Lands’ End made some tough decisions last year to ensure consistency across all of its marketing channels.
The Dodgeville, WI-based cataloger merged its individual business units – men’s, women’s and children’s’ apparel, and e-commerce – into one company.
In doing so, the firm hit some staffers right where they live. For one thing, Lands’ End overhauled its bonus structure, which had been based on divisional numbers. Bonuses are now tied to overall corporate performance.
“Instead of competing against each other, we are now one brand with one appearance and one goal,” says Jeremy Hauser, research and analytics specialist for Lands’ End.
For another, the company devised a new reporting structure requiring that every employee in the catalog and e-commerce departments – including marketing, design, creative and informationservices personnel – report to a manager in both of those areas, Hauser says.
That may sound threatening to marketers used to more traditional structures. But Lands’ End felt it was the only way to deal with the ever more complex challenges of doing business across several channels. And it is not the only firm trying to grapple with it.
When Eximious launched its Web site just over a year ago, it made that operation part of its existing catalog business. “We have overlapping responsibilities because we’re small,” says says CEO Jeff Parnell. “We have one customer service person for the Web, but all of the employees are involved in both aspects of the business (catalog and Internet), including merchandising, financial and logistics.”
This helps in achieving integration. “When a catalog customer goes to our Web site, we didn’t want them to be surprised,” Parnell says. Moreover, he adds, “the key people are wearing two hats and that ensures consistency as to how we treat our customers.”
Internal organization is only one issue faced by multimedia catalogers. Most are also trying to cope with marketing problems, such as how to target and retain customers.
For example, as electronic sales skyrocket, it is crucial to pinpoint which campaign drives traffic to the Web, marketers say. But the job is a tough one.
Prospects frequently circumvent links provided in e-mails and on banner ads and affiliate sites that are designed to drive and track traffic to a specific Web site. And requests for catalog shoppers to key in the identifying source code printed on the catalog when online often go unanswered. “We have the same challenges that everybody does,” says Pete Bather, vice president of Internet and corporate marketing for Hanover Brands Inc., Weehawken, NJ. “We’re dependent on the customer filling in a source code to get the true trackability of customers going online.”
Bather adds that most Hanover customers do not enter a source code unless they have an incentive to do so. A recent promotion of 10% off an online order if the code was entered pulled a good response. “That’s one of the ways we’re able to get a little clearer picture,” Bather says. “But we’re also cognizant and careful of providing promotions to catalog customers who may not have a computer. That worries us.”
Through database analysis, Hanover determined that more than 50% of its online sales are coming from entirely new customers. The cataloger mails millions of catalogs each year, promoting the Web address on every page.
Hanover uses back-end analysis to determine which of those customers are existing catalog buyers, which are new to the firm, and of the set identified as new, the percentage of those that were mailed a catalog. “It’s a complicated puzzle,” Bather says.
Omaha Steaks International Inc. uses a similar technique. For up to 30 days from the time of a mail drop, analysts take the e-mail address of a new customer to see if it matches a postal name attached to the print campaign, says Todd Simon, senior vice president of the Omaha, NE-based firm.
Another indicator that catalog buyers may be moving online is a dip in response to the print campaign and a jump in interest at the Web site. “It’s a gray area,” says Robert Manning, vice president and CEO of travel cataloger Magellan’s. “But whether we can track Internet sales to the catalog or not, there is a strong enough correlation that the catalog is driving sales.”
Once marketers have fine-tuned the source, another query begins to determine the most efficient mail stream for the e-commerce customer. Contact strategies for print customers have been well-honed through years of rigorous testing, modeling, reconfiguring control packages and list selection, but just what and when to mail the online buyer is a subject of debate and intense testing.
One trial, conducted last fall by Lands’ End, targeted a group of online buyers segmented into several groups. One group received the regular series of catalogs, another got nothing, a third received the smaller prospecting book and a fourth segment was targeted with postcards and other direct mail pieces.
While the test determined that a full-size catalog is not necessary to retain an e-shopper, the communication needed to be more than a postcard. Testing continues and no circulation plans have been finalized for the online shopper. However, preliminary results point to success with a prospecting catalog that could be mailed less frequently than the full-size catalog.
