A message from Jim

To my readers. I will not be posting anything new this week due to a death in my family. Look for new posts starting mid next week.

Rest now Dad…  You fought hard!

Video: Saturday Night Live skewers the direct marketing industry

Ok, I really have to take this with a grain of salt.  Never has a SNL sketch hit so close to home.  See it for yourself.  (when I get a chance later i may even parse out what untruths and fears that the sketch was playing on.  Got to admit I did laugh though… alot!

Check out the video  here.
SNL Direct Mail Marketers Alliance .

The USPS Might Just Be Onto Something – A Postage Sale!

Last week, word quickly spread that the USPS is looking to offer a “summer sale” on postage for large volume mailers of Standard Mail, pending Postal Regulatory Commission (PRC) approval.

Friends and readers, if this is true, I’d have to say that for the first time in my career in direct marketing, the people running the USPS may be thinking like businesspeople and not as a bureaucracy.

Having gotten the following details from a mailing industry source closely involved in the negotiations with the USPS, here’s the major takeaway point: The idea is to reduce postage pricing for standard and letter mailers who increase their mail volume during the third calendar quarter of 2009 (July through September).

The idea for this “mail sale” came through Mailing Industry CEO Council meetings with Postmaster General Jack Potter. Last Friday, the postmaster general convened a smaller group of CEOs from the printing and paper industries to discuss the reactions of mailers surveyed about discounted pricing for incrementally increased volumes above an established baseline. The meeting was very productive, ending with a concept on how to stimulate mail volume during off-peak times.

To qualify for the reduced postage rate, a calculation would be performed to determine the change in a mailer’s applicable USPS volume in two specific time periods, and the variance in the number of pieces mailed between Period A and Period B would be the baseline for determining the minimum required mail volume to qualify for the discount.

Again, the program would apply to all standard mailers and letter mailers of any size — even those who may already have increased their volume. 


The USPS is going to recommend a discount ranging somewhere between 20 percent and 30 percent for this program, but we won’t know the final percentage until the time of the filing. The proposed “test pricing” will be presented to the PRC within the next three weeks. The PRC then has 45 days to rule on the proposal. If it passes, the reduced rates are anticipated to be in effect July 1 through Sept. 30. It’s possible, however, that these dates will change before implementation.

There have also been discussions about possibly repeating this “mail sale” pricing in other off-peak times in the future, perhaps in early 2010.

FDMA Catalog Marketing Summit From The Basics to Beyond Thurs 4/16

FDMA Catalog Marketing Summit From The Basics to Beyond!

Host: Florida Direct Marketing Association

Date: Thursday, April 16, 2009
Time: 11:30am – 2:30pm
Location: Westin, Fort Lauderdale
Street: 400 Corporate Drive (I-95 and Cypress Creek Road
City/Town: Fort Lauderdale, FL
Phone: 786-357-3275
Email: info@fdma.org

REGISTER: http://guest.cvent.com/EVENTS/Info/Invitation.aspx?e=c746e12a-6705-48c5-85ff-943edd040881

Description: Catalog Marketing: From the Basics and Beyond.

What does it take to manage a multi-channel catalog and thrive in this economy? Come join us on April 16 as our frank 5 person panel of experts teaches you from the inside out. Each expert has been hand chosen due to their expertise in specific area’s of catalog management. After each panelist makes their presentation, you will be able to get hands on and ask questions. Topics include: 

• Knowing your customers! – Metrics, business intelligence, LTV, and repeat behavior.
• Printing – Optimizing size, page configuration, postal discounts, co-mailing.
• Creative- designing catalogs to sell. A case study in redesign.
• Operations – Insource, outsource, case studies call call center and fulfillment.
• Lists – a broker’s inside info that will help you challenge and get more from your broker.

Speakers, 

Fatemeh Khatibloo, VP of Strategic Services Binger Catalog Marketing, Inc.
Kathy Duggan-Josephs, VP, Multichannel Marketing, RMI Direct 
Tim Holody, COO, Seta Corporation (Palm Beach Jewelry Catalog) 
Scott M. Kaczmarek, Sales Manager, Quad/Graphics, Inc.
Fred Neil, President, Spectrum Management Associates, Inc.

