Operations: the missing piece of the list buying puzzle

When most catalogers are selecting mailing lists for a test or rollout, the last thing on their minds is the back-end: order-taking, fulfillment and distribution. But operations is a key factor in the success of a catalog mailing list campaign.

If you’re not prepared to fulfill orders or even answer the phones in response to a catalog mailing, you’re going to lose sales and potential customers – plus you won’t have an accurate record of how well the test list worked for you. You also need to have the products you’re offering in stock, so you must factor inventory control into your list plan. The case study below illustrates what can happen if you’re not prepared on the back-end.

TYPE OF COMPANY: Specialty gift retailer (with a catalog and traditional retail outlets)

BACKGROUND: A consumer cataloger/retailer had established a small but profitable business-to-business segment in its retail stores. The company had initially targeted its corporate gifts promotions exclusively to small businesses because it did not have a sales force to provide the personal service that larger businesses expect.

Based on the high average order of the business-to-business retail customers, the company decided to expand the audience with a new catalog offering. The marketer rented mailing lists that reflected the company size and types of businesses that were buying in the stores, and also expanded the test lists to include new prospects – industries that had not historically purchased in the stores. The company also expanded the sizes of businesses in the test to include mid-size and large companies, as well as smaller business targets.

INITIAL RESULTS: The initial test results were impressive: Not only was the catalog average order dramatically higher than any of the retail orders for business gifts, but mid-size businesses were responding well – which was a completely new audience for the company.

SUBSEQUENT FINDINGS: The one disappointment was that a catalog order for $500,000 worth of product went unfulfilled. One of the prospects on the test list of large companies tried to buy several thousand units of one specific item. But the retailer did not even come close to having the stock at hand, and the cycle for manufacturing additional units was several months.

Additionally, many incoming calls were abandoned because the existing call center could not handle the increased volume following the mail drop.

KEY LEARNINGS: Clearly, the limitations of the fulfillment and manufacturing operations should have been taken into consideration when the cataloger made its list selection. The company should have also provided tight projections of possible order sizes as part of the list buying process.

In this situation, it might have been best for the company to test only mid-size company lists in the first round of mailings. And knowing that larger orders would be a possible outcome of the test, the catalogershould have considered either staggering the mail drop or adding call center staff to respond to the increased call volume.

Also, to ensure adequate availability of product, the cataloger should have limited the merchandise offering in the test mailing to items with large in-stock inventory or products with short manufacturing cycles.

Once the mid-size company list test proved successful, the gifts marketer could have added larger companies as part of a second-round list test, while making even more dramatic operational adjustments to accommodate any possible fulfillment issues.