Package Insert Programs

More and more catalogers are finding that package insert programs (PIPs) are good ways to generate ancillary income. After all, you’re going to ship the customer a package anyway, and as long as the package weight remains the same, why not drop in a few complementary offers from other merchants? To be successful, however, the offers you select have to align well with your brand.

Two catalogers who accept package inserts shared their experiences and insights with Donna Loyle, editor in chief of Catalog Success.

Jeffrey Nissim, president, Musical Heritage Society, Oakhurst, NJ

What they sell: CDs of jazz and classical music, DVDs, and music-related merchandise sold from three catalog titles

Number of packages mailed annually: 672,000 (about 56,000 per month)

Catalog Success: From what type of companies do you accept package inserts?

Nissim: It’s easier to tell you what we don’t accept and that’s competitive offers or offers for products that are inappropriate for our customers. We’re pretty open minded, but occasionally we get samples for inappropriate offers. In general our audience likes books, history, culture, the arts and wine.

We look at every insert sample before we accept them. We need to see a physical sample before it goes to the lettershop. We accept a maximum of four, but it’s really a weight-based decision. The last thing you want is to go over your postal weight limit with these things. Even if it’s a quarter of an ounce too heavy, your mailing costs can be out of the ballpark. So we have to be very careful about weight. As each insert gets accepted, we weigh it to see how much room in the package we have left.

CS: Have you ever rejected inserts?

Nissim: Yes. Once, we had a mailer who showed us one offer, but then changed it to a competitive offer to ours, and we didn’t discover it until after the packages had gone out. That was bad.

Another merchant, a book seller from which we had previously accepted inserts, changed its creative for a military book, and we found the new creative offensive, so we rejected that one.

CS: How long have you had such a program running at your catalog?

Nissim: A little less than a year.

CS: Do you have any results for the program you can share?

Nissim: All I can say is we’re very happy with the results. At first we were concerned that it would depress our sales results, offend or confuse our customers, or take attention away from our products. But so far I haven’t seen any of that.

Plus, it’s given us additional revenue without impacting sales. I mean, let’s face it, I’m going to mail packages, and we have a weight ceiling. If without the inserts, the package is a half-ounce less than the post office’s maximum for that package, well then why wouldn’t I fill up the package? I pay that postage one way or the other. Frankly, it would be hard for me not to do this program.

I thought that testing such a program was worth a try, and so far, I’ve been waiting for the other shoe to drop. And I haven’t seen that yet. I may as well get my full value for postage costs.

The good part of this is that you can turn it on and off. If the program dries up and we get no more inserts, there’s no investment lost. In the end, I consider this a source of extra income.

CS: Any do’s and don’ts you can share?

Nissim: We were handling the PIP in house, doing the negotiating, coordination, etc., before we handed it over to Mokrynski & Associates. It’s just easier to have them do it.

However, only a business owner can accurately decide on what package inserts to accept. You shouldn’t leave that to third parties. I can’t expect any broker to know that a company from which we’ve accepted inserts before has changed its creative to something we think is inappropriate for our audience.

CS: Would you recommend PIPs for other direct marketers?

Nissim: It has brought us revenue that, other than Mokrynski’s commission, really has no cost attached to it. If we brought in, say, $20,000 in package inserts, that’s pure profit. I didn’t have to pay to print the inserts, it didn’t cost me any more to put the inserts in our outgoing packages, and someone hands me a check for $20,000 for use against my package mailing costs. Why wouldn’t I do it?

CS: What are the overall benefits to putting inserts in others’ package programs?

Nissim: With the shrinking list market, package inserts are a good alternative way to prospect for qualified leads. It’s hard for companies, I think, to rule it out.

I’ve been participating in PIPs from other merchants, and I find they’re a good supplement to our prospecting and sales efforts. Unless you’re one of those truly fortunate companies that doesn’t need any alternative means of prospecting, that has more names to mail than it can handle — and I have yet in my life to meet someone from such a company — this is truly an effective medium for prospecting.

And for catalogers, it’s a very low-cost source of extra income.

Manager:

Mokrynski & Associates,

Jody Smith, (201) 487-8181.

PIP Cost: $65/M

Bryan Johnson, director of marketing, Draper’s & Damon’s catalog, Irvine, CA

What they sell: women’s apparel primarily for the 50+ market

Number of packages mailed annually: about 725,000

Catalog Success: From what type of companies do you accept package inserts?

Johnson: We’ll accept inserts from any company whose products we think our customers will be interested in. The company has to align somewhat with our brand, meaning the offers can’t be for products that look like they’re poor quality or inappropriate. The products have to feel right for our brand, and offer the same value as we do.

CS: Can you give any examples of offers you’ve accepted?

Johnson: Books, food, health products, Bose-brand items.

CS: How long has your PIP been running?

Johnson: Several years.

CS: How often do the offers change?

Johnson: As often as we get new companies into the program. It’s on a rotating basis. We sell time slots. We used to just put the loose inserts in the shipped packages, but last year we started putting them in envelopes, which have our logo and a message to “see inside for special offers.” We can put six offers in the envelope. Currently, we’re full for the next two or three months.

Putting the offers into envelopes has been very beneficial. It’s allowed us to increase the number of inserts we can accept, and it improved the appearance of the offers to our customers.

CS: Do you have any results for the program that you can share?

Johnson: We’re at plan for the program, and we’re significantly up over last year.

CS: Would you recommend PIPs for other direct marketers?

Johnson: Yes. It’s a good ancillary source of income. It benefits both marketers: the cataloger and the company placing the insert.

Plus, it’s beneficial for the customer who can see several special offers at once. The offers are targeted to our customers, and often include discounts or free trials.

CS: Any caveats or challenges to a PIP?

Johnson: You need a keen understanding of package weights. As you’re adding inserts, you don’t want to go over the weight that such a package normally would be because then you’d have higher shipping costs.

Also, you have to be sure the offer aligns well with your brand.

Finally, it’s important to remember that it can be somewhat difficult to manage such a program, so you need someone to manage it for you.

Manager:

Mokrynski & Associates,

John Toscano, (201) 487-8181

PIP Cost: $65/M