January 20, 2019

How Do I Merchandise The Smaller Catalog?

Ok, you say you agree with me and you want to embrace smaller page count catalogs to the non-catalog majority of your customer file. Good for you!!

How do you merchandise the catalogs?

Strong Hint:  Only Winning Merchandise.

In my project work, small catalogs with Winning Merchandise perform exceptionally well.

Say you are merchandising a 32 page catalog, whereas you typically mail an 80 page catalog.

Here's your 80 page scenario for a "below-average" customer.
  • Customer Segment Spends $2.00
  • Cost = $0.47.
  • Profit Factor = 35%.
  • Profit = $2.00 * 0.35 - $0.47 = $0.23.
If you cut back to a 32 page catalog, you'll see the following:
  • Customer Segment Spends (32/80)^0.5 * $2.00 = $1.26.
  • Cost = $0.26.
  • Profit Factor = 35%.
  • Profit = $1.26 * 0.35 - $0.26 = $0.18.
For this "below average" customer, the bigger catalog is a better deal.

However, if the 32 page catalog is stuffed full of winning items (with online mentions for the remaining assortment), productivity will increase by 20%. I've measured the test results, and this is the rule of thumb.

Here's the 32 page "Winners" catalog:

  • Customer Segment Spends (32/80)^0.5 * $2.00 * 1.2 = $1.52.
  • Cost = $0.26.
  • Profit Factor = 35%.
  • Profit = $1.52 * 0.35 - $0.26 = $0.27.
The 32 page "Winners" catalog outperforms the 80 page "General Assortment" catalog among "below-average" customers.

When the 32 page catalog outperforms the 80 page catalog, guess what you get to do? You get to INCREASE CIRCULATION. You know who is happy when you profitably INCREASE CIRCULATION?
  • Your CEO.
  • Your CFO.
  • Your Chief Merchandising Officer.
  • Your Catalog Marketing Director.
  • Your Paper Rep.
  • Your Printer.
What's not to like about this scenario?

In fact, here's the rules of thumb I want you to remember:
  • Large page counts include lots of new merchandise, and are ONLY mailed to the bifurcated segment of Best Catalog Customers.
  • Small page counts are only merchandised with winners, and can be mailed to ANY customer.
  • Your Best Catalog Customers can absorb MANY MORE mailings per year.
  • The rest of your customer file should only receive 0-4 contacts per year.

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