Starting a Catalog - Ten Effective Strategies

Starting a catalog may seem like a bad idea these days. With all the high cost of paper and postage versus the relatively low cost of e-commerce, what's the advantage?

Here are just a few benefits of starting a catalog.

You can reach people that don't buy online or help ease the transition of someone that is unsure about making an online purchase.

Helps diversify your marketing channels and get your message out to people that might never see your website.

Provides positive reinforcement that you are a real company and not just a 14-year-old pimply-faced kid running a company out of his bedroom (with all due respect to pimply-faced kids).

A recent study by Forrester Research concluded that offering multiple marketing channels significantly increased spending and multi-channel shoppers purchased 70% more frequently than the average store customer.

Another study of 4,000 consumers showed that 34% of them made an online purchase only after viewing the company's offline catalog.

If done with careful thought and planning, starting a catalog can be a smart and profitable company decision. So what can you do to ensure you produce a profitable catalog? For one, you can follow these ten strategies.

Strategy #1: Make Sure Your Margins are High Enough

Probably one of the biggest mistakes made when starting a catalog is to include products with low margin. Producing and mailing a catalog is an expensive proposition.

Including expensive merchandise that only yields a 20% profit margin is a quick way to lose money.

If you are serious about starting a catalog, try to ensure most of your products have at least a 40% profit margin. This means if your cost on a item is $25, you sell it for 25/(1-.40) = $42.

Keep in mind that this is the minimum profit margin for including products. To be safe, work on a 50% margin so that a product you purchase for $25 sells in the catalog for $50 (or, better yet, $49.95).

There will always be a few popular items you will want to include that have lower than a 40% profit margin. This is ok, but please be careful. The more lower-margined product you add, the more difficult it will be to produce a profit.

Strategy #2: Avoid Writing in Gobbledygook

One important element when starting a catalog deals with your copy. It is critical that you intimately understand your target audience and speak to them in plain jargon-free language.

Phrases that simply try to impress the reader without conveying any real meaning or benefit can actually work to undermine trust. Here are some examples of gobbledygook words and phrases to avoid when writing your catalog copy.

Innovate
Unique
Leading Provider
New and Improved
Cost Effective
Next Generation
World Class
High Performance

I think you get the idea. Understand your target audience's needs and wants and then communicate directly to those needs clearly and persuasively, without using hype-filled words.

Strategy #3: Print Lower Quantities

This is a tough one because the more catalogs you print, the lower the cost per catalog. Should you opt for a larger print run or for lower quantities with a higher cost per catalog?

When first starting a catalog, I recommend you go for the lower print run. Although your cost per piece will be higher, you will limit your total financial exposure until your new catalog proves itself in the market.

With a lower print run, your catalog may very well not turn a profit in your initial mailing. The advantage, however, is that you will be able to access the results and viability (through surveys and direct feedback from customers and prospects) of your new catalog without going broke.

You can then fine-tune the catalog and graduate to higher-volume print runs, lowering your overall production costs.

Strategy #4: Concentrate on Mailing to Existing Customers

The key to long-term profitability when starting catalog is to focus your mailings on existing customers.

Why? Because your response rate will be much higher with your customer list than with any rented list you obtain. In my 20 years of direct marketing, I have never seen a rented prospect list outperform a house customer list.

In addition, the cost of rental lists combined with their lower response rates will mean your chances of turning a profit are virtually eliminated if you focus your mailing on list rentals. Does that mean you should never mail to rented lists? Of course not, but the bulk of your mailing list should consist of your current customers.

If you've done your homework and produced a catalog in a niche that fulfills a real need, you can expect a 3-10% response rate from your own customer list. You'll be doing well to get a 1% response rate from a targeted rental list. However, renting lists is still a viable way to flush in new customers.

Strategy #5: Think about How You Will Inventory Items

Starting a catalog in today's environment of instant gratification means your merchandise better be in stock and ready to ship the same day.

It is best if you only include items with an established sales history. If this is not possible, try and negotiate with your suppliers to be able to return product if it doesn't sell. In an effort to establish a profitable relationship, most manufacturers should be willing to support this request for your first catalog mailing.

Another option is to not keep any stock and to let the manufacturer drop-ship the item directly to your customers. This requires a bit of trust since it means your suppliers will have all the contact information of your customers. However, the benefit is that you have zero dollars tied up in stock.

Strategy #6: Don't Try to Be Everything to Everyone

The more you narrow your target market down to a well-defined niche, the more you can focus your product line on the needs and desires of your prospects and customers.

When starting a catalog, the biggest mistake you can make is to try and be everything to everyone. Not only will this cause product bloat, but weakens your ability to concentrate your offering to a well-defined set of customer needs and wants.

Strategy #7: Define Your Competitive Edge

Why should someone buy out of your catalog? If you have to think in order to answer this question, then you haven't defined your competitive edge.

If you're having difficulty, a good place to start is with the competition. Take a look at their catalogs and website. What unique value are they providing their customers? Is it compelling? Does it make you want to place an order?

Your competitive edge can be the breadth and/or depth of your product line within your defined niche, the uniqueness of your products, or the way they are packaged. Whatever it is you define, make sure it stands apart from the competition.

I don't feel rock-bottom pricing is necessarily a good way to define your competitive edge. You should know how your competitors are pricing similar products, but if you can truly create unique value for your target audience, you should be able to sell your products without heavy discounting. Once you start discounting merchandise as your main marketing strategy, you can find yourself traveling down a one-way street with no escape.

Strategy #8: Create a Compelling Offer

You know your target market. What offer could you create that compels them to place an order?

No matter what your industry and target market, a well-conceived offer when starting a catalog can help boost sales. Find out what would stimulate your prospect or customer to take action and advertise this offer on the cover of your catalog.

Here are some important points to keep in mind.

Make the offer easy to understand and even easier to redeem.

Don't create multiple offers in an attempt to broaden the appeal. Multiple offers can cause confusion and take too much space to explain.

Make sure your offer gets noticed. This means describing the offer on the front cover with a teaser to more information inside.

Test your offers. You may assume an offer has a high appeal, but if you don't test, you could be leaving money on the table. Testing offers on your website is fast and less expensive than trying to test via direct mail. Use A/B split testing to zero in on offers that convert the best on your site and then use those offers in your direct mail catalog.

Make sure your offer matches your target market. A sweepstakes offer might work well in a consumer catalog but fall flat in a Business-to-Business environment.

Strategy #9: Have a Plan for Tracking Results

Make sure you have a mechanism in place to track your catalog. One easy way to accomplish this is by adding an alpha code into your part number.

For example, if your part number is 4507, the number you use in the print catalog could be C4507, C-4507 or 4507C. This means creating these part number variances within your system.

While this may seem like a lot of work, it will allow you to easily and quickly access the sales of your catalog, whether the order comes in through the mail, the phone or your website.

Strategy #10: Odds & Ends

Place your best-selling products towards the front of the catalog

Give yourself enough time - starting a catalog from scratch can take 8-12 months from concept to mailing

Make sure the copy for each product clearly lists the main benefit in the very first sentence.

Doubling the number of products in a catalog will not double your response rate. Be careful about product proliferation. A small catalog with just 25 products can be quite profitable for a good targeted niche.

Spend the money to have your catalog well designed by a creative team, whether in-house or outsourced.

Starting a catalog should not be undertaken lightly. However, by following the above strategies and targeting a well-understood niche, your chances of success are greatly increased!