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Libey Incorporated
Economic Outlook
Secrets of the Catalog Master
Vol. MMV No. 1
January 2005
(Continued--page 3)
Sampling Programs
Nothing works like a sample. It's that simple.
Many very successful catalogs have been built with samples. Dollar for dollar there may not be a better prospect and customer tactic for acquiring and keeping customers.
How Samples Work
A sample works by putting the product into the potential buyer's sensory recognition. If the product is perfume, it has to be smelled. If it's hand lotion, it has to be felt and smelled. If it's food, it has to be tasted. If it's wine, it has to be smelled and tasted. If it's a shipping label, it has to be peeled and stuck. If it's pre-printed letterhead, it has to be seen. If it's music, it has to be heard. If it's fabric, it has to be felt and seen. If it's a car, it has to be driven. The secret of the catalog master is that you don't put the sample in the buyer's hands as is usually stated; rather, you put the sample into the sensory recognition of the buyer that will create desire. When you think about it, what you are really sampling is an application of the product, not the product itself. The application is what sells the product; therefore the application is of greater importance. If the label doesn't stick or peel, it isn't going to be purchased. If the wine smells bad, it isn't going to be bought. Samples entail both a product and a delivery mechanism for the application. Stated another way, you have to deliver aroma to sample perfume; you have to deliver taste to sell candy; you have to deliver smooth handling to sell cars; you have to deliver pleasing design to sell stationery; you have to deliver luxury to sell high-ticket fashion accessories; you have to deliver functionality to sell business forms.
What Products Benefit By Samples
Most products benefit from sampling programs. You will sell more products by sampling than you will by not sampling. Products that are far to the left in individuality require more intense sampling. For example, gourmet foods are at the far left of individuality-that what makes them gourmet. They require tasting. At the opposite end of the scale, at the far right are products that don't benefit from sampling. These tend to be commodities or products that just don't demand differentiation. Like gasoline. I cannot remember ever being sampled with gasoline. What does it matter? If it ignites, I'm good to go!
Interestingly, high-ticket products seem to be exempt from sampling. A $900 briefcase bought from a catalog is assumed to be right in every way because of its exclusive product attributes; touching it isn't necessary, plus that why we have 100 percent money-back guarantees. Where samples really kick it up a notch is in low-value products, such as spices or cosmetics. Consider the best spice catalog and retailer there is: Penzey's. Whether you receive a box by UPS or go to one of the retail stores, there are samples included in the experience to get you to have a sensory experience that creates desire, demand and add-on sales. As this involves one of my favorite product categories-foodstuffs-I can vouch for the efficacy of this approach. Two things about sampling: 1) you have to change the products constantly or sample a large variety of products; 2) you have to stick with it until the customer base is trained to look for new product experiences via the well-thought-out sample program.
Think back to some legendary business-to-business sample programs. In the late 1980s and early 1990s, there was the brilliant Sample Box from PaperDirect. It provided samples of most of their products at that time in a plastic file box-and they charged you for it! But, it worked. In fact, they are still being used today by customers and the company has been sold three times.
Another tour de force of sampling was Nelson Marketing which became 4imprint. Remember the 10 x 12 envelope with the catalog and a variety of new goodies inside? It came every two weeks, as I remember, and it always had neat stuff. Dick Nelson did very well with that impressive sampling program.
How about the Myron pocket calendar samples? What about Union Pen's sample pen with your company's name imprinted on it? Then there was the Stephen Fossler business anniversary labels that built one of the great 25-year product continuity programs. And, of course, the Day-Timers monthly planner sample that built an entire product category. There are the plastic, numbered ear tag samples for sheep, cattle, pig and goat farmers. We have the hay bale plastic cover samples for hay farmers. And let's not forget the honorable American pharmaceutical industry which stocks doctors' office closets with millions of free samples and then spends a few billion dollars on TV advertising telling people to go ask for those free samples for medical problems you don't even have! Is that multi-channel, integrated marketing, or what? Ah, the incredible power of free samples, morons and greed!
