Corporate Gift Sales Slow Down

Mar 01, 2002 10:30 PM  By

Given the number of layoffs reported in nearly every business sector during the past year, it’s no surprise that corporate spending is down. For catalogers selling promotional products, that means sales are down as well.

According to Irving, TX-based trade group Promotional Products Association International (APPAI), distributor sales of promotional products reached $17.85 billion in 2000 (the last year for which figures are available). But right now, “the overall gift market is soft for executives,” says Tom Shipley, president/CEO of B2B Brand Group, which mails the T. Shipley, Awards.com, and Reliable HomeOffice catalogs. Although overall sales increased due to the Altamonte Springs, FL-based B2B’s aggressive mailing plan, its T. Shipley catalog pulled 25% fewer sales per catalog mailed than it had in holiday 2000.

Other mailers, such as the $170 million Lands’ End Business Outfitters division of $1.36 billion consumer apparel cataloger Lands’ End, failed to make significant sales gains. The business-to-business unit experienced flat corporate gift and rewards sales during the holiday season, says marketing manager Hilary Kleese. “Companies were watching their pennies and looking for value.”

Another consumer mailer that also struggled in the b-to-b corporate gift market during holiday ’01 was $395 million Bear Creek Corp., which mails the Harry and David food and Jackson & Perkins horticultural catalogs, both based in Medford, OR. Corporate gift sales for the two books combined fell by an undisclosed amount, says spokesperson Bill Ihle. “Companies spent less on gifts to their employees or sent smaller gifts.”

Card sales mixed

Some catalogers that sell corporate greeting cards didn’t fare much better. Holiday sales for the two corporate card catalogs of New England Business Service (NEBS), RapidForms Holiday Expressions and NEBS Main Street, were “meaningfully below our expectations for pretty obvious reasons,” says NEBS vice president of finance/chief financial officer Dan Junius, referring to the falloff in business following Sept. 11. The company fared better withsales of corporate holiday cards in the U.K. and Canada.

“Businesses probably looked at discretionary items and decided that holiday cards were discretionary,” Junius says. “Also, the fact that we were in the mail with a lot of our catalogs right around Sept. 11 certainly reduced the impact of those catalogs.” One of NEBS’s biggest drops occurred on Sept. 8.

But another corporate greeting card cataloger, The Eimicke Collection, enjoyed double-digit holiday sales growth, says president Alicia Eimicke. Although she won’t reveal the Bronxville, NY-based company’s annual sales, she says: “We met all our budget figures.”

Eimicke contends that the slashing of corporate budgets helped her company. “If anything positive came out of Sept. 11 — at least for our business — it was that those companies that usually buy corporate gifts decided to scale back and instead send greeting cards,” she says. “So we picked up some corporate gift buyers who changed their plans. We picked up at least $200,000 in sales we don’t normally get.” Customers may also have responded to the company’s pledge to donate 5% from all card sales to the Fire Fighters Emergency Relief fund.

Anatomical Chart Co., a $17 million cataloger of science charts and offbeat anatomy novelties, also benefited from decreased business spending during the holiday season. Sales of medical-related gifts such as skeleton key chains and mugs, which were priced at less than $20, rose more than 15% from holiday 2000, exceeding plan.

Anatomical targets these gift items largely to chiropractors, who buy large quantities of the items to give to their patients, says executive vice president Bill Demas. The Skokie, IL-based company credits its e-mail campaign with much of the success of during the holidays.

“I tracked how many doctors we e-mailed, their click-through responses, average orders, and sales, and in December, we really kicked butt,” Demas says. Web sales jumped 50% from December 2000, and combined catalog/Web sales grew 7.5%. Demas is happy with that increase, especially considering that catalog circulation was flat.

Lessons for 2002

To try to drum up corporate sales, some mailers are tweaking their marketing messages. For instance, Dodgeville, WI-based Lands’ End developed a more value-added message in its catalog, accentuating the practicality of the corporate-logoed polo shirts it sells. The company also promotes the long-lasting impact of its gifts compared with that of items such as balloon bouquets, fruit cakes, and business lunches, Kleese says.

The division hopes to build corporate gift sales by emphasizing its ability to outfit entire businesses more than it has in the past, Kleese says. “We won’t phase out any items, but we will bring in more of a ‘best of Lands’ End,’ since that’s what our corporate customers have been telling us they know us best for.”

For the most part, catalogers are proceeding with caution when it comes to circulation. The Eimicke Collection will focus more heavily on profitability this year by cutting prospecting 10%-15% while keeping overall circulation flat with last year. In addition to mailing more heavily to customers, “this year, we’ll go with more tried-and-true lists, and stick with what we know works,” Eimicke says.

Despite the company’s success during holiday 2001, Eimicke expects the economic recovery to be slow, so she’s planning on single-digit sales gains this year. “But at the same time, we are looking for a bottom-line profitability increase in double-digits,” she adds, “which we accomplished in ’01.”

Tapping into telemarketing

As for B2B Brand Group’s T. Shipley and Awards.com catalogs, the company plans to circulate 15% more catalogs this year over last year, Shipley says. B2B Brand Group’s total house file has more than 900,000 names. T. Shipley accounts for more than 121,000 of those names, with 750,000 from Reliable HomeOffice and another 30,000 from Awards.com.

“Our goal is to be more effective in developing relationships with both our customers and our prospects through telemarketing,” Shipley says. “For lifetime value of corporate gift buyers, outbound telemarketing has been a home run for us. We’re able to prospect at breakeven. We’re able to place calls because so many [corporate] events — such as annual recognition awards, annual sales meetings, and annual parties — are predictable.”

The company segments its customer database using a number of criteria that influence response, such as recency, lifetime value, job title, company, and previous purchases. In addition, Shipley says, “we are collecting information on the customer at the order as well as during our quality-control follow-up calls as to what other events are planned, annual budget, timing of events, other opportunities in the company. In our business, timing is everything.”

B2B Brand Group is also discussing a plan to append other information from several large transactional and demographic databases, which will assist further in segmenting the customer base, Shipley says. “And along with outbound e-mails and our catalogs, we can put together a whole communications strategy even more effectively this year.”

With postage rates set to go up later this year, B2B Brand Group aims “to be as aggressive as possible in finding alternative marketing programs, such as outbound telemarketing and sending e-mails in every contact with customers,” Shipley says. The company has already boosted sales of its Awards.com catalog by getting listed with many Web search engines.

While NEBS was still unsure at press time how aggressively it would mail its greeting card catalogs for holiday ’02, Junius says that the although the company’s less-than-stellar holiday ’01 results “will have an influence, they won’t reduce our enthusiasm for the category. We’ll have to look at the individual cards we sell and some of our marketing programs to determine how we’ll spend our marketing dollars this year.”

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