Ask the Right Questions to Get Your Metrics Positioned

Whether your catalog company is at $10 million or $150 million in revenue, there are questions about the key metrics of cataloging and Web marketing you should ask yourself — and know where and how to find answers — if you expect to regularly generate above-average profits.

Here are the key areas; some are in the form of questions that I use when helping direct marketers prepare their strategic plans, raise growth financing or sell part or all of their business.

Merchandising

Q1. Describe your merchandising and buying function. Is it a “one-man show?”

Q2. Who attends trade shows, makes overseas sourcing trips, selects final products? Is there a true No. 2 lead merchant?

Q3. Discuss your best merchandise growth categories and their estimated gross profit margins.

Q4. What are your total sales and gross profit dollars from exclusive items over the past few years?

Q5. Same question for your import program: Are the resources in place to expand the percentage of imports you sell? Are the people you work with overseas agents or your employees?

Q6. Who are your top two competitors? If they’re larger or have greater growth, what resources do they have that you don’t?

Q7. If you could select a perfect partner or new parent company, what resources would either of them best bring to you (e.g., qualified prospect names, economies of scale in freight out, catalog production, etc.)?

Marketing, Prospecting

Q1. What percentage of your total mailings are to prospects? (Note: Although this varies by business size, product line and the amount of Web marketing done by the cataloger, it generally should be 35 to 60 percent for companies whose 12-month customer list is growing.)

Q2. Has your 12-month buyer file been growing at least 4 percent per year? If not, why?

Q3. Can you prospect at, or above, a breakeven defined as contribution to fixed expense as equal to zero? In only your primary season? Or during your off-season for your best lists? In both co-op databases and regular rental names?