The bottom line in ’99

Dec 01, 1998 10:30 PM  By

Christine E. Taylor is vice president of The Magic Attic Club, a Westbrook, ME-based cataloger of dolls and related accessories, and a division of Georgetown Collection. Annual sales, less than $10 million; annual circulation, less than 5 million.

This year was very good for us, especially in terms of profitability. Next year we’re looking to grow more through prospecting and also by expanding our channels of distribution. This year we introduced home parties-similar to Tupperware parties-to sell goods, which has worked out extremely well for us. We’re also selling on the Internet, where we’ve done okay if not great, but we’ll continue with our efforts there.

We’ll also continue to model our house file, something we’ve always done. We segment our list significantly, and next year we’ll begin using the Abacus co-op database as well as others. I think that’s definitely the wave of the future.

Jill Rockwell is the media promotions manager for International Bible Society, a Colorado Springs, CO-based cataloger of scriptures, Bibles, and Christian-themed books and videos. Annual sales, $10 million; annual circulation, 200,000.

As far as our Christmas projections, we’re looking forward to a good season. And so far, this has been a very good year for us. Sales and orders have been up every month, and we’re about 10% ahead of budget. We’ve mailed two Christmas catalogs this fall, and holiday sales are already slightly ahead of projections.

Based on the rest of the year, I’d expect holiday sales will be about 10% higher than they were during last year’s holiday season. We expect to continue to grow next year, and we’ve been looking at what was successful this year so that we can expand those areas next year.

For instance, we’re mailing more targeted marketing pieces for customer acquisition, because they’re cheaper to produce and mail than our full-fledged catalogs. Acquisition had been a significant problem for us, and now that we’ve hit on something that seems to work, we expect even better growth next year.

We’re also investing in new order processing software to enable us to learn more about our customers. And this year we ink-jetted our order forms to help us track orders better. Ultimately we’ll be able to measure lifetime value-something we haven’t done in the past.

Bob McArthur is the founder of Boston-based Rent Mother Nature, a food gifts catalog selling “participation in harvests conducted by small family farms devoted to sustainable agriculture.” Annual sales, less than $2 million; annual circulation, 1 million.

We’re mailing almost exclusively to our house file this year and doing very little prospecting, so we don’t know what to expect, although we are hoping to increase sales this season and into next year.

We have wanted for some time to really give our house file a solid test. We’re looking at the level of customer loyalty in our harvest programs and at the lifetime value of a buyer, going back over the last five years. We’re essentially trying to create a model to give us a better sense of how aggressively we can move into prospecting in the future and how much capital we’ll need to move the business forward.

Building loyalty among existing customers is fine, but my feeling is that if small catalogs are going to grow, they need to concentrate more on customer acquisition efforts than on loyalty programs. Customer acquisition is tougher for small catalogs, though, because we don’t get the postal discounts, production discounts, and other price breaks that many of the big companies get.

Jim Zimmerman is president of Los Angeles-based Cottura, a cataloger/retailer of imported ceramics. Annual catalog sales, approximately $1.5 million; annual circulation, 250,000.

Our overall sales are up about 20% for the year, and catalogwise, we’re up around 35%. We dropped our holiday books on Oct. 1, and as of mid-October we were up about 25% from last year’s holiday season. We’ve gotten a great response from our regular customers, but our prospecting response rate has also been way up. We’re using the Abacus Direct co-op database almost exclusively this year instead of renting outside lists. It’s as if we were throwing a hook into the water before, hoping that a fish would come along, and now we’re throwing a hook into an entire school of fish.

This year we also started doing a lot of database modeling, and as a result we’ve dumped a lot of customers from our house file. We can’t afford to mail to names that aren’t performing. And in 1999 we’re actually going to start charging $5 for our catalog and giving everyone who buys it a $10 gift certificate. Our catalogs cost us more than $1 to produce, and some people use them as coffee-table books rather than buy merchandise from them.

In fact, we even ran out of catalogs this year. So now when someone whom we mailed a catalog to but who hasn’t bought from us calls to receive another book, we have to politely tell him that our catalogs are only for our customers.

Of course, if things continue to go the way they’re going, we will probably be forced to increase the catalog print run. But because we’re such a small shop, everything goes back into the company. So we just don’t have the luxury of giving away catalogs to everyone who wants one when one of our top priorities is making sure that we can provide our 25 employees with health insurance.

How do your projected holiday and 1999 sales compare with last year’s? Even amid the tumult of erratic stock markets, unstable foreign economies, and wavering consumer confidence, the small catalogers we contacted are bullish on the future. They expect a strong holiday season and forecast big things for 1999. Their confidence stems largely from efforts to learn more about their customers, and the increased loyalty and more efficient customer acquisition they anticipate as a result of their efforts.