campaigns you can roll them out in the peak when you can really make some money. Online, don’t forget that Google is only
one source. Other pay-per-click (PPC) offers from Yahoo!, Microsoft’s Bing and Facebook ought to be tried out too. Whilst these, with the possible exception of Facebook, won’t deliver the volume, they may well offer better quality. With Facebook, you may be in for the long-haul but evidence from US practitioners shows the wait is worth it.
What do they want? I have probably bored the readership of this
magazine to death over the years by banging on about the importance of a range plan. My problem is that I have never seen anything that makes a greater difference to the profitability of a company than getting the correct product range in place. Putting together a range plan is not rocket science. It is simple to do with a bit of tenacity and a basic knowledge of Excel—although if you are really keen, teaching yourself about pivot tables can be a real help. The technique, with slight differences, can be applied to an online product range as well as offline. The benefit is a product range in line with
your customers’ expectations of you. As you are working in an absolute medium, with nothing getting between you and your consumer, your catalogue and website are excellent and reliable pieces of market research. Instead of answering questions on a form, customers vote for products with money. The more they like a product, the more money they send you. The same holds for product groups and price points. The more consumers think you have authority in a product area, the more of that type of product they buy from you. And the more comfortable they are in spending in a pricepoint band, the more they will spend with you too. It is sometimes said that a range plan is
more relevant to offline trading than online. The reasons given are that there is no product capacity restriction online so optimising the range is not as critical and that the online customer finds his way around by himself so the product structure can be looser. This is palpable rubbish. Unless you are a company that has direct despatch on all of your range
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