MANAGEMENT: Getting funding from the top

How to convince upper management to boost your catalog budget

While many consumer catalogers are pure direct marketers, business-to-business mailers are often the direct arm of a much larger organization. And when a company’s core business is, say, manufacturing with distribution primarily through a sales force, it may be more difficult to lobby top management for increased funds to expand or improve the catalog division.

According to Scott Robinette, general manager of the Hallmark Business Expressions division of Kansas City, MO-based Hallmark Cards, “You must first establish that your plans fit into the corporate vision, objectives, and direction – both strategically and financially. You have to recognize that choices have been made at a higher level, and you need to demonstrate that your plans are consistent with those choices. If you can’t, it’s not worth going up the hill no matter how compelling the financial scenario.”

And speaking of the financial scenario, there must be a reasonable payback for the incremental investment, “whether that’s an internal rate of return that’s consistent across all companies,” notes Robinette, “or a return on assets.”

Your own credibility and presentation skills also determine how likely you are to get additional resources for your catalog. “Most of the people [in our top management] are not direct mail people,” says Murray Smith Jr., direct response manager at Kingston, MA-based R.S. Means Co., which supplies construction-cost books, software, and seminars to developers and contractors. “So they depend on me to present the logistics of the marketing plan, then they decide how to fund it.”

The all-important presentation

Smith makes an annual presentation for funding for a mail plan that includes four catalog editions and a direct mail program. If during the year he sees opportunities for additional sales that require more funding, he justifies them to management with a plan and a summary of the returns on current promotions.

Nonetheless, Smith never sees a dramatic year-to-year increase in his budget or in catalog circulation – but for good reason, he says. “I have a limited audience of about 3 million people who are interested in my product.” The challenge is to mail smarter using database technology, modeling, and merge/purge. “So even though our circulation is flat, more pieces are reaching the right people,” he says. Over the past five years, despite mailing the same number of books and keeping the budget flat, catalog sales at the $15 million company have increased 8%-10%.

Lexington, KY-based cataloger Gall’s, which sells supplies for public safety officers, must submit a strategic plan twice a year to Aramark Corp., its $7 billion parent. The initial plan is followed by a more tactical business plan, says vice president of advertising Tim O’Malley. “We lay out an historic view of the previous three to five years, past and future trends, competition, and initiatives. We submit numbers, but at a fairly broad-brush level, then review them every month.”

Aramark’s core business has been global food distribution, O’Malley says. “But the catalog business is more profitable…so the company likes the numbers.” Gall’s circulation increased slightly this year over last, and this year’s estimated $150 million in sales continues a trend of double-digit revenue increases.

At calibration, test, and measurement products manufacturer/distributor Transmation, increases in catalog circulation or marketing budgets of its Transcat catalog must first pass by Neil McCaw, president of product distribution. If McCaw buys in to the plan, he then presents the proposition to his peers at the corporate level as a return on investment. As long as McCaw has the numbers to back up the plan for the Rochester, NY-based Transcat, it’s not a hard sell, he says.

But the catalog has been a tougher sell at Dallas-based Bearcom, the result of a ’95 merger between cataloger Pagecom and Bear Communications, which always relied on field sales. Recent major capital investments triggered extreme cost-cutting for the wireless products catalog. As a result, Bearcom’s catalog sales have slipped from $2 million for fiscal ’99 to $1.5 million for fiscal 2000.

Bearcom’s catalog department was mailing up to 60,000 56-page catalogs a day, says director of marketing Susan Hensley, until that number was capped at no more than 13,000 a day in January. “Catalog sales were driving the business,” she says, “but we had no ability to analyze the return on investment. We could look at total equipment sales vs. total cost of the catalog, but we couldn’t track a sale to a specific catalog version.” The company has invested in a tracking software system, “but until we have tracking reports and see a good return,” she says, “we can’t increase [or restore] our mailing level.”

Scott Robinette, general manager of the Hallmark Business Expressions, says he has a proven method for getting funding for large projects: Rather than asking senior management to commit to the entire project, break it into smaller phases.

Ask initially for funding for the first phase, and provide measurements for its success. Then show that you delivered results on phase one before asking for money for phase two, which will have its own deliverables and measurements. Each subsequent phase is contingent on the success of the previous one. “You give management confidence that they won’t have to make a full investment all at once,” says Robinette.

This strategy, in fact, accomplishes more than just funding your project. “It gives you the opportunity to adjust up,” he says. “It also keeps you in front of top management. And after doing it a couple of times, you get a reputation for delivering on your commitments.”

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