Catalog Marketing 101 - Front End & Back End Marketing, Planning
If you're new to direct marketing and catalog marketing, one of the first questions you will have is, "What are front end and back end marketing." Although we don't get into a thorough discussion of these concepts until after we have given you some background on planning for a catalog business...simply stated, front end marketing involves new customer acquisition, while backend marketing involves ongoing marketing to your customer file after they have made their initial purchase. Both are an important part of starting, growing and maintaining a catalog business. Front end, new customer acquisition is critically important; however, acquiring new customers is the most expensive part of starting a catalog business. And, the majority of your efforts should be spent on ongoing marketing to existing customers. In this section of the tutorial, you will learn how to develop your catalog marketing plans from acquisition, through conversion and retention, on to reactivation of good customers that may have stopped buying from you. You will learn about media buying and circulation planning, and also managing your house file (your customer list.)
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4. Know Your Objectives Before You
Mail
• Catalog and Internet Marketing Strategies
• Merchandising Strategies
• Creative Strategies
• Operations Strategies
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Marketing Planning 101 Workshop
4
5. Catalog & Internet Marketing
Strategies
1. Reduce prospect circulation
2. Don't mail so deeply to your house file
3. Increase the number of mailings to your best customers
4. Cut back on high cost-per-customer acquisition methods:
space ads, Internet banner ads, etc.
5. Decrease promotion activity and tie any promotions to high
average order value (AOV)
6. Don't do any non-selling (brand) advertising
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Marketing Planning 101 Workshop
5
6. Merchandising Strategies
1. Put high contribution items (profitable after the cost of their
2.
3.
4.
5.
space) in the key catalog hot spots and spread hot spots.
Don't offer a high percentage, more than 25 percent, of new
items.
Raise your threshold of success in your item analysis.
Increase your margin.
Increase your AOV with specials, bundles, multiple item
discounts, cross sells, etc.
(651) 315-7588
Marketing Planning 101 Workshop
6
7. Creative Strategies
• Maximize the use of space.
• Make sure that all high-profit items are given hero status with
the right amount of space, call-outs or other attention grabbers.
• Work with the merchants to improve your best selling items.
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Marketing Planning 101 Workshop
7
8. Operations Strategies
• Increase your shipping and handling charges, especially at the
low end of the shipping chart.
• Enforce strict policies on not reducing or eliminating shipping
charges to customers who complain, or paying for return
shipping.
• Use a lower-cost carrier, such as a USPS consolidator for
outbound packages.
• Upsell specials and close-outs on the phone.
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Marketing Planning 101 Workshop
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9. Concept of Front vs. Back End
• The concept of front end / back end marketing
• Front end marketing
– Acquiring new customers
– Acquiring new customers costs money
– Many catalogers lose money on first time buyers because of the
marketing dollars invested to acquire that name
• Back end marketing
– Converting 1st time buyers in to multi-buyers
– Ongoing marketing to existing customers
– Reactivating former customers who have stopped buying
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10. Front End Marketing
Objective
How results are measured
• Acquire new, first time
buyers
• Cost per customer
• Acquire new leads
• Acquire new inquiries
• Convert leads and inquiries
to customers
• Cost per lead
• Cost per name
• Cost of conversion
• Minimize cost of building
the customer file
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Marketing Planning 101 Workshop
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11. Back End Marketing
Objective
How results are measured
• Convert 1-time buyers into
2-time buyers
• Growth of multi-buyers
• Maximize number of
mailings to customer file
• Number of customer
mailings per year
• Make a profit
• Return on investment
• Return on sales
• Value of customer over 3
years
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12. The Road to Catalog Profitability
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13. The Hierarchy of a Customer
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14. Ways to Build Your Customer File
• List rental
• Broadcast (television, radio)
• Customer referrals
• Internet (website)
• Space advertising
• Social media (MySpace,
• Newspaper FSI
• Package inserts
•
• Co-op mailings
•
• Trade shows
• Co-op catalog shoppers
• Card decks
•
•
Google+, Facebook,
LinkedIn, YouTube)
Twitter
Banner ads
Airlines
Public relations
• Product inserts
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15. 3 Vertical Markets in List Industry
• Response lists
• Circulation lists
• Compiled lists
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16. Response Lists
• Best type of list available – best prospects
• Proven catalog order buyers
• Huge universe available for consumer offers
• Large business lists available
• Can match product with offer
• Most expensive
• Good investment
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Marketing Planning 101 Workshop
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17. Circulation Lists
• Publication subscribers that can be targeted by their expressed
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•
•
•
personal or business interests
Not all paid subscribers
Can target consumer interests
May not work well for catalog offer
Usually less expensive than response lists
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Marketing Planning 101 Workshop
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18. Compiled Lists
• List of people and companies put together from governmental,
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•
•
•
•
census, telephone, or other publicly available information
Most basic type of list
Strong lists for business mailers
Good for small, local consumer offers
Good for sampling programs
Least expensive; may be discounted for volume users
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Marketing Planning 101 Workshop
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19. List Strategies
•
•
•
•
•
•
•
•
Keep old buyers, old inquires who you are not mailing and put them
into the merge purge.
