The Subject Was Lists…

…and database modeling and circulation. The occasion was Catalog Age’s first-ever list roundtable, and the discussion among the participating catalogers was spirited

In late October, Catalog Age invited several marketers from the New York area to discuss circulation and list-related topics. The conversation was lively, to say the least, as well as highly insightful. Now we invite you to sit in on the idea exchange as well.

The roundtable participants were: Anne Marie Coffey, vice president of marketing for multititle gifts and home goods mailer Lillian Vernon Corp. The Rye, NY-based cataloger, which has annual sales of roughly $254 million, sends about 80% of its mailings to its house file and 20% to prospects.

Karen Greenberg, president of upscale women’s apparel marketer Olive and Bette’s. The New York-based retailer launched its catalog less than three years ago; roughly 70%-80% of its mailings go to prospects.

Phyliss Sorese, vice president of marketing for Silhouettes, a catalog of plus-size women’s apparel owned by multititle mailer Hanover Direct. Prospects account for about 40% of Weehawken, NJ-based Silhouettes’ annual circulation.

Craig Winer, systems and operations manager for Garrett Wade Co., a $6 million cataloger of quality woodworking tools. About 30%-50% of the New York-based mailer’s circulation goes to prospects.

In search of lists that work Catalog Age: What is your top list or circulation concern?

Anne Marie Coffey: I’d say the trend of an overall decline in response rates.

Catalog Age: Why do you think response rates have declined?

Coffey: The competition from other catalogers and online retailers. Customers are busy and tired.

Karen Greenberg: There is not a lot out there [in terms of lists that work]. We are exploring every avenue possible now because we are finding that our response rates [from rented lists] aren’t what they were even a year ago. Plus, we are definitely in a start-up mode. It has been nearly three years since we launched our catalog, and we’re still dealing with the issue of how you get somebody out there to try you. Do you provide free shipping – is that working?

Catalog Age: Online marketers are doing that. They’re giving away the house.

Phyliss Sorese: And if you give it away, they will take it. I would say our top list concern is finding targeted lists. There are a lot of large catalog companies out there with a lot of names. We probably are one of the largest companies. We have been around for 15 years, and we have a large database of names. But it is really difficult to grow that universe. You know the buyers are out there, but how do you find them? Honestly, knock on wood, our business has been doing well, but we need to find more buyers to get us to the next level.

Catalog Age: Exactly how do you do that?

Sorese: Online has helped. Our list broker is great and will call start-ups and try to get us 5,000 names on exchange. That has helped somewhat. But there are so many start-ups, and we don’t want to give them 300,000 or 400,000 buyers when they have only 40,000.

Greenberg: We have found little resistance [from large companies] when it comes to exchanging names, with a few exceptions. Where we have found success is with co-op databases like Abacus or Z-24. These are the names that are really performing for us.

Craig Winer: We are a niche cataloger with circulation of 150,000-250,000 bimonthly. Database models always work best for us.

Sorese: At Silhouettes, we are targeting pretty much anyone who has a list available in the plus-size women’s market. A Bloomingdale’s or a Saks that offers many sizes can segment its customers by size with SKUs. But a co-op database wouldn’t necessarily know that these are large-size buyers, just that they buy from Saks. Silhouettes is the only Hanover title that cannot make a co-op database work. We have tried really hard to get Abacus to work for us. But even though we see them as the best out there and we have strived to make it work, it just does not. And I think that is because the benefit of Abacus is knowing that the customer bought from six home catalogs and 12 baby catalogs and bought online four times, and that makes it rich data. But all we need to know is that the customer has purchased one large size, and then we have a potential customer. And Abacus can’t get at that.

Catalog Age: But Karen, you said that co-op databases are one of your better sources?

Greenberg: Co-op databases are probably my number-one source.

Winer: Are co-ops also a way to do a lot of testing and see what model works for you?

Greenberg: Exactly.

Sorese: For a niche catalog still in start-up mode, a co-op makes sense because it can give you this great wealth of information. The same goes for mass marketers too: If you know someone has purchased 40 times in the past year, then he would be perfect for a general merchandiser. Large catalogers can really make it work because all they need to know is the amount of times customers are buying. [To Coffey] I don’t know if you agree.

