Ideas for Small or Start-up Catalogers (1,131 words)

By Phil Mininx

Growing a new or small catalog takes time, energy, commitment, passion, risk and even a little luck. As it begins to grow, or hit some natural plateaus, there is often something fresh or innovative a cataloger can do to move the needle.

Yet, many of these actions are not practiced by start-up or small catalogers because of the additional time or resources required, or simply because everyone has been too busy getting the business off the ground.

However, if yours is a small- to medium-sized catalog, I encourage you to read the seven ideas below to make sure you're doing some or all of them. If you aren't, commit to implementing at least one in 2001, and I am confident you'll see measurable business improvements. These aren't radical concepts, but they're practices that will help you break through to the next level of success.

Idea #1—Capture E-mail Addresses

This may sound rudimentary, but there are many catalogs that still don't have e-mail addresses for very many of their customers. For effective outbound e-mail campaigns, you'll need a good number of valid addresses. I recommend to my clients a three-step process:

•Capture the address during order taking by asking for customers' e-mail addresses to notify them when their packages have shipped or if you have questions about their orders. You'll get a much higher capture rate by labeling it as a customer service.

•Send an e-mail following their orders, asking them to opt-in for e-mail specials, sales, discounts, etc.

•Promote the list with an offer.

Idea #2—Analyze Your Merchandise Performance

Effective merchandise analysis can dramatically impact your product assortment and your ability to grow your business. You must know which categories and individual products are profitable and where your potential for success is highest. In the developmental stages of growing a catalog, you must know where to take your offer to get the best results (a combination of demand and dollars). This can mean the difference between struggling to break even and being profitable.

At a minimum, do the following:

•Perform a square inch analysis by season. Start with the gross margin dollars of each item, and then subtract its pro-rata portion (based on the space it took in the catalog) of the printing, paper and postage costs for that mailing or group of mailings. Slice this information by page, category, price point, etc. This will tell you not only which items are profitable but which are your best categories, pages, price points, etc.

•Know from where your demand is coming. Look at your merchandise results not only by dollars, but almost more importantly, by units. This analysis represents the things your customers are most interested in (i.e., your response rate). Let this guide new product offerings, category growth, etc.

•Watch your top items and make sure they continue to improve. If you see a decline, fix it before it's a problem or start working on a replacement.

Idea #3—Track Your Orders

Strive to track 90 percent of your orders using a source code. This information helps you handle response from your next mailing. Teach your TSRs effective ways of capturing source codes, and make sure they understand the reasons for doing this. The more they know about how the information is used, the harder they will try. Letting 20 percent to 30 percent (very common) of your orders be untied to a source code can cause you to make bad decisions or miss important opportunities.

Idea #4—Mail Your Customers Based on RFM

I can't stress enough how important this is. Even as a relatively new cataloger, you need to do a Recency, Frequency, Monetary value (RFM) chart to understand the health of your housefile and to think about how to move more customers up the ladder to better segments. An RFM segmentation enables you to mail to your best customer segments more often, and mail your marginal or unprofitable customer segments less. It will give you a road map for developing offers that target your unproductive segments and entice them to become better customers. In many cases, reactivation is more cost effective than prospecting. Even if you are so new that you're still mailing your entire housefile, make sure you can segment by RFM and update frequently—you will need it!

Idea #5—Add Another Mailing to Your Best Customers

Unless you're already mailing at least eight or nine times a year to your best customers, add another mailing during your most productive season. Even if it's only a re-mail with a cover change, you may spin off enough profit to fund more prospecting, or allow that profit to drop to the bottom line. Don't mail everyone—just those who can produce an acceptable profit percentage.

Idea #6—Put a Communication in Your Outbound Packages

The most exciting time in which you contact your customers is when they open their catalog packages. Most of us who order by mail love the moment when the UPS driver arrives, or when we come home from work and see that brown box on the doorstep. Take advantage of this moment by talking to your customers when they are happiest. At a minimum, give them another catalog, sale insert or order form. But why not put a nice note inside telling them how much you appreciate their business? Welcome new customers to your business and say "Thanks!" Even inserting third-party offers can be beneficial if they're relevant to your customers.

Idea #7—Test, Test, Test

Testing is the lifeblood of any direct marketing operation. Make sure you've set up a program to test something in every mailing you make. Test paper, timing, number of contacts, new products, new product categories, cover concepts, repaginations, offers, page count, etc. You won't know what opportunities you're missing if you don't test. But make sure you know up-front what you're testing, what your hypothesis is, and what will happen if the test is fruitful. Don't bother testing something if you can't roll it out. Also, make sure you construct the test so you can read the results cleanly. Don't test more than one variable at a time or test something that has subjective results. For example, if you don't understand the difference between the cover concepts, cover tests can be a disaster to read. If the execution is different, such as using a lifestyle shot on the cover but using two different models, you won't know how to translate the results in the future.

Hopefully, you found one or more ideas to undertake this year and break through to a new level of success in 2001.

Phil Minix is executive vice president and general manager of J. Schmid & Associates. He can be reached at (913) 236-2408 or via e-mail at philm@jschmid.com.