Live From the National Catalog Forum: Prospect or Die

Apr 16, 2010 10:23 PM  By

Nashville—While prospecting through traditional direct mail channel isn’t getting any easier or cheaper, catalogers have to need to bring in new customers to grow their businesses—everybody knows this. Yet many mailers have pulled back sharply on prospecting.

A panel at the 2010 National Catalog Forum, presented here April 13-15 by the American Catalog Mailers Association, discussed why mailers were not prospecting. The main reason is the poor economy, but most catalogers are also dealing with fewer pages, fewer contacts, and changes in paper to keep costs down.

Still, bringing in new customers is critical to the health of a catalog business. “Through attrition, we could be left with nothing if we didn’t prospect,” said panelist Susan Isley, chief marketing officer for Stony Creek Brands, which includes the Cooking Enthusiast and Uno Alla Volta titles. Many catalogers indicated they start with a prospecting plan, but routinely have to make mid-season adjustments.

To minimize costs and to control the volatility of results, more catalogers are relying on co-op databases. (According to the MCM Outlook 2010 survey on Catalogs, 32.4% of respondents said they have relied more on co-ops during the past 12 months.)

What’s more, at certain times of the year, Isley said some of Stony Creek’s prospect mailings are 100% to co-op names because they can perform better than a traditional list mix of rentals and exchanges. A lot of other mailers use the same strategy.

For most catalogers, current buyers alone will not sustain their businesses. With average rebuy rates of 35%-40%, many catalogers would find themselves in the red without new buyer acquisitions.

Relying on existing customers could cause a “death spiral,” Isley said, if rebuy rates can’t be improved or enough new customers aren’t acquired.