Some Not-So-Obvious Ways to Get Through the Tough Holiday Season Ahead

Reading retail sales, housing sales and consumer confidence reports the past couple of weeks while watching the stock market sink, I’ve become quite worried about the outlook for the holiday season for catalog/multichannel marketers.

Retailers collectively reported their worst October in 12 years, and a Conference Board report last week said consumer confidence dropped in early November to its lowest level since Hurricane Katrina triggered soaring oil prices two years ago. Meanwhile, recent reports from the National Association of Realtors showed sales of existing homes had plunged to their lowest level in nearly a decade. None of this bodes well for catalogers.

So for this edition of The Corner View, I contacted members of the Catalog Success editorial board to see what kinds of advice they could offer other catalogers who are trying to keep this holiday season from becoming a disaster. Specifically, I asked the following:

Aside from the obvious — heavy discounting and free-shipping offers — how can catalogers make the most of what could be a tough season ahead?

Although some of the answers I got were a little more applicable to 2008, many can be implemented right now. As one board member points out, much of the catalog market has “shifted to value and luxury. We can’t compete with value unless we discount heavily and offer free shipping. That works for goods we no longer want in our warehouses. Luxury is game on. And ironically, that is where most of the innovative products are. Those of us heading into holiday know this; others will learn the hard way.”

I’ve organized their pointers by category below. Some board members were on the record, others requested anonymity; so I just pooled and paraphrased all their responses and got a whopping 83 percent response from the board! (Thanks folks!) For a complete list of our editorial advisory board, see the masthead of any print issue of Catalog Success, or go to www.catalogsuccess.com/docs/staff.bsp to see bios of the board and our staff.

Call Center & Customer Service

1. Be the hero to your customer. Get ready for a late holiday rush. Catalogers who meet the last-minute holiday needs of their customers with in-stock merchandise and quick delivery will win hearts and future purchases.

2. Empower your call center reps with product knowledge. Customers have less time to shop, so knowledgeable, confident recommendations are a welcome service. Your call center staffers need to be your product experts. Make sure that your merchandising staff has thoroughly explained and, if needed, demonstrated the products to your call center reps.

If you’re a food mailer, your call center staff should be your waiters and waitresses. Have a food tasting for the call center where they make notes about the products in their catalogs.

3. Increase your customer service, or “customer love.” It’s contagious, and the most lackluster of customers will buy more and tell more friends if you really knock ’em down with customer service.

4. Get creative. Suggest your items as holiday gifts. Send customers free samples. Or ask them what they would like for the holidays if a friend were buying for them. Then, if you have enough margin, send them a two-for-one offer on that item. This way, they get a free one if they buy one for a friend.

5. Set incentives for inbound reps and pay them if they increase the average order size of customers who call in by giving them a special offer or getting them to buy more units.

6. Have any free call center time? Use it to call your best customers to thank them and ask if you can do more.

Marketing & Circulation

1. Don’t over-mail. Look at the percent of prospecting vs. mailings to your housefile. Also, re-evaluate the circulation falling below your incremental break-even point. Control the amount of marginal circulation. Be willing to give up some sales to help the bottom line.

2. Reduce ad costs to fit the increase in variable expenses. This represents a 25 percent to 50 percent reduction in circulation. Remove all remails; they’re marginal and not productive.

3. Build customer loyalty. Extend recent customer offers in your outgoing packages and via e-mail to encourage re-buys.

4. Cut mailer penetration into big accounts. Instead of sending 12 mailers, consider sending 10 into one site. Then for the next mailing, cut two different names.

5. Add another e-mail in your plan and re-blast an existing e-mail to those who didn’t clickthrough previously. It’s quick to execute and it saves on creative costs.

6. For catalogs that aren’t promotionally driven, promotional offers that try to increase demand in the short term could have a negative impact on business going forward — for example, by bringing discount-oriented customers to your file or by reducing the perceived value of your products.

