Encourage Your Customers to be Multi-channel shoppers

Think your retail buyers don’t need to see a catalog?  Think your direct buyers don’t shop in your stores?   Think again! A recent look at one of our favorite client’s results highlight clearly just how important it is to encourage your customers to shop with you through more than one channel.   For this particular client, a customer who has purchased through more than one channel is 60-85% more productive ($/book) than single channel buyers.

• multi-channel buyer    $9.27/book
• direct buyer    $5.00/book
• retail buyer    $5.81/book

What does this mean to you?  Consider your direct only customers your absolute best retail prospects.  Consider your retail only buyers your best direct prospects.  However, you need to make it easy for a customer to shop with you through multiple channels:

• Offer the same merchandise assortment in your catalogs that you offer in your stores.
• Be diligent about presenting a consistent image of your brand in everything you do.  That includes catalogs, e-mails, blogs, social media and store design.
• Incorporate catalog creative in your retail visual merchandising plan.
• Offer retail customers free shipping on their first direct order.
• CAPTURE your retail names—these are the people who have already demonstrated that they like your product by making a purchase—don’t let them walk away without getting at least a phone number or e-mail address.  Follow up with an e-mail that allows the customer to give you more elaborate information or utilize one of the many reverse append services available.  We promise, it will pay off!

Cut Your Catalog Costs

The economic climate has created a flurry of cost-cutting ideas for conscientious catalog marketers.  Here are some of our favorites, which could save you money during your holiday planning:

1. Cut prospecting and replace with a house reactivation model from one of the co-ops.
2. Modify your catalog trim size to save paper and use a more efficient press configuration.
3. Explore a non-domestic paper with your paper broker.  If you are not negotiating your own paper, you need to be.
4. Pick up as much photography and catalog creative as possible from your last book(s).
5. Make sure your printer is getting you the maximum co-mail postage savings possible – even if this means moving your drop date by a few days.

Why it pays to outsource some of your marketing needs

In the current economy, outsourcing is a much more viable option for many companies, large and small.  We can think of quite a few good reasons to outsource, and yes we are a bit biased about this subject at Crunch Marketing!

1. You can obtain specialization easily – your marketing manager may be perfectly comfortable with catalog production, but not fluent in circulation planning and strategy (or vice versa).  Hire an expert for complicated or specialized processes.
2. Outsourcing allows you to plug into direct marketing industry best practices, without personally attending all of those workshops and conferences yourself.
3. You can hire a marketing expert for less than the cost of a mid-level manager, plus your company saves money by not paying employee benefits like medical and retirement.
4. You can add more bandwidth to your organization on a temporary basis, and just use an outsource option for your busy season.
5. Outsourcing makes your company more nimble and flexible, until you can ramp up and add more employees.

Let us show you how you can be more productive when you outsource your direct marketing needs – email Laura at laura@crunchmarketing.net.

Will the Paper Increases Stick?

During the last few weeks, there has been a flurry of activity in the paper market.   Most of the major paper mills have announced increases of $1.50/cwt on average for coated freesheet, coated groundwood and SCA paper.  The reasons for this increase include mill closures and consolidations,  Finnish dockworker strikes, and pulp shortages due to the recent earthquake in Chile.   To further compound the issues, mills are experiencing rising costs in oil, pulp, transportation, and wood.

Will these recently announced paper increases stick?  At CrunchMarketing we believe they will.  Paper mills operate on very thin margins, and fluctuations in raw materials & transportation can dramatically affect their bottom line.

For many catalogs, it will soon be time to begin holiday planning in earnest.  Make sure you are working with your printer or paper broker to explore new options in paper – perhaps you can move down to a lower weight, test a less expensive foreign paper option, or modify your trim size.   Do your homework, since paper can represent 30% of your overall catalog cost!

Is the economy beginning to rebound?

It sure looks promising.  Over the last few weeks, we’ve heard some positive momentum from the retail industy.  Consider these highlights from Chain Store Age:

• Home Depot announced it is adding store jobs for the first time in four years in anticipation of a rebound in sales.
• Kohl’s Corp. said Thursday same-store sales grew 22.5% in March, easily surpassing the 12.4% growth that analysts had expected. The company said it saw strong sales in its footwear, home and children’s departments.
• At Macy’s, same-store sales climbed 10.8% in March, ahead of the 7.9% gain forecast by analysts. Total sales for the period rose 11% to $2.14 billion.
• At J.C. Penney, same-store sales rose 5.4%.
• Nordstrom posted a 16.8% gain in March, much higher than the 10.6% gain analysts expected.
• Saks reported a 12.7% rise, ahead of the forecast of 8% in a survey of analysts.
• Dillard’s sales grew 9%, beating the 5% growth that analysts were anticipating.
• Neiman Marcus’ sales rose 9.6%, helped by demand for women’s clothing and shoes, beauty and men’s products.
• Pier 1 Imports posted a profit of $35 million during the fourth quarter, a strong improvement from last year when the company posted a net loss of $29 million.
• Target’s March comparable-store sales increased 10.3%.

What really gets us excited at crunchmarketing, is the fact that all retail segments are improving – from the high-end to the department stores to the mass merchants.  Let’s hope the trend continues in the coming months.

Breakeven formula calculation

Using a break-even analysis is critical to the understanding of your direct marketing or catalog business, as this represents the point where your total sales revenue equals the total costs associated with the sale of that product.  You can use this formula for multiple areas of your business, like list costs, catalog page costs, or email costs:

cost / GMM / the reciprocal of return rate called “net to gross” = break-even

Here are a few examples:
catalog page break-even:
$25,000 page cost/ 60% GMM / 80% net to gross  = $52,000 break-even sales

list rental break-even:
$1,000 list cost /65% GMM / 70% net to gross = $2,197 break-even sales

email break-even:
$500 email cost / 50% GMM / 90% net to gross = $1,111 breakeven sales

The break-even calculation can vary a great deal, depending on whether you include all of your fixed and variable costs into the cost figure.  For example, when calculating the breakeven for a catalog page, you may want to only include the INCREMENTAL cost in your calculation, or how much the EXTRA paper, printing, creative would cost if you added 4 pages vs. including all of the fixed costs for the entire catalog.  In addition, some people like to include indirect operating costs such as customer service representatives or warehouse costs into their formula.  Fool around with a couple of different options to find out what works best for you and your particular catalog or direct marketing business.

Postal Service Files 5-Day Delivery Plan With Postal Regulatory Commission

The Postal Service took its case for five-day delivery to the Postal Regulatory Commission (PRC) on March 30. The Postal Service is required by law to seek an advisory opinion from the PRC any time a nationwide change in service is proposed.  A report accompanying the request notes, “The Postal Service does not take this change lightly and would not propose it if six-day mail service could be supported by current volumes. There is no longer enough mail to sustain six days of delivery.”

Postmaster General John E. Potter said it was important to stress that the proposal dealt only with Saturday street delivery and that Post Offices will be open on Saturdays, access to P.O. boxes would continue, Express Mail would be delivered seven days a week and incoming mail would still be processed.  Read the entire press release here.

As a side note, we grabbed some financial stats from DM News:  the USPS ran a net loss of $3.8 billion for its 2009 fiscal year.  It is projecting a shortfall of $238 billion by 2020 without significant changes to its business structure.