Curve Your Enthusiasm

The management of catalog businesses large and small depends on order curves. Yet order curves are affected by several different factors — mail delivery, the weather, time of year, etc. — all of which affect delivery times.

This month, I want to touch on the factors that affect these curves, because your actions have the most influence over how soon orders start flowing after the initial mail date and when order levels will peak.

Typically, orders start flowing in seven to 10 days after the initial mail date based on a normal five-day mail distribution pattern. If the initial mail date is Dec. 31, the first week for orders would be Jan. 14. Some orders will start showing up toward the end of the prior week, but Jan. 14, in my example, would mark the first “full” week of order flow and the first week of the revenue/order forecast. Therefore, this is the week you want to start forecasting order volumes.

Co-mailing programs affect the order curve and the postage you pay. Postage predominately is impacted by co-mailing. The order curve is more heavily affected by distribution patterns — east to west or west to east — mail dates, in-home dates, and so forth.

The co-mailing process occurs during the binding/ink-jetting phase of catalog production. The process essentially is the same as selective binding. But instead of combining multiple mailing versions of the same catalog, your printer combines multiple catalog titles into one mailstream. This causes more of the mail to qualify for the carrier route rate, which, in turn, reduces your postage expense and speeds the in-home delivery time of your catalog.

From a cost-savings perspective, co-mailing is a win-win. For example, the piece rate for three-digit presort mail is $392/M, the five-digit rate is $335/M and the carrier route is $249/M. On a list pool size of 2 million, approximately half, or 1 million pieces, would qualify at the carrier route level. Of the remaining 1 million, approximately 40 percent, or 400,000, would qualify at the three-digit level and 600,000 at the five-digit level. The chart above right shows the typical savings based on a pool of 1 million and 2 million.

The point is pool size matters. In the above example, going from a pool size of 1 million to 2 million names will save an additional $25.75/M. (The figures are gross amounts.) But another benefit of co-mailing is improved deliverability. More carrier-route or five-digit presort pallets will enable catalogs to penetrate the postal system deeper, which could generate additional savings by going to more sectional center facilities. This will increase production flow through the postal system and alter your incoming order curve.

In a co-mail pool, the direction you mail also affects the order curve. For example, if your printer is located on the East Coast, it probably mails west to east, especially if in-home dates are important. Obviously it takes longer for the catalogs to get to the West Coast compared with trucking them east to west.

If a cataloger mails using in-home dates, the location you mail from shouldn’t matter since you work out your schedule with your logistics department. Your order curve shouldn’t be affected using in-home dates. If you mail by drop date, then your curve could be affected depending on the location of your printer and the demographics of your mailing list.

The mailing pattern also needs to be a part of the planning. If you and your printer are both located on the East Coast and you mail east to west, your catalog will arrive in-home sooner on a regional basis. This means you’ll begin to receive orders sooner.

Much depends on the level of circulation and the actual in-home dates. Holiday is the fastest curve. The summer curve is the next fastest. Fall and spring follow.

Keep in mind that the demand-revenue curve varies from the order curve for the first few weeks. The order curve generally is “faster” than the revenue curve by 1 percent to 5 percent. This means the average order size is slightly lower during the first seven or eight weeks because more impulse buying is taking place. It also means your revenue curve will vary slightly from your order curve. That’s another important point to help improve the accuracy of your forecast.

Mail Dates vs. In-Home Dates
Order flow is greatly affected by how you mail, i.e., mail dates vs. in-home dates. Some catalogers tend to use these terms interchangeably, although significant differences exist between the two methods; some work around mail dates, others around in-home dates. But there’s often confusion over which strategy to employ and why.

An in-home date applies when the majority of catalogs mailed hit in-home within a four-day window. When a mailing takes place, the printer will stagger the distribution so that approximately 90 percent of the total mailing reaches all customers and prospects within four days of each other. Customers in California will receive their catalogs within four days of those in New York, for example.

Mail dates are defined as the day mailings begin. Mailings generally take place over a five-day period, if in a mail pool drop-ship program, beginning on the specified date. When in-home dates are used, the printer determines the actual release date of the mail. When mail dates are used, the cataloger specifies these dates.

The most significant difference between in-home dates and mail dates has to do with the pace of the order volume that will result from each. When in-home dates are used, order curves will peak more sharply and die off more rapidly. Distributing catalogs using mail dates tends to cause the order curve to be flatter. There still is a peak, of course, but that order spike isn’t as pronounced, and the order line is longer compared to when in-home dates are used.

If there’s no in-home requirement, orders likely will be received more quickly from where they’re being distributed and extended out over a longer period of time. If in-home dates are used, there will be more of a peak in order volume and the order curve will be more compressed.

So why does this even matter? The use of in-home dates can affect call center staffing issues. When the order curve is more pronounced, additional people are needed during a shorter period of time to handle the volume of incoming calls. What’s more, the call volume will tend to decrease at a faster rate, which means you could be overstaffed unless you mail more frequently.

Cash flow, call center staffing and other timely issues are all affected by the order curve. Without proper planning, you can find your call center understaffed during peak order weeks and overstaffed soon after. The direction you give your marketing person and printer is important to your business. There are other external factors that affect your order curve, such as mail deliveries, your printer, etc. But my advice is to focus on those factors within your control.

Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He’s the author of the Catalog Success-published book, “Strategic Catalog Marketing.” You can reach him at (302) 537-0375, or by e-mail at www.lettdirect.com.