How Catalogers Are Understanding and Responding to the Post-Pandemic World

As the pandemic has eased, catalogers are having to pivot to the new reality of the post-pandemic world. Most catalogers saw significant changes to their businesses with the onset of the pandemic. Now, most catalogers are seeing another shift as demand, response rates, and the basic business models shift again. How can catalogers understand the business climate? Here are some thoughts to consider:

• Your best metrics for how your catalog is doing are your most recent data. How are daily, weekly and monthly sales trending? How do your sales trends compare to your past results? Catalogers that enjoyed a surge in response rate and revenue from the pandemic are frequently seeing their sales and key performance metrics reset. The most common reset is for sales to go back to the pre-pandemic world. Management would like to continue the uptick in sales many catalogers enjoyed over the past two years. In many cases the hope that pandemic sales levels will continue is unrealistic.
• Drilling deeper, how are your buyers responding now as compared to response rates during the pandemic? How do prospecting response rates and prospecting universe sizes compare to the pandemic? Buyer universes and prospecting universes need to be understood separately; buyers may continue traditional response rates or show smaller decreases in response rates. Prospecting for new customers have universes of potential new customers that are often more volatile and variable than the response rates of a cataloger’s established customers. Prospecting universes may shrink as response rates fall.
• What are the rates of acquiring new buyers as compared to during the pandemic? Many catalogers saw big increases in the rate of new customers making a first-time purchase. Key metrics include knowing the rate of new customer acquisition and the cost to acquire new customers.
• Are first-time buyers acquired during the pandemic converting from “triers” into “buyers” and making that all important second purchase from your catalog?
• Some catalogers are seeing their number of brand-new customers revert back to normal.
• Catalogers that experienced big spikes in first-time customers may see these “one and done” buyers being flushed out of their databases as these first-time buyers just naturally age out. Catalogers are effectively using cooperative databases to score these new first-time buyers and pruning back those households that score poorly as mail-order buyers or as buyers within a specific mail-order category.
• Some catalogers saw a boost in business during the pandemic because most stores were closed. Other catalogers saw increases in sales because their merchandise category became more popular during the pandemic. Gardening, woodworking, food and food gifts by mail saw big increases because these merchandise categories saw increased demand during the pandemic. People were stuck at home and looking for hobbies (e.g., gardening and woodworking,) while some categories proved to be good retail therapy for people stuck at home.
• Don’t assume your new post-pandemic reality is going to be stable and static. Response rates may continue to fluctuate. Know and understand your key metrics, such as web traffic, housefile and prospect response rates, average order size, number of new-to-file buyers, and the all-important rate of converting first-time “triers” into two-time “buyers” with a second purchase.
• Inflation pressures are also impacting consumers, especially in the senior’s category. High gas and grocery prices impact those on fixed incomes. So not only is the COVID bump gone, but it's being replaced with declines in response rates (from pre-COVID response rates) for many catalogers. Forecasting response rates for holiday 2022 isn't easy. Catalogers need to forecast what economic conditions will be, as well as have a realistic view of what performance they're willing to accept (as opposed to what they would like response rates to be).
• If you haven’t segmented by “pandemic” product vs. standard product, you should do so. Make sure your buyers are interested in what you “are,” not what you “were,” and chop the product deadweight.
• Compared to email, catalogs have a virtual 100 percent open rate. Consumers read catalogs and physical mail, while they may never see, let alone open, your emails.
• While catalog costs are rapidly rising, digital CPM costs are often unsustainable.
• Catalogers are getting nimbler with their printed formats. Smaller formats and postcards can be effective at driving web traffic. Some catalogers are trimming page counts because of the increasing costs of paper. They're cutting printing and paper costs to reach a larger circulation. With steeply rising costs, it's a balancing act between catalog pages and the size of the catalog’s circulation.
• Catalogers in COVID boom categories are testing modeling responders at the co-op databases who have two-plus purchases to try to omit one-time COVID triers from their model profile groups.
• Modeling buyers at the co-op databases is a method to identify and drop the poorest segments. COVID responders do have a lifetime value so all the new-to-file COVID responders shouldn’t be dropped.
• Catalogers are saving costs by limiting the number of print contacts.

How Should Catalogers Respond to This Post-Pandemic World?

• Your most recent results are your most reliable results for planning your future. Understand your recent results as the starting point for planning.
• What are your profitable prospecting universes now?
• How deeply can you profitably mail your house buyer file?
• What will be your catalog costs after this unending series of paper and postage increases? How can you manage your catalog cost budgets? Cutting circulation? Cutting page counts? Shifting marketing dollars toward proven profitable online programs?
• Plan catalog printing further into the future. Printers are being put on limited allocation by the paper mills so catalogs are needing to commit to press runs earlier. Printers are also filling up and reaching capacity, especially looking forward to the Q4 holiday season.
• Partner with the cooperative databases to score your house buyer files with a focus on finding and pruning unprofitable pockets of circulation. Catalog trends tend to evolve like other catalogers in your merchandise category. Know how your merchandise category is doing. Gardening, for example, was a super-hot market the last two years, but now seems to be returning to pre pandemic demand levels.
• Catalogers are resetting their expectations. The hypergrowth during the pandemic isn't sustainable. Brick-and-mortar stores are back open and consumers have more buying channels available to them. But many catalogers are coming out of the pandemic with much larger buyer files. Managing those bigger buyer files is a key to achieving maximum profitability.

The key to understanding your catalog’s future opportunity is to know the details of how your circulation is responding. Track and try to understand your recent results in detail.

Jim Coogan is the founder and president of Catalog Marketing Economics, a consulting firm focused on catalog circulation planning.