Riding the Paper Tiger

While deterrents to mailing catalogs continue to mount (rising postage and paper costs, threats of do-not-mail legislation, environmental backlash, the Web’s rising popularity, etc.), the benefits of this marketing medium seem to have gotten lost in the shuffle. So it’s fair to ask the question: Are catalogs worth it anymore?

We randomly surveyed a cross-section of multichannel merchants and found the following facts illustrating the catalog medium’s continued importance in most marketing budgets.

• Shiffler, a B-to-B cataloger of school and facility furniture, supplies and equipment, this year launched its second catalog title, Facility Hardware. More than 90 percent of its revenue comes from its catalogs.

• Specialty Catalog Corp., parent company of the Paula Young and Especially Yours wig catalogs, spends 90 percent of its marketing budget on its catalogs, according to Vice President of Marketing Joan Abrams.

• Mountain Gear, marketer of hiking and climbing gear, increased catalog circulation over the past two years and attributes nearly 85 percent of its sales to its catalog.

• Soft Surroundings, an apparel, bedding and beauty products cataloger targeted to women, is increasing its total number of catalog drops from four last year to eight this year, while increasing overall circulation.

• Office Depot, the multichannel retailer of office products and supplies continues to invest more money into its catalogs, says Dean Jackson, director of catalog and offline marketing. That’s because Jackson says customers acquired through catalogs have a higher average order value than their online counterparts.

More than just the established players say they’re investing in catalogs for the long haul. For instance, Richlund Ventures, parent company of home appliance marketer Compact Appliance, launched a catalog for that division about two years ago.

At first, the company was doubtful the catalog would pull a positive return on investment. But President Jason Roussos says its early mailings produced positive cash flow.

Get Smart
Despite these marketers’ bold plans, catalogers still must search harder than ever for ways to avoid mailing to people who have no interest in what they’re selling. “Segment your customers, and understand their buying behavior and how customers will or won’t shop in all channels, irrespective of the other channels,” advises John Lenser, president of the multichannel consulting firm LENSER.

For many mailers, this is an ongoing quest. “We’re continuously working to mail smarter,” says Charis Gaines, director of marketing, planning and analysis for Eckler Industries, a Corvette parts and accessories catalog. “We’re talking to customers as effectively as we can through a combination of our catalogs and e-mail programs.”

When More is More
In Soft Surroundings’ case, while shifting from four to eight catalog drops this year, it cut the page count per book, reducing postage costs. The additional mailings enabled the cataloger to offer more relevant and timely goods for its customers, says Jason Woodle, the company’s general counsel and director of operations. And the shift allows for more prospecting and increased sales.

As catalogers look for ways to offset rising costs associated with mailing catalogs, many have become more aggressive e-mailers. As a considerably less expensive means of communicating, e-mail has proven effective for both acquisition and selling in many cases. And many integrate e-mail campaigns with catalog in-home dates.

Lure of E-Mail
Soft Surroundings, for one, witnessed a 50 percent increase in its sales attributable to e-mail marketing this year over last, Woodle says.

To determine efficient and effective means of contacting customers and prospects, catalog or online, Soft Surroundings and others first get a fix on the cost to acquire individual customers and/or orders. “If you look at your whole marketing mix, you rate it by efficiencies,” says Dave Noonan, vice president of sales and marketing at Mountain Gear. “The cost structure of printing and mailing is making it harder to make that pay for itself compared to other options available. And on a cost-per-acquisition basis, e-mail is certainly effective.”

Gauge Your ROI
Online acquisition tools aren’t limited to e-mail, however. The popularity of search also continues to gain. But segmenting customers acquired purely online is vital to print mailing plans.

“The differential behavior has to provide the ROI to justify the mailing of the catalog,” Lenser says. “If you have customers who frequently place orders on the Internet — particularly if they originated on the Internet — segment these people by origination and degree of Internet shopping. Then see if you were to hold out control and test panels, whether the catalog would be fully justified to mail.”

The recent run-up in gasoline prices poses another reason catalogers won’t abandon print. But mailers aren’t quite assuming that consumers will stop driving to malls. Most will react according to market conditions, rather than potentially overmailing trying to predict consumers’ shopping behaviors.

“We’d like to see that happen [consumers going to stores less], and it probably will happen,” says Abrams of Specialty Catalog. “But we’re not going to increase catalog circulation in anticipation of that. As we see results improve and more customers ordering, then we’ll naturally increase our circulation.”

For more fully integrated multichannel marketers like Office Depot, which operates more than 1,200 stores nationwide, a consistent message across all channels remains key. According to Jackson, Office Depot strives for very high crossover rates of retail customers on the small business side in its catalog mailings.

Break Barriers
While soaring gas prices still hinder retailers like Office Depot, they’re also fueling all sorts of cost increases that affect print catalogs, too, says Steve Webb, director of marketing at Shiffler. Increased shipping costs in working with vendors can eat away at margins just as easily, he notes.

As a result, companies that most fully integrate catalog, e-commerce (including e-mail) and retail strategies stand to make the best gains. And the print catalog remains part and parcel to that effort. While it’s not necessarily true for all marketers, Lenser warns that most catalogers who cut back on their catalog circulation and blindly devote more resources to the Internet “will go down in flames.”