Hello Mr. (Catalog) President …

We all like to have our own ideas reinforced; it's difficult to hear the cold, hard facts. Like successful leaders and managers who are willing to speak up and be heard, I've identified 10 things company presidents don't like to hear. As good managers, it's your responsibility to speak the truth. So here goes:

1. We can't grow if we don't prospect more. A catalog company needs to invest in new buyers. Be willing to prospect to lists performing below breakeven. This doesn't mean the lists you're using are bad, it simply means the payback will take longer, requiring you to make an initial financial investment in your future. Mr. Catalog President, to think that you can grow your catalog business by limiting prospecting only to lists that generate a positive contribution to profit and overhead on the initial order isn't realistic.

2. We should be renting our list to other qualified firms. For a consumer catalog company, I see no reason why you shouldn't rent out your housefile. Mr. Catalog President, your customers enjoy receiving catalogs and are active mail order buyers. You too can generate extra bottom-line income from the rental of these nonunique buyer names.

3. Joining cooperative databases is critical to our growth. More than 95 percent of all catalog buyers already are listed on one or more co-op databases. Your customers are being mailed catalogs regularly, whether you participate in a co-op or not. You're not protecting or shielding customers from receiving catalogs simply by not participating in a co-op database. Mr. Catalog President, to exclude the use of cooperative databases is hurting your growth potential. You're not protecting "your" customers from receiving other catalog offers.

4. We should be willing to rent and/or exchange with our competitors. Why not? If you rent to a competitor, it should be on a reciprocal basis so you too can benefit from using their list. Consider a mail date restriction or an older recency if you feel it's necessary. Be sure your catalog is in the mail first, and monitor and control the exchange balance. Once again, if you elect not to rent to competitors there's a high probability they're working with a co-op database where they'll prospect names anyway. Mr. Catalog President, you have just as much (or more) to gain from renting your housefile to a competitor since they can most likely obtain these same names through one of the co-op databases anyway.

5. It's the merchandise. A successful catalog depends on three things: merchandise, merchandise and merchandise. Typically, gift catalogers will turn over 30 percent or more of their merchandise every season. Fresh merchandise is the key to growth. Mr. Catalog President, your merchandise isn't fresh and exciting. You're trying to pick up too many items. Keep in mind the one-third rule, which says one-third of your products are winners, one-third are so-so and one-third aren't cutting the mustard. Try replacing the losing one-third with new merchandise.

6. We don't have the cash to do that. Growing a catalog business takes funding. The cash flow of a business will determine to a large degree its rate of growth. Postage has to be paid up front; inventory needs to be purchased; etc. Serious money is required to grow a catalog business. Trying to grow too fast can lead to financial ruin. Mr. Catalog President, we need to be realistic about our growth expectations based on what we can afford. We may not have the funding to grow as fast as you'd like us to.

7. Catalog sales from the housefile keep declining. Or are they? Every week when you look at the source code report, it seems that your traceable catalog demand is declining. For example, the housefile that once did $3.25 per catalog is now doing, or so it seems, $2.25 per catalog. But wait a minute. What are you missing? Mr. Catalog President, it's the web. Unless you have a matchback program in place, you don't know how much of the demand that's going to the web should be credited back to your housefile (and prospect) mailings.

8. The prospecting universe isn't unlimited. Most catalogers want to grow. However, they don't always consider the fact that the number of qualified prospect names available to mail isn't unlimited. There may not be a universe of names to mail. Mr. Catalog President, our planning needs to be based on mailing universe counts from the core prospect lists we've been using. Your desire to throw out growth projections is well intended, but it needs to be supported by marketing and circulation data.

9. No, we shouldn't reduce our print quantity because of an increase in web sales. With the continuing increase in web demand, catalog executives are pondering the idea of reducing the number of catalogs circulated. Here's a typical scenario: catalog circulation has increased 20 percent, traceable catalog sales are down 5 percent and internet demand is up 10 percent to 15 percent. The conclusion you might draw from this might not be the right one. Keep in mind that the catalog is the biggest driver of traffic to the web. Mr. Catalog President, the web isn't a field of dreams. Just because it's built doesn't mean they'll come. The catalog drove those buyers to the web.

10.We've peaked! When you think about other markets, the sky isn't the limit. Even when there seems to be an endless number of potential customers, it gets narrowed down by the size of your market, the number of catalog shoppers within that market, your competition and other factors. At some point, your business will mature and it will become more difficult to maintain the same growth rates. Mr. Catalog President, your business has peaked. You've hit the wall. There are several ways to overcome hitting the wall, such as creating promotional offers, using modeling to improve performance, circulating smarter and so on. However, if you've peaked, rethinking circulation strategies may not be enough. You need to open and/or expand your market. Why not consider creating spin-off catalogs, changing your creative for a broader appeal, expanding your merchandise offers in an effort to grow your demographic universe, using the web more? Create your own focus group within your company. Creative ideas and good marketing can often be found internally.

It's important to set realistic expectations for your business. Solicit input from others. Hear people out even when you may disagree with them. Be willing to test and try new strategies. By working as a team and listening to others, you can have a successful catalog company — even in this day and age!

Stephen R. Lett is  president of catalog consulting firm Lett Direct. Reach Steve at steve@lettdirect.com.