There seems to be a disconnect between traditional catalog circulation managers and Web marketers. Multichannel merchants need to understand the gap between the two disciplines to maximize the potential of traditional catalogs and of the web.
Virtually all catalogers have integrated the Web into their businesses. For catalogs the Internet has been a plus both as an order channel and as a whole new world of potential customers. No catalog ever unplugs its Website.
But companies that started out as online-only merchants have not been so quick or nimble at integrating traditional catalogs into their marketing mix. Why not? There are a number of reasons:
1) Publishing catalogs requires some skill sets that pure Web merchants do not learn as they launch and build online businesses. Renting mailing lists, running merge/purges, buying printing, and analyzing mailing results are skills that are typically acquired on the job and not easily learned in the abstract. Without these esoteric skill sets, publishing a catalog is frankly a mystery to managers who have lived only in the Web world.
2) Printing and paper are expensive above-the-line marketing costs. Web managers are used to some fixed costs of Web development but are reluctant to embrace the baked-in marketing costs of catalog publishing: Why should I accept the 10%-25% marketing costs of cataloging if I can continue to grow my e-commerce business with some fixed Web costs and very small variable marketing costs?
3) Pure Web merchants have a mixed record of success and failure when launching catalogs. Sometimes they don’t do it correctly, and sometimes their base of Web buyers just isn’t responsive to a print catalog.
4) Some pure Web businesses simply don’t translate into mail order catalogs. The categories can be too broad (books, CDs, DVDs). Some categories can be too narrow, such as an online-only business that sellls a single product. Some can be targeted at demographic groups that don’t respond well to catalogs such as tweens.
How should online-only merchants approach launching a print catalog? There are some basic guidelines for success that have evolved:
* Start your planning with your current buyers. Will your buyers respond to a catalog? If they won’t, then the chance that you can use a catalog to prospect for fresh buyers using rented lists is slim to none.
* Test some outside rented lists to measure if you can use a catalog to prospect profitably for new customers.
* Segment your buyers into traditional RFM (recency, frequency and monetary) cells, and test how your very best buyers respond and how your older marginal buyers respond. Determine how much hidden profitable revenue you can get from your recent buyers and the sales potential of your entire customer file. Know how deeply you can mail into your house file before you fall below breakeven and your circulation is unprofitable. Is the potential list universe of buyers large enough to translate into economical press runs and to cover the fixed costs of creating a catalog?
* Test four-page, eight-page, or 16-page fliers to your very best buyers before you gear up for producing a full-length catalog. Test if you get any response to snail mail. Some pure web merchants find they get a better response to e-mail blasts than to flyers and catalogs at a much lower cost. Know the response rates, the incremental sales you’ll receive, the marketing costs and the potential profitability of e-mails compared to postcards and flyers compared to full blown catalogs.
* Measure sales using source codes on the catalogs. Make sure your online shopping cart captures as many source codes as possible. Offer a toll-free number for phone orders. Catalog shoppers expect the option of placing a phone order. Even if your Web buyers place the great majority of their orders online, you’ll still get phone orders when you mail a catalog. Use matchback processing after the mailing to get a more accurate measurement of the full demand from a catalog mailing.
* Plan on mailing your best buyers as often as every six to eight weeks.
* Merchandise and paginate your catalog like a traditional catalog, with the best merchandise up front. Use the inside front cover spread, the back cover, and the middle spread of the book to feature your best-selling items.
* Use your catalog cover and your creative to sell your company, and make sure your cover is attractive so that customers keep your catalog around. The longer they keep the catalog, the longer they will order.
Catalogs are great at getting reorders out of existing buyers. One of the weaknesses of the Web is in getting the existing buyer file to reorder. The catalog’s strength in getting buyers to order and to serve as a constant reminder of your company (because your catalog is sitting on the coffee table) compensates for this major weakness of the Web.
The Internet is fantastic at taking orders and harvesting existing demand but not so great at creating demand. Print catalogs can serve to leverage more sales and profits out of many online businesses.
Jim Coogan is president of Santa Fe, NM-based consultancy Catalog Marketing Economics.
Other articles by Jim Coogan:
Forecast Final Christmas Results Now
Keeping Your Circulation Healthy
How to Determine Your Catalog’s Financial Objective
Segmenting and Tracking by Source Code
Calculating the Impact of Advanced Data Hygiene