Last week, I blogged about getting the most out of your printer. This week, I’ll talk about some things you should never do when producing your catalog and managing your expenses.
The way to ensure your return on investment in the catalog business is to pay close attention to your catalog expenses, namely, printing, mailing, postage, design, prepress (these days called “premedia”), lists and service bureau. Coupled with cost of goods and operating expenses, they are the fundamental numbers you need to work up in order to define your break-even point for a particular mailing.
Carefully handling that break-even point by tightly managing catalog expenses is the key to profitability. Here’s a rule of thumb for you: Every penny you add to your catalog unit cost, means that you’ll need to generate roughly 2 cents more for every book you mail.
Now for the scary story: Last month, a catalog company I did some work for officially closed its doors. Some good people lost their jobs that day, because management ignored some simple rules of the catalog business. Others who saw the handwriting on the wall, left before the axe fell. The company could have been saved. Management had a small but powerful niche to work in, and if it had followed the principles of “cataloging 101,” it might have turned the business around.
Instead, those running the company threw every bell and whistle possible into their catalog creative. They built a catalog that looked more like a coffee table book with ridiculously heavy paper that weighed in at around 8 oz. What’s more, they turned the catalog on its side, and used metallic inks and varnishes. Even worse, when they mailed the catalog, the thing came apart, it was so heavy—and it wouldn’t remain flat. People were receiving only the catalog cover.
Needless to say, the outcome was disastrous, and the company never recovered. While the cataloger eased up on expenses with subsequent catalogs, its costs never came back to the levels that could sustain a catalog business.
The moral of the story: Never seek a “creative” solution to a marketing problem. Another maxim: the 40/40/20 rule. Throw 80 percent of your efforts into lists and offers. If you have the right offering to the right list, your creative almost becomes secondary. After all, your catalog should be an afterthought (I’m making a point here). Develop your book after you have the other 80 percent of your plan together, and only as a vehicle to speak to your customers and prospects in a manner that makes sense to your customers — not just yourself.
Don’t expect killer creative — the 20 percent of the 40/40/20 rule — to make you successful. It’s job is to sell. Find ways to be creative and lower your catalog expenses while increasing the quality of your products, your lists and communications.
This business revolves around simple metrics; break-even points, and something as silly as shaving off a quarter of a penny from your catalog costs can sometimes be a cause for celebration.
More on catalog printing, paper types and costs, and then I’ll start a discussion on selecting the best list broker for your particular type of merchandise.
Got any good catalog-related Halloween stories to share? As always, please feel free to fire off a comment using the form below.
- Categories:
- Creative
- Printing/Production
Jim Gilbert has had a storied career in direct and digital marketing resulting in a burning desire to tell stories that educate, inform, and inspire marketers to new heights of success.
After years of marketing consulting, Jim decided it was time to “put his money where his mouth was" and build his own e-commerce company, Premo Natural Products, with its flagship product, Premo Guard Bed Bug & Mite Sprays. Premo in its second year is poised to eclipse 100 percent growth.
Jim has been writing for Target Marketing Group since 2006, first on the pages of Catalog Success Magazine, then as the first blogger for its online division. Jim continues to write for Total Retail.
Along the way, Jim has led the Florida Direct Marketing Association as their Marketing Chair and then three-term President, been an Adjunct Professor of Direct and Digital marketing for Miami International University, and created a lecture series, “The 9 Immutable Laws of Social Media Marketing,” which he has presented across the country at conferences and universities.