Reduce Catalog Costs
By Jim W. Gilbert
It's likely we'll see a 5.4 percent increase in postal expenses in 2006. To us mailers the meaning is simple: 5.4 percent less contribution to overhead and profits. We'll need to rethink list and circulation strategies to keep some of our marginal lists within our allowable metrics.
Therefore, we'll either have to:
* scrap the mailing lists that aren't performing within allowable metrics;
* review customer lifetime value and allow for a longer payback process (the time it takes to recoup the investment into acquiring a new customer), and a deeper loss per customer acquired; or
* reduce catalog expenses to an amount commensurate to the postal increase in order to maintain the status quo.
In this article, starting with postage, I'll focus on seven ways to effectively reduce your catalog costs.
1. Destination entry discounts. Your catalogs get palletized and trucked with other catalogs closer to your customers and prospects. The trucks deliver the catalogs to regional postal centers called Sectional Center Facilities (SCF) and Bulk Mail Centers (BMC). By sharing the trucking charge with other catalogers, your cost is minimized. But such expenses are offset by postal savings greater than the trucking charges.Your savings could be as high as .03 cents per unit mailed.
2. Co-mailing. Catalog printer Arandell Corp. defines co-mailing as "combining two or more mail streams (different customers/permit numbers) into one mail stream, thus increasing the enhanced carrier route presort, which saves postage dollars and increases delivery service." Savings per unit should be a minimum of .03 cents, but in the past I've done co-mail programs that saved almost a nickel.
Points about co-mailing: Each catalog in the mail stream must be the same trim size, and all of the catalogers going into the program must share the same mail dates. So coordination is key between your printer/mailing house, service bureau and the other mailers.