Ten Proven Ways To Increase Your Revenue Per Catalog
by Stephen Lett
Catalogers are always interested in increasing the amount of Revenue per Catalog (RPC) mailed to their house file and to outside prospects. As you increase circulation, the RPC will decrease since catalogs are being sent to lower performing names; generally to prospects. So, the more you mail, the less RPC you will achieve. Increasing the RPC will most often result in increasing your bottom line. So, if you grow by increasing circulation, how can you maintain or increase the RPC? Here are 10 proven ways to increase your RPC.
|Sub-Total - House File:
Control Group - No Offer:
|Sub-Total - House File:
Test Group - Free Shipping:
- Page Count - Consider adding pages to your catalog as a way to leverage postage costs and to increase the revenue per catalog mailed. This, of course, assumes you have plenty of excellent quality merchandise available to support the additional square increases of selling space. When direct selling costs increase, there is a tendency for catalogers to cut back ... to reduce page count. Doing this will make it even more difficult to absorb the various cost increases. Increasing your page count will help you dilute these cost increases and your RPC will increase, as it needs to do. RULE OF THUMB: Your revenue per catalog will increase by one-half the percentage increase in page count. For example, if your page count increases 20% then your RPC should increase by about 10%. This assumes, of course, that your page density remains the same and that product offerings increase accordingly. Increasing pages is one of the few real bargains afforded catalogers today!
- Marginal Names - They must be eliminated. Your incremental breakeven point is, and will continue to be, higher. Therefore, marginal buyer names and outside prospect names should be eliminated. Let’s assume your incremental breakeven point (net sales less cost-of-goods sold less direct selling expenses less variable order processing costs = incremental breakeven) was $1.25 per catalog mailed. Eliminating marginal names and/or not mailing to outside lists performing below the incremental breakeven point will increase your RPC. Be careful not to reduce the amount of prospecting too much or you could be limiting the growth rate of your house file.
- New-to-File Buyers – You can re-mail new buyers even faster. Remember, recency of purchase is the #1 determining factor when it comes to repeat purchases. There is no need to wait for your next regular catalog mailing cycle to convert new, one time buyers into two or more time customers. I am sure you are aware of the potential of contacting new-to-file buyers soon after their initial purchase. Consider setting up a daily or weekly program (depending on volume) to download these “hot” names for mailing to a letter shop or outside inquiry fulfillment service. They will treat these proven buyer names with the same importance and priority they give inquiries.
- Package Inserts (or Bounce Backs) - You can also increase your RPC by packing a catalog and other promotional inserts with every outgoing order. This sounds very basic and it is. However, I am constantly surprised how many times I do not see this being done. This is a must! It is easy to do. It is cost effective. And, it works. When I have suggested packing a catalog with every outgoing order, I’m often asked, “Why should I do this if the customer just ordered?” Recency of purchase is the most important criteria in circulation planning. Therefore, putting a catalog in the hands of a “recent” buyer will increase the odds of that person buying again especially if they are pleased with their order. Or, they may give the extra catalog to a friend. When considering these catalogs ride along postage free, packing a catalog with every order is a must! Packing other promotional inserts featuring sale items, new items, over stocks, etc., can also add revenue helping to increase your overall RPC. The chart below provides actual results you can expect from packing a catalog with ever outgoing order and the relationship to bounce-back catalogs vs. mailings to the house file vs. mailings to prospects.
REVENUE PER CATALOG MAILED SEASON BOUNCE-BACK
Fall $2.80 $2.30 $1.25 Holiday $4.49 $2.51 $1.15 Spring $1.19 $1.74 $1.10
- House File Modeling - I believe you can use house file modeling for specific applications to improve your RPC but not as a substitute for R-F-M (recency, frequency and monetary value) analysis. One way to use house file modeling effectively is to model all the previous buyer names you do not plan to mail plus your non-converting inquiries. Using modeling to reactivate your house file will help you identify previous customers who are most likely to purchase again. The same is true of using modeling to identify which of your inquiries are most likely to buy. In both cases, you will increase your RPC by eliminating circulation to non-performing names before you even mail them. After you have mailed to your non-converting inquiries for the last time (generally 3 times), have these prospect names modeled and mail them one more time. You will be pleased with the results when you see the increase in your RPC.
- Add-A-Mailing - If you can squeeze-in one additional mailing to your house file during your busy season, do it. Let’s assume you mail to your house file 12 times a year ... every month. Let’s also assume Holiday is your best season. During the months of September, October and November you might want to consider mailing 3 weeks apart vs. 4 weeks so you can mail one additional time to your house file. This additional drop should perform at 70.0% of a regular house file mailing to like R-F-M segments of your customer list. I have also seen companies mail to the best segments of their house file in early December as a last minute ideas mailing. There is no question that the gift giving season is getting later and later. Therefore, later mailings do work since the buyer has confidence in your ability to fulfill on time. Remember, it is very difficult to over mail your house file!
- Try Promotional Offers - Special offers can help increase your RPC too. Using promotional offers such as free freight, a dollar amount off the order, and other ordering incentives can motivate your prospect to purchase and help to increase the RPC. Free shipping is by far the #1 offer. Shown below is recent free shipping vs. control (no offer) test we did. As you can see, the free shipping offer increased the revenue per catalog mailed by 30%! These results are consistent with other tests we have done.
- Title Slug Mailings - For you business-to-business mailers, consider using your house file as a prospect file as a way to increase your RPC. Simply remove the name of your customer and replace it with a function title such as President, Purchasing Manager, or other. In addition to mailing your catalog to your customer, mail the same catalog to someone else within the same company and at the same address. There is no cost for the name and results you achieve will most likely fall somewhere between your house file results and mailings to outside rented names. This should be a win-win for you and it will increase your RPC.
- Optimize Rental Singles - This method is used post-merge to identify and suppress the rental singles (one-time buyers). After the merge, you can optimize the rental singles and suppress the worst scoring 10.0% to 20.0%. This method should yield a 5.0% to 15.0% (or higher) lift. (It is always good to mail a 5,000 to 10,000 back-test cell to monitor the suppression results in order to measure the exact lift you achieve.)
- Reactivation Technique – Mail your merge/purge “hits” to older buyers, as a reactivation technique will yield higher revenue per catalog mailed. These are “hits” between the rented lists you use and your inactive buyers. These names are also called “super dups”.
There are other marketing strategies you can try which will help increase your RPC. I hope these suggestions help you increase your RPC and help you maintain your profitability in the face of rising costs and lower response rates.