Geerlings & Wade Sales Rise After Changes in Marketing Strategy
Although the company posted a loss for the second quarter, which ended June 30, it said its sales for the period increased about 3.8 percent, to $8.9 million, over the figure from last year's second quarter. The loss for the quarter totaled $357,000, which it attributed to severance payments and legal expenses.
The company attributed the increased sales to more effective acquisition mailings and increased e-commerce sales. Sales from acquisition mailings increased $390,000 over sales from the same in the second quarter of 1999.
David Pearce, CEO of Geerlings & Wade, Canton, MA, said the gains from the acquisition mailings were due to improved response rates to the company's direct mail offers, and because of the timing of some of the mailings.
"We're basically trying to treat our customer base not as one, but separately, trying to get a higher conversion rate from first-time buyers to multibuyers," Pearce said. "We're also trying to reactivate old buyers by offering them different wines, making different offers and using different creative pieces."
He also said the company, which creates its mail programs inhouse, was considering beefing up its technology capabilities by investing in a database marketing system that will assist it in creating more customized marketing programs.
One of the company's primary segmentation initiatives has been targeting its higher-end buyers. Geerlings & Wade has long offered a newsletter called High Geerlings for this group of customers, but lately it has been sending more customized direct mail pieces with personalized letters and educational materials with information about various wine-growing regions and winemakers.
"We're spending a lot more money on those people, with more personalization and more high-end product, because those are the customers who buy it," said Eric Welter, vice president of marketing. "We're also sending a few extra mailings that are exclusive just to them."
Geerlings & Wade segments its database of 400,000 customers, including its 12-month file of 145,000 buyers, into three categories: high end, midrange and low end. Pearce and Welter both declined to describe the criteria it uses to delineate each of those groups or to reveal how many of its customers fall into each category.
In addition to its renewed focus on its high-end customers, the company also is devoting more resources to driving customers to its Web site, www.geerwade.com, and is sending companion e-mail messages to its customers when it sends postal direct mail pieces. The Web site is designed to coordinate with the mail pieces, so that consumers who read the address in a direct mail piece will see the same promotions online that are offered by mail.
"We're trying to migrate people over to the Internet, and we're doing that through mail, telephone, e-mail -- we're letting the customer order whatever way they want to and communicate whatever way they want," Pearce said.
The company had online sales of about $1.53 million in the second quarter, which was almost four times its online sales volume in the year-ago period. Online sales accounted for 17 percent of the company's total sales in the second quarter. In the first quarter, online sales were 13 percent of the company's total sales volume.
The company primarily uses direct mail to acquire new customers, but it also rents some e-mail names for customer acquisition purposes. About 21 percent of the company's new customers in the second quarter were acquired through online channels.
Geerlings & Wade also has been in discussions with other Web site operators to create links to attract new customers, according to Pearce.
The company traditionally mails two to three times per month to its database, and it mails catalogs in the spring and before the winter holidays.