Why Giving Away the Catalog Is A Good Idea!
-by John Sanpietro
Certified Professional Development Coach
Stamping Is My Business!
The following was posted on 6/6/07 as a response to various comments on SUDSOL about the wisdom of giving out the catalog.
Hi everyone,
Every year when I suggest giving the catalog away for free, it stirs up a hornets nest of conversation and controversy. Of all of the things I say, this is the one that meets the most resistance, even from some of my most supportive clients. So, I wanted to take a break from “stuffing my pockets with your $5 bills” (my new favorite comment, by the way J) and take some time to write this to make sure you understand the idea in full, and the reasoning behind it. This is a lengthy post, but I would ask that you take a moment to read it in its entirety.
The question is… why? Why does the idea of giving away the catalog strike such a nerve?
I believe the answer, quite simply, is money. Purchasing catalogs and giving them away costs you money. And its ‘in-your-face’ spending. Its much more obvious spending than a couple of extra stamp sets. And parting with money for something as boring as the catalog (as opposed to product) is tough. Also, some of you have so many customers that the thought of giving each one of them a catalog seems like it would break the bank.
In other words, most of you are looking at this from the beginning as a losing proposition. You look at this idea and assume you’re going to lose money doing it. Negative thinking at its finest. And why? Because, whether you realize it or not, you’re probably comparing it to your experiences with the mini-catalogs.
Most of you send out mini-catalogs to most or all of your customers each time one becomes available. And most of you lose money doing it. Your customers don’t call you and place orders when they get the minis in the mail. So, if you’re losing what you’re losing on the minis, imagine what you would lose if you gave away the main catalog, right?
Wrong!
The mini-catalog isn’t a losing proposition. Most of you make it a losing proposition because you’re not handling the distribution properly.
Let me ask you two questions:
- How many of you sent out mini-catalogs this year?
- Now, how many of you followed up on each of those minis with at least one phone call to see if your customer received it and if there was anything they’d like to order?
I’m betting most of you answered ‘yes’ to question 1, and ‘no’ to question 2. THAT’S why you didn’t make any money on the minis. Because you passively waited for your customers to call you, rather than actively reaching out to them. There were plenty of people in your customer base who would’ve made a purchase… if you had called them. They just weren’t so excited that they were going to pick up the phone and call you.
You have to remember that your customers don’t treat this the same way you do. They don’t sit by the mailbox waiting for the new catalog like you do. They don’t clear their day when the catalog arrives so they can slowly browse it page-by-page putting together their order. The mini catalog probably arrived in their mailbox with fourteen other pieces of mail that day… including three other catalogs. Unless you pick up the phone to call them, many of your customers don’t even remember getting the mini by the end of the day.
And so, given the lack of orders the mini generates, its understandable that you’d be reluctant to do the same thing with the IBC.
So, what are you doing instead? You’re making your customers jump through hoops to get your catalog. They either have to book a workshop, spend a certain amount of money, or out-and-out pay for it. In other words, before your customers can have the catalog to do business with you, they have to do business with you!? I know a lot of you don’t want to hear it, but that defies all business sense.
I spend hundreds of dollars per month in marketing. I give away several hundred dollars a month in referral rewards and Card of the Month prizes. For most businesses, including mine, marketing is a big part of their budget. But very few businesses would ever consider holding back their products or services until a customer or potential customer paid a premium.
Think about it in terms of my business… What would happen if I started charging you or making you do something BEFORE I let you know what products and services I offered? A handful of you, who were really into what I have to say, would do what you had to do to find out what I’m offering. Most of you, though, wouldn’t do business with me. If you look at your customer base, and the percentage of people who have bought something over the last six months, you’ll probably find a similar scenario occurring.
Think about it… How many other companies’ catalogs have YOU bought in the last six months?
The catalogs are a cost of doing business. They’re marketing tools for you. And even though you may think you’re saving money by not giving them away or (even worse) selling them at a profit, you’re actually losing money because of all of the sales you’re not generating from the customers you’re not giving catalogs to.
Its been implied that I would never give away catalogs if I were a demo. However, I assure you, the first thing I would buy every month was another box of catalogs to give away. I know a lot of you are stuck on the fact that they cost $4 each, but in business, you sometimes have to spend money to make money. This is one of those times. Besides… they only cost $4 each! They’re a fantastic investment! For $4, you’re handing a customer hundreds of stamp sets, and accessories, and more! You only have to sell $12 in product for every catalog you hand out. That’s half a stamp set!