I first learned about samples selling business forms for Streamliners. I created a new shipping label design and put it in the catalog where it essentially died. Suffering from a terrible overstock on this item due to my high-volume sales estimate, I decided to get rid of the damning evidence of my stupidity by including 5 or 10 labels in each #10 envelope mailing that prospected for business form sales with products that actually worked. Well, that was nothing short of genius! Sales of the orphan shipping label skyrocketed and I was in the envious position of having to reprint. This of course, led to my somewhat legendary history as a new product mucky-muck and I was off and running on a fairly spurious career requiring new jobs every two years or whenever the various warehouses filled up with unsold stuff I dreamed up that wouldn't fit in a #10 envelope as a sample. This all culminated 12 years later when I owned the Olde Maine Seafood catalog selling lobster dinners overnight. A dearth of actual business required that I convert the entire inventory to samples which I then had to consume myself within a 24-hour period. After I got out of the hospital, I sold the company to Jo Von Tucker at Clambake Celebrations and quite naturally went into consulting.
Sample Linkages
I try to give you consumer examples because we can all relate to them. You can draw the business-to-business parallels as they occur for your particular business. There is a concept used by the catalog masters known as "sample links" or sometimes as "stepped samples" or "progressive sampling." Here's how it works.
Let's say you sell skin and beauty products for women 35 years old and older. You begin with the most common skin problem and sample a dry skin lotion. When they order that product, you sample with a product aimed at improving the next most common problem, crows' feet around the eyes. When that product is bought, you move to problem number three and sample a product for age spots. Each of these samples is progressive in terms of commonality of problem, degree of complaint, and product dollar value. In short, you are moving through a logical sales progression attacking increasingly serious complaints with products that are increasingly expensive. You have to have the ability to track what you have sampled to whom and what they bought and what they didn't buy. Samples can be repeated until the customer buys or until they receive a certain number of that particular sample without a purchase of that product. Then you move on to another problem, another sample and another offer. In short, sampling means you manage the progressive product sales process proactively for each customer and for each product and each product category.
If you were in the spice business, you might begin with a nice sea salt, then a cracked black pepper, next maybe red pepper flakes, then dried rosemary, perhaps working up through the curries and garmasalas. Each progression would entail more and more complex cooking techniques and spicing techniques, as well as more and more expensive spices. You might include recipe cards with each sample. Remember: It isn't a successful sample until the application is delivered as a sensory recognition. They have to taste the success of their own cooking in order to complete the repeat sale of the product and set up the next progressive sample and sale. Sampling is not serendipitous; it is planned, logical, progressive, tracked and measured.
How You Obtain Samples
If you manufacture your own products, you'll need to set up a separate sample manufacturing program that anticipates all of the operational, marketing and fulfillment elements of a fully-furnished sample program. The samples are tacked on the back of normal manufacturing runs, but may include variable formats, sizes, etc. depending on the product. Manufacturing scheduling, make-readies, run parameters and cost absorption have to be looked at in as much depth as the normal product runs. Somebody has to be in charge of the sample program. Since it is a marketing initiative, marketing is usually the best place to assign the program, especially for accountability. However, if self-manufactured, you will have to have close cooperation and planning between marketing, manufacturing and fulfillment. These are complex programs and require precise execution to be successful.
If you purchase your products, you ask the manufacturers of those products to provide you with the samples. Whether you pay for them or negotiate reduced costs or get them free is entirely dependent on your negotiating skills. Remember, each manufacturer has a vested interest in providing samples that will increase your sales. You may have to educate them on this point, however. One client requires a sample program from every supplier as a contractual condition of the product being accepted for their catalog. Nice if you can get it.
Sample sizes are a critical aspect of the program. If you are doing spices, the amount of the spice will be determined by the amount of the ingredient in the sample recipe, or some other common amount in customary recipes that the consumer might follow when making a particular dish. If you are doing moisturizing lotion, the sample should be sufficient to produce a positive application and create a beneficial sensory recognition. Remember, it is self-defeating and actually regressive to have samples that are so small they are ineffective in creating a positive application of the product. We have all seen the teeny-tiny little vials of hand cream that drive you nuts getting them open and then deliver nothing even remotely resembling a positive experience. You want the person experiencing the sample to think, 'Wow' not 'Why bother.'
