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Playing Private Eye By Paul Miller, Senior News Editor, “Catalog Age” This article contains material from Jim Wheaton, a Principal at Wheaton Group. This material has been underlined for quick reference. Reprinted with permission from the April 1, 1999 issue of Catalog Age, http://catalogagemag.com/ar/marketing_playing_private_eye/. Catalogers and industry observers estimate that 20%-60% of the names on a business-to-business house file become inactive in any given year. And reactivating such dormant customers involves considerably more than a "we haven't heard from you lately" message on a catalog. It can be a three-step process: First, the cataloger often has to track down the dormant customers. Next, it needs to determine whether the customers are worth reactivating. Then, finally, the marketer has to decide how to try to win back the customers, usually with special mailings or outbound telemarketing campaigns. Step 1: Playing private eye. At G. Neil, a Sunrise, FL-based cataloger of materials for human resources directors, more than half of the 20%-40% of its house file that becomes dormant each year are "simply people changing jobs," says president/COO Terry Jukes, "and the replacements are not aware of us." Indeed, "a lot of b-to-b lists can become notoriously dirty," says Jim Wheaton, senior vice president of strategic consulting for Chapel Hill, NC-based database marketing firm KnowledgeBase marketing. "Customers leave their companies, and catalogers have no idea they've left. Or customers may move to another plant location or take another position within the company and are no longer in a buying position." Wheaton says that one of the first things catalogers like G. Neil should do is contact mailroom supervisors of large corporate customers through the mail to see where those customers have gone. (See "Getting past the gatekeeper," December 1998.) Some marketers also use outbound telemarketing to update their house files. G. Neil, for one, uses both mail and phone to find dormant customers-and to recruit new customers at the same time. "We often have to capture people who have replaced former customers and educate them about us," Jukes says. "And the phone works very well." Step 2: Who's worth reactivating? As far as which customers are worth reactivating, "I like to use multivariate analytical techniques, in which you use statistics to evaluate many factors," Wheaton says. Such factors include when the customers last ordered, how much they spent, and what they bought. The cataloger can then weigh this against how much it will cost to reactivate them. For example, a customer who hasn't ordered in six months may be easier and therefore cheaper to reactivate. But a cataloger may opt to spend more resources on trying to reactivate a customer who hasn't ordered in 12 months, because his average order was three times as high as the first customer's. "You need to see whether it's going to be cost-effective to try to reactivate them," Wheaton says. As for what time frame defines dormancy, it varies among business sectors, catalogers, and according to Christal Gray Davis, advertising manager for wholesale firearms cataloger Acusport, even among accounts. "It can be anywhere from one month to one year," Davis says. Like many mailers, G. Neil doesn't have an exact cut-off point at which the cataloger determines it needs to reactivate customers. "In our business, it's six to nine months," Jukes says. "If, however, you're selling a highly consumable product, it's a shorter time." Step 3: Making contact. G. Neil uses outbound telemarketing not only to find its dormant customers, but also to reactivate them. The method is particularly effective, Jukes says, "when you have a customer who has given you more than $250,000 in revenue over two or three orders." On the telephone, outbound telemarketers "can qualify customers, probe them for their needs, listen to why they haven't been ordering, and try to find out what they want. It's interactive, compared to direct mail, where you take your best shot with a mailing and hope for the best." In addition, G. Neil sends reactivation catalogs containing a "we want you back" message to some dormant customers. Belle Fontaine, OH-based Acusport also relies on both telemarketing and mailings as reactivation tools. "If customers are dormant for whatever reason," Davis says, "we do periodic 'prospect' mailings, sending monthly 16- to 100-page so-called flyers to rejuvenate them." Acusport mails upward of 200,000 prospecting books a year, in addition to the 20,000 big-book (1,000-plus-page) catalogs it mails annually to preferred dealers. Although the smaller books don't contain any special reactivation messages, Davis says they serve as reminders to dormant customers. Acusport telemarketers don't stop at phoning dormant customers. "Our telemarketers [who double as field sales reps] visit customers several times a year, depending on the circumstances," Davis says. Mom-and-pop retailers, who require more hand-holding than large corporate clients, make up a significant share of Acusport's customer file. Jim Wheaton is a Principal at Wheaton Group, and can be reached at 919-969-8859 or jim.wheaton@wheatongroup.com. The firm specializes in direct marketing consulting and data mining, data quality assessment and assurance, and the delivery of cost-effective data warehouses and marts. Jim is also a Co-Founder of Data University www.datauniversity.org. |
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