Use zip overlays to make subscriber lists work.
Create a mini-file (match code) record of prior-mailed names (nonresponders) and use a suppress file during the merge/purge.
Pre-qualify a name with a phone call or postcard.
Track list results with tenacity.
Target- segment.
Test.
Watch seasonality of mailings.
(651) 315-7588
Marketing Planning 101 Workshop
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20. New Customer Acquisition
Strategies
•
•
•
•
•
•
•
•
Understand the difference between front end and back end (and
middle end)
Understand the hierarchy of a customer
Test new alternative ways to build your customer list. .. without
using the mail
Get smarter with your list prospecting
Improve the tracking of results ... mail, phone, fax
Know (through careful measurement) what a new customer costs
Correlate back end (customer) name value with front end name
sources
Turn around catalog requests (inquires) quickly
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Marketing Planning 101 Workshop
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21. Your Customer List
• Your buyer list is your most valuable asset.
• Your buyer list is perishable.
• Your buyer list will out pull outside lists by 4 to 10 times.
• How often can your customer list be promoted?
• When should you merge/purge your buyer list?
• Rental of your buyer lists - another way to generate income.
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Marketing Planning 101 Workshop
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22. All Customers Are Not Created
Equal
• Best customer
– High $ value; multi-buyer; last 6 months recency
• Next best customer
– Medium $ value; multi-buyer; last 12 months recency
• Average customer
– Medium $ value; 1-time buyer; last 18 months recency
• Poor customer
– Low $ value; 1-time buyer; last 24 months recency
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23. Customer Segmentation
• Is the use of database information to target your marketing
efforts
• Segmentation applications
– Generally used with customer list
– Recency, frequency, monetary
– Regression analysis
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24. Segmentation Factors Tested in
Regression Analysis
• Date of last purchase - - by three month segments
• Number of purchases
• Previous products purchased
• $ spent with catalog
• Matching against outside lists
• Purchased from multiple catalogs of the same company
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25. Mailing Customer More Often
• Most catalogs underutilize their customer list
• Mailing options to mail customer list more frequently
– Mail totally new catalog
– Mail catalog with new cover
– Mail catalog with new cover and outer signature
– Mail catalog with new format
• Tabloid
• Mini-catalog
• Newsletter
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26. Catalog Circulation Planning
Factors
• Number of current customers
• Current house file segments
• Customer acquisition goals
• Sales goals
• In home date
• Print quantity
• Re-mail strategy
• Merge purge strategy
• Break even requirements
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27. House File Management Practices
• Develop a strong relationship with broker and manager
– Best to have brokerage and management in same company
• List rental income – generate income by renting your list.
• Leverage list for exchanges which lowers cost of acquiring a
•
•
•
•
customer
Protect mail dates
Offer non competitive list rental rates
Offer reduced list rental rate for fundraisers and publishers
Make use of overlays and appending services to refine
selections for users of your file
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Marketing Planning 101 Workshop
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28. Customer Loyalty Programs
• Developing customer loyalty programs to support your sales
efforts is important to establishing long term customer loyalty.