Instead, if you see soft results, tighten name selection, reduce circulation and push up dollars per book. Also look at inventory position on individual items when deciding on repeats for later catalogs.

Postage, Printing & Paper

1. Do more co-mailing. If you’re mailing at the pound rate, consider trim size and paper changes to reduce catalog weight. Mailing a slim-jim size saves postage currently, but watch out because the USPS is testing and may change the rules for slim jims soon.

2. Competitive bids: Don’t become complacent. Obtain competitive print bids at least once a year. Value-added considerations only go so far, and price is important.

3. It takes large quantities to co-mail in-line, however, off-line co-mailing is a good option for smaller mailers (200M and up).

4. Be conscious of the catalog maximum piece rate catalog requirement and mail at the postage piece rate if you can. Look at trim-size options and paper-weight options.

5. Work with your paper merchant or paper mill. With paper prices escalating, lock in prices by having an annual or three-year contract that offers upside protection on paper price increases.

6. Buy paper up front if you can afford the cash outlay.

Merchandising, Sourcing & Pricing

1. Begin to anticipate 25 percent to 40 percent price advances from China within 12 to 18 months, and delist products as required.

2. Are you a low-price leader? If so, a downturn in the economy may actually be good for you. Many buyers — especially for holiday giving — don’t stop buying. They just chop how much they’re willing to spend. Look for opportunities to trumpet your value as buyers trade down to your catalog.

3. Plan more conservatively and be more careful when buying inventory. This will leave you in a better position to mark down less merchandise and protect margins.

Management

1. Reduce your overhead by a similar amount to your reduction in ad costs and circ. (See tip #2 in Marketing & Circulation.) It’s tough, but must be done to survive.

2. Be nimble. It’s too late to change your mail plan, but what can you influence? Skunk works — an ad hoc team assembled to accomplish a specific project, which has the connotation of not being part of bureaucracy and, thus, being able to get things done quickly and effectively — and cross-functional teams of marketers, merchandisers and customer service reps can identify key opportunities to improve your holiday sales through pay per click, Web site changes and call center opportunities.

Creative

1. Increase product density a bit. Even an average of one-half extra product per spread in a 60-page catalog will put 15 more buying opportunities in front of your buyers and prospects.

Parcel Shipping

1. Work with an inbound freight consolidator. It may not be too late this year to do so, and you can save 10 percent to 25 percent on your freight bills this way.

Paul’s Thoughts

As Gary Drenik, president/CEO of BIGresearch said when his firm reported earlier this week that according to its own consumer confidence report, confidence fell to 37.3 percent, its lowest level since June 2006, gas price increases may be a contributing factor. It’s conceivable that a gallon of gas will surpass the $4 mark before the year’s out.

So my own personal two cents here is to remind your customers of this through e-mails. Your print catalog mail plans are set, but you have plenty of flexibility with e-mail. I get a ton of e-mail from 1-800-Flowers.com, but not from many other multichannel marketers I’ve done business with. Why not drive home the point, however obvious it is, that customers can spare the expense of gas by buying direct? Possible approaches:

1. Send a “Breaking News!” e-bulletin to customers whose e-mail addresses you’ve mailed before alerting them of the novelty, the luxury of shopping direct and its ability to save them money … gas money! Offer some holiday season gift-giving ideas as part of your “news.”

2. Send a “we haven’t heard from you this holiday season” e-mail to your best customers and be sure it’s signed by your CEO or owner. Don’t let a holiday season go by without getting their business. Encourage a response. To engage them, try giving them an easy-response, multiple-choice mechanism to e-mail you back and tell you why they haven’t bought from you this holiday:

a. I was about to buy something from your catalog.

b. I shopped elsewhere this season.

c. I can’t find what I want in your catalog and Web site this season.

d. I have no plans to buy anything.

Ask them if they mind if you respond to their reply and depending on how they answer, it could open the door for a personal response from you. In this day and age of online social networking, why not socialize with your own customers?