Our column this month is devoted entirely to B-to-B (Business-to-Business) catalog circulation techniques. We will discuss effective prospecting techniques for B-to-B and B-to-I (Business-to-Institutions) catalogers. Topics will include how to use your own housefile as a prospect file, mailing by name of individual vs. by functional title, and much more. While there are many similarities between a consumer vs. a B-to-B catalog company, there are differences which we will also discuss this month.

The Income Statement

One of the significant differences between a consumer vs. a business-to-business catalog company can be found on the income statement. The EBIT (Earnings Before Interest and Taxes) of a typical B-to-B company ranges from 10% to 12%. Consumer catalog companies are less profitable at 3% to 6%. Direct selling expenses account for a large part of this difference. There can be as much as ten or twelve percentage points between the two. Selling expense to sales ratios for a B-to-C catalog company range from 25% on the low side to 30% or more. This same ratio for B-to-B catalog companies is typically around 18% of net sales. The key differences are noted in our chart below:

“Title Slug” Your Own Housefile

One way to get more out of your housefile is to use it as a prospect file. Your housefile contains the names and addresses of companies who have made a purchase from your firm. It could be that the person you have in your customer record is no longer with the company. Therefore, the catalogs you are mailing into a particular business could not be getting to the right person therefore ending up in the trash! It has already been demonstrated that the company has a need for your products. It may simply be a matter of getting to the “right” person. So, what can you do? “Title slug” your own housefile deleting the name of the individual in the contact field and insert an attention line, i.e., a functional title in its place.  You need to determine the most appropriate functional title including but not limited to Sales Manager, Purchasing Director, Marketing Manager, etc. You might want to move the name field since it normally appears on top of the company name. The functional title can also be inserted just below the company name. Shown below is an actual example of how the name of an individual is removed and replaced with a functional title:

Start by testing title slugging your “older” buyers who have not made a purchase for awhile, i.e., 18+ month, 24+ month or older. (You might not want to “title slug” your 0-12 buyers.) You already own the company name and address therefore there is no list rental expense. With proper instructions, your service bureau can implement this idea easily for you.

Mailing By Functional Title

Unless you are mailing to the Chairmen or Presidents of the Fortune 500 or 1000 companies, try prospecting to functional titles and not to the names of a specific individual. Your mail has a better chance of getting to the “right” person if you do. When you mail to the name of a specific individual you run several risks as follows:

• The person’s name might be spelled incorrectly. No one likes to see their name spelled wrong therefore when this occurs, it does not leave a good first impression on the prospect.
• The individual might not be in that job any longer. It is possible they could have been moved to a different department, promoted to a higher level position, etc.
• The individual might not be with that firm any longer. In this case, the mail room will most likely discard the mail.
• You don’t always know who the influential person is. When you mail to the names of an individual you could miss the mark all together.

Mailing to a functional title does help insure that your catalog or direct mail piece will be delivered to someone. It is not as likely to end up on the recycle bid. What’s more, it is more likely to end up on the desk of the person who is responsible for the purchase of products you are selling.
Cost is another advantage of mailing by functional title. You can rent company names and addresses by SIC (Standard Industrial Classification) code with a functional title “slugged-in” for $50 to $55 per thousand. If you want a person’s name, you are going to pay $90 per thousand and up.

There are exceptions to functional title mailings. If you are mailing to subscriber lists, i.e., magazine or newsletter lists, you are safe to mail by name. You would not want to “title slug” these lists, for example. The same holds true for direct response B-to-B lists you also might be using.

Other Testing Ideas:

• Consumer Catalog Lists – If you are a B-to-B catalog, don’t overlook opportunities in the consumer market. For example, if you sell tools, corporate gifts, etc., you might be well advised to test a few consumer lists.
• Space Ad – Generate inquiries using space ads. This 2-step approach to generating an order can often be cost effective.  Space ads can help get the catalog in the hands of those prospects who are specifically interested in your products.
• Cooperative Databases – There are several excellent B-to-B coops you might want to test. Abacus also has a good business coop which is worth joining. MeritDirect’s B2B Base is also worth considering. While Abacus is a “blind” database, MeritDirect’s B2B Base is not. Here you can see the other participates.

Number Of Catalogs To Anyone Location

Many B-to-B or B-to-I catalog companies set a limit on how many books they want to mail to any one company.  If they are mailing to previous customers by R-F-M there are no limits. Often catalogers have their service bureau generate a report similar to the one shown below. In our example, wave 1 shows the number of catalogs going to one person; wave 2 represents the number of books going to two people at the same location and so on. This report can be helpful when limiting the number of catalogs you wish to send to any given location.

Company size is certainly a factor to consider. For example, when mailing to smaller companies you might want to limit the number of catalogs you sent to a business.  When mailing to larger firms, the more books the merrier! Our rule-of-thumb is as follows: When mailing to your housefile, limit the number of books going to a particular firm based on recency of purchase. When mailing to prospects, limit the number of books based on the size of the business you are prospecting to.

If you want to determine the number of catalogs mailed to one location, you might want to consider a structured test. We recommend testing be conducted over multiple mailings, per title, to determine the appropriate threshold per title. After testing, the results can be tabulated and measured. In order to build a contact mail strategy, consider the following:

1. The use of overlap data and limiting the number of catalogs based on the size of the business or institution.
2. Coding the “waves” separately on the backend for better tracking and monitoring. Measure the results by R-F-M and wave to determine and control the number of catalogs mailed per address.
3. Create a structured A/B split test panels and mail each one to a specific wave number.

In summary, a cataloger selling B-to-B or B-to-I have a lower seller selling expense to sales ratio compared with a consumer catalog company. Be sure to consider using your own housefile to prospect to. And, be careful limiting the number of catalogs you mail to any one location. It is risky to limit the number of books going to previous customers providing they fall within the R-F-M cells you plan to mail. Follow these and other business-to-business circulation techniques in order to grow your business.