STRATEGIES: Cost-cutting 2000

Tips for a more profitable new year

For many, a new year is a time for new resolutions. And often enough, those resolutions have a money-saving bent. But while you may know that you want to reduce your call center expenses or slash postage, you might not be sure how to go about it.

In this follow-up to our June feature, “The 10 best cost-cutting ideas,” Catalog Age polled a number of catalogers – large and small, consumer and business-to-business – to get additional cost-cutting tips. Their suggestions run the gamut, from changing paper to using a freight consolidator to automating specific processes, so at least one or two are sure to be applicable to your operation. And perhaps best of all, all of the suggestions have been tested by your fellow catalogers.

Tip #1: Drop the envelope from the order form.

“We noticed that the number of orders coming through the mail had dropped well below 10%, so this past fall we tested a catalog without the order form envelope,” says Chris Bradley, president of Cuddledown of Maine, a catalog of high-end bedding and linens based in Portland, ME. “Although I can’t say exactly how much it saved us, we plan to eliminate the envelope indefinitely starting with our spring mailings.”

Tip #2: Switch to a less expensive grade of paper.

Depending on your product line and target market, you may experience no drop in sales following a switch to a less expensive grade of paper. Anatomical Chart Co., a business-to-business cataloger of scientific charts and models, felt safe in making the switch. “We print our book on a #4 coated groundwood stock – 70 lb. for the cover, 60 lb. for the inside charts, and 38 lb. for inside pages,” says Paul Collander, catalog creative director of the Skokie, IL-based company. “But in July, the prices for that paper stock increased. We kept the #4 stock for the cover, but for the books that will mail in January, we switched to a cheaper #5 stock for the inside pages, though we kept the same basis weights. We expect to save about $18,000 in paper costs.”

Tip #3: Reduce the paper basis weight to save on postal costs.

Two catalogers offered this suggestion. “Our 400-page catalog was at the pound rate,” says Tim O’Malley, vice president of advertising for Lexington, KY-based Gall’s, a cataloger of police and firefighting supplies. If Gall’s added any more pages, the book would have weighed more than a pound, which meant Gall’s would have had to pay the more expensive Standard B postal rate. “So we downgraded our basis paper weight from 28 lbs. to 26 lbs.,” O’Malley says. “By switching to a lighter weight, we continued to pay the Standard A rate, which saved us almost $1 million a year.”

Chicago-based women’s apparel cataloger Barrie Pace made a similar switch. “In 1998 we changed our paper from 34 lbs. to 32 lbs., which saved us 4%-10%,” notes catalog production supervisor Jennifer Anderson. “By changing the weight of the paper you may see a decrease in paper costs, but the real dollar advantage comes from postal savings.”

Tip #4: Switch at least some of your shipping volume to USPS Priority Mail.

“Our decision to ship via Priority Mail two years ago has been one of our biggest cost-cutting changes,” says Cheri Woodard, president of Sperryville, VA-based apparel and gifts catalog Faith Mountain. “While we still primarily ship via United Parcel Service, there are a lot of benefits to shipping via Priority Mail, such as free boxes with our logo and free packing supplies because of the volume of packages we mail.”

Tip #5: Regularly analyze your advertising efforts.

Too many companies continue to place ads with the same publications without determining how effective those ads really are, says Holly Smith-Bove, director of finance for Northampton, MA-based maternity apparel and accessories catalog Motherwear. “We advertise in a number of motherhood and parenting magazines. At least twice a month we analyze our advertising efforts by determining how many sales come from each ad. We’ve been able to save $10,000 a month in advertising costs as a result.”

Tip #6: Communicate better with your printer.

Being proactive, rather than reactive, when it comes to printing can save time as well as money, notes Janet Thompson, vice president of gifts catalog The San Francisco Music Box & Gift Co.

“We’re very direct with our printers, and we give them a `bible’ of instructions and parameters with our jobs,” Thompson explains. “We also consider it an efficiency to always have someone working with them on press and bindery. A bindery mistake could cost us a whole season.”

Tip #7: Use a freight consolidator.

Many catalogers believe that only high-volume marketers can benefit from using a freight consolidator. Not so, says Matt Simon, vice president of Belmont, OH-based woodwoking kits catalog Cherry Tree Toys.

“This month we’ll switch to a freight consolidator for 65% of our packages. The remaining 35% will be shipped via USPS or UPS,” Simon explains. “Freight consolidators combine our packages with others, drop-ship them into SCFs [sectional center facilities], and then drop them into the postal system. We expect to save 35%, or close to $50,000, on shipping charges.”

Tip #8: Encourage customers to order online.

By repositioning its 800-Trekker and Brainstorms catalogs as Internet brands over the past six months, David Blaise, president/CEO of Reading, PA-based science fiction and novelty gifts marketer 800-Trekker, has cut call center costs.

“It costs about $3-$5 to process an order if a call comes into our inbound telemarketing center after hours,” Blaise says. “We eliminate that cost by having the customers type in their own orders online. We’ve also been able to get by with fewer customer service representatives over the holiday season as a result.”

Tip #9: Install shoots in your warehouse.

“We installed individual metal shoots to feed our different-size gift boxes from the upper level of our warehouse to a picking station down below,” says Justin Rashid, president of Petoskey, MI-based specialty foods catalog American Spoon Foods. “In the past, we would assemble the boxes upstairs and bring them down on a pallet, which would take up floor space in the shipping department. In addition to saving space, the metal shoots save about eight hours a day in labor.”

Tip #10: Use the Internet to better target mailings.

Asking online users a few questions about their interests can make your print mailings more efficient, says Ed Bjorncrantz, vice president of marketing at Chicago-based automotive parts catalog J.C. Whitney. So can analyzing their traffic patterns. “For instance, we’ll send a Ford-specific catalog to those Internet visitors who searched for Ford products, instead of mailing them the larger general catalog,” Bjorncrantz says. “This cuts down on paper and mailing costs.”

Tip #11: Automate the order-entry system for your sales force.

“We’re working on automating the 450-person sales force in our McBee Systems catalog division,” says Tim Althof, vice president of investor relations for Groton, MA-based New England Business Service (NEBS), a multititle cataloger of business forms and packaging supplies. “While that’s not a direct cost cut, it cuts the amount of time the sales force spends on placing orders. Because McBee Systems sells printed products, the field salespeople had to go to the nearest branch office to physically place the order after making the sale. We’re hoping to bypass that process.”