Press Release - October 2009
Looked at purely in cost terms the decision seems straightforward. Indeed, many companies will have had to cut out this channel just because they lack the budget to support it. Those with a more data-driven marketing culture, however, will first have run some data mining and predictive analytics across the problem before making the decision.
Chances are they might have discovered a scenario like the one told to me by a data planner last week. He had worked with several multi-channel retailers, one where the web was the primary storefront and the other where High Street shops were still the engine of sales.
For the e-retailer, online shoppers spent four times as much as those buying solely through the catalogue. For the physical world retailer, store visits drove four times as many sales as the catalogue. That would seem to make a case for axing the big book and all of its associated costs.
Yet when the analysts looked into multi-channel buyers, they found that shoppers who bought from both channels (website and catalogue or store and catalogue) spent nine times what single channel shoppers did. In other words, your most valuable customers are produced by the combination of touch points.
This is increasingly being recognised and understood by marketers who have the behavioural data and tools to mine it. It demonstrates just how important it is to avoid the instinctive reaction – cut costs in order to survive – in order to avoid potentially damaging impacts – cutting your own throat by losing valuable customers.
For companies that do not have access to behavioural data, either because they do not sell direct or their data flows are not in place to get this integrated picture, planning the Christmas campaign will not have been easy. Assuming that pulling out of high-cost channels will have looked like the right thing to do.
Discovering it was not will happen when it is too late to change tack. If the hoped-for sales are not pouring in because your catalogue is not being browsed, no amount of last minute emailing or frantic banner placement will compensate. Some retailers learnt that the hard way last year when survivalism drove many of them out of print. Others could discover this year that a prejudice against physical marketing will drive them out of business.
Taken from an article by David Reed, Editor, Data Strategy in Data Strategy issue October 2009
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