Basic RFM Analysis Yields Binding ResultsMorgan Cloward decided that a bit of Direct Marketing 101 was needed this summer to improve the performance of an annual direct mail piece designed to generate sales of a binding machine.
The director of sales and marketing at Office Zone, Kaysville, UT, a business-to-business marketer of office equipment, realized that last year's 1 percent response rate could be improved in an effort to sell the Bind Fast Five, which costs $3,418. His strategy: simply employ an RFM strategy to target a segment of the company's house file that would receive a postcard.
"It was like day and night," said Cloward, who joined the company in June 2002, which was after last year's postcard mailed. "No type of modeling or analysis had been done in the past. [The postcard was] mailed and we hoped for the best. We felt an RFM effort was the way to improve sales."
Targets were schools, including universities and colleges, as well as print shops and large corporations that "do a lot of binding of documents in-house," plus government agencies. This year's postcard, which was 6 by 11 inches, mailed in July to about 10,000 recipients.
"It was a targeted mailing that was narrowed down to a select few from our house file, hitting about 25 percent of it," he said. "By using an RFM analysis of our database, we were able to identify our most valuable customers. We were able to identify the ones that order from us on a frequent basis -- once every few weeks. And also for this campaign, they had to have ordered something within a month. The monetary requirement was having spent at least $2,000 over the last year."
The result: a 6 percent response rate.
"Last year's mailing was not targeted at all," he said. "It was basically a scattershot approach, using a 6-by-9 postcard, that went to a larger group. The lesson is to do your research before jumping into something blind."