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Channel Alignment and Direct Mail: Finding the Perfect Balance – Case Study

Too often with long-running catalog programs, companies forget the importance of cleaning their mailing lists and the impact it can have on their business. In this case study, you’ll read about a successful retailer who needed assistance with channel alignment and the integrity of its mailing list after a several years long sales plateau and how Arandell helped to get their profitability back on track.

About the Customer

Since 1980, this company has been a pioneer in funding and reporting the latest anti-aging research and integrative health therapies. Today, the research company has transformed into a successful retailer, reaching 120 million US households, and has a database of more than 24 million customers. This company has been on a sales and earnings plateau for several years until undergoing a major overhaul.

In less than a year and under budget, they produced an immediate increase in profitability and beat forecasts. By re-evaluating the needs of its customers and market, this company re-balanced its investment into strategies, technology, and people.

This channel alignment revitalization included selecting a single partner — Arandell — to transform its database and marketing initiatives.

The Challenge

Too many catalogs were being mailed to unresponsive customers. Arandell broke down processes and embraced a customer-centric approach to marketing, thus changing the way promotion and circulation planning decisions were made within their organization. Analysts segmented their customer database to find that 11 million customers whom each received 6 to 13 catalogs annually haven’t purchased in over 2 years. This segment represented a marketing cost of $4.6 million, and identified 129k customers (receiving a total of 1 million catalogs annually) whose addresses were on file as unresponsive.

The Solution

Excess marketing dollars were being spent in the wrong areas. This company took Arandell’s advice and eliminated the catalog mailing for this unresponsive email segment since that wasn’t the most effective marketing channel for this audience. They decided to allocate 1% of their savings to email marketing, therefore replacing the catalog mailings with digital communications for the 129k customer segment.

Through a catalog circulation analysis, we discovered more than 50% of new customers place orders in response to the second or third catalog they receive. Less than 9% place their first order after receiving their eighth catalog.

Additionally, through Arandell’s Marketing Genetics™ and Power Analysis™ reports, this company was able to remove files from channels that were unprofitable. By also implementing co-mail to their program, Arandell discovered the net monthly savings would be $.05/pc and the annual savings would reach $500K by adopting co-mail strategies.

Channel Alignment Thought Bubble

Overall Impact

Today, this company continues to use channel alignment models provided by Arandell to determine which customers qualify for catalogs. The difference now is they know which customers their direct mail investments are reaching, and which customers are providing the best returns on these investments.

• The number of orders increased 3.5 times
• The number of orders per click increased by 41%
• Revenue per click increased by 24%
• Revenue nearly tripled