Catalogue Circulation Planning & Finance Ray Morris-Hill Ray Morris-Hill Associates

2 How do we plan a circulation? Start with your database Maximise the profitable mailings to house file Determine the available recruitment activity and the likely costs of recruiting buyers Mail prospects to the point of acceptable cost per buyer

Ray Morris-Hill Associates3 Simple Database Segmentation Buyers versus Enquirers Recency: 0-6 months, 7-12 months, months etc Frequency: 1, 2, 3+ Monetary: 0-£50, £50-£100, £100+

Ray Morris-Hill Associates4 Database Example - Buyers

Ray Morris-Hill Associates5 Buyer Circulation - Example Mail all our buyers in first drop - 22,732 R all buyers in second drop - 22,732 R best buyers in third drop - 10,000 Mail hot line buyers in drops 2 and 3 - TBD We expect all these buyer mailings to be profitable

Ray Morris-Hill Associates6 Database Example - Enquirers 0-6 month enquirers – 6, month enquirers – 4, month enquirers – 3,754

Ray Morris-Hill Associates7 Enquirer Circulation - Example Mail all Enquirers in Drop ,819 Mail 0-6 month Enquirers in Drop 2 - 6,523 We expect all these enquirer mailings to be profitable

Ray Morris-Hill Associates8 Prospect Circulation Only time to consider lists here Rank list history by the profit or loss of acquiring a new buyer Determine cut-off point by pay back criteria Maximise roll-out to successful lists remembering statistical variation in results

Ray Morris-Hill Associates9 Payback Criteria What is an acceptable cost of acquiring a buyer? Depends on propensity to buy again and the profit from those future orders If I recruit 1,000 new buyers today and mail them my catalogue programme, how much profit will I make over the next 6 months?

Ray Morris-Hill Associates10 Sample Answer to Payback Question assuming 3 mailings in next 6 months Mail Spring Catalogue Drop £15.00/book Demand £15,000 Profit £5,000 Catalogue Costs (£500) Net Profit £4,500 Mail Spring Catalogue Drop £9.00/book Demand £9,000 Profit £3,000 Catalogue Costs (£500) Net Profit £2,500 Mail Spring Catalogue Drop £4.50/book Demand £4,500 Profit £1,500 Catalogue Costs (£500) Net Profit £1,000 Total Profit in next 6 months from 1,000 buyers is £8,000 - £8 per buyer If it cost more than £8 per buyer to recruit, payback will be longer than 6 months

Ray Morris-Hill Associates11 Prospect Circulation Example List PLANB Action Quantity A – 0-12+£3 Mail all available on same select 30,000 B – 0-12-£4 Mail all available on same select 25,000 C – 0-12-£8 Consider tighter select 10,000 D – 0-12-£12 Consider re-test with tighter select 6,000 E – 0-12-£20 Drop - A – 13-24Not tested Test extension 6,000 F Not tested Test 6,000

Ray Morris-Hill Associates12

Ray Morris-Hill Associates13 Summary Start with your own database Maximise profitable buyer mailings Maximise profitable/acceptable enquirer mailings Evaluate acceptable loss per new buyer Rank lists by profit/loss of acquiring a new buyer Mail prospects down to acceptable loss

Ray Morris-Hill Associates14 Further Information Ray Morris-Hill 3 Bickley Court 12 Southlands Grove Bickley Kent BR1 2BZ Telephone/Fax: