Don’t Put All Your Reactivation Eggs in One Basket

One of the biggest assets a mature direct marketing company has is their house file, and within that house file are pockets of lapsed customers, normally thought of as 12+ or 24+ month buyers. Through RFM segmentation, scoring, NaviStone® and/or house file modeling, companies are able to identify which of these customers qualify for postal mailings, and which don’t.

Many times, lapsed customers who do not qualify for a postal contact based on internal segmentation rules are sent to a cooperative database  where reactivation or optimization models cull the very top of this file based upon their purchase behavior within the industry. The theory here is that if a customer is highly active shopping in the industry, they are more likely to respond to your particular offer. This is a tried and true catalog method to reactivate lapsed customers.

The issue with this reactivation strategy, in practice, is that most companies will choose one database cooperative to run the reactivation, and will stick with that company until results start to decline, or one of the other co-ops sells them on the premise that they are the better option.  At that point they will test another database, see positive results and make a wholesale switch, starting the whole process over again.

The issue here is that each one of the cooperative databases will find different names through their modeling, even when using the exact same universe of names. The same thing that happens with prospecting, where each of the co-ops will provide quality unique names, applies to reactivation modeling as well. So at a minimum, each of the cooperative databases that are being used for prospecting should be alternated throughout the year, to provide reactivation names for your postal mailings.

The better option is to treat the reactivation sources the same way you would the prospecting sources. Bring in all of the reactivation sources at the same time (same merge), and create unique and multi names which can be managed throughout the season. The unique names should be mailed in the first drop, while the 2x, 3x, 4x multis can be mailed multiple times throughout the season, just as you would prospecting multis.

Below are two examples of client data where we used three co-ops to provide reactivation names.  In the case where there were two time multis, they were mailed in consecutive drops, and the three time multis (Multi Both) were mailed in all three drops of the season. To evaluate performance, this analysis tracks index to breakeven, where 100 is breakeven and represents our acceptable level of performance.

As the analysis demonstrates, all of the unique names that were provided performed at acceptable levels, and in many cases up to 40% of their names were incrementally unique. If only relying on one source of names, this would be an opportunity lost. As expected, the multis, when mailed multiple times through the season, performed at an even higher rate.

While this process mimics what you may be doing for prospecting, this is a less expensive endeavor, since the price to model a house record is lower than to rent a prospect name. The best aspect of this strategy is that more lapsed customers are being reactivated at a profit and are transitioned back into the active twelve month file.

Co-op blog pic

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