How to Treat Time Buyers on Your Database
Segmenting your house file by RFM (recency, frequency and monetary value) may not be enough segmentation in today’s multichannel environment. Often, the goal is to mail fewer catalogs while growing the online business. I have always believed that one-time buyers hold the key to mailing “smarter” and accomplishing this goal. Here are some of the ways to segment one-time buyers in order to mail more cost effectively.
A one-time buyer is someone who purchased once; a customer is someone who purchased more than once. Obviously, buyers come before customers. Do everything you can (within reason) to convert buyers to customers but know when to stop mailing them. Here’s where proper segmentation will help you form the right circulation strategy for your business.
1. Housefile Models – Build housefile models separately for the one-time and more than two time buyers. When these models are run as a combined housefile model, often the buyers never make it to the top of the model. We have found that by doing this, we are able to cherry pick the one time buyers more likely to repeat purchase.
2. Web Only Buyers – Identify buyers with only one purchase who found your firm via paid search or affiliate programs. Mail as a group and assign a separate key code. (Be careful not to eliminate web driven buyers who searched using your company name.) Flag your web driven buyers in the merge and reduce or eliminate mailings to them when older or lower performing segments are selected. Mailing them catalogs will only increase your marketing costs with very little in return. Instead, email them on a regular and on-going basis.
3. “Sale” Buyers – Be aware of buyers who search for and purchase an item on sale. They may have purchased because of the deep discount on a particular item but they might not be willing to pay full retail. They are “sale” or discount buyers.
4. Gift Recipient Buyers – Buyers who redeem gift cards are another target group. They are purchasing a particular item because they received a gift card from a friend. That does not necessarily mean they will go on to make multiple purchases. Segment and key code this group of buyers in order to determine how many times to mail them regardless of their RFM.
5. Promotional Buyers – Promotional buyers behave much like “sale” buyers. They purchased because they were offered a strong promotion, i.e., a dollar amount off their order, a percentage off, free gift with purchase, etc. Again, remove them from the R-F-M, segment and track their purchase behavior after a few re-mails.
6. Low Dollar Buyers – When segmenting your housefile, be sure to segment the one-time only low dollar buyers. Avoid mailing them a catalog just because they fall into a recent segment. Email them instead.
One-time buyers typically account for at least 50% of your total housefile. Therefore, by circulating the right number of catalogs to this group of buyers can reduce costs and improve profitability. Bring your circulation to a whole new level by managing your one-time only buyers.
Stephen R. Lett is President of Lett Direct Inc.
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