Consumer Prospecting with Fewer Pages

The idea of creating a smaller prospecting catalog (same trim size but with fewer pages) full of best-selling pick-up items is appealing and sounds like a logical thing to do for a consumer cataloger. It saves money (or so it seems), and in theory has little, if any, impact on performance. But in practice, this generally isn’t the case.

This month, I’ll discuss why it’s more cost-efficient for consumer catalogers to prospect with more pages and the advantages of doing so from a financial perspective. In other words, I’ll examine why you should prospect with the same catalog you mail to your housefile.

Pages Boost Response

Having more pages in your catalog will increase your number of orders and revenue. This assumes your page density remains the same. Adding more new items to your catalog and keeping the page density — i.e., a larger store — will increase revenue.

It would seem a catalog that included only bestsellers would perform so well it would offset the falloff from a catalog with fewer pages. At first, this might be so. But prospects will tire of seeing the same products time and again.

When prospecting, you’re continually mailing many of the same outside names. In fact, if you’re actively mailing prospects, some of those people will see your catalog as often as your customers. Therefore, the importance of introducing new items to stimulate sales holds true when mailing to prospects, for the same reason you want to change the catalog when mailing to your housefile.

Whether you’re considering a smaller version of your catalog, including new and pick-up items, or a “best of” book, keep the following in mind: When adding pages to your catalog, the revenue will increase by half of the percentage increase in pages. That is, if you increase your page count by 10 percent, you’ll see an increase in sales of about 5 percent. When you add pages, you improve performance; if you reduce pages, performance declines.

Let’s look at the numbers. In the pro-forma income statement, you’ll see the expected prospect performance at 48 to 80 pages. If your main catalog is 80 pages and you’re considering mailing a prospect book of 48 pages, you can save $135,000 on a circulation of 1 million catalogs. Pretty nice, right? However, you could lose more than $333,000 in sales and more than $37,333 in profit contribution, as the chart shows.

Take-away tip: When considering prospecting with a smaller catalog, don’t look just at how much money you’ll save on paper, printing and postage. Consider the whole picture.

12-month Impact

The impact of lower prospect performance carries through to future mailings. During a 12-month period with a mailing frequency of six times per year, the impact of mailing a 48-page vs. an 80-page catalog on the initial mailing is even more apparent.

Since this example assumes all housefile buyers will get an 80-page catalog regardless of what their initial catalog page count size was, the only increase in catalog expense is due to the difference in the number of new buyers and therefore, circulation. As you’ll see, using this example you could lose $100,000 in sales and about $40,740 in 12-month profit contribution (in addition to the initial loss).

The greatest risk in cutting the page count is the potential shrinkage of your housefile due to lower performance rates, i.e., lower response. Therefore, if you reduce pages, you must increase the overall amount of prospecting to maintain the level of new buyers brought onto your housefile. To do this, you’d have to mail lower-performing prospect names, which would reduce your overall performance rates even further.

Catalog printing, paper and postage expenses represent, on average, about 80 percent of total catalog selling expenses and 20 percent to 25 percent of net sales. I’ve always emphasized the importance of maximizing page count. Pages do increase the amount of revenue generated per catalog mailed. Adding pages, while ensuring the paper and press manufacturing are efficient, can lower your incremental break-even point while increasing revenue.

Adding pages is cost-effective (assuming you have the merchandise). What’s more, producing two different catalogs will increase the unit cost of the version with more pages, because you’ll have reduced the print quantity in favor of the small prospecting book. This will increase your overall break-even point for the catalog you mail to your housefile. This also must be taken into account when doing your test and cost analysis.

If you decide to mail a smaller prospect catalog with fewer pages, create a reliable test and try to discern the long-term impact. As you can see from the example on page 32, prospecting with a catalog that has fewer pages than your main book is risky. Yes, it sounds like you’ll save money upfront, but in the long run, it’ll cost more, and you’ll have less new buyers to add to your housefile.

In short, think long and hard about prospecting with a different catalog than the one you mail to your housefile.

Stephen R. Lett is president of Lett Direct a catalog consulting firm specializing in circulation planning, forecasting and analysis. He spent the first 25 years of his career with leading catalog companies, both business-to-business and consumer. He can be reached at (302) 541-0608, or visit his Web site at www.lettdirect.com.