Last year, The Home Depot's 1,900 stores rang up $70 billion in sales. But customers don't elect to shop there because of the company's size — they do so because it's close and familiar.
The Atlanta-based DIY titan faces the challenge of maintaining a personal connection with customers while thriving as a large-scale corporation. Technology can help in the process, but that alone isn't enough to create a strong bond, said John Costello, executive vice president for merchandising and marketing.
“The success of technology in the future may be defined more by how it engages and interrelates with other aspects of the business than by pure innovation,” Costello said at the recent Ad:Tech San Francisco conference. “There was a feeling once that technology would change the world and replace old media, old retailing, old product development. But we're seeing a convergence of technology and those old business elements.”
Costello outlined three examples of how his company has integrated technology into other existing aspects of merchandising. The company prides itself on the know-how of its associates, but found that it was over-marketing to men, even though half its transactions were with women. So more than a year ago, it inaugurated a series of in-store “Do-It-Herself” classes in home improvement targeting women.
Home Depot used conventional TV, print marketing, e-mail and direct mail to publicize the classes. A microsite allowing women to go online and register for the workshops proved particularly effective, because students could give the company feedback on what they wanted to learn. To date, 200,000 women have signed up for the workshops, and 97% have said they would attend another one. The top complaint, he said, was that the courses weren't long enough.
Home Depot's sponsorship of NASCAR racing taps into the tremendous loyalty the sport engenders among fans, and takes advantage of the fact that while fans see commercialism in other sports as a spoiler, in racing they view it as an enabler. Home Depot differentiates itself from other sponsors with TV spots and by offering on-field activities at races, such as letting kids build homemade model race cars.
Finally, Costello said, Home Depot has become the country's third-largest appliance retailer in just four years. Last December the company rolled out an appliance section on its Web site that allows customers to research, browse and then buy appliances online. While the commerce portion was crucial, equally important was building in the ability to reach customers in a number of different ways. To this end, a print catalog for appliances was launched as well.
“Rather than telling our customers that they must purchase appliances online, in the store or by catalog, we turned control over to the customers and made it easy to do research online and then go into a store and buy,” Costello said. For example, outdoor grills have become a big-ticket purchase. Home Depot organized its online and in-store grill departments to make it easier for customers to compare features and prices, and offered take-home brochures and spec sheets at in-store kiosks.
Other touch points where technology can aid with customer engagement include digital I-store signs that answer the simpler product questions — about extended-life light bulbs, for example — and free up salespeople for consulting on more complex home-improvement projects. Home Depot also is mining its sales data for new ways to build customer relationships.
Costello urged DMers to embrace the permission-based sector. With too many options, customers are going to sit back and ask, “Who do I want to let into my world?” Costello said. “We're going from broadcasting out to being invited in.”
The Internet has the potential to become the ultimate marketing tool, combining the accountability of classic direct marketing with a reach that far exceeds traditional mass media. “The challenge is understanding how to maximize that,” he said.
