Are SOHOs worth it?

The small office/home office, or SOHO, market has long been hailed as the next hot segment for business-to-business catalogers. Estimates of the growing number of home-based offices now exceed 40 million, according to Framingham, MA-based marketing consulting firm International Data Corp. (IDC).

But some business mailers-including $1.4 billion Viking Office Products-have been disappointed with SOHOs and are suppressing these names from business prospecting mailings. “Nine out of 10 home office names do not have an ongoing need for our products,” says Viking president Irwin Helford. “Either they don’t buy enough continuously or their supplies are furnished from a corporate office. Were we to clutter our customer file, which is about 800,000 active accounts in the U.S. and more overseas, with home businesses, we would waste a lot of resources.”

Los Angeles-based Viking’s best customers are businesses that buy a lot-and keep buying. “Consumable office products represent 74% of our business, and all of our profitability comes from repeat customer business,” Helford says.

But the cataloger, which mails more than 100 catalog versions annually, hasn’t abandoned SOHOs altogether. “We break the ‘SO’ from the ‘HO,'” Helford says, by suppressing residential addresses. He estimates that 20,000-30,000 home office businesses do buy supplies from Viking. But while the company continues mailing to them, it’s trying not to rent any more home office names.

In some cases, catalogs have more success with home offices via careful targeting of their mailings. For instance, while some of plumbing supplies cataloger Barnett’s best customers are home-based operations, the Jacksonville, FL-based mailer has found that it can’t afford to mail its 2-1/2-lb., 800- to 900-page catalog to just any small business, says director of advertising Joel McEwen. “The people receiving our catalog must use it with enough frequency that there’s a payback,” he explains. “I wouldn’t use the term ‘suppressing,’ but we are making decisions not to send every catalog to everybody. We may send fliers or postcards first to prescreen the list.”

Not a widespread trend But many b-to-b mailers are still high on SOHOs. “We see more mailers wanting home-based business addresses,” says Ed Bocknik, business unit leader, list management, for Greenwich, CT-based list firm Acxiom Direct Media. But he admits that many of the mailers targeting SOHOs sell high-ticket items such as computers and fax machines, which have a quick initial payback “and an opportunity for significant upgrades down the line.”

Viking competitor Staples doesn’t suppress SOHO names, but that has more to do with its overall catalog/ retail strategy. “SOHO customers make up about 50% of sales in our stores,” says Shannon LaPierre, spokeswoman for the Westborough, MA-based Staples, “and a lot of those people are also catalog shoppers. By getting the catalog, they may be more inclined to shop at the stores.”

Larger businesses are certainly more profitable customers than small operations, LaPierre concedes, “but our definition of a small office is one with fewer than 10 employees. And they’re our primary customers.”

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