Fingerhut optimized each customer's catalog stream, not each mailing

Fingerhut mailed up to 120 catalogs a year to each of 7 million customers. With each catalog planned on its own, many customers received redundant and unproductive mailings, and the cost of paper, postage and printing piled up.

IBM and Fingerhut developed an optimization system that selects the most profitable sequence of catalogs for each customer — a mail stream — instead of deciding each catalog in isolation. It runs weekly to keep the plan current.

The move works because a customer's response to one catalog depends on what they were sent before: joint optimization of the sequence captures that dependence, cuts wasteful mail and raises the profit of the mail plan.

Optimize the sequence of mailings, not each catalog

Joint sequencing captures how mailings cannibalize each other

Customer-level decisions replace catalog-level averages

Weekly reruns kept plans fresh

When repeated offers compete for the same customer, optimize the whole sequence jointly; independently optimized touches can cannibalize each other.

The 2001 Interfaces paper documented the system as a winner in the Edelman competition series; Fingerhut continued to run the mail-stream application weekly.