A trend has emerged among catalog companies: E-mail is promotional. This interesting turn of events has affected even stalwart catalogs that you never would assume to be promotionally driven.
The underlying assumption here is that online consumers, especially e-mail consumers, won’t buy unless given a special offer or discount. However, when you examine the logic, this doesn’t make sense.
The online population increasingly looks more like the actual population. This is mainly because of the sheer numbers of people now surfing the Internet. Virtually all of these online consumers have access to e-mail accounts, whether free accounts like Hotmail, corporate accounts or home accounts. If anything, they are slightly higher paid than the average consumer and slightly more educated.
If someone signs up for your e-mail list, either in a retail storefront, online or through a catalog blow-in, they are indicating an interest in your products. This does not necessarily indicate they have purchased before, but it does indicate a propensity to buy and an affinity for your products. It is very likely that your e-mail list resembles your house file (including requestors) in terms of demographic makeup. It is also very likely that your best buyers have signed up for your e-mail list, since they are more interested in your offerings than others.
So, would you mail only sale catalogs to your house file? Then why are you mailing only special offers or sales to your e-mail list? These are the same customers albeit in a different channel.
The temptation is to seek out that bump in demand that a promotional e-mail gives. However, remember that this is the same in the catalog business. You can get quick demand increases at the expense of long-term demand in any business, but it rarely makes sense to do so. This turns your e-mail customers (some of whom may be your better buyers) into sale buyers, who wait patiently for a promotion so that they do not have to pay full price.
Non-promotional e-mail works. The next issue is whether an e-mail program can work without the emphasis on promotion. The answer is absolutely. Since it is likely that these buyers resemble your house file in terms of demographics and propensity to purchase, you should treat these buyers like you treat your house file.
E-mail has the ability to go even further in building a relationship with customers because of personalization at a one-to-one level. E-mails should emphasize to your customers that you know them – they are not some stranger you are trying to hard-sell.
This requires segmentation of the e-mail list and targeted positioning for each segment. Though segmentation can get to the one-to-one level, a good start is breaking the list among buyers and prospects. Even better is the ability to break buyers into segments based on RFM analysis and target them directly. And the perfect system suggests purchases based on a buyer’s history.
Though many mailers have not reached this stage yet, it is a great target. It may make sense to interject some promotion into some of these segments (such as buyers over 24 months), but on the whole your e-mail approach should be consistent with your catalog approach. Perfecting this will require consistently testing and analyzing each mailing.
When you begin to wean your e-mail customers from promotions, results likely will be a little disappointing, though profit numbers (at least margin) should improve immediately. However, as a long-term strategy this creates a clear, concise message to your customer base about who you are as a company and what your catalog stands for (or doesn’t stand for, in this case).
In addition, it stops the erosion of profit caused by turning your customer list into discount shoppers. One of the easiest problems to create in catalogs is the customer who expects everything at a discount. Lately, it seems this is where our e-mails are taking us.
If you want to get rid of inventory through discounting, create a separate Web site or use eBay, but don’t be tempted to use your e-mail list as a dumping ground. You are more likely to be sending these promotions to your best buyers than you are to unknown prospects. Every cataloger also should be working to tie its e-mail database to its house list for a complete understanding of the e-mail customers. It might be eye opening for some of us.