Boosting average orders

Jun 01, 1999 9:30 PM  By

This year, 89% of the business-to-business catalog participants in the Catalog Age Benchmark Report on Marketing (February issue) posted average order sizes of more than $150, compared to just 59% the previous year.

B-to-b mailers cite adding promotional sale mailings to spur more orders from their main catalogs; offering discounts, free merchandise, and gifts for larger orders; and upselling on the phone as strategies to boost average orders-and in some cases, response rates.

WearGuard, a $250 million uniforms cataloger, has seen its average order size increase from less than $200 three years ago to $380 this year, says vice president of sales Tom McDermott. WearGuard credits the average order hike primarily to a focus on targeting bigger companies, which typically place larger orders, rather than smaller companies with less than 10 employees. He won’t specify what percentage of customers are from larger companies now compared to three years ago.

WearGuard also keeps its lists clean and eliminates marginal customers, “so we end up with our top buyers,” McDermott says. Beyond that, the Norwell, MA-based mailer promotes “hurdled” offers to get customers to spend more than their typical price threshold. For instance, a free jacket offered to customers who spend more than $350 “might get customers who plan to spend $300 to spend more,” he says.

What’s more, WearGuard has increased its outbound telemarketing campaign over the past few years, thereby forming closer relationships with customers that spend $5,000 or more. And WearGuard has an aggressive inbound telephone upselling strategy, in which sales reps offer phone customers unadvertised product specials. “The items aren’t necessarily discounted products, but fast-selling catalog items that we offer to customers while they’re on the phone with us,” McDermott says. “Even though the products are good sellers, we can afford to discount them because we have customers on the phone already, so our marketing cost at that point is zero. Even better, we need only offer a 5% discount, because since you have them on the phone, it doesn’t take a deep discount to upsell them.”

Cross-selling and upselling have also helped Los Angeles-based Viking Office Products improve its average order size 15% over the past three years, says Sean Clough, vice president of marketing for U.S. operations. “If, for example, a customer is buying ring binders and hasn’t bought indexes, we offer him indexes while he’s on the phone,” he says. “And when customers buy quantities close to the size of the master cartons, we’ll step them up to get us incremental dollars. So if the customer is buying eight reams of copy paper, we’ll step him up to 10 reams by offering pricing incentives.”

Like WearGuard, the $1.4 billion-plus Viking, which hopes to increase its average order an additional 6% over the next year, also offers unadvertised specials to phone customers, Clough says. And in recent years the company has made a conscientious effort to expand its product offerings beyond basic office supplies to larger-ticket items, such as office furniture, computer supplies, and imaging supplies.

Indeed, offering greater breadth of product has helped other companies, such as Colchester, CT-based S&S Worldwide, build up average orders. Among S&S’s 18 institutional products catalogs, which include S&S Education, S&S Healthcare, and S&S Recreation, average order size has increased 12%-15% over last year, says marketing director Keith House. The company has steadily increased the number of SKUs in its catalogs and also bumped up the number of promotional sales flier mailings in recent years.

S&S mails two sales fliers a year to customers and prospects, and for most orders, “we find that 50% of the items ordered are from sales fliers just received, while 50% come from customers referring back to the annual catalogs,” House says. “So the fliers give the catalogs a boost, pushing up the averag e order.”

What effect on response? An increase in average order size can result in lower response rates if companies are combining smaller but more frequent orders into one. But all the business catalogers contacted say that’s not been their experience. At Viking, “we’re increasing response as well,” Clough says. “We have to, because we’re under extreme competitive pressure from our parent company [superstore retailer] Office Depot, and from [cataloger] Quill Corp. So we have aggressive direct mail programs, and even compete head-to-head with Office Depot [which has a catalog] in some cases.”

S&S Worldwide is holding the line on response rates. “We still get the same response percentage, and we simply get larger orders,” House says. “With a greater average order, we gain efficiencies as we get more product lines per order, because our operating costs to fill the larger orders don’t increase proportionately, so we gain in profitability. And in theory, inventory should turn more quickly.”

For its part, WearGuard is “most concerned with dollars per customer,” McDermott says, rather than response and average order numbers. “But when customers are placing larger orders, you know they’ll come back over and over.”

WearGuard is counting on outbound telemarketing efforts to push its average order size even higher, McDermott says. Customers might be accustomed to buying only one type of product from the company, “but when an outbound service rep calls them and lets them know what other products we offer, we can get the full potential out of those customers,” not to mention larger orders.