The recent surge in online product sales combined with America's steady demographic shift toward an older, more ethnically diverse population presents catalog merchandisers with complicated new customer performance challenges in an already overcrowded direct mail marketplace.
Despite these hazards, a lot of catalog and direct response consultants say that overprospecting should not be the biggest risk most catalogers face. Many contend that persistently poor response rates ultimately reflect poor strategy, insufficient testing or just plain bad timing, if not all three.
According to Susan Tolliver, president of Tolliver Inc., New York, overprospecting is usually a sign of something more complicated than simply the competitive times we're living in, especially for smaller companies where undercapitalization can play a role.
“Twenty years ago our industry's probability estimates were much more reliable than today,” she said. “I think that means the little guys have to look at how deep their pockets are. Some don't, and when the bills come in they go into shock.”
Howard Kupfer, senior VP of Mokrynski and Associates, Hackensack, NJ, agrees. “There are very few catalog companies out there that are overprospecting.” Response hinges on the products and the merchandise. Although he does concede that poor management and cash flow combined with overprospecting could spell trouble.
“I think it could put a small company out of business if they don't know how to prospect well, especially if they don't know what their circulation should be, and they're undercapitalized.”
But apparently even larger companies can find themselves vulnerable to combined prospecting and cash-flow challenges as John Peterman, president/founder of The J. Peterman Co., acknowledged last month regarding his company's announced bankruptcy plans: “We did a number of things that contributed to it. In hind site, we overcirculated. We also prospected too deep.”
Tolliver said capital is often not the biggest problem when things go wrong for the larger catalog houses, however. Nor is overprospecting. More company means more things have to be monitored, even the company's leadership.
A number of big-name catalogers have had to cut staff or reorganize financially over the past six months. Besides prospecting, some cited management problems, others have pointed to cash flow issues or strategy challenges.
Catalog and DM consultant Glenda Shasho Jones said from her perspective people are being much more conservative about prospecting, which in the long run is probably a mistake. “We saw lot of that during the holidays,” she said. “Part of it is a result of not getting the kind of performance that they would hope to get. Cooperative databases have been helpful, but I'm hearing people say we need to get more creative about prospecting.”
To be sure, many catalogers are getting results with cooperative databases like Abacus, which allows marketers to search and compile new names for prospecting by pulling them from a large combined pool of files that closely mirror data on their existing buyers. Still, Jones said that overprospecting is something that people should do in a planned and thoughtful way.
Jones said catalog overprospecting is really a way to describe the process of not being smart about what you are doing with your lists. But the smaller the company, the more effective they should be in their efforts “because they have the crème de la crème of existing lists to their advantage.”
Robin Glatt, director of marketing services at AGA, New York, concurs with other catalog consultants that broad stroke assumptions can't be made. She said chances have to be taken by smaller companies.
“Depending on how aggressive your growth goals are, you have to do a certain amount of prospecting,” Glatt said, “And if your growth goals are aggressive, then your prospecting is going to be aggressive. Sure it's a risk, but if you want to grow it's a risk that you have to take.”