Examples of these programs/offers:
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–
–
Thank you’s
Discounts
Bogo’s (Buy 1, get 1 free)
Shipment upgrades (e.g., free shipping, express shipping)
Extended warranties
Free personalization
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Marketing Planning 101 Workshop
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29. Customer Reactivation
•
•
Customer reactivation needs to be part of your overall catalog
marketing plan. Depending on why a customer stopped
purchasing, it is less expensive to reactivate former buyers
than acquire new customers.
Customer reactivation involves putting together marketing
programs that get former customers to start purchasing from
you again. Examples:
–
–
–
–
Offers
Letters
Discounts
Bogos (buy-one, get-one – e.g. “buy 1, get 1 free”)
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30. Reactivating Inactive Customers
• A major area of opportunity for catalogers
• Build on past loyalty, purchase activity
• Special messages that work
– We miss you
– We want you
– Last chance
• Getting a special message across
– Outer wrap
– Sticker on cover
– Special letter in envelope
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Marketing Planning 101 Workshop
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31. Catalog Requests Generation
• Methods of generating catalog requesters:
• Referrals
• Space advertising
• Web site
• Mobile marketing
• Radio/television advertising
• Hang tags
• Package inserts
• Catalog/magazine bind in programs
• Catalog/magazine blow in programs
• Direct mail
• Bounce backs in gift recipient shipments
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Marketing Planning 101 Workshop
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32. Alternative Revenue Opportunities
• Alternative avenues for generating revenues from your
catalogs and catalog customers
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–
–
–
Package inserts (third party paid)
Blow ins (third party paid)
Bind ins (third party paid)
List rental revenue from renting your house file (customer list) to
other marketers
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Marketing Planning 101 Workshop
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33. Catalog Mailing Frequency
• How frequently do you mail your entire customer list or
segments of your list?
– The only way to answer this question is to test and analyze.
– If you don’t mail often enough you lose the opportunity to sell
merchandise and build the relationship between you and the
customer.
– If you mail too often, the newest catalog will steal sales from the
current catalog.
– It pays to mail more catalogs, more often, to better customers…
these customers tend to buy more often.
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34. How to Increase Catalog Sales
• Product/space allocation analysis
• Proper targeting for mailings
• Price point analysis
• Refresh product offering 40% to 60% by removing dogs and
testing new or rolling out winners
• Understand value of re-mailing house file and multi-buyers
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Marketing Planning 101 Workshop
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35. List Selection Process
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•
•
•
•
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•
•
•
•
Define your catalog product profile.
Define your target market.
Determine which kind of lists are appropriate: response, buyer, mass or compiled.
Research and collect data on lists available.
Analyze list histories in order to match your offer.
Investigate selectivity within list.
Screen lists which will allow you to mail your catalog.
Price out lists to fit your budget.
Determine quantities available.
Develop your circulation plan.
Schedule a test.
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36. Customer List Strategies Summary
• Segment your customer list to find your best customers
• Mail your best customers more often
• Build special "perks" for being a customer
• Work at building customer loyalty
• Consider a spin-off catalog to generate additional sales from
your customers
• Build a reactivation program
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37. Catalog Offer Design
• What is the offer?
– It’s simply your entire selling proposition to the prospect or customer.
• The offer is the 2nd most important factor
– Behind list selection and audience targeting, in determining the success
of a catalog.
• Important to think of your market as you structure your offer.
– What’s their sex, age, educational level, special interests, and socialeconomic status?
• How you state your offer counts
– It both selects and involves the prospects.
– It determines the quality of the customers who respond.
– Creatively, it’s important to find news ways of stating an existing offer.
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38. Catalog Offer Design (cont’d)
•
You need to balance your offer with the products being sold and the
customers you want to sell– too much of a good thing can attract the
wrong kind of buyers.
• Check that your offer is relevant to both your target audience and
the product in question. Mismatching the offer to the audience will
make it less attractive and may dissuade fence sitters from
responding.
• Before working up your offer look at what your competitors do.
• If you can make offers that do not obviously reduce the price of
your product, it is worth trying to do so. If you bring a customer on
board at a reduced margin and a special price, there is every chance
that they will expect the same come the next time they purchase.