Coffey: We didn’t join Abacus. We didn’t feel there was a compelling reason that would add value to the business as opposed to transferring new data about our customer database [to other companies]. We are members of Z-24, and we are using that more for our house file than for prospecting. It can help us with inactives, catalog requesters, lapsed buyers – not necessarily prospects. [With lapsed buyers,] there could have been a single event that made them dissatisfied with the company, and this is what the modeling with Z-24 can let us know. With the amount of house file names we have – more than 5 million active two-year buyers – we try to do as much with them as possible rather than going out and acquiring more.

Catalog Age: Have you had luck with noncatalog lists such as compiled files or subscriber lists?

Winer: The biggest success we have had is with magazine lists. We rent the whole file but look at the customer profile to figure out whom to mail to. We mail just to mail order buyers on the list.

Coffey: Subscriber files have worked for us primarily [for our children’s catalogs] – magazines that have overlays with children’s ages. Obviously the catalog buyers are our best bet, but taking a subscriber list and finding the names that have children has helped us target new buyers. Unfortunately it has changed, but a few years ago, catalog buyers’ change-of-address information was available. Now you can’t just sell the NCOA [National Change of Address File]. That used to be really good.

Catalog Age: What about compiled lists?

Sorese: We have tried them. We have pretty much tried everything. The questionnaires [used by list compilers to solicit data from consumers] may even ask things like “Do you buy plus sizes?” And of course we spend a lot of money and have little to show for it. We even thought about sponsoring a question.

Greenberg: We have simply found that you need a person who will shop from a catalog.

Winer: Because [the people on a compiled list] may say they have to shop for a particular item, but they may intend to buy it from the local department store and never plan on ordering from a catalog.

Catalog Age: The trouble for the industry is that only, say, half of the population are catalog buyers. In essence, you are marketing to the converted. Are you trying to convert non-direct shoppers to direct mail, or have you given up on that?

Coffey: The Internet will potentially convert more people to remote shopping. People will become more trusting on ordering things they haven’t seen or paying shipping and handling, which I am sure is why many customers are hesitant.

Winer (mimicking a customer): “This can’t cost you $5 to ship to me!” [Laughter]

Cyber-prospecting Catalog Age: Are you renting buyers files from pure-plays?

Winer: We aren’t, no. We would be different from a large Website that might sell tools. Amazon bought Tool Crib, but they are so different from us, so that list wouldn’t work for us. It’s a completely different audience.

Greenberg: We are starting to, but we are doing it now so I can’t tell you what the results will be. I have no idea as to how it will perform.

Coffey: I see the opposite as well; online marketers like [the now-defunct] Garden.com are mailing print catalogers to their own Web buyers. The pure-plays are just not cutting it. It’s a natural progression because there is real power in the direct mail piece’s ability and in traditional direct marketing.

Catalog Age: Do any of you rent e-mail lists?

Coffey: We send e-mails only to our own Web buyers list.

Sorese: We did some targeted e-mails [using a rented list] and had such little response that I called up the company and almost demanded my money back. It was as if no e-mails had gone out at all. That said, you can change your whole order curve with an e-mail campaign [to buyers].

Catalog Age: Can you get the same benefit from e-mails that you get from a catalog drop?

Sorese: No, I don’t think anyone has seen that. And everyone has tried to make e-mailing work and see if it could replace a number of mailings and save money. We have certainly tested it, and so far the results are clearly no. I think everyone is seeing this, and I think it is proven by the migration of the pure-plays to print. There is a statistic that you can send something like 25 e-mails for the cost of mailing a catalog to a prospect. But are you getting a response?

Catalog Age: Are you renting out your own e-mail lists?

Coffey: Not at this point or in the foreseeable future. Until we all learn enough about these customers, we really need to be careful. And now privacy is even more of an issue.

Catalog Age: How have privacy concerns affected your circulation strategy?

