Control Direct Selling Expenses
Of course, increasing the amount of prospecting you do will, in turn, boost this key ratio. If you drive the ratio from, say, 30 percent to 40 percent, your profitability will suffer. As I’ve noted in past columns, don’t try to grow too quickly. Rather, grow within your financial means and maintain the proper balance between mailings to your housefile vs. mailings to prospects. If you make a conscious effort to grow at a faster rate, be sure you have the proper amount of financing in place to fund the growth.
Reduce Direct Selling Expenses
1. Cut catalog creative expenses. Minimize version changes and take advantage of re-mails — for example, make cover changes only.
2. Reduce printing and paper costs. Get at least three competitive bids from different catalog printers once every year or two. Change always is difficult, but you should be willing to do so for a difference of 5 percent or more. Following are some ways to reduce your printing costs:
- Ask your printer for alternative trim sizes that can reduce paper and postage costs, especially if your catalog exceeds the Standard A piece rate minimum.
- Prepare your disks correctly. Send them to your printer with all of the necessary files.
- Leverage longer print runs. Use multiple covers and a re-mail strategy to maximize economies of scale.
- Buy your own paper. Caveat: Do this only if your company is of the size and scope to deal with results such as what to do with butt rolls, paper-quality issues, etc.
3. Cut postage costs.
- Consider reducing your catalog paper’s weight. Paper is sold by the pound, so if you use fewer pounds, you’ll save money. And you may save money on postage, providing your catalog mails at the pound rate (vs. the piece rate), i.e., exceeds 3.306 ounces.
- Use a printer that specializes in catalogs. Many companies can put ink on paper, but the efficient distribution of a catalog through the postal system should be an important criterion in your print vendor selection. While a local lettershop most likely will send all mail to a local post office or bulk mail center, a catalog printer is set up to penetrate the postal system by drop-shipping catalogs to various points.
- Explore with your printer the idea of co-mailing your catalog with one of its other catalog customers in order to create a denser mailing list. This will help create more carrier route mail, which enjoys a lower rate.
- Exchange lists when you can, but don’t accumulate exchange balances that you’re unlikely to ever use.
- Leverage the cooperative databases.
- Reduce outside list costs by minimizing the per thousand additional charges for extra selects (e.g., dollar, recency) that you may not need.
- By all means, use your list broker to negotiate base pricing, net arrangements and select charges on your behalf.
- Get competitive bids from at least three merge/purge service bureaus every year or two to be sure the one you use is competitively priced.
- Purge your file. When doing a merge/purge, don’t pass more names than necessary. Also, combine merge/purges when you can. Caveat: This is possible only if your mailings are fairly close together, say, four or five weeks apart. Obviously, you want to mail to fresh names when possible.