When it comes to postal rates, less can be more. Specifically, mailing only nine catalogs into a particular carrier route can cost more than mailing 10, because 10 is the minimum to qualify for a postal presort discount.
To obtain mailing discounts, catalogers often practice add-a-name: mailing to a marginal record solely to obtain the discount. In addition to providing postal discounts, adding a name and changing from a three- or five-digit noncarrier route presort to a carrier route presort results in speedier delivery, says Paul Imbierowicz, general manager of Broomfield, CO-based co-op database Abacus Direct.
Nonetheless, mailing more to achieve the postal discount does not always pay off. You have to factor in additional costs, such as that of producing additional catalogs and finding the “extra” names.
Doing the math
Although rates vary according to the level of presortation mailers do, the difference between mailing nine catalogs to a particular zip code region at a noncarrier route presort rate and mailing 10 to that same area at the carrier route presort rate can be as great as 25%.
For instance, to mail nine catalogs weighing 0.206 lbs. each at a 3/5-digit presort rate would cost $2.35, or $0.0261 a piece. The total postage for 10 of those same catalogs mailed at the carrier presort rate would be $1.94, or $0.0194 per book. That’s a savings of $0.041 per piece, or 21.2%. Assuming that the incremental cost to add a name is $0.09, a figure that Abacus cites as an average, you’re still saving on postage.
For catalogers whose books are relatively cheap to produce, mailing additional catalogs to obtain the discount makes sense. “You run add-a-name if you think you can break even with the postage savings vs. the added production cost,” says Erik Martinez, director of marketing for Arlington Heights, IL-based home decor and garden products mailer Design Toscano. “We don’t currently do it, but we’ve not given up on it. We’ll use it again judiciously, doing an analysis of the new postal rates to determine where that new breakeven point will be.”
Like Design Toscano, Beverly, MA-based women’s apparel mailer Appleseed’s wasn’t performing add-a-name during the summer, but vice president of marketing Carl Erikson plans to try it again during the fall/holiday season. “We get better response in fall/holiday books,” Erikson explains, “so we have a better chance to break even or maybe make a little money” on the added names.
Sparks, NV-based apparel marketer Sportif USA has already determined that add-a-name will pay off. “We’ll save even if all the tenth books aren’t responsive,” says vice president, consumer division Matt Glerum.
Catalogers should remember that expecting lower response is key when determining whether to use add-a-name. After all, these names or customers or prospects that you’d originally opted not to mail to in the first place, presumably because your modeling and calculation indicated that they wouldn’t be profitable.
“Obviously, you can take names of past customers or catalog requesters who never placed orders from your own house file,” says Dan Harding, marketing consultant for New York-based list firm List Technology Services. Harding also recommends that catalogers look to compiled lists from telephone directories or automobile registrations, which may be more likely to yield a decent prospect.
Finding the tenth name
Many catalogers opt to work with co-op databases to pick up the best tenth names possible. Fran Wollmann, vice president of list brokerage for Sherman Oaks, CA-based list firm Fasano and Associates, points out that many of her catalog clients “have segments that don’t perform, so they haven’t used them.” But if catalogers have those segments optimized through the co-op databases, she says, “they can find usable names.”
Design Toscano, for instance, uses a combination of catalog requesters who never responded and Abacus names modeled against older segments of its buyer file that weren’t selected for mailings. The company typically mails catalog requesters over a six-month period, Martinez says.
When that six-month period expires, Design Toscano will score the names and may optimize them through a co-op database. All of the co-op databases, Martinez says, “tend to work the same for us with add-a-name. It just depends how deeply you’re going into the pool.”
Sportif USA will find its tenth names using Abacus’s co-op database, though it is considering using the co-op database of New York-based Prefer Network as well, Glerum says. The cataloger will find additional names by modeling older or poorer-performing names from its house file through Abacus.
“But finding those tenth names in our house file is like finding a needle in a haystack,” Glerun says, “because we already go pretty deeply into our house file. But because Abacus’s database is much larger, I’m more confident of it than I am of our own house file.”
Glerum is also considering adding two names for carrier routes in which Sportif USA has only eight addresses, but he notes that the names need to be more likely to gain some sort of response rate.
“With adding one name, it’s a no-brainer,” Glerum explains. “We can almost throw those books out, get no response, and still save in postage. With adding two names, it becomes more of an issue of response because there’s no longer straight-up cost savings.”
Martinez says that Design Toscano will add two names sometimes and “in very rare cases, we’ll add three. But once you get to three, you’re getting pretty deep, and the payback tends not to be there because of nonresponse vs. the postage savings,” he says. “But since the postage savings can offset some of the additional costs of mailing, that’s when add-a-name can be viewed as a reactivation tool.”
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