Appleseed's reveals success of catalog segmentation at NEMOA
While growing cost pressures have forced some catalogers to prune wherever possible, apparel cataloger Appleseed's has watched a seed that it planted several years ago grow.
In the summer of 2005, Appleseed's was trying to streamline its merchandise mix and, as a result, was walking away from approximately $20 million in sales of items that didn't address the brand's core customer, Claire Spofford, SVP and chief brand officer, Appleseed's, told attendees of the New England Mail Order Association's fall conference in Portland, ME, last week.
When an opportunity to acquire The Tog Shop appeared, Appleseed's took it because this would enable the company to target two segments of the apparel market for mature women, baby boomers and the earlier generation.
Later the same year, Golden Gate Capital acquired Appleseed's and soon after picked up several other brands targeting this age group, including Drapers & Damons, Norm Thompson, Sahalie, Haband and Blair. Along the way, it named the new group of businesses The Orchard Brands, which currently does over $1 billion in revenue annually.
Facing postal increases and other cost pressures during this period, Appleseed's has focused on being as productive as possible. One of the most important strategies was a segmentation, which surveyed 800 women between the ages of 50 and 75 years old.
"Direct marketers have so much rich data," Spofford said. However, much of that information tends to be internal data about how their lists are performing and less about the external marketplace and potential customers, something a segmentation study can provide.
The rule of thumb for the surveys used in these studies is that they shouldn't last more than 20 to 25 minutes, otherwise customers will start to abandon the survey and skew the results, Spofford said. However, the average talk time for the Appleseed's survey was 43 minutes and there was no abandonment problem. "This tells us these women feel like they're not being heard," she said.
Prior to the study, Appleseed's knew basic demographic information about its core customer. She is white, suburban, a home owner, between the ages of 55 and 65 years old and has a household income of $75,000.
What this information didn't tell Appleseed's, however, is that some of these women want to be noticed, others don't enjoy shopping and others believe they desever the finest things in life.
"We learned that what drives the segments is the hearts and minds," Spofford said. By focusing just on the demographics, a retailer would come up with a merchandise assortment that wouldn't be as focused on the needs of any one of these particular segments, she continued.
Appleseed's continues to check in with its customers every six months or so by doing focus groups. With the segmentation study completed, Appleseed's focused on streamlining its product selection.
"Every product has to have a reason to be there," Spofford said, adding that the company also focuses on making sure its expectations for each product are clear from the beginning. "This seems really basic, but from what I've seen, its not widely done," she said.
Being part of The Orchard Brands group allows Appleseed's to synergize and target a similar audience. For example, the group shares a database that has 65 percent of the women, 55 years and older, who shop direct. The database includes full transactional history and the ability to model.
"This has proven a very successful prospecting strategy for us," Spofford said. n