All mailers must constantly try to identify the best way to grow revenues. It seems like it should be pretty easy to do. After all, every marketing guru has professed that if a company spends more money on marketing, or offers more products, sales will happen.
But in the present multichannel environment, how do you fuel that growth and determine where to invest scarce resources to expand market share in a cost effective manner?
One way to grow a business is to look for more universes to will expand the target audience for acquisitions. First, a mailer needs to develop a good understanding of its current successes and failures. Trends that are representative of the past few years must be identified so you can map out where to focus your attention and resources.
One trend that is a terrific starting point is the number of new-to-file buyers that have been added to the house file.
Response rates are a great gauge of which lists and categories of lists are acquiring the most customers and, in conjunction with universe counts, have the most potential. Cost per acquisition (CPA) by list and category enables mailers to rank each source of names based on profitability.
To assist in planning for the coming year, CPA and response rates together will enable a mailer to both budget effectively for marketing spend and to estimate the number of new buyers to be acquired.
Once a mailer has exhausted its catalog-specific list universes, to expand its target audience further, marketers must consider a large non-catalog specific universe. These include nonprofit, financial, publishing, and demographic sourced prospect names.
Many list brokers will work with catalogers to try to develop these sources as productive avenues for catalog companies using ‘test’ rental fees, net name deals and modeling opportunities. While some of these new sources may have higher CPAs and require mailers to acquire customers at a loss, lifetime value must be calculated to see if they are profitable long term.
Michael I. Grant is president of catalog consultancy Michael I. Grant Direct.