Refine with online data

Sep 01, 2006 9:30 PM  By

As multichannel merchants generate more online sales, they receive more data to help them understand their customers better.

Take Plano, TX-based general merchant J.C. Penney Co., which last year became the first department store to reach $1 billion in annual online sales. “What that does is gives us more velocity, more transactions to look at,” says Kevin Gebhardt, director of multichannel coordination and implementation for catalog and Internet. “You begin to understand the customers’ habits, and it’s making us a lot smarter.”

Merchants can use online marketing data to pitch more-targeted offers through offline campaigns. But your success will depend on what data you collect from Web transactions and how you use them for offline contacts.

To mail or not to mail?

“When you think of the difference between an online shopper and an offline shopper, you first have to challenge what the retailer means by an online customer,” says Bart Sichel, associate principal with New York-based marketing consulting firm McKinsey & Co. “Only a portion of online shoppers are ‘online shoppers.’ Others are catalog shoppers who transact online.”

Online-only shoppers are typically driven to the site by search engine optimization and marketing, banner ads, and e-mails. Sichel says these people generally do not to respond to print catalogs they receive in the mail, so you shouldn’t send them as many mailings, or the same type of mailings, as your traditional catalog customers.

But many online buyers are actually catalog shoppers who are driven to the Website to complete a transaction only after they’ve shopped the print mail piece. For New York-based apparel and home goods merchant Spiegel, for instance, the catalog is still the primary driver of brand awareness and online sales, says vice president of marketing Tony Chivari. Even though multibuyers may have changed how they shop, he notes, they haven’t changed why they shop.

“In the old days it was easier to count the number of unique offers we were sending customers using catalogs and postcards,” Chivari says. “Now it’s easier and cost-effective to send targeted e-mail to customers, but you still need to mail offers and catalogs to continue delivering a brand image and giving customers a reason to shop.”

To help determine which of its Web buyers are true online-only shoppers, Ross-Simons, a Cranston, RI-based cataloger/retailer of jewelry, home decor, and gifts, sends all first-time buyers a catalog. The consumer’s response to the mailing determines how often he will receive subsequent catalogs, says senior marketing director John Buleza.

“If a one-time buyer does not buy anything for a while, I’m going to tailor offline offers differently than I would for a two-time buyer or a multibuyer,” says Buleza. “If the customer becomes a one-time in the 7- to 12-month segment, he or she will receive more e-mails than catalogs. I can skip some remails with them because their recency doesn’t make them worth a monthly remail.”

Like many other multichannel merchants, Ross-Simons sends a “watch your mailbox” e-mail to many of its customers alerting them that a print catalog is on its way. And Buleza agrees with Chivari that even if a customer starts off as a pure online buyer, you still need offline marketing tactics such as catalog and postcard mailings to pull the consumers back to the Website.

Sichel also advocates mailing print catalogs to online customers — but not necessarily the same catalogs that you send other customers. Instead of sending the full-line book, you may want to mail a smaller — say, 32-page — edition with a more focused product selection and messaging to drive recipients to an online landing page where the rest of the inventory resides. This can reduce your paper, production, and mailing expenses without eroding Website traffic and sales.

Amy Africa, “chief imagin.8.ion officer” for Williston, VT-based e-commerce consultancy Eight by Eight, advises getting fairly specific with the landing pages you promote in these Web-traffic drivers.

“If you want a customer to buy a tennis racquet you sent them a direct offer for, you want them to have as few distractions as possible,” Africa explains. “If you’re going to drive them to the Web to make a purchase, you want their buying experience to be as fast as possible.” Providing shoppers with the URLs of specific product category pages minimizes the chances that a transaction will be interrupted by e-mail, server crashes, or other factors that could slow the customer experience.

Sending recipients of your offline communications to a separate, specific landing page makes tracking response that much easier. And, Africa continues, it will give you a conversion rate 8-12 times greater than what you’d get by directing them to your home page.

“Say you get a mail offer from Omaha Steaks for filets,” Africa says. “Why should you have to go to their home page and check out seafood? Why pork chops? You want filets. It’s like going to a department store, telling a salesperson you want an Armani suit, and having the salesperson try to sell you Old Navy. You have to give your customers what they want, or something close to it.”

Integrated databases to the rescue

To refine your contact strategy with targeted mailings to online shoppers, you need to have your customer data from all channels integrated into one database. It also helps to have, if not one unified marketing team, channel-specific marketing teams that work together and communicate on a regular basis.

When the e-commerce boom began, merchants tended to have separate databases for online customers and traditional shoppers. Though many, if not most, have since integrated their databases, a number of companies still have separate online marketing and offline marketing teams that do not know what the other is doing. says Mark Stephens, vice president/general manager of the central region for Seattle-based interactive services firm Avenue A | Razorfish. “And that can be a challenge for the multichannel retailer because those businesses are very different.”

But Stephens adds that most of his company’s multichannel retail clients that haven’t yet combined their marketing teams are doing so now, which helps the online crew understand how they can market to the offline team’s customers, and vice versa.

The data from an integrated database can also help you determine whether you should create specialized catalogs for your traditional customers as well. When J.C. Penney was building its e-tail business in the late 1990s, for example, it tested toys as an online-only product. The experiment was successful enough to convince Penney to launch a separate catalog selling only toys, even though it doesn’t sell toys in its stores.

“By parsing online transactions out and piecing them back together, you can see how [shoppers will] respond to a book,” McKinsey & Co.’s Sichel says.