You’re Smarter. Avoid the Reduction in Revenue.

How to avoid a plunge in revenue. Stories from the trenches.

In the past three years I’ve seen these three things happen to more than one client. Don’t be next. I write this as a perspective to any cataloger who is considering one of these paths.

Email is not a 1:1 replacement for the mail box. Catalogers try this tactic more times than I want to count. Yes, at first glance, catalogs are expensive. Just remember to finish the sentence and look at the corresponding revenue that is generated. When you take away the catalog expense, you need to determine how to recoup the catalog revenue. Then ask yourself, will the email campaign (or social media ads or whatever it is) replace the lost catalog revenue? Three real world examples (using silly names) for you to consider.

The Acme Company decided to stop mailing their consumer catalog(s) and use the money for other big branding opportunities (cue the sound effect: ker-plunk.) Year over year comps were significantly down, as was the new customer count. Then of course there was the mad scramble to get something in the mail…to go back to what was working. An expensive lesson learned. This cause and effect was immediate. YOY comps were quickly noted and unfortunately, the decrease in customer count was a multi-month declining period during, what should have been, their busiest time.

The Wyle E. Coyote Company digital team said that the catalog spends too much money on prospecting and made a case to have the money reallocated to online prospecting opportunities. The catalog was fiscally mindful with their prospecting and was using a 9-month payback on the investment (versus a 12-month industry standard payback.) Guess what?  (Repeat sound effect: ker-plunk.) Glaringly noticeable downturn in the first month of new customer acquisition counts, and this continued until the reallocated budget ran out. Sadly, lower customer counts have a longer term impact on the overall heath of the business.

The Widget Consumer Company had a large digital department that included PR, digital ambassadors, online presence, ads, banners, displays, emails galore, and so many bells and whistles. Lots of branding emphasis…all the goodies you hear about. Unbeknownst to the catalog team, there was a problem with the catalog mailing list. It was an unfortunate perfect storm combination of the best customers, new customers, and reactivated customers who were not receiving catalogs (they were still receiving email and online contacts.) The company revenue takes a downturn, downturn, downturn. More money is poured into online efforts to no avail. This big digital staff, the online budget dollars, and the “right kinds of branding and messaging” did not produce results. Eventually (and thankfully) the issue with the customer data was fixed and as soon as it was, revenue started to climb. And climb. And climb. The online department shrank and is focused on financially productive efforts that are aligned with the brand and have tangible results.

The lessons here are good ones. The point is, don’t stop doing financially viable efforts without replacing these efforts with better ones. Revenue doesn’t magically appear.  It’s all about Dollars and Cents. Do what makes sense for you!

Gina Valentino

Dean of Marketing, CatalogUniversity.com

Comments

  • Sarah Fletcher
    Reply

    So true, it’s all a numbers game. Testing the new online efforts first would help mitigate the risk. I think good online teams look at the big catalog budgets and just assume they could use the money better. That may be true, but test it don’t guess it. I’m seeing more companies who started online turning to catalogs as a more productive way to prospect.