“What we do know is that there is a direct relationship with some kind of printed communication coming to Internet buyers’ homes and their then going online to buy,” Hauser explains. “We know that when we mail catalogs, we can immediately see a spike in Internet visits and sales when the catalog arrives in customers’ homes.”
More than 20% of Lands’ End’s online customers are new to the company. In fiscal 2000, online sales comprised more than 10%, or $138 million, of the company’s total sales, compared with 4.5%, or $61 million, the year before. There were 15 million site visits in 1999.
The results of such tests, while reinforcing that the print catalog remains a key force in sparking interest and driving traffic to the Web, have revealed a significant benefit for some catalogers: the license to cut circulation to online shoppers.
Hanover, for example, wants to reduce expenses for catalogs sent to Internet customers by 25% next year. The cutback will follow a year of testing a variety of contact streams and strategies to customers based on Web activity, Bather says. “Like everyone else, we fully believe there’s a way to migrate customers online and save a big chunk of change on our catalog costs.”
Magellan’s, Santa Barbara, CA, whose Web sales comprise 17% of total sales – up 300% from last year – has begun “easing back” on circulation to its Web shoppers, according to Manning. More than 50% of its online customers are also catalog buyers.
And Eximious, Northfield, IL, which, like many others found success liquidating products online, has eliminated several sale catalogs. In addition, it plans to cut circulation of several other catalogs by as much as 50% as online sales climb to 10% of overall sales, says Parnell.
And like many that start an online storefront, Eximious reaped the unforeseen benefit of tapping a whole new demographic with the rollout of www.eximious.com. Its traditional catalog shopper, a 55- to 57-year-old female who’s not particularly techno-savvy, has morphed into an online 40- to 55-year-old that, like her catalog counterpart, is sophisticated, interested in culture and society, likes to entertain and is well educated. The success of the site has prompted Eximious to set up a site in the United Kingdom, www.eximious.co.uk, during the third quarter.
At Omaha Steaks International, that company’s biggest challenge in managing multiple channels lies in maintaining brand consistency, Simon says. “We want the customer to get the same sense of brand, product and company no matter how or where they shop,” he says.
One of the ways the beef marketer achieved consistency was by consolidating advertising companies to one that offers the brand across all channels, using similar typefaces, graphics and copy. It also advertises the same core group of products in each medium.
In addition, Omaha Steaks applied its well-honed catalog customer service techniques to its 200,000 online buyers.
It improved its database so that when a customer service rep enters an e-mail address, the system automatically calls up recent order information related to that address.
Another challenge marketers face is appeasing customers, who for decades have been conditioned on the service benefits of offline shopping, and tolerate little in the way of imperfection on the Web.
The latest technologies offer companies the opportunity to develop and capitalize on products and services that help soften one of the most pressing issues, conveying the offline experience on the Web, and thus ensuring that customers are comfortable shopping regardless of the channel they choose.
For example, Shop With a Friend, a new online tool developed by Lands’ End, allows a friend in, say, Wisconsin to log on with a buddy in New York so the two can shop together via a connected server. The friends can communicate online via text chatting by phone line. They move simultaneously around the site, just as they would if they sat down together with a catalog or dropped into the retail store.
Innovations like the swimsuit finder at the Lands’ End Web site (www.landsend.com) offer a handful of suits from an inventory of 1,000 based on shoppers’ body shapes. And Oxford Express helps men choose dress shirts. At Magellan’s, customers can listen to the sounds of alarm clocks before choosing one, and a series of travel guides identifies helpful products to take along depending on the adventurer’s destination. “People are very demanding on the Web,” Manning says. “They have been conditioned to expect a very high level of service.”
Macy’s by Mail, now being integrated into the macys.com site, plans to offer a bit of a twist: an online perk for the strictly offline shopper. Catalog buyers wanting to check the status of an order can boot up and click on an icon to view such details as the shipping method or when the delivery is expected.
“The convergence of offline and online marketing will benefit customers, giving them the ability to integrate the distribution channels and utilize the piece of each that they’re most comfortable doing business with,” says Gary Ostrager, vice president of direct marketing at Macy’s by Mail.
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