Nine Catalog Management Mistakes to Avoid

We’ve all done dumb things that I’m sure seemed smart at the time we were doing them. I look back to my 33-year career as a cataloger and can think of things I did that were really silly. It’s all part of the learning experience.

This month, I’m taking a slightly different approach from my normal columns. At the suggestion of my friend and client Shep Moyle, president and CEO of Stumps catalogs, I’ve devised a list of nine catalog management mistakes to avoid.

1. Don’t hire experts, even when needed. Or hire/fire the wrong person.

I’ve seen this happen: A successful cataloger with strong financial controls and disciplines doesn’t hire a controller or qualified financial person when such a professional obviously is needed. Indeed, in some cases, the need for a financial expert isn’t even recognized.

Yet well-run companies with sound financial expertise in house enjoy, for instance, financial statements ready by the fifth to 10th day following the month’s end (or certainly on a timely basis). They prepare cash-flow statements, get bids, issue purchase orders, approve invoices, etc.

Or perhaps you should’ve hired someone with catalog experience rather than promoting from within. Too many times catalogers think they can save time and money by promoting a person internally rather than going outside for the best, most experienced candidate. Promoting from within certainly is a good idea, as long as you’re not making a compromise just to fill a position quickly and save a few bucks.

Always fill key positions with the best people you can find, even if it means spending money to hire a professional recruiter. Again, don’t promote blindly or hire just to fill a slot.

Not firing someone soon enough also is a common mistake. Generally the employee knows the job isn’t right for him or her. You know it, too. But you wait too long to take action. Do the employee and yourself a favor by asking the person to move on. You can’t “wish” a misplaced manager or employee into success.

2. Grow the company too quickly. Mailing too many catalogs can lead to financial ruin. Trying to grow too quickly also can put stress on operations that can do your company and customers a disservice. Balance growth with the ability to service the most recent customer just as well as the first one you ever served.

3. Solicit professional legal advice too late. No one likes to pay $400 per hour for legal advice. When legal questions arise, it can be much less expensive in the long run to get an opinion from a lawyer before the matter ends up in court. Legal action of just about any kind will result in thousands of dollars of expense. Invest in great advice up front. It will be cheaper in the end.

4. Put the top line ahead of the bottom line. Catalogers tend to want to put the top line (e.g., sales) ahead of bottom line (e.g., profits). Your housefile is up as are your sales, so everything must be OK, right? Not necessarily. The fundamental measurement of any catalog company’s success is its cash flow and bottom line profitability. This creates shareholder value. Trying to grow your way into profitability requires very deep pockets.

5. Pay no attention to details. As your business becomes more successful, there’s a tendency to pay less attention to the details. You’ll tend to focus on the bigger issues while leaving details, like revenue per catalog and 12-month buyer counts, to others. Pay attention to even the smallest details of your business.

6. Don’t get competitive print/paper bids. You can save thousands of dollars by getting competitive printing and paper bids. Yet too many times catalogers are complacent and simply remain with their current suppliers. They’re comfortable and therefore resistant to change. But when you’re spending up to 30 percent of sales on direct selling expenses, the dollars involved shouldn’t be ignored.

Moreover, market conditions continually change, so get print/paper bids at least annually to be sure you’re paying a competitive price. Be prepared to switch printers for any variance of 5 percent or greater. And get competitive bids only from catalog printers you’d seriously consider using.

Finally, don’t solicit bids from other printers unless you’re truly prepared to make a change. Why? Printers will realize the only reason you’re requesting a bid is to get your current printer to lower its prices.

7. Pursue too many things at once. For example, I know a cataloger who thinks growth will come from having multiple catalog titles. While this often is true, it’s best to focus on those catalog titles that will yield the greatest return.

Maximize your existing titles before starting new ones. It’s always best to put your valuable labor resources and precious dollars in what works before you try other things. Remember: Focus is key.

8. Develop your own operating software instead of buying a mail-order software package. Both large and small catalog companies can benefit by purchasing a package. Every time I’ve seen catalogers try to develop their own software, they end up spending more and getting less.

9. Remain unrealistic about growth. I once had a client, a seasonal food mailer, who wanted to grow to $50 million in annual revenue. The cataloger expected to accomplish this growth with a limited number of SKUs. Its prospecting universe simply wasn’t that large, and at best, it was a solid $5 to $6 million business. And it was profitable. But it simply wasn’t realistic to think it could achieve this amount of growth from its core business.

Be sure you know your true potential. Expect a lot, but remain realistic. Your market is only so large, and just about every business has limitations.

In short, we learn, and we move on. It’s all part of growing and building a successful catalog business.

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. He can be reached at (302) 537-0375, or by e-mail via his Web site: www.lettdirect.com.