Switch to Catalog Makes Good Horse Sense

Last year's shift from a 16-page magazine insert to a 32-page catalog is paying off for a direct marketer of horse-care products during its busiest time of year.

SmartPak Equine LLC, Pembroke, MA, is on track to more than double the response rate of last year's inserts with volume two of its Complete Horse Care Catalog 2003. Previously, the company placed inserts in a handful of magazines targeting horse owners and people who work with horses, said president/CEO Paal Gisholt. The last insert went out in May 2002.

“The good thing about the inserts was it gave us a way to get the word out to a very broad audience and establish ourselves quickly,” he said. “It was a way to get a very big list quickly and establish broad credibility fast. It helped us increase our house file as we moved away from our original model of pure prospecting. But the bad thing is a magazine doesn't present an insert in a way that forces people to take action. It's too easy for people to say, 'What a great idea,' and then just turn the page.”

While year-over-year circulation stayed at 500,000, Gisholt expects the higher mailing and production costs will be justified. The per-piece cost rose 50 percent since going to a catalog format in October.

“We hypothesized that even though the cost of distribution would be greater, we would see higher response rates with a catalog,” he said.

The current book is using three drops: April 29, May 12 and a third set for this week or next. Most recipients are prospects taken from 15 lists.

“By spending the extra money on postage and name rental for a stand-alone catalog, we believed we would get an elevated response rate,” Gisholt said. “So we went for quality rather than just pumping up the circulation.”

The average order also is up, which he attributed to additional product categories.

“The insert last year allowed us to test whether if, in addition to purchasing supplements, they would also want to buy other healthcare items from us,” he said.

Along with dog and cat supplements, new categories include pharmaceuticals, fly masks/sheets, boots/wraps, training/conditioning aids, rider gear, gloves, help around the barn as well as Ariat brand boots, shoes and chaps.

The target audience is 80 percent female and includes horse owners and barn managers concentrated in Florida and California.

Supplements are found in the front of the book. An insect-control section includes a $1,295 Mosquito Magnet Pro described as the “best pick for stables or large yards.”

The next catalog will be printed in July, followed by a fall book. Each will have a circulation of 500,000.

The company, founded in late 1999 as a dot-com startup, receives more than half its orders via SmartPakEquine.com, with orders faxed and mailed in accounting for only “low single digits.” Its toll-free number generates the rest.

“We, like so many people who are using the Internet as an order-taking and communications tool, tried to use it as our main sales and marketing tool and were not successful,” Gisholt said. “After using the inserts, we went to full-blown catalogs, and what we've found is catalogs do a much better job at eliciting response. A Web site is a tremendous tool for complex order entry and customization, but not as a standalone sales and marketing vehicle.”

The main point of differentiation, he said, is the company's use of SmartPaks in which it custom packs a horse's regimen.

“It's like what Dell does with computers — build to suit,” he said. “We do it with $50 worth of supplements versus a $1,200 computer. We're using a direct mail model to support a mass customization business.”

Catalog recipients learn on the inside front cover that prices for supplements are for a 28-day supply “at the maintenance dosage.” First orders are shipped within one business day, and subsequent SmartPaks can be sent automatically every 28 days.

“We're trying to change customer behavior,” Gisholt said. “People traditionally bought these items from catalogs or tack stores in buckets. The traditional way it's fed is in a feed room that has, maybe, 50 buckets with different supplies, and the buckets are labeled with the horse's name and the supplements they have to be on. Some poor soul each day must feed them to 20 or 30 horses in a barn, and they have to measure and scoop. There's a lot of opportunity for error.”

Instead, SmartPaks operates it like a book-of-the-month club.

“We put them on automatic replenishment,” he said. “All a barn manager has to do is pull out the customized SmartPak, peel it open and drop it in the grain.”

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