How to Evaluate Your Remailing Strategy

Most consumer catalogers remail the same catalog to the same people multiple times. Remailing generally involves making at least a cover change to the catalog each time the catalog is mailed, thus creating the illusion that the catalog is new and different.

Obviously, a remail strategy is more cost-efficient than trying to produce a new catalog for every new mailing. Longer press runs reduce the unit cost per catalog printed.

How many remails should you make, and how much of the catalog should be changed each time? The number of remails will vary among catalogers. Here’s how to evaluate your current remailing strategy.

Boost Revenue Per Catalog Mailed

The goal is to find ways to increase revenue per catalog mailed, which will, of course, improve your bottom line. You can accomplish this by:
—reducing circulation (which I am not necessarily recommending);
—focusing on identifying and then maximizing the best lists;
—mailing to all housefile segments;
—introducing other cooperative databases; and
—doing more computer modeling.

Another key factor to increasing the revenue per catalog mailed involves merchandising changes to the catalog. Marketing and merchandising must work together to maximize the revenue per catalog mailed.

A typical consumer gift cataloger, for example, will change up to 30 percent or more of its merchandise four times a year. Circulation strategy and merchandising combine to affect the revenue per catalog mailed.

A common strategy is to print three or four times a year, with up to three drops per printing. There’s a loss of revenue associated with each remail. The degradation from one drop to the next generally ranges from 20 percent to 30 percent. But the economics associated with a longer press run may offset any decrease in the response rates caused by the remails (up to a point, that is).

Seasonality

Seasonality also is a factor. Catalogers count on merchandise changes to carry them through seasonal variations. When the same catalog is mailed, for example, five times consecutively, what normally happens is graphed out in Charts 1 and 2 on page 40. (Note: The data presented should be considered only as examples.)

Chart 1 shows a 25-percent decrease in the revenue per catalog mailed for each successive drop. In our example, drop No. 1 represents 100 percent. Drop No. 2 normally will perform at 75 percent of the first drop; drop No. 3 will come in at 75 percent of drop No. 2; and so on.

After five consecutive mailings to the same housefile segments, the revenue per catalog mailed would have decreased from $8.83 to $2.79 to the best segments of this housefile.

Part of the decrease is due to seasonality. The remainder results from not changing the merchandise offering. Only the cover is changed each time in this example. Keep in mind the back cover also can be changed for no additional plate costs, because the front and back covers both are on the same side of the web press.

In the example featured in Chart 2 on page 40, we have mailed the same catalog three times only. Merchandise changes then are made to the catalog, and the book is fresh again. From the first printing, drop No. 1, to the second printing, drop No. 1, there’s a 10-percent decrease in the revenue per catalog mailed due to seasonality.

Comparing the second printing, drop No. 1 (Chart 2) to drop No. 4 in (Chart 1) and the second printing, drop No. 2 (Chart 2) to drop No. 5 (Chart 1), you will see a nice increase in the revenue per catalog mailed.

We can conclude that fresh merchandise has had a positive effect on this catalog.

Gain vs. Cost

Next, I will evaluate the gain versus the additional cost of re-merchandising the catalog and going back to press.

Chart 3 details the cumulative revenue expected during the five catalog drops, which amounts to $1,503,238 for the 12-month buyer group shown in our example.

Chart 4 shows the amount of revenue expected from three drops of the same catalog, two separate printings and two additional drops—five mailings in total. This plan generated an additional $412,284 in gross revenue. At a 53-percent gross profit margin, an additional $218,510 of gross profit was the result.

Let’s assume it cost an additional $25,000 to go back on press for the second run. The additional contribution from having two press runs was $193,510 to the company. Therefore, three drops (a reprint with two additional drops) was cost-effective for this company.

Keep in mind there’s a cost associated with the merchandising changes made to a catalog. For example, more staff may be required to source the needed merchandise. Be sure you’ve considered these and other points before making critical merchandising changes.

The issue of how many remails to make is a merchandising question. I suggest that 30 percent of your merchandise should be changed each printing to have the same type of effect. From my experience, limiting the number of remails to three will have a positive impact on your revenue per catalog mailed. The question is, how much?

The recommended number of remails will vary by cataloger. Unfortunately, you won’t know exactly how many re-mails to make until you test.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in marketing, circulation planning, forecasting and analysis. He can be reached at (317) 844-8228 or by e-mail at slett@lettdirect.com.