Coffey: Everyone is very conscious of what customers want when they call and ask “Where did you get my name?” and say “Remove me from your list.” It’s just heightened awareness. It has always been important, but now it is a priority throughout all positions within catalog companies….And the timing aspect is tricky because if someone calls today and the tape is already made and sent to the printer, the customer does not understand why he is getting the catalog again, and he gets angry. These are the people who get really aggravated. And you don’t want to mail to these people, so you take them off as fast as possible.

Catalog Age: Are you merging data from your online buyers and your print buyers?

Coffey: Each item has an item number distinct to the channel through which it is offered. So if the customer service representative inputs a certain product number we can tell where the item was seen because an identical product has a different catalog number and a different Web number. The curves of the online buyers can be plopped right on top of the curves of the print buyers.

Catalog Age: It sounds as if you are able to calculate how catalogs are working as traffic drivers. How do you quantify the conversion rate?

Coffey: Based on coding, we feel the catalog is really driving the Web sales. After all, we are not renting e-mail names. We promote the Web in the catalog, so it is primarily our customers who are aware of the site.

Remails: Too much of a good thing?

Catalog Age: When it comes to remails, how much is too much?

Sorese: I think you have to look at where you are. If you are in a start-up mode you don’t remail as much. As we grow we are remailing more often. If you look at some of your catalog’s best buyers, they are almost expecting to get a book very frequently. And you can definitely prove that remails are incremental and that you are not cannibalizing yourself. It’s a straight equation, very simple to do. Then you can decide if once every two weeks is not enough and if you need to mail certain customers every week. Then there are many people such as first-time buyers where with too-frequent remails all you are doing is fatiguing the list and wasting money.

Coffey: It’s been proven time and time again that the best customers can absorb more mailings. It is also important that the offer is made fresh by changing the cover. We are a seasonal cataloger, so we are coming to customers frequently but have many editions, from Valentine’s Day to Easter to the Fourth of July, and so we are mailing you many times, but we are always giving you something different.

Winer: Do you segment your lists?

Coffey: It depends on the time of the year. During holiday we mail much deeper than we do in spring.

Sorese: This is going to sound like a no-brainer, but especially for some of the smaller catalogs, you always think that if you mail again you will get more sales, but you need to make sure that you wouldn’t have had that sale next week even without the remail. In other words, you want to ensure that you are driving more sales and not just manipulating when a customer buys. And you have to do that carefully through testing. It’s an easy thing to do, but you have to do it. After all, your catalog is not completely new every time you mail. You may be adding pages, changing product, swapping covers, but it is not a drastically different piece.

Greenberg: For new customers it is important to keep our catalog in their faces. We know you are going to get J. Crew every week, and we are trying to build our own brand recognition. You have to look at it that way too.

Coffey: Especially since you don’t know why a catalog gets overlooked…it may have been a bad day for the customer, or maybe the customer was away. You just want to always be there.

Winer: You are in essence training your customers by controlling the mailings. They know to expect a new catalog at a certain patterned frequency.

Sorese: You would be surprised how much your customers know about your business. If they know that certain types of items sell out quickly, they will order faster and change your order curve. If they know how long it is before you put things on sale they will catch on, so you have to mix things up. But you have to be sensitive to this and monitor how you are mailing.

Catalog Age: How often do you remail prospects if they have not bought?

Winer: We do the initial mailing and then three more. Three seems to pay off; the response drops down, and then the group is so small anyway.

Catalog Age: How often do you remail?

Winer: About every two months. As of January we will have two cycles with the same core 80 pages, and we will change the outer 20 pages to offer more flexibility, as we are trying to grow and offer some change in products and pricing.

Speaking to the nonconverted Catalog Age: What sort of conversion rate do you get from catalog requesters?

Greenberg: We find that people who request the catalogs do not often translate into buyers.

Sorese: Right, but we have it a little bit better because at least when people request our catalog they are telling us that they are a plus size.

Winer: A lot of people just want the catalog to check it out. And that’s an expensive thing. Because you have the name and you send out the catalog and then you might remail because you have the name, and suddenly there you are out all that money [which could have been used for more-targeted prospecting efforts].

