Getting creative

Aug 01, 2008 9:30 PM  By

Your catalog creative has to entice people to open the book; it must make the products look their best and inspire customers to buy. So catalog design isn’t an option when looking for places to cut costs.

Or is it?

Catalog creative is one of the most expensive elements of marketing. Anyone remotely involved with contacting customers is aware of the cost. But you can keep up your marketing while maintaining brand identity, catalog mailings, e-mail campaigns, and all other contact strategies and save money. Here are six ideas how.

  1. Evaluate all assumptions for catalog creative

    This means from the kickoff meeting to page count, from paper weight to versioned order forms — every single element of catalog creative and production.

    Recently a multichannel merchant with more than 200 stores was completing the final layout of the catalog before printing. The majority of the catalogs mailed to customers, and an additional 20% of the printing was allocated for copies for the stores.

    In the past, each store received its bulk shipment of catalogs with an inkjet message on the back cover. In addition, the order forms were preprinted with special tracking codes and bound into the catalog.

    The opportunity? Each geographic area had a different order form. While the marketer was making only an economical black-plate change, the number of versions needed was plentiful.

    The company questioned if the tracking was worthwhile. In theory, it was; in reality, tracking was so minimal that the retailer decided not to invest in versioning. This decision saved on creative costs for versioning, the black-plate changes and shipping material to parse each geographic.

  2. Truly evaluate your catalog paper weight

    Mailers often fear reducing the weight of the paper because of a perceived value to customers. But when catalogers test paper weight, the result typically is the same: no difference in customer behavior.

    And the difference in what you save in paper and on postage can be significant. Ask your printer for printed samples of catalogs on different weights of paper for visual evaluation.

    Then conduct a test so that a portion of the mailing receives a catalog printed on the current paper weight and another portion receives a lower paper weight. This way you can be sure that a lighter-weight paper won’t hurt response rates.

    Reducing the paper weight may enable higher page counts, inserts and blow-in cards. Some catalogers mix paper weights, using a higher paper weight on the outer pages vs. lighter on the inside pages.

    Another trick is to look at the brightness of paper. Catalogers with a lot of ink coverage or product that is not color-critical can more easily use a lower brightness. But catalogs with apparel or food need brighter paper stock, as food doesn’t look too appetizing on dingy white paper.

  3. Shoot items for multiple settings

    Photography is a critical step in the production process, so you don’t want to skimp here. But you should make the most of your photo shoots so that you have plenty of product images for multiple purposes.

    To maximize a product image’s usefulness, take photos with and without propping. This allows you to keep current after a holiday.

    So if a product has been propped for Valentine’s Day, remove all propping and make the image event-neutral. This allows you to update the Website right after the holiday with refreshed, relevant photos.

  4. Develop one-on-one relationships with customers

    You know that targeted communication brings stronger results than marketing to every customer similarly. So what are you doing about it?

    You should review data to find out what first-time buyers purchased (such as the item, merchandise category, price point) and produce a cover with that item for the prospect catalog. It works.

    The best way to determine the value of this type of versioning is to do the math. For instance, assume the total cost to create the targeted cover is $2,000 (creative, production, color separation, proof and version charges). How many more orders would you need to cover your costs?

    Divide the cost ($2,000) by your average order value ($85) to reveal 24 more orders to cover the cost. Is 24 doable? You can take a gut-check and say yes. Or you can do more math.

    Looking at the chart below, if you were planning to mail 50,000 catalogs at a planned response rate of 0.5% for 250 expected orders, you would need to add the 24 more orders to cover the creative costs. The revised expected orders are now 274. Take the 274 and divide by 50,000 for a revised response rate of 0.548%.

    You have to do the math with your data. Whether prospects or segments of the customer file, the methodology remains constant.

  5. Evaluate the order form pagination

    Sometimes it’s easy to focus solely on cost cutting and ignore the topline sales. If you’re omitting two pages of selling space to accommodate the order form, you have to judge this against the lost sales.

    The simplest gauge is to use last year’s revenue and divide by page count. If the 32-page catalog generated $500,000, the revenue per page is $15,625 ($500,000 divided by 32 pages). How much does the order form cost, and can you afford it?

    But if an order form is important to your audience or product category, consider the potential negative implications of getting rid of it.

  6. Challenge your catalog’s format

    Mailing a smaller size can save paper and postage. But with considerations from branding issues to page density — and ultimately the potential impact on revenue — moving from a full-size flat (roughly 8″ × 10-½”) to a maximum letter rate slim-jim (about 6″ × 11″) is not a change to take lightly.

The chart “Slim-jims vs. full-size” above shows that the slim-jim catalog circulation is 500,000 and the contribution to fulfillment and overhead (general and administrative expenses) is $670,000. To compare a full-size catalog, use the same metrics but change the unit cost to $0.55 to reflect the cost for the larger size books. The contribution is reduced by $45,000.

All things being equal except the cost, the full-size catalog reduces contribution by $45,000. The next question naturally asks if the full-size book could contribute the $45,000, as does the slim-jim. Use the spreadsheet and change the response rate to reflow the scenario until the bottom line is $670,000 as shown in Catalog C.

Moving the response rate from 6.1% to 6.43% doesn’t appear to be a huge leap of faith — or is it? Only your data can decide for you. Your data is critical because the answer swings: If you had 1 million in circ, you’d need an 11% incremental lift in response.

The expense consideration is important, because if you don’t have the extra $45,000 ($0.09 per book), it doesn’t matter what the tradeoffs are between the two sizes.

If you can afford the extra $45,000 but you’re not convinced the incremental sales will materialize with the full-size catalog, you could consider mailing 97,826 more slim-jims (97,826 x $0.46 = $45,000.) This allows for additional circulation and a positive contribution to fulfillment and overhead, even at a 50% drop in response rate!

All creative solutions begin by challenging your assumptions. Always outline a financial scenario to help clear up the budget considerations. Use the data as a tool to help guide decisions, and work with your other departments to ensure agreement prior to proceeding with any changes.

Consultant Gina Valentino is the owner of Hemisphere Marketing.

Slim-jims vs. full size

CATALOG A CATALOG B CATALOG C
Slim-jim Full Size Full Size
Circulation 500,000 500,000 500,000
$/bk $3.00 $3.00 $3.00
Net sales $1,500,000 $1,500,000 $1,575,350
AOV $49 $49 $49
Net orders 30,612 30,612 32,150
Response rate 6.1% 6.1% 6.430%
Unit cost $0.46 $0.55 $0.55
Total cost $230,000 $275,000 $275,000
Gross margin 60% $900,000 $900,000 945,210
Contribution to fulfillment and overhead $670,000 $625,000 670,210
50,000 Current prospect mailing
0.500% Current prospect response rate
250 Expected orders
24 Orders needed to cover $2,000 expense
274 Revised total orders
0.548% Revised response rate