Leverage Your Bottom Line With Buyer Remails

Dec 04, 2006 10:56 PM  By

What can a high-profit buyer remail do to boost your bottom line? Compare a circulation plan before and after adding a buyer remail. When you take the financials all the way down to the bottom line, you can see the dramatic change in profitability you can achieve.

Buyer remails are such a leverage point in a cataloger’s business model because catalogers can often add a small circulation remail to the very best buyers and maintain strong sales per book and deliver a high profit mailing.

Catalogers need to know if their buyer file can be mailed to more frequently and still deliver incremental sales. Most buyer files are robust and can be leveraged to support additional mailings to the best buyer segments.

Here are the financials for a mailing before adding a remail to the circulation mix:

Buyers Prospects Total
Circulation 120,000 100,000 220,000
Sales per book $8.00/catalog $1.40/catalog
Sales $960,000 $140,000 $1,100,000
Catalog Cost $.90/catalog $.90/catalog
Catalog Cost $108,000 $90,000
Margin % 60% 60%
Margin $576,000 $84,000
Contribution to fixed
(Available for overhead)
$468,000 ($6,000)
Total Contribution
To fixed
$462,000
Overhead $380,000
Profit $82,000
Percent 7.5%

Here is a pro forma profit and loss after you add a buyer remail:

40,000$8.00/catalog$960,000

In this example the profit percentage and the profits double with the addition of a small circulation buyer remail.

Test your best buyers and you’ll find the profit potential in remailing your best buyers more often.

Jim Coogan is president of Santa Fe, NM-based consultancy Catalog Marketing Economics.

Buyers Prospects Buyer
Remail
Total
Circulation 120,000 100,000
260,000
Sales per book
$1.40/catalog $7.00/catalog
Sales
$140,000 $280,000 $1,380,000
Catalog Cost $.90/catalog $.90/catalog $.90/catalog
Catalog Cost $180,000 $90,000 $36,000
Margin % 60% 60% 60%
Margin $576,000 $84,000 $168,000
Contribution to Fixed
(Available for Overhead)
$468,000 ($6,000) $132,000
Total contribution to fixed $594,000
Overhead ($380,000)
Profit $214,000
Profit % 15.5%