After the Hike: Mailing Strategies

This summer, catalogers will get hit with yet another postal rate increase. The U.S. Postal Service (USPS) plans to raise rates 7.7 percent on average, with a 6.2-percent increase for catalogers who presort mailings by carrier route.

So, what’s a cataloger to do? Catalog Success asked three industry veterans for their strategies on saving costs following a postal hike.

Alan Rimm-Kaufman, vice president of marketing at Crutchfield catalog

Q: In what ways will you save money after the postal hike?
A: On mailing catalogs, the two big things are to mail to better names and to have a more efficient book. It’s really back to basics when the economy is like this. We’re really homing in on the best parts of the list. The largest thing you can do is control whom you mail to.

We aren’t cutting circulation as much as reallocating. We’re moving from worst- to better-performing names. We’re optimizing the housefile better and prospecting better.

To make the book more efficient, look at paper weight and quantities. We have tested [taking] out the order form. We started by testing out the envelope, and then we tested out of the order form. Now it’s simply a page in the catalog. In the test, we found that it was just a repository of ordering information.

For us, it was successful. It saves us 2 to 5 percent annually.

[Catalogers] also should try to optimize production and printing. Scrutinize your contract. What does it cost for a dot [-whack], a fake dot, a card? We surf the markers around the shoals of high prices.

Q: What are you looking at differently in terms of postal products?
A: We’re buying more NCOA [National Change of Address] and third-party products. We’re looking at every postal discount available: mail strings, add-a-names, complete carrier backs. If you’re a little catalog, some of these things don’t work for you. We put out about 25 million, so everything we do we save a percentage here and there—and they add up.

Q: What types of hygiene methods are you using for your list?
A: Simply don’t mail to bad names. Look at what every piece of the catalog and marketing is adding, and especially look at square-inch analysis.

We NCOA seven times a year—every mailing. And we merge/purge with CCOA [change of addresses from credit card data] through Experian. If you do the economics, it’s a no-brainer.

Q: Are you using more online marketing?
A: We use e-mail as vitamins: They don’t make the plant grow, but they help the plant grow stronger. We do e-mail creative and marketing in-house, so there are no costs. Given that we’re selling high-end luxury products, e-mail doesn’t do the heavy lifting that the catalog does.

Q: Have you considered using sale catalogs that use lesser-quality paper and are smaller in circulation?
A: We have a 150-plus-page flagship that we put out four times a year. And then in between we use sales flyers four times a year and one for the holidays. Those tend to go to our best buyers and our freshest requesters.

We put deals in them, a product no one else has, where we own the market and at a great price. We put it on the cover. It’s more about brand on the bigger book. The sales flyers are more promotional.

Bill Ness, chief operating officer, Road Runner Sports catalog

Q: How are you gearing up to save money on your mailings once postal rates rise?
A: A little change in timing, not in method. We’re mailing a major catalog the day before the postal rate goes into effect, a few days earlier than we had planned.

Q: Have you considered reducing the weight of your catalog, and if so, how will you do that?
A: Not at this time.

We’ve reduced weight in the past with success. We’re not going to reduce weight any more due to our testing of less weight and poorer performance/response rates. We’re already on the lowest grade paper (#5).

Q: Will you use any of the following options: using different paper, cutting page count, decreasing circulation?
A: No. We prepared the 2002 budget with the assumption of a rate increase.

We also were able to get a significant reduction in paper costs and advertising production for 2002. And we anticipate additional paper-cost reductions. These will offset the increases in the second half of 2002, as we’re benefiting in the first half of 2002 already.

Q: Will you change your method of delivery for products?
A: Regarding postal rates for outgoing packages, we’re considering switching to any and all carriers from USPS.

This rate change affects us in a big way as most of our outgoing packages are less than 5 pounds and go coast to coast. With the new rates being “zone-sensitive” under 5 pounds, we’re going to see higher-than-usual increases in rates.

Q: How does your versioning affect your ability to decrease postal costs?
A: As part of our merge/purge, our mail is sorted to give us the most efficient postal rate. The printer mingles the mail with other mailers’ to ensure we get the best price and delivery.

Q: Has RFM (recency, frequency monetary) value or CRM (customer relationship management) become more important in deciding to whom to mail?
A: In the near future, we’ll be able to improve our ability to eliminate non-productive names and perhaps deliver a smaller-size book to targeted customers.

Q: Will you prospect differently? To fewer names and/or different profiles?
A: The postal rate increase will not affect our prospecting strategy.

Q: What are your top three recommendations to catalogers for cutting postal costs?
A: First, work on your paper costs to reduce postal costs.

Second, evaluate the weight of your paper; test lighter paper but do not sacrifice response rate for paper costs.

Third, take a more active role in postal DMA [Direct Marketing Association] forums and communicate your concerns to the commission. In light of this increase, I’m sure there will be ample opportunity to express opinions.

Alan Paggao, campaign manager for PCMall, MacMall and Ecost catalogs

Q: How are you gearing up to save money on your mailings once postal rates rise this year?
A: I’m requesting efficiencies from the paper mills.

Q: Have you considered reducing the weight of your catalog, and if so, how will you do that?
A: Paper prices are going down but not on a continuum. We’ve tested almost every stock. We try to remain as thin as possible. We’ve changed different paper stocks on our outside signatures of the catalogs.

We put our top-selling SKUs on the heavier stock, and inside use a different stock to lower the base weight. This way we can send out a 92-page book at the same weight as a 68-page book.

We’ve tried different coated papers and have had good success with coated SCA to SCA-plus. If you have a very color-sensitive product I wouldn’t recommend it. We’re not that color-sensitive and are more worried about decreasing base weight.

We’re going out to prospects on lower-grade stock, and we put only our top-selling items in those catalogs. We’ve capitalized on our drive to the Web with smaller-page books that get rid of the fat.

For us the catalog is a reminder and many customers reference it.

Q: Are you using any technology to help streamline your mailing operations? And if so, what are you using?
A: About five years ago we revamped our production to capitalize on pool freights and to take advantage of postal pre-sorts. We have multiple titles, so we rehashed schedules to optimize efficient co-mailing savings. The advantage is you can go over the postal piece rate minimum. We save about 2 to 3 cents a book; that’s $6,000 a mailing and that adds up.

Q: Are you planning to clean up your database for more accurate mailing?
A: CRM-land [customer relationship management] is a huge piece in saving costs. We’re in the middle of understanding our data more intelligently. If you can get a good understanding of who [your] customers are and who is not responding, then you can get rid of those who have limited to no activity—take them off the whole mailing list.

Q: What are the top tips you can offer your fellow catalogers that will help them reduce postal/

mailing costs and staff time?
A: First, consider co-mailing, especially with your own titles, to get a smaller mailing—say, 50,000 pieces—presorted on its own. This is likely to have no Carrier Route qualification. A larger mailing—say, 750,000 to 1.5 million—already has enough pieces to qualify for some Carrier Route qualification.

Drop shipping, or pool shipping, among several mailers can save an average of $7 to $10 per thousand.

A second tip: Internet e-mail marketing. We’ve had this in place, and it’s cost-efficient for us. We’ve increased our catalog circulation because it drives traffic to the Web.

Melissa Sepos, an editor at American Lawyer Media, is the former managing editor of Catalog Success magazine.