Where NOT to Cut Costs in Your Catalog Business

Cost cutting among catalog brands has been widespread for the past few years — and with good results. It's kept many catalogers afloat during the recent tough times, and helped build profits as well as operational disciplines.

All that's swell, but beware of going to extremes and overcutting in ways that could harm. Here are four ways that, reliably for most, increase sales and return on investment, and therefore should be on your do-not-cut list:

Testing
Testing is one of your best ongoing tools for increasing sales and profits. Yes, it has more up-front costs than not testing, and so seems to the uninitiated to be ripe for cutting. Don't get sucked into no-test arguments from short-term-thinking bean counters or you'll regret it in the long run.

Affordable tests I've seen with excellent payoffs include the following:

• Mail frequency: Segment by segment you can really fine-tune who needs more catalogs, who needs fewer, and with what timing. Result: maximizing ROI and often cutting costs big time in the long run.
• Offers and order-size hurdles for those offers: Investing in offer tests can deliver big paybacks. They let you fine-tune who gets offers, when and how much margin to give away to each group. Be sure to track one-year response and ROI, which can look very different from initial test results.
• Freshness: That is, when to have new covers, new 2/3's, new page rearrangements. A fresh-looking catalog for each mailing usually lifts response at the small cost of plate changes. I've seen impressive results.

For high returns, I'd way rather put my money into testing than into the stock market.

Prospecting
I've seen catalog brands go into serious tailspins from cutting prospecting too much. It takes years to recover — and some never recover at all.