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catalogers and other direct marketers
 
FEW YEARS AGO, catalogers and other direct marketers ! working at Internet speed ! were gung-ho to get their e-commerce Web sites going. Now the rallying cry is to coordinate that channel with the companies' others, such as catalog and retail. The buzzword is channel integration. And with the fevered Internet pace having slowed to something approaching rationality, marketers actually have time to focus on this.

Some have more work to do than others. What's clear is that pulling together the channels on both the front and back ends is now seen as crucial for success.

All these channels make for a tangled marketing world. Businesses are using catalogs and other direct mail to drive store and Web traffic, stores to drive Web and catalog traffic, and Web sites and e-mail to drive store and catalog traffic.

But it appears that the print catalog is moving front and center as the most successful medium for driving traffic and sales, no matter what channel a consumer ultimately shops. In the land of multiple channels, it seems, the catalog is king. So much so that many pure-play dot-coms are now rushing to fashion paper catalogs ! not just for sales but for steering traffic to their Web sites. For example, online jeweler Blue Nile dropped its first print catalog in April.

"In the last couple of years when the Web became so important, I don't think many Internet sites or interactive marketers really expected the catalog to do better than an e-mail contact" when it comes to prospecting, comments Donna Belardi, president of list company ALC of New York LLC.

The goal of channel integration is to make the shopping experience seamless and uniform for the customer. That doesn't just mean being able to call, click and drive to make purchases. It also means that the services available in each channel are the same ! branding through service.

Another objective is to turn one channel's customers into customers in another. Why? Because the more ways a person shops, the better customer he or she is. All agree that the frequency, spending and lifetime value are higher. For example, Framingham, MA-based office products retailer Staples Inc. has said that consumers who shop all three of its channels spend on average 4.5 times as much per year as those who shop only the stores.

Which is not to say ! like the Coke commercial of old urged people to do ! that all channels can live in harmony all the time. For example, Brian M. Rainey, president of Abacus Direct Corp. in Broomfield, CO, says that a retail store opening can have a severe impact ! potentially a 30% to 40% decline ! on catalog sales within a 25-mile radius. "[People are] being driven to the store through the catalog but they're not shopping through the catalog."

One of the stickiest problems about having multiple channels ! and the one that marketers are determined to tackle in earnest this year, several observers say ! is understanding which offline media are pushing customers to shop online.

"I'm hearing from catalogers that 15% of their sales are coming from their Web sites but they have no idea what's driving the customers there," says Rainey. Abacus has a product in beta testing that, he says, will help address that problem. He declines to go into more detail other than to say it should debut in the fourth quarter.

Of course, marketers can do this in a rudimentary way, which is how they know about the success of their catalog efforts. These methods include unique URLs in print ads and using match-backs (comparing recent Web buyers to recent catalog recipients).

"We have all kinds of hypotheses and try to come to some conclusions," says Christian Feuer, senior vice president of marketing and advertising production for Spiegel Catalog Inc., Downers Grove, IL. "[One] conclusion is that we see the catalog and the Internet as a symbiotic relationship. We've had large successes in being able to make Internet customers catalog customers and we continue to do that. We haven't had as much success in making catalog customers Internet customers."

Feuer adds that this is because the catalog is a "push" medium sent to consumers and the Internet is a "pull" medium that the individual has to search out after seeing the URL in the catalogs.

Spiegel has always viewed the channels in an integrated way, Feuer comments. "We always tried to grow the Internet business at the same time as the catalog business but never in the sense that if I don't mail you a catalog you may go to the Internet. We always believed it works the other way around."

The firm's channels are its Web site, print catalog and 18 Spiegel Outlet Stores, mostly in the Midwest. The company mails at least one book a week. Last year it had 83 of them for a total circulation of 149 million.

What's most important for Spiegel, Feuer says, is that the customer is not different depending on the channel. Even their average ages are almost identical: 43 for the catalog, 41 online. "It was never our objective to get different customers online. There's only one Spiegel," he adds.

But why would the same person shop in two channels? Feuer offers the example of a mother who, after she puts the kids to bed, curls up with the Spiegel catalog and indulges herself in a purchase via the phone. That same woman could be at work the next day and jump online while having lunch to order something off the Web.

Then there's the issue of merchandising: For this company anyway, the Web site is the only place to find all its products.

Like Spiegel, Omaha Steaks maintains that its channels have never been far apart even though, unlike Spiegel, each channel has a different customer base. "One of the things we know is that each of our channels represents a distinct group of customers," says Todd Simon, senior vice president of Omaha Steaks, which has a catalog, Web site, stores and outbound telemarketing, in addition to a business-to-business channel.

For this reason, Simon admits, Omaha doesn't view integration as "the holy grail." The back-end operation is unified and the company shares data among channels "to the extent it will help us maximize sales and give service to those customers." But Simon emphasizes that running a retail store requires different skills from running a catalog or an e-commerce Web site.

Was Simon surprised when he learned that there wasn't much crossover among customers? "A little bit. But then when we saw the difference in demographics it became more obvious," he says. "Quite honestly, I think there's a strong habitual bias from consumers. I think they'll buy from you the way they're used to buying from you."

