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Facing rising costs, VistaPrint revamps its most effective sales tool

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With the rising costs of postage, paper and production, squeezing money from its catalog was proving a difficult task for VistaPrint, a b-to-b supplier of printed materials to small businesses.

The company launched its first b-to-b product catalog in February 2006. The book typically ran 42 pages and was a standard 8½-by-11-inch piece, with cover art that featured photos of businesspeople using the products. Those photos were another expense, costing the company dearly for pricey photo shoots.

But scratching the catalog because of high costs was not a consideration; it has been effective in making the products come alive and helping customers with tips and advice on how to use VistaPrint’s products for marketing. The catalog also drives customers to its Web site and helps them navigate the site once there.

“We’re an online business, so it is difficult to showcase to our customers how they can use our products,” said Christine Wallace, senior marketing associate at VistaPrint. “We use the catalog to help customers understand that and how to use our site.”

Something had to be done to bring down costs but not lose this effective sales tool.

In early 2007, Wallace began conducting so-called “square inch analysis” to determine the ideal number of products to showcase per page.

“It determines at a high level how much space you should allocate to your products,” Wallace said. “You take into consideration how much revenue you’ve made on a particular product and the number of products on the page, and we literally have someone measure the catalog with a ruler. Based on the amount of square inches you allocate to one design, you calculate how much in dollars that product is giving you. It’s pretty sophisticated, detailed analysis.”

Wallace compared the spring 2006 edition with spring 2007.

She said taking catalogs with six business cards on a page to 12 in the following edition proved to be a much more effective and profitable use of each page.

In addition to showcasing more products per page, VistaPrint wanted to save costs on production, so it reduced the size of the mailer to 5.375 inches by 8.25 inches.

“The cost of manufacturing was so high that we needed to not only keep what we had and increase the number of designs on the page but also do so in a smaller-size catalog,” Wallace said. That would save not only paper costs, but printing and postage as well.

Shrinking it was a gamble, though. The cost to manufacture two catalogs in both the small and the large size would be prohibitive, so the company wouldn’t be able to test it first.

“It was a huge risk for us,” Wallace said. “VistaPrint is a ‘test before invest’ company, but the cost to manufacture two separate catalogs in both sizes is double, so we weren’t able to test the new against the old.”

Cutting the size by 53% and cutting costs by 55% was too attractive to pass up. The company mailed the reduced, “digest size” catalog this past February.

The risk was worth it. Response rates on the larger, 8½-by-11-size catalog were 7%, and the new reduced catalog bested that, producing a 9% response rate and a conversion rate increase of 4.75%.

In addition, a cover showing a “set” (business cards, postcards, brochures and folders) consistently outperformed the photo-driven front covers, so VistaPrint ended up saving a bundle on costs associated with the photo shoots by scrapping them altogether.

Finally, Wallace worked on improving targeting to identify the company’s very best customers, which would ultimately result in fewer pieces mailed.

“Mailing deep isn’t always the best way to get your ROI,” Wallace said. “We wanted to focus on who were our most valuable customers.” Even with a smaller book and more products per page, it was still costly to produce the book, so she wanted to target the right people.

Those were customers who purchased products within the last six to 12 months, made multiple purchases and spent more overall compared with other customers. Wallace found high-value customers have about five times as much marketing budget compared with VistaPrint’s “normal” small-business customers.

Using advanced analytics, VistaPrint’s catalog team used responsive modeling to determine which customers would be most likely to purchase, and purchase at high value. This led to the smaller mailings but a rise in revenue. Diving into the audience paid big dividends.

As a result of its precise targeting, the catalog’s circulation was reduced by 67% to 200,000 catalogs mailed. (Before the targeting exercise, circulation was 600,000.)

“We have made radical changes to both the book itself as well as the process, and truly turned the channel into a success, so much so that it’s at the forefront of our direct mail efforts,” Wallace said.

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