Sample or Gift: It's All the Same
Some merchants call the sample a gift. This removes the sample from the realm of "product come on" and turns it into "a gift." That's a nice touch. It is no longer a crass commercial prod but rather a thoughtful token of appreciation. The Levenger catalog could pull off the gift aspect of sampling. Perhaps one of their printed note card products would be a nice "gift" with your name on the top. That isn't a sample; it's a gift. See how that slight perception shift is beneficial. I doubt however, that the same perception would be experienced by, say, Seton. Embossed pipe markers, regardless of how nice they are, are simply always going to be seen as samples, not gifts. Common sense has to prevail. The sample presentation, however, can be ginned up a bit to make it special. Anything is an improvement over dumping a few free goodies into the box. Put them in a special presentation envelope; include an information card extolling the virtues of the product; entice customers with a special offer; incent customers with an immediate reward for immediate orders; and time limit the reward for ordering.
Accounting for Sample Programs
How will you know whether samples work for you? Did the inclusion of samples increase response? How much? What did it cost? Should you include the sample in the campaign cost, or should you account for samples separately? What is the return on sample investment, per campaign, per catalog, per quarter, per year? Should the sample program be expanded or cut back? Is it making money or losing money? What would happen to sales if you doubled the sample initiative?
All of these questions have to be answered. Therefore, you have to design a sample tracking and accounting program that allows you to slice and dice performance data to accurately answer all of these (and many other) questions. You also need to test sample campaigns against non-sample campaigns so that you have empirical data to support your subjective observations and the fulsome seat-of-the-pants acceptance of, "Hey, samples are good!"
There are those who enjoy life out on the edge and who tend to go with their gut on sample programs, simply including them in orders without a plan or measurements of success. For many, that works well, too. I would only offer that, of all the great samplers in business-to-business and consumer cataloging that I have observed and known, the consistently successful and profitable ones ran and managed fully-furnished, planned sample programs with the same intensity and accountability as their circulation plans. They are the catalog masters who built strong sample programs that drove their businesses and vaulted them to the top echelons of their product categories.
Samples: One of the Secrets of the Catalog Master
In a hierarchy of catalog magic and secrets, I don't quite know where to rank sample programs, but it's up there with the best tactics for building successful businesses. Of course, there are businesses where samples are meaningless; however, there are far more where samples can be a powerful driver. The real secret behind sample programs is that they have to be taken seriously and managed with as much precision, performance and financial accountability and hard work as any other keystone of catalog mastery.
Go forth, and sample!
An Open Invitation
Many of our readers have asked us in to assist in reviewing their strategic directions, or to conduct a deeper forensic analysis of their catalog and organizational performance. Many of these are one-day consultations; the deeper investigations often require several days. In some instances, these are purely performance reviews and are focused on growth. In others, these are initial or continuing reviews to develop sound exit strategies and to outline the logical steps to be taken to maximize the value of the business at the harvest event. As a MeritDirect client, we extend to you a significantly reduced, or shared, consulting fee for these reviews and extend an open invitation to call and talk with me directly about your requirements. As always, I can be reached anytime, anywhere through my toll-free direct line (877) 903 9448. We also currently represent a number of interesting catalog companies for sale. If you have interest, or if you are thinking about your own exit strategy and are considering a sale of your business, I would be pleased to visit with you anytime and invite your call.
The Libey Incorporated Economic Outlook and Secrets of the Catalog Master is published seven-eight times annually and synthesizes economic information from around the country, filtered through analyses of the Federal Reserve, The Department of Commerce, and numerous public and private analytic sources, as well as a broad base of industry contacts developed as a part of the extensive contact base of the Libey Incorporated investment banking firm.
The information provided in the Libey Incorporated Economic Outlook and Secret of the Catalog Master is published for information purposes only and does not constitute recommendations for investment or other financial activities. No guarantee of market or economic direction is made or implied and readers are encouraged to seek adequate professional advice prior to making financial decisions or investments, or to altering planned business activities.
Copyright 2005 by Donald R. Libey. No reproduction or dissemination of this material by any means whatsoever, electronic or printed, is permitted without written consent of the author and publisher. Copyright infringement s will be pursued to the full extent allowed by law.
The Libey Incorporated Economic Outlook and Secrets of the Catalog Master is provided to clients of Libey Incorporated and its strategic partners, Libey Incorporated, Concordia Financial Group, Inc., Penn Capital Group, Walker Direct Incorporated., MeritDirect, Inc., Amtower & Company.
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