Direct mail and catalogs make a come-back

March 27, 2015

Catalogs Back En Vogue Courtesy Wall Street Journal

The demise of print started the moment digital was born. Once the only form of direct marketing besides telemarketing, direct mail and catalogues have been on a steady decline as marketers turn to more cost effective digital marketing.

The Catalog is Back: 2013 Marks The First Year of Catalog Growth Since 2007

Courtesy NY Times Courtesy NY Times

In 2007 the number of catalogs mailed peaked at nearly 20 billion, but until 2012 were on a steady decline. In 2013 they grew for the first time in years. Why? First, consumers still like to buy through catalogues, and some consumers only buy through catalogues and cannot be reached otherwise. Secondly, more accurate and easy predictive algorithms have become available use catalogues surgically and only send them to those customers who are a) likely to buy, b) have high predicted lifetime value and c) will not engage with you otherwise.

Some consumers love catalogues

According to an article in the NY Times, Bruce Cohen, a retail private equity strategist at Kurt Salmon, a consulting firm, references Lands’ End which experienced a $100 million drop in sales after reducing the number of catalogs it sent. Through a pop-up survey on their website, they learned that 75% of their customers were making purchases after reviewing their catalog.

JC Penney recently announced the return of its Big Book after phasing it out in 2009, along with 70 more catalogs in 2010. They’re bringing back the 120-page book because data showed that many of its online sales were driven by what shoppers saw in print.

Restoration Hardware made a bold move with its 17-pound catalog mailing that contained over 13 “source-books” inciting consumer outrage. But has provided mobile apps and online version for the digitally inclined and eco-friendly shopper.

Online menswear retailer, Bonobos, first tested the use of catalogs in 2013 to new and prospective customers. They’ve found 20% of first-time customers place an order after receiving a catalog and they spend 1.5x more than customers who didn't receive a catalog first.

Here are some stats that should make you take a second look at direct mail:

1. After receiving a catalog, 44% of consumers visit the brand’s website, 34% search online and 24% keep around for future use. – Direct Marketing Association
2. Direct mail, too, has a long shelf life with 2/3 of customers keeping their mail for future reference. – Direct Marketing Association
3. 79% of consumers react immediately after receiving direct mail and 56% think printed marketing is more trustworthy than other comms. – Direct Marketing Association
4. According to Epsilon’s 2012 Channel Preference Study, 40% of consumers have tried a new business after receiving a direct mail, 70% have renewed relationships with businesses that they had previously ceased using. 
5. U.S. advertisers spend $167 per person on direct mail to earn $2,095 worth of goods sold; a 1,300% return – Print Drives Commerce 2013

Predictive Marketing For Direct Mail Precision

Online and traditional retailers shouldn’t mail indiscriminately. While many continue to rent mailing lists based on demographics (income, age, gender, location, etc) and psychographics (needs, interests, values, etc), blanketing households is not always the most cost effective.

Here are 3 scenarios you might not have thought about:

1. Predictive Analytics beats old-school RFM for direct mail targeting.

Historically direct marketers have used RFM models (recency, frequency, monetary value) to decide who to send catalogues. The fundamental flaw in RFM is that it uses recency in order to account for likelihood to buy. But that’s not always the case. At-risk or lapsed customers with high potential future lifetime value are often overlooked and excluded from the models. Just because a customer hasn't bought recently, doesn't mean there is no future potential. Likelihood to buy, as calculated with predictive algorithms, are a better - and frankly easier - way to decide who to mail. Ask yourself? Are you missing high potential customers who haven't bought for a while, or who haven't bought just yet? Predictive algorithms are at least 30% more accurate than RFM models in determining who to mail.

The Opportunity:

  • Replace RFM with predictive algorithms, amongst others, to recapture high value customers: Customers that spent heavily with you in the past should be marketed to in order to re-engage and retain them.
  • Identify those with high potential: Past behavior isn’t an indicator of potential. Brands taking advantage of predictive marketing can also identify current customers in their database that have similar characteristics to other high LTV customers but haven't purchased a lot - yet.

The Business Impact:

  • Print is expensive. Reduce waste associated with marketing to low likelihood to buy.
  • Increase sales by recapturing revenue from lapsed customers.

2. Focus direct mail campaigns on those that aren’t engaging with you on email.

Consumers are increasingly overwhelmed by the volume of email they receive. Customers who have unsubscribed from email may not want to hear from you via email. But that doesn’t mean they don’t want to hear from you at all. And just because they’ve unsubscribed from email doesn’t mean you should give up on them. More people who haven't actively unsubscribed, may not every open an email from you and are "silent unsubscribes" with the same effect. Ask yourself, do you have customers who’ve unsubscribed or stopped engaging with your email? How are you reaching these customers?

The Opportunity:

  • Make sure you’re not putting all your eggs in one “digital” basket. Customers may still love your brand but not love your emails. Whether they have unsubscribed or stopped paying attention all together, if you’re not ensuring you’re brand is top of mind, you may lose them to the competition.
  • Remarket to your high value customers (based on historical or predicted LTV) via direct mail - which could be a catalogue or a simple postcard.

The Business Impact:

  • Increase retention of high-value customers who aren’t engaging via email or other digital channels. Don’t forget the 80/20 rule. Eighty percent of your revenue is coming from twenty percent of your customers. Make sure you’re not losing them.

3. Personalize your mailers. 

It may not be necessary to mail every customer the exact same catalogue - your entire catalogue. Your customers probably split in different brand or product clusters. Perhaps one segment of your customers only ever buys cosmetics from you, whereas another segment buys only bath products.

The Opportunity

  • Print thinner, more focused catalogues for your different personas, saving both money and reducing the environmental footprint of your mailer. You also might print a thinner mailer to get on your customers' radar, then link to your online assets.
  • Consider adding value to your print catalogs like IKEA did with their mobile app or extend the catalog experience online like Restoration Hardware. Many catalogs are limited due to print costs but that doesn’t mean you can’t expand their breadth or portability online.

The Business Impact

  • Reduce costs and increase conversions by focusing on products that customers favor.
  • Considering using digital methods that complement and optimize the print experience.

How are you using direct mail and catalogs in your business? Share your experiences in the comments section!

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