Measuring direct mail results in a multichannel age

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Tom Mabee
Tom Mabee
Online shopping has migrated from an increasing trend to a way of life for most consumers — and traditional catalogers who once ruled the mail order landscape know this.

However, this doesn't mean catalogs aren't a viable and valuable communication channel driving substantial phone and online responses. But for catalogers, it becomes ever more important to achieve a better understanding of what motivates consumers' shopping behaviors.

Typically, measuring campaign results focuses on attribut­ing purchases to one or more advertising methods based on a variety of factors such as source codes, item codes, matching the customer to a mail file, and the date of the order in relation to the mail date. However, when the same message appears online, in stores, as well as in e-mails and direct mailings, how can the marketer figure out what is driving the response? The simplest approach is to measure the incremental effect of each potential customer contact.

A straightforward way to assess the incremental effect of a campaign is to conduct a hold-out test. First, select two Nth or random samples of names and mail one while suppressing the other, then accumulate all the purchase information for each sample for the campaign period or a little longer. The difference between the mailed sample and the suppressed sample — orders, sales and marketing contribution — is the incremental effect of the campaign.

This method of measure­ment uses all of the purchase activity in both samples, not just the activity attributable by key or by matching to the mail file. In that way, canni­balization between contacts is accounted for.

Incremental sales and incre­mental contribution measure­ments provide clear evaluations of the return on marketing spending for the specific campaign among the specific names in the test. They tell the marketer which campaigns or which segments are worth repeating. Even better, the findings generalize across similar campaigns and with similar kinds of names. This approach provides a clear and simple way to make rational mailing decisions for many segments across many similar campaigns using the results of a single hold-out test.

Each response across every marketing channel has its value and, in as little as one campaign cycle, the incremental value from catalog mailings can easily be measured and understood to determine the best multichannel marketing investment possible.

Tim Mabee is a senior consultant for the Decision Sciences group of Ex­perian Marketing Services. Reach him at tim.mabee@experian.com.

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