Greenberg: When we first started we got 10,000 requests from readers of The New York Times [after the company was cited in an article]. We had to mail to them because they asked. We might as well have flushed the money away. We came to find that we could have run the names through a co-op database.

Coffey: Still, especially in the beginning, you need to mail to everyone.

Winer: We used to use card decks and we would do a [business reply card] on the back because it was an easy thing to do and a way for us to get response. But it was taking us so long to sort through all the names, so we decided not to put the postage on it, just to make people work a little bit.

Greenberg: And people who put the stamp on a request are more likely to buy.

Winer: People who are just getting into a hobby like woodworking who have the choice of a free catalog or one that costs money are going to take the free one, so we don’t charge, because we don’t want to exclude beginning hobbyists.

Coffey: Some of our online requesters have been better prospects and have been really responding.

Winer: We are seeing this also. I think people see a catalog and then go to the Website and want a copy, so they are better prospects.

Greenberg: I think a lot of people are going to their computers with catalogs in hand as well.

Considering the alternative Catalog Age: Craig, earlier you had mentioned using alternative media such as card decks. Do they work for you?

Winer: They give you a lot of names and at some point it pays out. The question is how much time are you willing to invest? I think the good thing is that you get a lot of names and you get 1.5%-2% conversion, and that’s a lot of people. And it doesn’t really cost much. You can get really good deals on the card decks. The thing that costs a lot are the follow-up mailings. My point is that you can up the response rate and get even more qualified buyers by not including postage and making them put the stamp on it if they’re interested. While you get fewer people responding, you are increasing your conversion rates [by prequalifying the requesters].

Catalog Age: Are the card decks that you use targeted toward your niche?

Winer: Yes, there are about a half-dozen targeted just for woodworking.

Coffey: I don’t know if we have tried card decks, and I might be biased because I hate getting them.

Winer: Someone is opening them. It’s amazing. Lots of people are responding to them. The card decks probably work best for hobbyists because they are inclined to order and read about what they are interested in.

Catalog Age: What about package inserts?

Coffey: We have used package inserts, though not recently. People in continuity – book clubs, special offers, etc. – seem to use them the most. It is unusual for other catalogers to use them unless it is for a request form. We haven’t done inserts in years. For us the better bang for the buck is mailing the entire catalog to a prospect. The return is there.

Sorese: For us it has been a couple of years since we used package inserts. They didn’t do much for us.

Winer: It is also hard because the outgoing orders don’t bring you the volume that a full prospecting drop will.

Greenberg: We decided that we were going to hire a PR person so that we could get merchandise in a magazine. For instance, [in October] we were in InStyle magazine with three items and our 800-number, and we were getting lots of calls. We really like doing this, and the customers respond directly to it. There is a new shopping magazine from Conde Nast called Lucky, and it’s phenomenal. That is a great way to get your name out there.

Reconciled to postage increases Catalog Age: Will the postal rate increase affect your circulation plans?

Sorese: Not really. We look at it as the cost of being in direct mail.

Winer: You really can’t do anything about it.

Coffey: You have to invest in your customer. Like anything else there are increases, but you factor them in and plan for them.

Catalog Age: The rate hike may spur some catalogers to dig a little deeper or do more modeling or clean up their files a bit.

Sorese: Of course you should be doing that anyway. I have a mail pattern, and I am not going to throw that off because of a postal hike.

Coffey: A rate increase makes things more interesting and challenging, and you have to adjust, but there are ways around it, such as changing paper and envelope weights, and also pushing to clean up your database.

Sorese: However, the increase may prompt you to be more proactive for the following year to try to compensate.

Coffey: You should be planning for these postage increases because they are announced well in advance.

Greenberg: We are in a start-up mode, so we definitely would not cut back mailings.

Winer: We have tested lighter paper weights and grades and gone down in weight, but you can go only so low without really affecting quality. We have done that in preparation for the increase to lighten up the book and have tested that.

Coffey: Two other big factors are paper increases and ink increases. Also, labor and fulfillment costs. Everything is going up; it’s just that postal is getting the big play.

What can list companies do for me? Catalog Age: List companies feel that catalogers want more from them. Do you expect more?