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39. What Makes Up Your Offer?
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40. Questions To Ask About Your Offer
• Does it help you meet your financial / marketing objectives?
– Immediate profit
– Back-end long term business
– Developing new market
• Is it the strongest offer you can make?
• Is the offer overstated?
• Would additional incentives help?
•
For more information on offer design and development, see our Direct
Marketing Workshop 3 Tutorial – Appeal and Offer Development
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41. Catalog Call To Actions
• Passive Call to Actions
– Phone (toll-free number)
– Website (general site or dedicated landing page)
– Order form
• Active Call to Actions (e.g.)
–
–
–
–
Free shipping on orders over $50
Order now and receive 1 item free with every 2 ordered
Limited quantity
Sale ends 09/01/13
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42. Catalog Call to Action - Ordering
• Today, catalog customers can order three basic ways. They
can order via (1) Phone, (2) Website or (3) Mail.
• Yes, people still order through the mail and they can be some
of the best catalog customers in the world.
• The phone number and website URL should be on the bottom
of each page or phone number and URL on alternating pages.
• The mail order form is usually located in the center of the
catalog.
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Notas del editor
Breakthrough success comes from first developing an understanding of what your measures of success will be and then planning all of your efforts toward effecting those measures. For a catalog marketer, merchant, art director or operations manager, this means first understanding your owner's, company's or department's objectives. You can't begin to achieve success if you don't know your overall goals and the goal of each individual mailing.
Once you are aware of the corporate objectives, you can begin creating plans for how your department can support those objectives. Developing a plan before mailing will give you the tool you need to evaluate the success of that effort against your benchmark. It will also ensure that what you are about to undertake will, indeed, move you in the direction you are striving to go. And most importantly, creating your plans from the overall company objectives will ensure that everyone is acting in concert.
There should be a pro-forma profit & loss (P&L) developed for each mailing so that the expectations of the mailing are clear. An actual P&L developed during post analysis should then be compared to the plan. I suggest to our clients that the P&L be done at the segment level so they will know which media codes and which offers are the most profitable. Building a segment-level P&L will also help you make sure that you have put together a mailing that will achieve your company goals.
Here are some specific examples of how proper planning and execution can be undertaken in each functional area to achieve a shared objective: increasing profitability.
Not all of these strategies may work with your brand and positioning. Be wise in choosing what to implement. There are different strategies for other objectives such as growing your house file or growing your top line sales, but hopefully these examples have demonstrated the importance of everyone in your company working together to achieve common objectives, once you know what those objectives are.
Catalog and Internet Marketing Strategies
1. Reduce prospect circulation—mail only proven rental lists with past performance at or above your variable breakeven.
2. Don't mail so deeply to your house file—mailing your worst recency, frequency, monetary (RFM) segments can be as costly as prospecting.
3. Increase the number of mailings to your best customers—mail another book at your best time of year to your top customers.
4. Cut back on high cost-per-customer acquisition methods: space ads, Internet banner ads, etc.
5. Decrease promotion activity and tie any promotions to high average order value (AOV)—make sure that any promotions you are doing are adding new customers at or above breakeven (use your P&L plan at the segment level) or are increasing profitability from current customers by increasing response or AOV more than the cost of the promotion.
6. Don't do any non-selling (brand) advertising—make sure that all of your advertising efforts are supporting a response vehicle.
Merchandising Strategies
1. Put high contribution items (profitable after the cost of their space) in the key catalog hot spots and spread hot spots.
2. Don't offer a high percentage, more than 25 percent, of new items. New items are costly and usually have a success rate of only around 33 percent. Make sure you have minimized this risk as much as possible. Keep in mind, however, that as you are mailing more customers and fewer prospects, new items become more important to keeping your catalog fresh.
3. Raise your threshold of success in your item analysis. Make sure that high-profit-percentage and high-profit-dollar items are given more weight than high-demand items.
4. Increase your margin. You should always try to get better margins by buying smarter, negotiating better, etc. You may even have room to raise prices.
