In 88 years in business, Hodges Badge Co. has never had an unprofitable year. But in this rocky year, a potentially negative bottom line was too real a possibility for it to rest on its laurels. Like so many catalog/multichannel merchants, Hodges sought to defray costs to ensure that its 89th year would also be profitable.
So Rick Hodges, president of this family-owned, Portsmouth, R.I.-based B-to-B cataloger of ribbons, rosettes, medals, presentation silver, sashes and buttons, targeted his biggest cost center — postage rates — as the focal point for potential savings.
His goal was to cut costs without reducing the circulation of his catalog, which accounts for more than 70 percent of company sales. His solution: change the catalog’s format to a slim jim, which created cost savings while allowing circ to remain stable. Beginning with its general athletic book this past August, Hodges Badge began mailing slim-jim catalogs.
Despite this year’s difficult environment, the company is roughly 4 percent ahead of last year’s sales total of around $14 million.
“We were looking ahead, trying to figure out how we could get our hands around the postage costs,” Hodges says. “And this was the only thing that really came along, because when we started talking about reducing circ to keep things under control, we didn’t really like the effect that we thought that that was going to lead to: reduced sales. I don’t think I can replace the catalog with the Web yet. So it wasn’t an option to say, ‘We’re going to cut the catalog by 50 percent and double our e-mailing.’”
It’s not as if Hodges Badge made the transition to a slim-jim format without any trepidation. While concerned the move could hurt response, Hodges says the company didn’t have a choice — increased postage rates were eating away at its margins.
On top of that, Hodges Badge Co. was unable to test-mail a segment of its housefile the new catalog to gauge response efficiently enough, Hodges laments. At $14 million in sales and circulation of less than 400,000 catalogs last year, the company’s size is a liability in this case. With only a 25,000-book mailing of its general athletic catalog to kick off the new format, Hodges reasoned a test wasn’t cost-efficient.
“We looked at the cost of doing the book the old way vs. the new way and printing both, and I just decided that was something we couldn’t afford to absorb,” he says, regarding the production costs associated with printing the books in such a small quantity in each format.
So Hodges went against conventional catalog wisdom and ruled out conducting a test because it doesn’t mail enough books to bear the expense. Plus, the data wouldn’t yield a convincing enough response. “Think about what the production cost is to do all that work twice and only run 25,000 books,” he says.
One advantage Hodges Badge foresees from the new slim-jim format, however, is how the products themselves appear in the catalog. Most of the merchandise is long and skinny — ribbons, rosettes, medals — and in many cases better-suited for the vertical slim-jim format than a standard catalog.
Gives Customers a Heads-Up
The first slim jims started reaching customers in mid-August. A few weeks prior to the mailing, Hodges Badge sent an e-mail alerting its entire housefile of the format change. Rick Hodges also announced the change on his personal blog, with links for customers to preview the redesigned catalogs.
Although the company was still gauging response to the first slim jims at press time, Rick Hodges says he’ll be patient before making any future format decisions. The company plans to give the slim-jim format at least 18 months to prove its value before even considering another format change.
Regardless of response and beyond the postage savings, the slim jim has yielded at least one other key benefit: The format change forced Hodges Badge to address and upgrade the catalog’s creative, an area that had been more or less neglected for years. This was welcome news to Art Director Sue Brescia, whose department was often hamstrung by the company’s reticence to change the book’s creative.
Given the freedom to design the catalog as they saw fit, Brescia and her staff went to work. First on her agenda was conveying to customers the quality of Hodges’ products in the catalog. “We have the most beautiful products around,” Brescia says. “Our materials and how we produce these products … we really care about attention to detail.”
To convey this message, product photography shots were redone in an “up close and personal” style to highlight their detail and texture, particularly the medals. The company also updated the copy from its prior role of providing technical product specifications (e.g., “this rosette has a 4 inch rosette top with 2 by 9 inch streamers”) to more of an emotional pitch to customers. It resulted in a very clean book, according to Brescia, more so than in previous years. “Previously, there was no feeling to the catalog, and it didn’t convey the care that we put into the product or the quality of the product.”
Grazing on BlueSky
Hodges Badge’s Portsmouth neighbor BlueSky Brands was forced to close its doors this past March after failing to secure additional financing for its floundering operation, which included the Paragon Gifts, Bits and Pieces, National Wildlife Direct, and Winterthur catalogs. Hodges Badge seized the opportunity and brought in some of the now-defunct BlueSky’s higher-level talent, including Jean Giesmann (creative), who has since joined Uno Alla Volta full time; Gary Smith (marketing); and Eileen Houlihan (marketing) — all in freelance/advisory roles. In fact, Houlihan became the first freelance copywriter in the company’s history.
“Being a small cataloger in a state where there aren’t a lot of catalogers left, one of the problems you have is finding outside talent,” Rick Hodges says. “Right after BlueSky’s demise, we talked to Jean to get her to come in. Thanks to that connection with Jean, we were able to access Gary for help with our database and list management, and Eileen for copywriting.”
Giesmann, in fact, was responsible for a large portion of the creative redesign. “When you have somebody with a fresh pair of eyes come in, people listen,” Brescia says. “And that’s what Jean did.”
Circ Strategy Overhaul
Whereas Giesmann helped with the catalog’s creative redesign, Hodges Badge turned to Smith to build a customer database that would segment and prioritize customers based on their value to the company. Hodges produces individual books for the equestrian, fair, dog show, school, general athletic, gymnastics and swimming markets. The equestrian market accounts for the largest portion of Hodges’ sales at about 40 percent. Despite this dominance, the company had been primarily using the same mailing strategy for all of its customers, no matter what topic.
“All customers and leads were being treated equally,” Smith says. “Now we’re changing our contact and segmentation strategies so they focus on the higher opportunity customers and leads from the data research we’ve just done.”
Previously, the data was in several different places. By compiling it in one database, Hodges Badge has gained a common business understanding of its sales results, Smith says. The company plans to test its analysis in the upcoming fall/holiday season when some of its larger mailings are scheduled.