Moderator: Jim Gilbert, President, Gilbert Direct Marketing, Inc.

11:30 a.m. – 12:00 pm Registration Check-in and Networking
12:00 pm – 1:30 pm Program and Lunch
1:30 pm – 2:15 pm Expanded Bonus Speaker Tracks

Register early to avoid additional $10 walk-up fee. 

Interested in attending our Board meeting at 10:00am and learning more about getting further involved with the FDMA, please let us know at 786-357-3275.

WHEN
Thursday, April 16, 2009 11:30 AM – 2:15 PM

WHERE
Westin Hotel Fort Lauderdale
400 Corporate Drive
(I-95 and Cypress Creek exit)
Fort Lauderdale, FL 33334

REGISTER: http://guest.cvent.com/EVENTS/Info/Invitation.aspx?e=c746e12a-6705-48c5-85ff-943edd040881

Funny video about the disconnect between marketers and customers

Why Catalogs Fail

Note from Jim: This is the second and final in a series of articles from fellow consultant Bob Klapprodt. I’ll be back with another column next week.

Why do catalogs fail? The answer is deceptively simple, while the remedy is not. 

Most catalogs fail because they walk away from the basics; they ignore the elementary economic analyses necessary to properly measure and control the business.

The Other Guy’s Model
In the vast majority of American businesses, fixed costs are high and variable costs are low. For example, in the retail arena, companies can increase sales simply by staying open longer. The variable cost may be merely the salary of a clerk for an extra hour. 

By monitoring the top line, you can fairly accurately estimate the impact on the bottom line. To increase profitability, all you need is enough incremental margin to cover low incremental costs.

Our Model
For catalogs, just the opposite is true: Fixed costs are low and variable costs are high. In the most traditional cases, the way to incremental sales is through mailing more catalogs. Mailing includes increased printing and postage costs, the two highest budget lines of a catalog operation. 

I normally provide my clients a model P&L that shows fixed costs should run around 7 percent of net sales, while mailing costs should be in the 30 percent range. Very few consumer catalogs can fit into this idealized model.

The result is that many catalogs lose sight of this and end up overmailing. Incremental margin is far outstripped by incremental costs — and this can happen in a hurry. The bottom line goes from black to red, and the catalog is in trouble. 

The beauty of direct marketing is that when a catalog is growing, you can monitor the pieces of your growth and add circulation to list segments that are performing above average. Your P&L is in the black, and life is good.

Why, then, is it so difficult to cut circ when times are bad? Why is it so difficult to monitor the impact of incremental costs that are necessary to gain incremental sales? The answer is, It’s not if you stick to the basic economic fundamentals. Go find the marketing analyst sitting in the far corner of your office; he/she has the answer. If you don’t have one of these analysts, you’re probably already in trouble and don’t know it … yet.

When times are bad, the normal response is to cut overhead. This is exactly the wrong response. Constantly monitor results at the micro level, understand when incremental costs exceed incremental margin, then react by re-evaluating your circ. Cut it when you have to. Leave your overhead alone unless you’re going out of business.

It’s All in the Analysis
The first thing I do when taking on a new client is I go back through two to three years of history and look for instances when incremental costs are too high to support the incremental margin. I’m constantly amazed by the number of times this happens. This is a very sensitive analysis; it doesn’t take much to turn the numbers red.

If you understand response curves and know how to accurately forecast your results, you don’t have to wait for a mailing response to be complete before you undertake this analysis. I’m a spreadsheet geek, so I build this measurement into all my analyses and can tell early on when things are headed south — and by how much.

How to Measure, What to Measure
If you’re a catalog owner, do the analysis. Do it every week. Constantly measure your incremental sales, and compare them to your incremental costs. And don’t forget the cost of taking and shipping an order; this can make a big difference in the results. Your bottom line will thank you.