5. Increase your AOV with specials, bundles, multiple item discounts, cross sells, etc.
Creative Strategies
1. Maximize the use of space. Try to make room for more items so that every page has a better chance of being profitable. Even if pages are cut, try to hang on to as many products as possible by being efficient with every last square inch.
2. Make sure that all high-profit items are given hero status with the right amount of space, call-outs or other attention grabbers.
3. Work with the merchants to improve your best selling items. Getting a 10-percent lift from your best items is not that difficult and will contribute much more to the bottom line than spending time on new or marginal items.
Operations Strategies
1. Increase your shipping and handling charges, especially at the low end of the shipping chart. This will bring in more revenue, and if done correctly, may deter small, unprofitable orders without affecting your profitable ones.
2. Enforce strict policies on not reducing or eliminating shipping charges to customers who complain, or paying for return shipping.
3. Use a lower-cost carrier, such as a USPS consolidator for outbound packages.
4. Upsell specials and close-outs on the phone. Remember that your marketing expense at the end of the order is $0 (all costs are already sunk). So, a typical company can reduce a product's selling price by 25 percent and still add the same contribution to the bottom line as a full-priced item during this stage of the sale. Use this knowledge to give really great deals on your upsells.
What’s the purpose of your catalog?
Is your catalog going to be a front end marketing, back end marketing or combination effort?
Why is this important?
You need to know the answer to this question, because it will affect how you approach the basics for catalog success:
Right market positioning
Right merchandise
Right position and grouping of merchandise
Right graphics
Right use of color
Right size
Right copy
Right sales stimulants
Source: New Catalog Launch: Back to Basics; Presented by Jack Schmid, July 1993
This is a partial list of the ways you can build your customer list for either consumer or business-to-business catalogs.
1. Keep old buyers, old inquires who you are not mailing and put them into the merge purge.
2. Use zip overlays to make subscriber lists work.
3. Create a mini-file (match code) record of prior-mailed names (non-responders) and use a suppress file during the merge/purge.
4. Pre-qualify a name with a phone call or postcard.
5. Track list results with tenacity.
6. Target- segment.
7. Test.
8. Watch seasonality of mailings.
1. Understand the difference between front end and back end (and middle end)
2. Understand the hierarchy of a customer
3. Test new alternative ways to build your customer list. .. without using the mail
4. Get smarter with your list prospecting
5. Improve the tracking of results ... mail, phone, fax
6. Know (through careful measurement) what a new customer costs
7. Correlate back end (customer) name value with front end name sources
8. Turn around catalog requests (inquires) quickly
1. Your buyer list is your most valuable asset.
2. Your buyer list is perishable.
3. Your buyer list will outpoll outside lists by 4 to 10 times.
4. How often can your customer list be promoted?
5. When should you merge/purge your buyer list?
6. Rental of your buyer lists - another way to generate income.
This data will help with segmentation strategies.
1. Date of last purchase - - by three month segments
2. Number of purchases
3. Previous products purchased
4. $ spent with catalog
5. Matching against outside lists
6. Purchased from multiple catalogs of the same company
Needs more explanation
Sensible organization, crisp photography, bold graphics, and powerful copywriting are the keys to a successful catalog. But experienced catalog marketers also use dozens of sales-boosting gimmicks that have little to do with the basics of salesmanship or good copywriting. All we know is that these tricks of the trade work - and that’s reason enough to use them. Here are five that may be helpful to you:
Include a letter. To add a personal touch to your product catalog, write a “personal letter” to your customers from the president of your firm. The letter can be printed inside the front cover or run off on letterhead and bound into the catalog. You can use this type of letter to introduce the catalog, explain your ordering system, state a company “philosophy,” stress your dedication to service and quality, or alert the reader to new, discounted, and other special offerings. Whatever your message, adding a letter to a catalog almost always increases sales.
Bursts. Often used by cereal-makers to alert children to the prize inside the box, the “burst” (a star-shaped graphic with a copy line inside) also can draw a reader to special items within a catalog. Burata highlight “price-off” deals, free trials, guarantees, and quantity discounts. Use bursts and other special graphic techniques (such as underlining, colored or boldface type, fake handwriting) sparingly. Overuse dilutes their effect.
