Former Grolier Chief Reveals Insert Cost Savings

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RYE BROOK, NY -- "Insert media is a very complicated media to execute, but we realized early on that there were probably huge opportunities to reduce costs and improve results," said Dan Cirilli, former president of Grolier Direct, a marketer of children's book clubs now known as Scholastic at Home.


Cirilli was the keynote speaker at yesterday's Insert Media Day, sponsored by the Direct Marketing Association's Insert Media Council.


Cirilli began his 40-year career at Grolier in an entry-level mailroom job and rose to the position of president before retiring in 2000.


He detailed the ways in which the company revamped its insert media efforts to lower costs and increase results under his watch.


When Grolier first looked at its inserts, the firm was sending 70 million to 80 million annually. Cirilli sought to bring break-even numbers by lowering production costs.


Cirilli first eyed printing. The firm was using four printers with insert print runs occurring monthly. To save money, it went to two printing vendors, one on the East Coast and one on the West, and decreased the frequency of its runs to four times a year, and eventually to three. These changes reduced the unit cost for printing.


Grolier also shifted from allowing its printers to use their own trucking vendors to ship the inserts to the insertion vendors to hiring two national trucking companies to do this. The firm got volume discounts and took advantage of free storage offered by the trucking companies.


Another element Grolier evaluated was the format of its inserts. Previously, the firm used different formats including costly die-cut pieces. By going to three standard insert formats -- small, medium and large -- Grolier cut costs by $500,000 annually, Cirilli said. The company later found that it could phase out the medium-size piece to save even more.


Grolier made changes regarding creative. The firm often used the same insert repeatedly, stopping only after results fell below the acceptable level. This left no time to test new creative, Cirilli said. Grolier adopted a rotation strategy using several inserts for each program so prospects would see the same piece only once every three to six months. Another key element was an easy-to-grasp offer on both sides of the inserts.


Grolier even went to a paper mill to develop its own paper for its inserts that would meet the minimum requirements of the U.S. Postal Service and, therefore, lower its costs.


These cost savings let Grolier increase its volume, Cirilli said.


"Costs went down so much that we were able to go into more general programs and be successful," he added.


After revamping its own inserts, Grolier made its program available to other marketers.


"It brought in revenue, and it gave us information that we could use to better target our outgoing inserts," Cirilli said. "We got to see who the repeat users of our program were."


When Cirilli retired, Grolier was netting more than 2 million new members annually with about 40 percent attributable to insert media. It mailed more than 600 million inserts annually.


Cirilli also discussed the medium's challenges. He said the cost of producing inserts with different key codes was a burden, yet necessary to track results. He also said that reading results was difficult given the long order curve on inserts.


"I guess the message is that insert media programs are complicated to manage, but a well-managed program can be extremely profitable," he said.


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