When you think about it in terms of ROI (return on investment), 5 catalogs for $20 is a much better investment than a $20 stamp set. In order to make my money back on the catalogs (containing hundreds of sets), I have to sell $60 in product. In order to make my money back on the stamp set, I have to sell $80 in product – and that product is limited to that particular stamp set.
And be honest… how many of you have sets that are retiring that you’ve never showed to your customers? Each of those sets represents money you could have put somewhere else. How much do you spend on swaps? I’m not attacking swaps, but if you’re willing to spend a couple of hundred dollars on swaps, shouldn’t you be willing to spend the same amount on catalogs? In many cases, its not a matter of spending extra money…it’s a matter of reallocating the money you’re already spending to something with a more profitable return.
And handing out the catalogs is profitable. As long as you do it the right way. I’ll detail what I believe is the right way after this next section.
Let’s take a look at some of the common responses/answers/solutions I hear from SBO’s (stamping business owners) on this topic:
- “It’s a catalog AND idea book!”
Technically, yes. But its much more important to you as a catalog than to your customers as an idea book. Your customers don’t need the IBC to find ideas. You, however, need your customers to have the catalog in order for them to buy from you.
- “My customers don’t mind paying.”
Not exactly. Your BEST customers don’t mind paying. For the customers who are buying and booking from you no matter what, they’re going to get the catalog sooner or later, and if they have to do something to get it now, so be it. But what about the customers you aren’t doing business with? Aren’t they the ones who REALLY need the catalog? Let’s say you’re only doing business with 25% of your customer base right now. What would your business look like if you were doing business with 50% or 60%?
- “I use the catalog as an incentive to book a workshop. What’ll I do now?”
Find a different incentive. Or don’t offer an incentive at all. Frankly, I think the ‘hostess benefits’ program is more than enough of an incentive. The only reason your customers want more is because you’ve trained them to expect more. So, now you have to retrain them.
- “I charge $5 for the catalog, but include a $5 gift certificate they can use when they place an order.”
Again, you’re making your customer jump through a hoop in order to see your product line. The small percentage of customers (your best ones) won’t mind. But the much larger percentage in the middle (your casual customers) aren’t going to go for it.
- “I’ll end up deep in debt if I give the catalog away to too many people!”
Again, it may just be a matter of reallocating some money you’re already spending on less profitable or unprofitable things. However, if you follow the steps below, I think you’ll find it will be VERY difficult to lose money.
Here’s how to give away the catalog without losing money:
- Say to your customer – “I’d like to give you a copy of the new catalog. It retails for $10, but I’d like to give it to you for free. However, I am going to call you in two or three days to follow up and see what you’d like to order. Would that be OK?”
- Wait for the customer to say yes. Then, and only then, give them the catalog.
- Most importantly, follow up and call them when you’re supposed to follow up!
If you do this every time. If you get the buy-in from each person and follow up with each person in a timely fashion, you will not lose money!
Most of you who have tried giving away the catalog in the past have lost money because you didn’t follow up. You waited for them to call you. If you’re not going to make the call, don’t even bother!
What if they don’t say yes? Then, you say, “no problem, but I hope you understand that I can’t give you the catalog.”
Is everyone you call going to buy something? No. Of course not. Some people won’t even take your call. But more than enough people will place orders to make up for the people who don’t. AND you’ll increase your sales AND your profit. Remember, based on how much you make in instant income and volume rebate, and assuming an average order is around $50, you only need one out of every four people to place an order remain profitable. And since the average order from a new catalog is probably higher than that, you don't even need that many people. In all likelihood, though, you’ll have an even better rate of return than you actually need… as long as you make the calls!
Give catalogs to the customers you don’t see first. Call them, get the buy-in, put one in the mail and follow-up! Give them to people in your classes. Don’t worry about your best customers yet. Your best customers are actually the people who need the catalog the least! They’re going to buy from you whether you give them a catalog or not.
The only people you don’t want to give the catalog to this way is workshop attendees the night of the workshop. They’re already looking at the catalog and its unlikely that they’re going to place an order three days after they placed their workshop order. It may also hurt workshop sales, which won’t make the hostess too happy.
For workshop attendees, let them know you'll follow up with them shortly after they receive their workshop order and make arrangements for them to receive their catalogs at that time.
If you follow these steps, including the follow-up call, you’re going to increase your sales without having to lift a finger to find new customers. Remember, it’s a lot easier to sell to a repeat customer than it is to find a new one.
Generate the repeat business you deserve. Try and get past the money you’re spending and focus on the money you’ll be making.
Thanks for taking the time to read this. If anyone has any questions, please feel free to e-mail me at john@stampingismybusiness.com.
Warmest regards and much success,
John
John Sanpietro
Personal & Professional Development Coach
Stamping Is My Business!
