HGH invites suppliers to ride along

Birmingham, AL-based HGH Hardware Supply likes to share. In each of its quarterly catalogs, HGH includes another catalog from one of the manufacturers whose products HGH carries.

FastCap, a Bellingham, WA-based manufacturer of woodworking supplies for professional cabinet makers, saw sales of its products in HGH’s catalog go from $50,000 in 2003 to $85,000 in 2004 after it inserted its catalog into that of HGH last year. HGH mails to 6,000 house file names each quarter; it prints an additional 3,000 copies a year for use in its showroom.

This year, HGH projects that its customers will buy about $170,000 worth of FastCap product thanks to its inclusion of another catalog insert. “Since we’re a distributor for them, what’s good for them is good for us,” says HGH marketing and customer service manager Charlie White.

What’s more, White says, HGH’s wholesale customers, who account for 95% of its business, consider receiving the inserted catalogs a bonus of receiving the HGH book. These retailers will use the supplier’s catalog as a reference tool with their customers, enabling sales reps to look through it with customers, figuring out what the store needs to order if it doesn’t have a particular item in stock. “It becomes a retail piece that our customers can use with their customers,” says White.

The inserted catalog also becomes part of a larger promotion, in which call center reps are instructed to upsell and cross-sell products from the inserted catalog. One reason sales of FastCap via the insert are expected to be double this year is because its upsell/cross-sell program with HGH has been extended throughout the year. Last year the program lasted only a few weeks.

HGH has been inserting other companies’ catalogs into its own for about 10 years. Some of the manufacturers also create retail aids that can be pulled out of the HGH catalog, such as posters listing the many varieties of cutting tools that woodworkers can choose from.

Howdy, partner

Don Nicholson, East Coast sales manager for FastCap, credits customer affinity for the success of his company’s partnership with HGH. “HGH is a distributor to the cabinet industry, which is the biggest part of our market, so it’s only natural that we insert our catalog into their catalog to reach their clientele,” says Nicholson. FastCap also inserts catalogs in trade publications such as CabinetMaker and Woodshop News.

The customer overlap itself, of course, can be an issue unless the catalog your book is being inserted into also serves as your distributor, as HGH does for FastCap. When FastCap approached another, newly launched woodworker’s supplier about a similar deal, it was turned down. “One reason they wouldn’t insert the catalog is that they were looking for recognition themselves and didn’t want the focus to be on anyone else,” Nicholson says.

White says HGH will insert only catalogs that sell products or product categories its buyers have a history of purchasing. “If a tool manufacturer wanted to insert a catalog with us, it would have to be woodworking tools,” he explains. “It has to be targeted to our customer base.”

To ensure that the inserts hew to HGH’s criteria, the company designs and manages the production of most of the inserted catalogs, even overseeing the photography. Most of the insertees pay only for the printing, which ranges from $5,000 to $12,000, depending on the size and page count.

Every fall HGH meets with its approximately 20 major vendors to decide whose catalogs it will insert in the coming year. “It depends on what we want to promote each quarter,” White says. For example, if during the first quarter of next year, the company wants to kick off a campaign for the cabinet doors it sells, it might be especially receptive to inserting a catalog that sells such merchandise.

The companies working with HGH are kept abreast of the promotional efforts both before the design of the catalog, to be sure that the desired products are highlighted, and after the catalogs have mailed. The companies will work together on any midcampaign promotions such as sales and specials.

“We share in the promotions with them,” says Nicholson. “They’ll give us an idea, and we’ll make it happen, so we’ve been very instrumental in making our products a success for them.”

Cross-promoting mutual values

About four times a year for the past two years, Norm Thompson Outfitters has given a plug in its Sahalie outdoor apparel title to Berkeley, CA-based travel cataloger Backroads. The Sahalie catalog will include a paragraph promoting one of Backroads’ trip packages, says Sahalie art director Rich Lorimor.

The arrangement came about through a friendship between a graphic arts employee at Sahalie and a member of the Backroads creative team. The two companies, Lorimor says, have a record of social responsibility, including a commitment to preserving the environment. “I think that Backroads has a lot of the same philosophies we do — travel, sustainability, a lot of natural tie-ins,” he notes. By promoting Backroads, Portland, OR-based Norm Thompson is encouraging its shoppers to check out another company that believes in the same things it does.

Backroads does compensate Norm Thompson for the promotional space, but Lorimor won’t disclose the terms. In fact, he’s not even comfortable calling the plug advertising. “I wouldn’t want to put a label on it,” he says. “I think because we are fortunate enough to have the relationship that we do, we don’t charge by square inches like you do with advertising. It’s just an understanding we have as partners. We would never do it [solely] for financial reasons, because as a company we represent so much more than that.”

Neither Sahalie nor Norm Thompson’s two other titles — Norm Thompson and Solutions — are promoted in Backroads’ pages, and Lorimor says his company doesn’t specifically track results of products sold on the pages featuring the Backroads blurbs to see how their inclusion affects buyer behavior.

Because honesty with customers is one of the values the two companies share, they coordinate the marketing effort, finding a travel package that includes a trip to the place where the photos featured in a particular Sahalie book were shot. For example, photos in Sahalie’s spring 2005 catalog were taken in Italy’s Puglia region, complementing the Backroads blurb touting a trip featuring “villages of whitewashed cottages” and “stretches of Adriatic coastline.” The promotional paragraph is accompanied by a photo of two hikers walking along a craggy shore. Without that authenticity, the catalog featuring the promotion would be reduced to a “social responsibility flier,” Lorimor says. “It’s important not to mislead.”

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