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Litle & Co. finds state-by-state variance in direct response spending

Wyoming, Alaska, Hawaii, and Nevada are the most active states for consumer direct response spending. The least active are Oregon, Indiana, Tennessee, and Michigan, according to payment processing company Litle & Co., which released its findings on state-by-state consumer direct response spending on August 22.

The company’s payment processing engine analyzed 20 million “card-not-present” direct response customer transactions that were sparked by televised infomercials and shopping networks, catalog call centers, and online marketing programs that occurred in Q1 2012, says Trevor Bass, Litle’s director of business intelligence.

“The findings seem to corroborate that consumers in certain low population density states find direct response an appealing way to get their shopping done,” Bass says. “While the direct response industry has done a great job over the past few years to drive traffic to brick-and-mortar locations, these findings may suggest that consumers in areas with brick-and-mortar locations that are fewer and further between are shopping via direct response.”

Factors such as marketing channel availability, locations where direct response ads air, traditional spending trends, and the availability of desirable direct response products, are all drivers for the states-by-state spending habits, Bass says. Bass also cites consumer economic status, age, and gender as potential influences.

“Our main goal was to uncover valuable payments trends that direct response merchants can use to help drive future business decisions,” Bass says.

Litle analyzed payments from Visa, Mastercard, Discover, and American Express because of their wide adoption in the U.S. Correlations between cards’ frequency of use and geographical location can be associated with several trends, including the card company’s origin. For example, San Francisco-based Visa is a popular choice among West Coast consumers; whereas Discover, based near Chicago, has greater popularity in the Midwest.

“American Express is most widely used on the West Coast and in the Northeast, two areas that indicate affluence,” Bass adds. “This is valuable information for direct response merchants, as they could use it to target specific offers for this customer base and card type.”

Bass hopes C-level executives will take a particular interest in Litle’s findings.

“CFOs might be interested in this data to compare with revenue concentration and help justify incremental monetary investments in advertising spend,” Bass says. “Likewise, CMOs could use this data to help with media buying decisions, a huge expense for direct response merchants, to validate or justify how their advertising budget is allocated.”

While Bass acknowledges that Litle doesn’t have access to every customer transaction, he claims that the company’s findings are on target. “A battery of statistical tests strongly suggests that the maps we published are not significantly affected by sampling bias.”

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