Cataloger Happy That Check's Not in the Mail

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Mike Reed has an advantage most other catalogers can only dream of: not dealing with postal-related expenses.


"Paychex has more than 100 branch offices, and they put our catalogs in with the packages in which the payrolls are delivered to our clients," said Reed, manager of business development at Paychex, Rochester, NY. "Most of our payroll packages are couriered or picked up at the branch by the client. The impact of postage is negligible since very few catalogs are mailed -- less than 5 percent."


Initial national rollout of the 24-page Paychex Employers' Resource Direct catalog was sent to the full house file of 390,000 names across three drops split evenly: to the Midwest on Feb. 24, the East on March 10 and the West on March 20. Per-book printing expense was 10 cents.


"We did two test market efforts of 50,000 each -- last June and then in the fall," he said. "The results of the test marketing were positive, and we believed we had something of value for the client and something that is good for our business as well. Net revenue for the test market was 80 cents per book."


The book has 254 SKUs, up from 230 in last year's test versions.


"We stayed at 24 pages because we wanted to keep it focused on practical business needs with a meat and potatoes look so that it would utilize a very relevant marketing mix," Reed said. "We also had to be conscious of the weight since our branch offices were handling it."


Paychex's clients have an average of 14 employees, though some have several thousand.


Paychex worked to develop more merchandising, including a full-page offer with a credit card company in last year's test catalogs.


"A lot of our small-business customers use the owner's personal credit card, and we knew it bothers them to do that," Reed said. "So we found a partner for that, but it didn't click for either of us."


New products, including a Record of Disciplinary Action and a Reference Check Form, are identified as such throughout the catalog.


"Another new product is Keller's Healthcare Employee Safety Handbook [$7.50], which we put in since we're doing business with a lot of healthcare companies as well as practitioners," he said. "We've also got many foodservice-specific items since we do a lot of business with them as well."


State and Federal Poster Kits -- labor posters occupying all of page 2 that must be displayed in the workplace -- are providing brisk sales at $59.95 along with Time & Attendance products on pages 12 and 13. One of those is Time Guardian, which allows for the swiping of a magnetic badge instead of an old-fashioned timecard.


Time Guardian 50, for up to 50 employees, has a list price of $695, but "Save $100!" is offered for purchases made via the catalog. Such catalog discounts are offered throughout the book and are helping sales.


The average order has been just over $100, described as "very consistent with last year's numbers." The response rate so far is 0.8 percent to 1 percent.


"It's growing compared to last year, and it's what we expected," Reed said. "We expect to get to 2 percent by the end of the calendar year. We now intend to mail catalogs quarterly."


The toll-free number is generating 85 percent of catalog sales while nearly all the rest are realized via fax with fewer than 1 percent mailing in order forms. A TeleCheck payment option is used by 20 percent to 25 percent of those ordering. A Web site ordering option is not available and is "still in development."


The next catalog will include a prospecting effort to 20,000 to 50,000 recipients in May, followed by distribution to the house file in June.


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