Last-minute specials. Insert into your catalog a separate sheet featuring items added to your product line or discounted at the last minute. Tell the customer these bargains were included just in time for mailing, but too late to print in the catalog. This insert generates additional sales because people like to be “in” on the latest developments.
Give technical information and tips of a general nature. The usefulness of this information will encourage buyers to keep your catalog. And the longer they have it, the more often they’ll order from it. For instance, a hardware catalog might include an article or table titled, “A Guide to Screw Selection.” A filtration catalog could include tips on “How to Clean and Care for Filters.”
Put your catalog in a three-ring binder. Expensive, but people won’t throw out a hardback binder as readily as they would an ordinary paperback catalog. Your customer also is more likely to keep your binder on his shelf because it’s too bulky for the filing cabinet.
Tricks of the Trade: 5 More Sales Boosters For Your Catalog.
In addition to using good photography, clear copywriting and sensible catalog organization, throw in a few sales-boosting gimmicks to pull in more orders. The prior issue of B/BCM gave you five of them. Here are five more.
Include product samples. You get two advantages. First, mailings which have three-dimensional objects inside are more likely to be opened than flat envelopes. Second, engineers and other technical buyers often like to play with product samples, keeping them handy on their desks or shelves.
A fine example of this technique was used in a brochure for Gore-Tex, a sealant that prevents leaks in pipe sections when you bolt them together. The sample sealant was stuck to a photo of a pipe flange in the exact position it would be used in real life. The copy told the reader to remove the sample and put it through a series of simple tests (accomplished in 5 minutes at his desk) to demonstrate its effectiveness.
List Your Customers. Include a complete list of all the firms that have bought from you, whether you have 300 or 3,000 names. Seeing such a list in print makes a powerful impression on your customers. They’ll think, “How can I go wrong buying from these guys? Everybody in the world does business with them.”
Include an order form. Make it easy to fill out. Leave enough space for customers to write in needed information. Bind it into the catalog so it won’t be lost/misplaced.
If your products can’t be ordered by mail, include a “spec sheet.” The spec sheet asks the prospect to provide key information on his applications (such as, size of plant, hours of operation, type of process, and so on). With this information in hand, you can specify the equipment the prospect needs and tell him what it will cost.
Include a business reply envelope (BRE). The BRE is a self-addressed, postage-paid envelope the prospect can use to mail the order form or spec sheet back to you. Practically every consumer catalog has a BRE.
Most business catalogs don’t. Business-to-business marketers think, “My prospect works in an office; he has a supply of envelopes and a postage meter handy. He doesn’t care about the cost of postage, and he can have his secretary take care of addressing the envelope.” This may be true, but a BRE still boosts the response rate in business catalogs. Why? Not because they save the buyer 20 cents, but because they flag readers to notice you’d like them to respond to your catalog.
In the same way, a coupon in an ad increases the number of people who phone or write letters. The coupon says, “This is a direct-response ad. A response is the appropriate next step if you’re interested in the product.”
Make it an event. Industrial buyers get a lot of catalogs in the mail, so the boredom factor is high. Anything you can do to make your catalog mailing special, to stand out from the crowd, will boost sales and inquiries.
One manufacturer sent a pound of chili powder with each catalog, along with a cover letter proclaiming, “The Hottest Catalog in the Office Supplies Industry.” With a little imagination, you’ll come up with an approach that fits your catalog and customers.
There are really two types of “call-to-actions” in a catalog. The first group might be called the passive calls to action because they are permanent and provide information on how to contact the company, but do not actively drive the consumer to act.
Active “call-to-actions” tend to be temporal and have a time limit, implied or actual, associated with them. Examples of active call to actions:
Free shipping on orders if placed by such and such a date
Order by such and such a date and receive 1 item free with every item ordered
Sale end on such and such a date
Today, catalog customers can order three basic ways. They can order via (1) Phone, (2) Website or (3) Mail. Yes, people still order through the mail and they can be some of the best catalog customers in the world. The phone number and website URL should be on the bottom of each page or phone number and URL on alternating pages. The mail order form is usually located in the center of the catalog.