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June 6, 2011 | by Sandra Beckwith
When Macy’s Inc. was established as a national brand in 2004, its leadership insisted that each store stay connected to its local community. The resulting “My Macy’s” localization initiative gives stores the latitude to be good corporate citizens in their communities while selecting merchandise according to local tastes, preferences and seasons.
The company took this “stay close to your customer” strategy to a new level in November 2010, when it personalized its direct mail marketing strategy to target regional preferences and individual shopper habits, too. Customers who made credit card purchases received catalogs that reflected their specific shopping histories. For example, a shopper who purchased mostly clothing, cosmetics and jewelry received a catalog with more pages featuring those products and fewer pages with items they didn’t normally buy.
Macy’s produced more than 30,000 catalog versions with page counts that varied from 32 to 76. It was more expensive than a traditional one-size-fits-all catalog — the company’s marketers had to create content showcasing four times as many products and match customer data with product options — but the new approach paid off.
“We mailed a traditional catalog to 10 percent of the list and saw enough of a lift in sales from the customized version in comparison that we knew we needed to continue this and get some traction behind it,” says Martine Reardon, Macy’s executive vice president of Marketing & Advertising. The company is doing eight more similar mailings in 2011.
The lesson, according to one-to-one marketing specialist Mark Klein, is that because these mailings generate so much more in sales, the results pay for any extra cost. “When you individualize the mailings, response rate goes up enormously,” says Klein, CEO of Loyalty Builders LLC in Portsmouth, N.H. Individualization, he notes, involves using predictive analytics to offer different products or discounts to individuals.
Creating Custom Mailers on Any Budget – Klein offers the following tips for individualizing direct mail to generate Macy’s results without a Macy’s budget:
- Collect data. Recognize that your customer transaction data is a “gold mine.” If you aren’t collecting that data, start doing so.
- Analyze transactions. “Even if that’s just rudimentary RFM — recency, frequency and monetary value — it’s better than doing nothing, and it’s easy to do,” he says.
- Interpret the results. Use that analysis to understand who is most likely to buy, and mail your offer to them.
- Determine what to offer and when. “If I get an oil change today, don’t send me a coupon for another one next week,” he says. If you don’t have the capability for this in-house, find a vendor that does.
- Use postcards. Klein’s company sends digitally printed individualized postcards to customers of businesses as varied as a regional chain of tire service centers to a medical supply company. The cost? Less than 50 cents per card. The payoff? Klein’s clients generate enough sales in three to six months to cover the entire year’s postcard mailing budget.
“In the past, this process was so expensive that only companies the size of Macy’s could afford it, but automation has changed that,” Klein says. Take it from Macy’s: “If we didn’t think it was a good idea, we would have stopped,” says Reardon.