Multiple Views of Multichannel Promos

Like many other mailers, San Jose, CA-based Hello Direct finds that processing orders online costs less than taking orders over the phone. So the cataloger of wireless communications tools makes a point of offering promotions such as 10% off Web orders, and of advertising the offers in its print catalog, even though customers who call the toll-free number to order aren’t eligible for the discount.

“We consistently allocate space within our catalog to promote offers and sweepstakes that incent people to register and buy through the Website,” says Bob Faville, Hello Direct’s director of direct marketing.

Quincy, MA-based apparel cataloger/retailer J. Jill Group also offers discounts to spur sales. But unlike Hello Direct, J. Jill strives to offer the same promotions across its channels. If it offers 10% off Web orders, retail and catalog shoppers will receive a 10% discount as well. “It’s our goal going forward to maximize the synergy between channels,” says John Hayes, president of J. Jill Direct.

And there you have two opposing views of multichannel marketing. One school of thought holds that you should tailor the promotion to the channel, to “train” the consumer to use the channel of your choice, rather than of his choosing. The other way of thinking contends that varying promotions by channel turns off more customers than it wins over.

Consistency — or “foolish” consistency?

Consistency across channels has long been a guiding principle of catalogers branching out into retail and online sales. To maintain a strong brand, the product and the presentation must be consistent regardless of channel. Many marketers and consultants believe that the consistency should extend to sales promotions and offers as well.

One danger of varying promotions by channel, says Will Goodman, president of educational videos cataloger Guidance Associates, is having customers who prefer to shop the “less favored” channels feeling resentful. “You don’t want to offend a buyer who purchased from the catalog a week earlier with an e-mail offering the same product online with a 15% discount,” Goodman says. For that reason, the Mount Kisco, NY-based mailer offers its customer base of teachers and administrators who provide e-mail addresses and school names free calculators, CD-ROMs, and lesson plans regardless of whether they order from the catalog or the Website.

Looked at another way, for every customer who is persuaded by a Web-only discount to make his purchase online, there’s another customer who is so irritated by the “discriminatory” discount that he heads to another marketer altogether. At least that’s the opinion of Tim O’Malley, vice president of advertising at Lexington, KY-based Gall’s, which sells apparel and equipment to public-safety professionals.

“Customers are going to order they way they want to order,” O’Malley says. “I think it’s very dangerous to try to push that, especially since multichannel customers are more valuable than single-channel customers.”

Indeed, according to Richmond, VA-based operations consultancy F. Curtis Barry & Co., customers who use a variety of a cataloger’s channels spend 25%-100% more than their single-channel counterparts. Database and CRM solutions provider MBS Multimode puts the value of multichannel shoppers even higher: It estimates that multichannel customers spend two times to five times as much as single-channel customers.

For most marketers, one of the advantages of selling via multiple channels is being able to bolster customer loyalty and repeat business by allowing shoppers to choose the medium in which they want to shop.

Offering different promotions to users of different channels, says East Greenwich, RI-based consultant Coy Clement, removes that advantage.

Clement, who advises catalog clients to become “channel agnostics,” points to research from New York-based marketing solutions provider DoubleClick that shows the cross-pollination of channels and shoppers. For instance, one-third of catalog recipients who make a purchase from the cataloger actually do so at one of the company’s stores; another 21% make their purchase online. For that reason, Clement says, the brand should be “the key concept and the channels used to communicate messages in the most efficient and effective way.”

Shades of gray

Which is not to say that one promotion necessarily fits all channels. After all, the axiom is that “a foolish consistency is the hobgoblin of little minds,” not that any and all consistencies are. Promotions should be planned, Clement says, “to let each channel do what it does best. Certainly there are promotions that don’t translate. For instance, an auction can be great on a Website but can’t be executed in the catalog or a store.”

J. Jill’s Hayes cites as an example of an untranslatable promotion a print catalog with a dot whack on the cover declaring “This is the last catalog you’ll be getting unless you buy…” And O’Malley says that Gall’s will offer clearance items on its Website only. It will promote the clearance sale, however, with package inserts.

Clement agrees that if you’re going to offer a channel-specific promotion that cannot be practically offered in other channels, you should at least communicate the offer across all media. For that reason, he has advised clients to promote Web auctions through e-mails and dot whacks on catalog covers.

Some multichannel marketers argue that the very nature of the Internet, in particular, makes it suited for channel-specific promotions that cannot be carried over to other channels. “The nimble nature of the Web allows us to develop and execute promotions quicker than we can within the catalog, which has a three-month lead time,” notes Hello Direct’s Faville. The cataloger’s Web-only promotions include discounts with registration and sweepstakes with registration.

Besides, if you’re going to offer channel-specific promotions that take advantage of a medium’s unique assets, some argue, why not offer channel-specific promotions so that you can profit from those assets?

For smaller marketers in particular, the lower cost of taking Web orders vs. call center orders is significant. According to F. Curtis Barry, it costs $8-$13 to process a typical catalog phone order (excluding shipping and handling). Since about half of that cost is for the call center, processing costs for Website orders drop to $6-$9.75.

Economic necessity is why Fullerton, CA-based Wine Country Gift Baskets gives customers a 5% discount if they buy from the Website.

Says general manager John Pitzen: “We want customers to order from the Web because it’s easier to process the order. Eighty percent of our orders come in from October through December.” For the cataloger, which has added a third server for the holidays, “it’s easier [and less expensive] to build the infrastructure for the Internet than it is to hire and train seasonal staff,” Pitzen says.

To look at it another way, catalogers that offer Web-only discounts are passing some of the operational savings onto the customer. Such is the reasoning of Los Angeles-based Babystyle, which sells merchandise for pregnant women and babies.

Because processing online orders is so much more efficient than handling phone orders, says president/chief operating officer Tom Park, Babystyle offers first-time customers free shipping and handling and discounts if they order and spend at least $75 online — an offer that it highlights on the cover of its print books.

Then again, when Babystyle launched its print catalog in the summer of 2001, two years after the Website debuted, the book’s main purpose was — that’s right, to drive traffic to the Website.

Keep in Mind

Coy Clement, of catalog consultancy ClementDirect, offers these tips to multichannel marketers planning sales promotions:

  • Plan promotions horizontally, not vertically by business unit or channel. In other words, take a holistic approach. Create the messages or the promotions, then determine how to communicate them in a variety of media, including catalog, e-mail, the Web, telephone, and retail. You can use even your call center’s on-hold message and your outgoing packages to convey your message.
  • Remember that multichannel marketing can cost more than using just one channel. You may need to simplify some of your traditional programs to pay for the additional Web, e-mail, and point-of-purchase promotions.
  • Make the effort to measure results regardless of channel. It’s easier to track results among some media (catalogs, for instance) than others (the Web and retail). But neglecting to account for all channels can lead you to erroneous conclusions regarding the effectiveness of certain media or promotions. So use research, match-backs, and improved tracking systems to measure promotional ROI.
  • Never forget that multichannel marketing should offer customers more choices, not fewer. Don’t simply replace catalogs with e-mail and a Website. Even if you can’t translate a particular offer across every channel, try to inform all customers of the option.

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