Can Catalog or Internet Offers Make a Difference? (1,261 words)

By Jack Schmid

Imagine the perfect catalog or Internet offer that

•increased response rate 25 percent for the entire mailing,

•improved average order value (AOV) by 20 percent,

•motivated customers to order earlier or more often,

•grabbed the attention of prospective customers and doubled order response and

•made a difference compared to "no offer."

The following deals with the topic of catalog and Web offers (sometimes called the proposition), and looks at the logic behind offers and surveys several catalogs to see some breakthrough offers and how their presentations get noticed.

What Is an Offer?

In formal terms, a catalog or Internet offer is the proposition you make to prospective customers. It is what you are willing to give them in return for their response. There are dozens of variations used by direct sellers, but whatever the offer, it must be in keeping with your niche, positioning and brand.

Does Every Catalog Need an Offer?

I have heard catalogers admit that they are reluctant to consider making an offer out of fear it will give their catalog a cheaper look and it will be perceived as a discount catalog. Yet, some of the most upscale catalogs use techniques and devices to motivate customers and prospects to action. Victoria's Secret, Chef's Catalog and even Neiman Marcus have used special motivational offers to entice customers to read and buy.

What is a Successful Offer?

There are six ingredients of successful offers in catalogs or on the Internet.

1. The offer must pay for itself. If you are giving a discount or a premium with every order, the offer must generate sufficient response to pay for the cost of the offer. It is like adding an extra element, such as a wrap-around, to the catalog promotion. In order for the wrap to be justified, it must produce sufficient orders to pay for itself. Offer costs can be easily calculated to determine exactly what percentage of gain is needed to break even. You need to know the exact "gain needed" and measure and track results or you could be throwing away money.

2. Test offers correctly. You cannot assume that an offer will be an automatic winner. Every offer must be tested against a control group that doesn't get an offer. The test must be carefully planned:

•to mail to exact selections of the same list;

•to mail at exactly the same time; and

•to be of sufficient quantity to be statistically significant.

3. Tracking results is crucial. If an offer test is properly constructed, tracking and measurement are quite simple. Each test and the control must be given unique source codes. Looking at response rate, AOV and sales per catalog will allow you to compare the tests. Small and medium-size catalogs often find that careful tracking of source codes is too difficult. There is little reason to test offers if you can't track results. If more than 10 percent to 15 percent of the orders are "uncoded" or cannot be directly attributed to a specific source code, you have a problem.

4. Offer should reflect brand and niche. Are discounts or sweepstakes right for every catalog? Hardly! If a new cataloger has done its positioning homework and developed a mission statement, offer development is easier.

Offers for upscale gift catalogs are quite different than for the lower-end gift books. Business catalogs or Internet catalogs have different objectives and therefore quite different offers.

Every aspect of how products are priced and how offers motivate different buyer or prospect segments to action must be in sync with your catalog's image and what your catalog stands for.

5. Use offers to accomplish specific things. It's okay to think of offers as a means of accomplishing general objectives, such as increasing response rates or improving average order values, but smart direct sellers are more specific about what offers can and should accomplish. Here are some examples:

•"Early bird" offers are used to get orders in earlier in the response cycle.

•Reactivation offers are used to motivate older buyers and prospects to become active.

•Offers to first-time buyers are used to encourage purchase a second time.

•Special introductory offers are for new prospects.

•Offers to encourage low-average-order buyers to buy at a higher level are used on the next purchase.

•Loyalty offers are made to top customer segments to keep them active or to move them up the loyalty hierarchy.

•Some offers encourage people to order online.

•Some offers drive retail store traffic.

6. Offers must get noticed. An offer is useless if customers don't "get it." If the message is obscurely tucked into the gutter on pages two and three or buried on a flap of the order form, look out! Offers ideally should be explained or at least mentioned on the covers (front and back.) They must be reiterated on the opening spread, and pages two and three. Offers also must be prominent on the order form, especially in the ordering section. If an offer is used to motivate customers to action, it cannot be buried.

Breakthrough Offers

Let's look at a number of recent catalog and Internet offers and apply the criteria above to evaluate each offer. While it is nearly impossible to measure each company's tracking or effectiveness of its testing, the offers can be judged in terms of brand enhancement, clarity of the offer and whether it is creatively presented.

Discount: Stuart McGuire catalog offers a $10 discount coupon for an order of $39.99 or more. The offer has an expiration date. This is well-presented on the cover and is positioned well on the order form, immediately above the order section in the center of the publication.

Internet ordering discount: HARMONY catalog offers a 20-percent discount for ordering from its Web site, www.giam.com. The offer is presented on the front cover. However, there is poor follow-up in the catalog, as the offer is not repeated on either the opening spread or the order form. Even the dot whack on the front cover is a bit subdued.

Free shipping on Internet orders: SPORTIF USA catalog has applied a bright yellow dot whack mentioning its offer on the front cover, but never mentions it elsewhere in the catalog.

Contest: iGo, the "Mobile Technology Outfitter," uses a giveaway or contest offering an $800 digital camera. There is a good inside reference to page nine, where the contest is described and where readers are directed to enter online at www.igo.com. This type of giveaway is probably subject to sweepstakes rules.

Use of a wrap-around: While most catalogs examined used a pre-printed or affixed dot whack to present their offer, SelfCare catalog uses a three-color wrap-around to mention two different offers. The first offer, boldly stated on the front cover, is 25 percent off all regularly priced products on its Web site. This offer is repeated on the inside front cover of the wrap and the back cover. The second offer is for free shipping of orders in excess of $40. The offer detail is similarly presented on the inside front cover of the wrap. Excellent presentation!

My experience has demonstrated that offers work. But, they must be tested and be relevant to your catalog or Internet brand. Remember that there are two parts to a successful offer—the message and the incentive. All offers don't necessarily need an incentive, but you need to test to find out.

Jack Schmid is president of J. Schmid & Associates, a catalog consulting firm in Shawnee Mission, KS. He would love to hear from you. He can be reached at (913) 385-0220.