Live from eTail 2005: RedEnvelope Reveals Five Growth Imperatives

Philadelphia—Before joining RedEnvelope earlier this year, vice president of marketing Gary Korotzer worked in the financial services sector. His newness to the retail sector, he told attendees at eTail 2005 during a Tuesday session, has colored what he described as his five imperatives for the gift merchant’s growth.

The first imperative, he said, is to look inside—among customers rather than prospects. That involves segmenting RedEnvelope’s 2 million-name customer file into four groups: customers it wants to keep, unprofitable customers it should stop mailing to, customers to develop (“the high-potential segment”), and new customers. From there it’s a matter of determining how each segment differs from the others and what each wants, then creating goals for each segment across channels.

Korotzer’s second imperative is to get customer focused. “RedEnvelope is a very customer-service-focused company but not necessarily customer-focused,” he said. To ensure that customers “have a seat at the table” regarding the introduction of products and services, he says investing in focus groups and other forms of research is necessary.

Similarly, “we’ve been a very good testing company,” Korotzer said, “but I think we’ve been risk averse.” Hence the third imperative, experimentation. “If we don’t try something, one of you might,” he said, addressing potential competitors. Among the areas where he’s looking to experiment are blogging and new online models.

The fourth imperative is to “get real”—find ways to let customers “touch” the products. That’s not to say RedEnvelope, which sells exclusively online and via catalog, is looking to expand into retail. “Most of our customers have never actually seen the product,” he explained, as most make gift purchases. One way the company might try to “get real” could be to send gift-givers a small gift of their own so that they could experience receiving and opening the carefully wrapped merchandise, for instance. Korotzer also referred to a product design contest the company is running in its San Francisco hometown; perhaps RedEnvelope will let the customers vote on their choice among the five prospective products that make the final cut.

His final imperative is “to get rid of bad habits.” One habit the company has already started to kick is a tendency to send too many e-mails. This spring it tested cutting back the frequency of its e-mails, which produced lifts in response of up to 200%. As a result, RedEnvelope is cutting back its e-mail frequency 30%, Korotzer said.

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