3 Tips for Catalogers on Limited Budgets
Still reeling from the 2007 postal rate increases, catalogers will need to make further budget cuts in 2009 to adjust to the faltering economy. "I think you will find that there will be a budget cut of another 10 [percent] to 20 percent for most pure play catalogers in 2009," projects Monica Smith, president and CEO of Marketsmith, a direct marketing agency with a focus on the catalog channel.
Looking ahead, Smith sees catalogers' bottom lines threatened by erosion of both housefiles and prospect files, and a projected increase in production costs of about 6 percent to 10 percent in 2009. The following are some of her tips for withstanding this tough market:
Don't Overcirculate Your Pages. Smith believes that not enough catalogers use a contribution-per-square-inch analysis on their mailings. Without this metric in place, she says many catalogers have already overcirculated their pages in 2008, creating more pages that are not producing and therefore actually costing the bottom line. "It is the absolute, No. 1 mistake that is happening, and we are recommending that if you really want to get it right for 2009, do your square-inch down to contribution," she asserts.
Supplement Your Efforts With Postcards. Smith advocates testing postcards as a supplement to catalog efforts. She explains that postcards are not for everyone, because they can be costly and low on response. "If you can do it for, let's say, 50 or 60 cents, it is something that is worthwhile," she says. When promoting a strong or high-end product, like designer sunglasses, the postcard is a disruptive force that acts as a placeholder to generate revenue and keep the sales moving, she advises.
Demolish Silos and Integrate. "No company should have a silo," Smith asserts. From her experience, financially constricted organizations tend to make blind cuts in departments like circulation and still expect to spend in other areas. A recent audit for a museum with a retail and catalog program showed huge circulation cuts resulting in lost growth. "They were having a hard time finding growth, but the amazing thing to us is that they were willing to do a $200,000 creative test that wasn't going to be able to be validated," she shares. "Merchandising and creative ... they're not fully integrated into the marketing program ... Where there needs to be cuts and re-evaluation, it's not occuring, and circulation is the first to get cut," she warns.