Catalog Modeling: Optimal Annual Contacts

I'm working on three (3) catalog modeling projects over the next six weeks. These projects have become a lot more important than in the past few years for three reasons.

• Response is down due to the end of the COVID-bump.
• Catalog costs are up and paper availability is sketchy.
• Cost of goods sold are up.

Those three factors reduce the optimal number of catalogs to mail. Here's an example. Two years ago this company averaged $0.70 per catalog mailed and 45% of sales flowed-through to profit. An optimal catalog mailing table might look like this, for a customer with a 50% organic rate.

The optimal strategy isn't the twelve catalogs currently being mailed, but is instead 5 catalogs, though anywhere between 3 catalogs and 10 catalogs is close to optimal.

Now, what happens when the average cost of a catalog increases to $0.75 and the profit factor decreases to 40% due to a higher cost of goods sold?

Oh oh. The optimal answer now happens at 4 catalogs, though anywhere between 2 catalogs and 7 catalogs is close to optimal.

So, here's what we know from this example.

• The company mails 12 times per year, yielding in this case $11.00 profit under current circumstances (the prior answer, two years ago, was $14.10 profit).
• Two years ago, an optimal answer was between 3 and 10 catalogs.
• Today, with different cost constraints, an optimal answer is between 2 and 7 catalogs.

You probably want to know this stuff, right?

So join the companies that are getting way ahead of the curve on this topic ... I have a slot that opens up October 1 ... be the first to obtain that slot.