September 27, 2008

Remail Catalogs

Many of you who in the audience who are not catalogers may not realize that catalogers send you the same catalog, over and over and over.

This strategy is called a "remail" strategy.

It is a labor-intensive process to put a catalog together. It may be ten times harder to paginate a catalog than it is to construct a hundred landing pages. In saddle-stitched catalogs, you have to physically coordinate the merchandise on pages 2-3 as well as pages 78-79, since they are technically produced on the same piece of paper.

So catalogers figured out a way to be sneaky. We replaced the cover, back cover, and the inside pages associated with those pages with new creative and merchandise. However, what appears inside the remainder of the catalog is fundamentally the same.

This allows the cataloger to avoid having to pay the costs of producing new pages, often costing between $500 and $5,000 per page.

Of course, loyal customers indirectly realize that catalogers are fooling with them. We can see this, because the productivity of the "remail" catalog isn't as good as in the first release.

The table below illustrates what typically happens when a company sends a pair of remail catalogs to a customer, following new creative.

Catalog Remail Strategy

Release 1
Release 2
Release 3

$ per Bk Profit $ per Bk Profit $ per Bk Profit
Segment 1 $8.00 $2.05 $5.60 $1.31 $3.92 $0.72
Segment 2 $5.00 $1.00 $3.50 $0.58 $2.45 $0.21
Segment 3 $3.50 $0.48 $2.45 $0.21 $1.72 ($0.05)
Segment 4 $2.75 $0.21 $1.93 $0.02 $1.35 ($0.18)
Segment 5 $2.50 $0.13 $1.75 ($0.04) $1.23 ($0.22)

Notice that each time a catalog is mailed, it performs at 70% the level of the first mailing (in this example, your mileage will vary).

However, the productivity is usually good enough in subsequent releases that it allows the cataloger to mail the second and third release to many customers. In this case, the cataloger would not mail the catalogs to customers who are losing money. So, the best segment (segment 1) and the next best segment (segment 2) receives all three mailings. The third and fourth segments receive releases one and two. The fifth segment only receives the first release.

This strategy worked really well in a pre-Google world. Today, the fixed costs associated with producing new creative can be minimized in a veritable plethora of ways. And if the fixed costs can be minimized, new creative drives up productivity --- and causes customers to not feel like they are being duped. Further, with e-commerce sites changing often and e-mail marketing campaigns featuring fresh merchandise on a weekly basis, it makes less sense to stick to this old-school marketing strategy.

Until the profit and loss statement looks different than what is illustrated above, you'll continue to see catalogers execute this strategy. And it fuels a self-fulfilling prophesy --- customers feel exasperated when they keep getting similar catalogs in the mailbox, so they keep throwing them out.

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