Grow Sales and Your Bottom Line

By Jack Schmid

One way: Test insert media and other options.

Particularly challenging in today's business-to-business (b-to-b) catalog environment is testing new ideas that can have a positive impact on future revenues and profits. And if you have a big, perfect-bound catalog, effective testing can be even more problematic. But you have alternatives that can help you present new merchandise and offers or target a special message to a specific customer segment.

In Your Creative

While consumer catalogs have used order-form changes to test offers, messages and even products, b-to-b catalogs — with their more common single page, back-of-the-book order form — usually must find other ways to test new ideas. It might surprise you to learn, however, that printing, binding and blow-in technologies have brought additional options in insert media — options you can use in your testing initiatives.

One caveat: During the testing phase, stay focused on your overall goal. When exploring separate bind-in inserts or catalog wraps, for example, be sure your base or control catalog isn't being changed or affected by the testing. Any special promotion, then, should be in addition to your base catalog.

That said, here are three options to try in your creative:

1. An inserted signature (8, 12, 16 or more pages). This can be put into a perfect-bound big catalog or inserted between signatures of a saddle-stitched book. To help the insert stand out from the rest of your catalog, some companies prefer to change page size, use a different type of paper or design the pages using a color palette different from the main book. The good news about an inserted signature is that there's quite a bit of flexibility about where to put the insert: center, inside or between other signatures.

2. A wrap-around or "outsert" technique can be comprised of as few as four pages or an entire signature. The wrap on a saddle-stitched catalog is just that: half the pages in the front of the catalog and half in back. In a perfect-bound catalog, the pages can include the front cover, with additional pages inserted as the opening section of the catalog.

3. Blow-in technology is much more limited in size and application, but it's most often a card-type format with a special offer or message inserted, perhaps in several places, in your catalog. One of the most common b-to-b applications using blow-ins includes directing customers to the Web for special sales or events.

Goal-setting

The objectives of an insert or wrap should include:

- introducing a new product line or subcategory;

- presenting a special message to a customer segment;

- highlighting a new pricing concept or special offer;

- introducing a loyalty program; and/or

- explaining a new customer service feature.

Accurately measuring your result is just as important as knowing your objective. Why go to the trouble and expense of a special catalog section without finding the answer to "Did it work?" To effectively plan your test, you must identify all costs, create a break-even analysis, project results and define the criteria by which the insert will be judged.

Let's look at examples of each of these objectives, how catalogers generally apply their skills to them and how to measure results for each.

Test a new product category, line extension or spin-off catalog candidate. Every cataloger wants to test product line extensions of already successful categories. After all, this is how you grow your business, right? A safety-products catalog might introduce, say, a new line of protective glasses. An insert can be an ideal way to give the items a special introduction and appropriate promotional positioning. It also can be used to highlight a merchandise category that might have potential for a spin-off book.

Measure results: Look at sales and contribution per item, page and the insert. Do a mini-square inch analysis and compare it with pages in your main catalog.

Test special messages to targeted customer segments. A circulation scheme outlined in the chart "Circulation-Testing Plan" used an outer wrap and cover change to vary its message (and offer) to various segments of its housefile.

As you can see, the key "problem" groups included first-time buyers, inactive buyers, low average order value (AOV) buyers, gift recipients and catalog requesters. Each of these customer segments got a special message and offer to motivate them to a desired action.

Measure results: With a control offer from the regular catalog (and no offer), determine if the special wrap, message and offer are beating the control and paying for the additional cost of the outsert or wrap. Proper customer data segmentation and insert coding are important if you want to see decent measurements.

Test a new pricing scheme. It's expensive to do split price testing in cataloging. Even a simple black plate change can cost thousands of dollars in printing. Why not test a pricing scheme in a specially designed insert? Perhaps you're using a single-price concept and want to introduce a multiple-price scheme (e.g., the more the customer buys of an item, the lower the unit price). Test it in an insert.

Measure results: In an ideal test, you'd include the special merchandise section with regular pricing in the control catalog, and test an insert with the special pricing. You want to measure gain in unit, page and overall section sales vs. the control.

Test a new special offer. Many b-to-b catalogers want to test variable offers to their control catalog. You can do this, too, with a cover change, cover dot whack or a special multi-page insert in the book's opening pages.

Clearly it's important that the new offer message stand out and be understood by customers. That's why using covers and opening pages are critically important to conveying this message.

Consider testing multiple offers against one another to discern which have the most strength. For example, you could try the following:

Control — No offer

Test A — Free shipping and handling

Test B — Free electronic product with any order of more than $200

Test C — Graduated premiums with orders of more than $100, $200 and $300

Test D — Free gift certificates for video rental and pizza with each order

Measure results: Compare results of each test against the control (no offer) and determine gain. A break-even analysis will tell you what percentage of gain you'll need to cover the cost of each test.

Test a new customer service feature. Perhaps you're opening a new warehouse to provide better service to a section of the country. Or you've launched an updated Web site or phone service to improve customer ordering and order turnaround. Let customers know! An insert that stands out in your catalog will improve readability and customer comprehension.

Measure results: This is a bit more difficult to measure. Orders taken per month vs. a comparable time last year is one way to measure the impact of a new service such as I've described above.

Test a new customer loyalty scheme. Introducing a loyalty program is a much bigger deal that takes a lot of planning and research before implementing. If all your customer research indicates that a loyalty program will improve retention and lifetime value, by all means, do it. An insert and special wrap might both be used to introduce such a program.

Measure results: It's difficult to execute an A/B test on a loyalty program. Use the results from your previous focus group sessions as well as customer research to determine if such a plan will produce the results you want.

In summary, explore the use of catalog inserts and wraps to help you grow sales and boost profits.

Jack Schmid is the founder of J. Schmid & Assoc., a catalog consultancy. Call (913) 236-8988.