Sound Circulation Tactics for B-to-B Catalogers

By Stephen R. Lett

If yours is a business-to-business (b-to-b) or a business-to-institution (b-to-i) catalog, no doubt you have questions about effective prospecting techniques. Below are some tips on how to use your housefile as a prospecting file, such as mailing by name of individual vs. by functional title.

The Income Statement

One of the significant differences between a consumer and a b-to-b catalog company is the income statement. The EBIT (earnings before interest and taxes) of a typical b-to-b company ranges from 10 to 12 percent. Consumer catalogs tend to be less profitable at 3 to 6 percent. Direct selling expenses account for a large part of this difference. There can be as much as 10 or 12 percentage points between them.

Selling expense to sales ratios for a consumer catalog usually range from 25 to 30 percent — or more. This same ratio for a b-to-b catalog typically is about 18 percent of net sales. The key differences are noted in the chart "Direct Selling Expenses."

"Title Slug" Your Housefile

One way to get more out of your housefile is to use it as a prospecting file. Your housefile contains the names and addresses of companies that have bought from you. It's possible the person you have in your customer record is no longer with the company. So the catalogs you're mailing to a particular business may not get to the right person and may end up in the trash.

However, it's already been demonstrated that the company has a need for your products. So it simply may be a matter of getting to the right person. What can you do? "Title slug" your housefile: Delete the name of the individual in the contact field and insert an attention line (i.e., a functional title) in its place.

Determine the most appropriate functional titles (e.g., sales manager, purchasing director, marketing manager) for your products. Then try moving the functional title so it appears just below the company name. Here's an example of how the name of an individual is removed and replaced with a functional title.

Before:

Mr. Stephen Lett

President

Lett Direct

123 Main St.

Anytown, IN 12345

After:

Marketing Director

Lett Direct

123 Main St.

Anytown, IN 12345

Start by testing the practice of title slugging your previous buyers who haven't bought for awhile (e.g., 18+ month, 24+ month). Note: You may not want to title slug your zero-to-12-month buyers. You already own the customer's company name and address; therefore, there's no list-rental expense. With proper instructions, your service bureau easily can implement this idea.

Mail by Functional Title

Unless you're mailing to the chairmen or presidents of Fortune 500 or 1000 companies, try prospecting to functional titles and not to the names of specific individuals. Your mail has a better chance of getting to the right person if you do. When you mail to the name of a specific individual you run several risks:

- The person's name may be spelled incorrectly. And that does not leave a good first impression.

- The individual may not be in that job any longer. He or she could have been moved to a different department, been promoted to a higher-level position, etc.

- The individual may no longer be with the firm. In this case, the mailroom likely will discard the person's mail.

- You don't always know who the influential person at that company is. So when you mail to individual names, you could miss the mark altogether.

Mailing to a functional title helps ensure your catalog or direct mail piece is delivered to someone, and therefore is more likely to end up on the desk of someone responsible for purchasing your products.

Cost is another advantage of mailing by functional title. You can rent company names and addresses by SIC (standard industrial classification) code with a functional title slugged in for $50 to $55 per thousand. If you want a person's name, expect to pay $90 or more per thousand.

That said, there are exceptions to functional title mailings: If you're mailing to subscriber lists (e.g., magazine, newsletter lists), it's safe to mail by name. You wouldn't want to title slug these lists, for example. The same holds true for direct response b-to-b lists.

Other Testing Ideas

- Consumer catalog lists. If you're a b-to-b cataloger, don't overlook opportunities in the consumer market. For example, if you sell tools or corporate gifts, test a few consumer lists.

- Space ads. Use the two-step approach to generating an order. Space ads can help get your catalog in the hands of prospects interested in your products.

- Cooperative databases. Excellent b-to-b co-ops to test include Abacus, MeritDirect and Experian's b2bBase.

Limit Number of Catalogs to Any One Location

Many b-to-b and b-to-i catalogers set a limit on how many books they mail to any one company. If they're mailing to previous customers by recency, frequency or monetary (RFM) values, there are no limits. Often catalogers have their service bureaus generate reports similar to the one shown in the chart "Number of Catalogs Per Location."

In our example, wave 1 shows the number of catalogs mailed to one person; wave 2 shows the number going to two people at the same location, and so on. Such a report can be helpful when limiting the number of catalogs you send to a given location.

Company size certainly is a factor to consider. For example, when mailing to smaller companies, limit the number of catalogs you send, but when mailing to larger firms, the more books the merrier. Our rule of thumb: When mailing to your housefile, limit the number of books going to a particular firm based on recency of purchase. When mailing to prospects, limit the number of books based on the size of the business to which you're prospecting.

To determine the number of catalogs mailed to one location, consider a structured test. I recommend that testing be conducted over multiple mailings, per title, to determine the appropriate threshold per title. After testing, tabulate and measure the results. To build a contact mail strategy, consider the following:

- Use overlap data, and limit the number of catalogs based on the size of the business or institution.

- Code the waves separately on the backend for better tracking and monitoring. Measure the results by RFM and wave to determine and control the number of catalogs mailed per address.

- Create structured A/B split test panels, and mail each one to a specific wave number.

Conclusion

A cataloger selling b-to-b or b-to-i has a lower selling expense to sales ratio compared with a consumer cataloger. Use your housefile to prospect. And be careful limiting the number of catalogs you mail to a single location.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 537-0375, or by e-mail via his Web site: www.lettdirect.com.