September 11, 2011

Dear Catalog CEOs: Smaller Page Counts

Dear Catalog CEOs:

Last week, we talked about how the organic percentage changes your view of profitability.  We learned that, by and large, your matchback analytics are significantly over-stating the importance of your catalog mailings.  We learned that somewhere between 30% and 65% of your housefile demand will happen if you don't mail any catalogs anymore.

As a result, you're going to mail fewer catalogs to many customers.  You're going to be much more profitable.  And you're going to generate less demand if you do not reinvest the ad cost you save.

Another possibility is to mail smaller catalogs, more often.

Remember, we had an example where we were mailing a customer 12 times a year.  At a 40% organic percentage, only 4 catalogs per year is optimal.

Here's what demand looks like at different page counts.

Table with a 40% Organic Percentage:  Demand



Pages
Catalogs 32 64 96 128
0 $12.00 $12.00 $12.00 $12.00
1 $14.04 $14.69 $15.16 $15.55
2 $15.31 $16.37 $17.14 $17.76
3 $16.40 $17.80 $18.82 $19.65
4 $17.38 $19.09 $20.34 $21.36
5 $18.28 $20.29 $21.75 $22.94
6 $19.14 $21.42 $23.08 $24.43
7 $19.95 $22.49 $24.34 $25.85
8 $20.73 $23.52 $25.55 $27.20
9 $21.48 $24.51 $26.72 $28.51
10 $22.21 $25.47 $27.84 $29.78
11 $22.91 $26.40 $28.94 $31.00
12 $23.60 $27.31 $30.00 $32.20
13 $24.27 $28.19 $31.04 $33.36
14 $24.92 $29.05 $32.05 $34.50
15 $25.56 $29.89 $33.04 $35.61

And here's what profit looks like at different page counts:
Table with a 40% Organic Percentage:  Profit



Pages
Catalogs 32 64 96 128
0 $4.20 $4.20 $4.20 $4.20
1 $4.64 $4.76 $4.81 $4.84
2 $4.82 $4.96 $5.00 $5.02
3 $4.93 $5.07 $5.09 $5.08
4 $5.00 $5.14 $5.12 $5.08
5 $5.05 $5.18 $5.11 $5.03
6 $5.08 $5.19 $5.08 $4.95
7 $5.09 $5.18 $5.02 $4.85
8 $5.10 $5.15 $4.94 $4.72
9 $5.09 $5.11 $4.85 $4.58
10 $5.07 $5.06 $4.75 $4.42
11 $5.05 $5.01 $4.63 $4.25
12 $5.02 $4.94 $4.50 $4.07
13 $4.98 $4.86 $4.36 $3.88
14 $4.94 $4.78 $4.22 $3.67
15 $4.90 $4.69 $4.07 $3.46

Instead of four 96 page catalogs, you could mail six or seven 64 page catalogs ... more contacts, more profit.

Your printer is going to fight you on this ... they are going to make the economics look so poor that they will try to force you into higher page counts.  You'll be presented with charts that suggest "efficiencies".

It's time you did what is right for your customer, not what is right for your printer.  If you do what is right for your customer, you'll generate more profit, and that's what is right for everybody.  If everybody stands up and demands better pricing for the page counts that are, by and large, working more efficiently, then we'll receive more efficient pricing on non-standard page counts.

No comments:

Post a Comment