Despite the struggle to build a constantly churning customer base, Publishers Clearing House is finding a gold mine in its Canadian continuity clubs.
A year ago, the company had only two continuity club programs in Canada. Today, it's up to five.
“Continuity clubs are working very well for us right now,” said Grace Corsini, director of marketing for Canada and continuity clubs at the Port Washington, NY, company.
This year, the company will mail 30,000 pieces for each of its clubs: three jewelry and two coin clubs. PCH gets its club members from consumers who respond to its various magazine and merchandise mailings throughout the year.
“If a new customer comes into PCH with a jewelry purchase, we would follow them up with a club mailing,” Corsini said.
Between the growing continuity clubs and its regular merchandise and magazine promotions, PCH has increased sales in Canada by 30 percent in the past three years. The average order size is up as well, she said, now around $30. But the company is continually fighting a decreasing customer base.
“Our customer base has declined significantly because we can't generate new customers like we used to. I'm expecting to lose 10 percent of my active file between now and the end of the year,” Corsini said, though she hasn't seen any sign of the attrition rate changing drastically. “There's just a constant churn. The main challenge is getting new names.”
When Corsini joined PCH three years ago, the company mailed nearly 9 million pieces to Canada. This year, she expects to mail just 6.2 million, about the same as last year. The lion's share — 3.8 million — goes to merchandise mailings, while magazine promotions total 1 million. New business mail volume, which is spread evenly between merchandise and magazines, is 1.2 million. Continuity club volume totals 150,000.
“We were definitely overmailing,” she said. “The number of profitable names had declined, but we hadn't really taken down our mail volume. We went through an adjustment period, but profitability took off. The number of orders really stayed the same.”
Corsini finds Canada a hard nut to crack as far as prospecting. That's an area where she wants to see improvement.
“Lists aren't updated as often as a U.S. list. They're updated every three months, six months, maybe every year,” she said. “Also, the volumes are very low, you know, like 5,000 names for a three-month update, which is not the most cost-effective way to run a campaign. Also, the privacy laws are a lot stricter in Canada. Right now, we're looking into list exchanges because our names just went on the market.”
Merchandise promotions usually work better than magazine subscriptions, Corsini said, which is why the results of a recent test surprised her.
“We had two main types of mailing. One was all merchandise, and the other was a mix of merchandise and magazines. Over the years, merchandise has taken more and more of the share of those mailings,” she said. “We tested having just a magazine-only mailing. We weren't really sure what to expect, but it did very well, so well that we'll be doing that from now on.”
For the new business merchandise mailings, just under 50 percent of the volume is from new test lists, “but the volumes are very small. I go out with less than 1,000 [pieces] for some mailings,” Corsini said.
As far as sweepstakes, she said, there are two main laws: the competition act and the criminal code.
“They have certain requirements where you have to state in disclosure the number of prizes, approximate value and the areas in which they'll be awarded and any fact that materially affects the chances of winning,” she said. “In Canada, it's a criminal offense if you violate one of their sweepstakes laws.”
Marketing to Canadians takes some changes in the copy, too.
“We do Canadianize the language and the spellings. Certain words are spelled differently, so we make all the changes in our mailings,” she said. “As far as French [language] mailings, we did that years ago before I was here, but that stopped. We don't market into Quebec anymore. The language laws are pretty strict, and there are requirements for product labels.”
However, Corsini wants to return to the Quebec market.
Though U.S. mailers will get a break from postal rate increases for the next three years, thanks to changes Congress approved in the amount of money the U.S. Postal Service needs to pay into a retirement fund, it's a different story in Canada.
“We're expecting rates with Canada Post to keep going up,” Corsini said. “Right now we're in a three-year contract for certain minimum volumes, but it's a challenge when our customer base is eroding and it's harder and harder to get new names. The good news is that our merchandising strategies are continually improving, so we can leverage our postal business and our fulfillment packages to help us with the challenges of our ad mail.”
