Geerlings & Wade Inc. has returned to prospecting in 2003 after two years of mailing mostly to existing customers.
The firm, a direct marketer of wine and wine products, plans to roll out an aggressive yearlong catalog and direct mail campaign. It also will use e-mail, radio and TV for the first time.
The budget was not available, but CEO Huib Geerlings said the company had increased its acquisition spending by $1.7 million during the first half of 2002. That went into tests.
However, the firm's acquisition mail spending fell by $402,000 for the entire year. That drop during the second half came as Geerlings & Wade implemented “a more effective marketing communication strategy,” Geerlings said during a Feb. 18 teleconference.
“We believe that this discipline has greatly increased profitability during the latter quarters of 2002, albeit at the expense of sales,” he continued.
The company reported fourth quarter net income of $1.4 million, compared with a $910,000 net loss in the fourth quarter of 2001. Sales dropped 23% to $8.3 million during the same period.
While Geerlings & Wade did not break out exactly how much it spent on marketing alone in 2002, its total selling, general and administrative expenses fell from $18.6 million in 2001 to $17.6 million.
The company's renewed focus on customer acquisition will “reinvigorate the creative, the channel, the offer — you name it,” Geerlings said in an interview.
He added that the company's previous media mix, which relied almost entirely on solo mailings, would branch out in 2003 to include radio, television and e-mail, although he did not offer any specifics regarding placement or number of efforts.
The company began its first direct response radio campaign last quarter, Geerlings said.
“A lot of people are hard to find through mail,” he noted. “When this whole Internet thing happened, something shifted from the consumer perspective. A direct marketing purchaser had meant a mail order buyer. Youths buying from Amazon do not consider themselves mail order buyers.”
The new prospecting push comes at a time when the wine merchant appeared to have exhausted use of its customer file. During the first nine months of 2002 (the latest for which figures were available at deadline) sales to its house file were down by nearly $2.5 million from the same period in 2001.
Total sales to new customers were half a million dollars below 2001's level.