Greenberg: We do. If things aren’t working we ask them why our response rates aren’t better. We expect them to do a bit of consulting.

Sorese: I find that list firms are concentrating on bringing very talented people in, and I have never really worked in that capacity with a broker, but I think that people are really finding that very beneficial because these people used to be top managers at catalog companies.

Coffey: I think that is the difference now. The brokers have been mailers themselves and bring more to the table.

Winer: We rely on brokers to respond rapidly. I don’t want a list in two weeks; I want it now.

Greenberg: Because we use just one brokerage firm, they will even offer creative advice.

Sorese: Some will even consult for you on what products you should have in your book because there is that depth of experience and knowledge out there in that field.

Greenberg: Ours even helps with our mail plan. Making an offer they can’t refuse

Catalog Age: Do you use different promotions for the different segments of our mailings?

Sorese: In the past, the belief at Silhouettes was that you didn’t need to convince people to buy; our file didn’t grow because of that, and retention was low. Now we treat a prospect different from a house file name. The hurdle is getting customers to try us, so we have done things like offering free shipping and easy or free returns on a first order. It helps the business phenomenally for first-time buyers. But once they know us and are consistent we don’t feel as if we need to offer them free returns. We spend more for the initial purchase even though it seems you should spend more on your customer, but we do it to get them in, and we have a very structured tier as to what they get afterward. However, we do have special sales just for customers, so there are perks there as well. What you offer depends on the specific problems in your business. When we did focus groups and found our key weak areas, we decided to combat them by promoting growth in those areas. We also use special offers to reactivate buyers. And promotions do work. This is the best thing about direct response: You know right away what is working and what is not.

Coffey: And you constantly back-test to make sure you are maintaining your lift. We are very promotional, so we also offer free shipping. This is a big challenge for our company to cover. So we may set a minimum like “free shipping on orders over $50.” Then you test higher and lower, and you see what works. We also offer free gifts with purchase.

Winer: With free shipping, you are training the customer. You don’t know if they are buying for love of the merchandise or because of free shipping. We have tried different promotional events and are still testing them, but so far they have not made a real difference. Our average order is more than $125, so our customers are not really concerned with shipping costs.

Greenberg: We are going to try a promotion for spring. We are going to target prospects possibly with a promotion listed on a dot-whack sticker.

Sorese: We don’t use dot whacks, but people say they really give lift.

Coffey: The actual sticker seems to add personalization, and people respond to it.

Catalog Age: What about free-gift offers: “Spend $30 and receive a free widget; spend $50 and receive two free widgets”?

Sorese: If you think about it, those offers make sense. You have in mind your products and your price points and what you need to get customers to that next tier. Clearly, they can’t work for everyone, but when you know what your average order is and your buying patterns, you can use the offers to manipulate your order size and your response rate.

Coffey: But you have to be careful. If you set the goal too high, you will dissatisfy the customers who can never reach the required order size. It has to be just a little reach for them but not too much.

Sorese: Otherwise the customers are saying, “Hey, they get the free thing and I don’t,” and then they walk away completely.

Coffey: The goal is not what your average order is necessarily but the number of customers who are falling in that deviation between levels. You would never make the limit $55 if most people are at the $40 level. It is also easy to have different offers with the dot whacks for different customers.

Looking ahead Catalog Age: Any predictions about changes in strategies over the next few years?

Coffey: I think that as the Web picks up speed, there will be more universal buyers who cross all channels, so you will have to stop thinking of people as print buyers or as Web buyers. How you treat them is going to be the biggest change. I have no idea specifically how we are going to handle it, but I think this is the biggest challenge we will see over the next two to three years. .

Greenberg: We are a little different because we also have retail. But I think the Web is never going to replace catalogs, because people like to have something to hold onto.

Wine: And I am on my computer so much that sometimes it is more convenient [to shop online], but sometimes I need a change.

Sorese: The Web is better for destination-driven sales, and the catalog is better for browsing.

Coffey: Plus, customers have to think about going to the Web, and that is why the catalog is so helpful; it is a reminder.

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