Three’s COMPANY

Corporate financial reports often say less than they really mean.

For example, J. Jill attributed a 21.3% increase in first quarter sales to a new emphasis on color, an in-store visual presentation and some relatively minor adjustments to its merchandise silhouettes.

Those things did help. But they may have less impact over the long term than two other improvements mentioned in the same sentence: The firm’s multichannel marketing campaign and the rollout of its cross-channel customer database.

And even that fails to impart just what it took to get it right.

It started in 1999 when the Quincy, MA-based cataloger, in an effort to move beyond mail order, launched a Web site (www.jjill.com) and started opening retail stores (it now has 128). But those actions alone did not make a great multichannel marketer, according to Eric Welter, senior vice president of marketing services.

For one thing, it found that there were now three groups of marketing people, each conducting their own campaigns. Worse yet, there was no central pool of information.

“The e-mail data was in a separate repository, and the catalog list was off site at a service bureau,” Welter says. “There were no retail campaigns because we couldn’t extract data from point of sale.”

Welter’s assignment when he arrived in 2002 was to change all that. The firm needed to see its customers across all channels, and then market and react to them.

So a multichannel database was needed. But how does one sell an expensive project like that to upper management? “It was simple,” Welter says. “I pointed out that we have a private-label credit card, a base we could measure across all channels. We could analyze what happens with catalog buyers as they become retail shoppers, and the effect on catalog circulation.”

He also argues that J. Jill would become a “more profitable, more efficient marketing company.”

The sales job was easy. Next began the heavy lifting. The process started with a request for proposals. “I wasn’t looking for a person to put all the data together,” Welter says. “I wanted everything.”

That meant data for prospecting, and the ability to perform match backs, modeling, analysis and retail address appending. It also meant direct access to the data at all contact points. The challenge was finding “somebody to do it, knowing that it was something that wasn’t out there yet.” Eight companies responded, and that list was winnowed down to two or three. In the end, J. Jill chose Experian.

The first thing was to combine all data from all sources. “We had 3 million names on our direct mail file, but we didn’t know how many we had on retail,” Welter says. “We now have more than 4.5 million people combined.”

Perhaps the toughest channel to deal with was retail. And yet it was important because the company wanted to use its DM expertise to drive store traffic. To do that, it had to do a better job of capturing names and addresses in the store, and to provide instant access to data on all the names in the database. It took a lot of work integrating the point of sale with back-end direct systems.

It also meant that the stores had to collect e-mail addresses. “We’ve done a great job collecting e-mail names from the catalog and Web site, but it hasn’t been a major initiative in stores,” he says.

And now? The company has started sending e-mails to invite consumers to new store openings, to come in for a sale or to look for the new catalog in their mailbox. It has e-mail addresses on 35% to 40% of its customers, Welter says.

That’s not all. The database is “updated daily,” says Welter. “We don’t miss a beat. If someone comes into a store, we can have the transaction loaded by 8 the next morning, and start to market to that person.” Moreover, the company is using DM modeling techniques to drive store traffic. In May, it sent 500,000 20-page catalogs to retail shoppers, offering $20 off every $100 purchase. The regular mail order catalog has 88 pages.

True channel alignments were impossible to discern when data was kept in separate silos. “It looks like people are attriting, but in fact they’re shopping in stores,” Welter says. But now the company can show that while catalog shoppers may move over to retail, the reverse also can occur. It’s a wash.

The firm is using its knowledge to move beyond its credit card base, which now has 500,000 names, with its targeting. A person without a card might be “just as good a J. Jill buyer,” he says.

First quarter financials show that direct sales declined by 2.6% to $48.7 million while retail sales went up. Does that mean that J. Jill wants to get out of its $200 million-a-year catalog business? No way.

“Our goal is to maintain a profitable direct business to support store growth through our own cash,” Welter says.

That means maintaining the catalog and growing it slightly while cutting circulation, which is now around 75 million a year.

What’s next? Lifetime value analysis by channel. “My job for next year is to figure these things out and start to make investments in growing business for the appropriate channels,” Welter says. In addition, the company hopes to use those traditional DM techniques to expand into radio and TV.

Today the database resides at Experian. Why outsource it? Because it includes “parts and process that we don’t have the skill sets to maintain,” Welter says.

Any regrets? “We’ve taken a longer time to build it than I would have liked, but purposely so because we wanted to get a lot of these things right in the beginning,” says Welter.