Lessons Learned From a Lifetime in the Catalog Business
I began my catalog career over 40 years ago. I've learned several lessons over the years about the dos and don'ts of catalog marketing. I'd like to pass along some of what I've learned and the principles we follow today as we advise our customers. I've seen companies with the best of intentions make decisions opposite of what they should have done. Often these decisions have been an attempt to save money (or at least they thought). In many cases, adding rather than reducing is the better choice.
1. Slash-and-burn theory: You cannot "slash and burn" your way to prosperity. By this I mean you can't cut circulation and direct selling expenses as a way to improve profitability. Yes, you need to mail "smart," but cutting circulation simply to reduce your printing and postage bill will often result in a downward spiral and the loss of contribution dollars to your bottom line. What's important is how you go about trying to reduce direct selling expenses. For example, when was the last time you went to the marketplace to obtain print bids? Or looked into purchasing your own paper? There are many ways to save money other than the slash-and-burn approach.
2. Seasonality factors: You need to go fishing when the fish are biting. Seasonal factors play a huge role in determining your level of circulation, both housefile and prospecting. You can't make consumers buy. Therefore, it's important that you maintain the right level of circulation depending on the time of the year. Typically, holiday is the best season for most consumer catalogs. Fall performance represents 70 percent to 75 percent of your holiday results. Spring is 60 percent to 70 percent of the response you'll get during holiday. Summer is the least responsive period, generating response rates 55 percent to 60 percent of holiday. Maximize your results when response rates will be at the highest level and don't force the issue.
3. Frequency of contact: It's difficult to overmail your housefile (or at least some segments of it). Therefore, don't reduce the number of mailings to your housefile as a way to save money. Cutting out drops to your own customers will cause your contribution to profit and overhead to decrease. Not all segments of your housefile are mailed every time. The more recent cells can be mailed more frequently and strict RFM guidelines should be followed. Remails to your housefile can be done cost effectively without the added expense of producing a completely new catalog.
4. Prospecting: When should you stop prospecting? Never! The attrition rate of your housefile will help determine the desired level of prospecting. A catalog will grow by approximately the same percentage increase in your 12-month buyer file. Therefore, if you're prospecting and growing your buyer file, your business will also grow.
5. Page count: Don't cut page count as a way to save money. Cutting pages will reduce sales and contribution to profit and overhead. Look for ways to increase, not decrease, page count. If your catalog weighs less than 3.1 ounces, cutting pages will impact your bottom line even more. Your postage costs will remain the same and the few dollars you save on paper and print manufacturing will be minor compared to the loss of revenue and contribution dollars.
Make the right choices. Learn from my experiences. Knowing what to do is as important as knowing what not to do. I hope these lessons learned help you improve the results of your business.
Stephen R. Lett spent the first 25 years of his career in executive-level positions at both business-to-business and business-to-consumer catalog companies, including Monarch Marketing Systems, Tandy Corp., Edmund Scientific Co., The Drawing Board and Country Curtains. Additionally, he owned... the Writewell Co., and started (and owned) The Write Touch.
He also taught direct marketing at Indiana University. Today, Steve owns Lett Direct, a catalog and internet consulting firm specializing in circulation planning, plan execution, analysis, as well as internet marketing and email marketing. He’s the winner of a Silver Mail Box Award from the Direct Marketing Association (DMA), is a past chairman of the DMA’s Catalog Council, and a former member of the DMA’s Committee on Ethical Business Practices. Steve also writes a monthly column in Catalog Success Magazine.