Omaha Steaks' average mail order customer is about 50 years old, 40 to 45 for retail and 30 to 40 online. The retail customer tends to be the most affluent, followed by mail order and then the Web (though Simon says that the "empty nester" segment is growing online).

"The primary strategy is to maintain consistent branding across all the channels," Simon observes. This means more than just the look and feel but also merchandising and service. For example, it should be possible to change an order over the phone that was originally made online. "Consistent branding is the biggest challenge and probably where it falls down most is in service," he says. "Many companies haven't figured out how to integrate the back end of service into the front end of the Web site."

Although Omaha's orders all go to the same place, Simon admits that the firm is still challenged by having the same special offers online as off. "Right now you might not be able to find the special offer online, such as a free salt-and-pepper shaker with an order, because the Web site has hardwired features that allow only so many free gifts. Fortunately, because the crossover isn't that big, the problem isn't that big. But even if it's 7% to 8% of customers, that's still too many."

One thing the Internet has brought to Omaha Steaks is a new openness to inquiries. Simon explains that in the mail order business "we don't say, 'Call and get a catalog.' Some catalogers use it with a lot of success but we find it's not cost-effective. But on the Web we do encourage people to provide an e-mail address, so we have a much larger inquiry file from the Web because it's so much less expensive. It's an 800,000-name inquiry file and it performs well as a prospecting list because we have very little cost. We've never really had a two-step sale work for us cost-effectively and that is in effect what it is. I think it's one of the primary advantages of the Web."

The 182-year-old fashion retailer Brooks Brothers is also focusing on integrating its channels. Though about 90% of its sales are rung up at its 82 retail stores or at factory outlets, it also has a catalog (10 million copies mailed annually) and, since 1998, a Web site. Mark Friedman, executive vice president and chief marketing officer, who joined the company last year after having worked at The Company Store and Tweeds, initially oversaw only the Internet and catalog. But when the person responsible for retail left, the firm put that in his bailiwick too to create more synergies.

As an example, Friedman says that this spring Brooks Brothers launched a product, the BrooksAire sports coat, a navy blue blazer that's lightweight (22 ounces) and has dark buttons rather than the typical gold ones. Friedman says the promotion was coordinated online, in print ads, through store signage, on the catalog cover and through mailed postcards ! all pushing the same product, where in the past they may not have. "We drove a lot of sales because of that consistent voice," he adds.

According to the CMO, Brooks Brothers is now focusing on leveraging its database to mail better; this hadn't been a priority in the past, as the company was primarily a retailer.

"The majority of the traffic that we drive to the site is stimulated by the catalog," he asserts. "Hands down, I mail a book, I get more visits to the Web site."

For Brooks Brothers, the average customer age increases by channel: Internet is youngest, then the stores, then the catalog. Friedman says that's partly because the company uses the catalog to sell items it usually no longer stocks in the stores, such as sack jackets, which appeal to older men. In the stores it sells more three-button suits and blazers proportionately than online or from the catalog. On the Internet, about a quarter of the business is from women. It's not that high offline but, Friedman says, "it might be soon."

As for service, Brooks Brothers used to have separate telemarketing, customer service and Web staffs. Now telemarketing and customer service has been brought together and it plans in the next six months to have the entire call center deal with Web orders, too. "Customers can't be penalized or get lesser service because they choose to order in a particular way," Friedman comments.

Julie Hopkins, director of direct marketing and advertising for The Sharper Image, San Francisco, says coordination of promotions is key to her company's cross-channel success. "We know when the catalog is going to drop that the information has to be on the Web, the stores have to have the signage. It all happens at once. We don't want the catalog dropping without the signs up and the phone reps ready."

Hopkins says the firm is highly successful at integrating the channels ! and has always done it. For example, you can order an item online and return it at a store.

"We look at the catalog as an advertising vehicle for all three channels" ! catalog, stores and Web site, says Hopkins. "We know who we mailed the catalog to and whether they shopped online."

Hopkins says she's noticed one difference between catalog and online shoppers: "My observation has been that the [former] tend to be impulse buyers. Internet buyers tend to research things more. People say all the time, 'I saw it in the catalog, I looked it up on the Web and then I bought it in the store."

Coordination of marketing is also essential to Rye, NY gift retailer Lillian Vernon Corp., whose channels include a catalog (165 million circulation), a Web site and outlet stores, as well as a business-to-business incentives operation.

"The key is to integrate all marketing efforts no matter what the channel," asserts David Hochberg, Lillian Vernon's vice president of public affairs. "That's an ongoing process we're engaged in. All catalogs promote the Web site, outlet stores have signs promoting the Web site, we have computers in the stores, the B-to-B site will have a section of the consumer Web site."

The site has 1,500 of the company's top-selling items out of a total of 6,000. So, Hochberg points out, if a customer goes to the electronic order form and orders something that isn't on the site, it knows it was most likely driven there by one of the catalogs. In April, The New York Times featured a Lillian Vernon item ! a breadbox ! but included only the business's phone number, not its Web address. And yet, online sales for the item jumped too, Hochberg says.

"The biggest case [in terms of using one channel to drive traffic to another] is using the 165 million print catalogs to drive the Web," Hochberg observes. "There are thousands of Web sites that sell giftware. The Web is more cluttered than catalogs. How do you drive traffic and get noticed among that clutter?"

 


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