Cataloger Focuses on Customer Retention

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Lobster Gram is looking to boil down its database by dropping customers who are not performing well and buttering up to those who do.

Dan Zawacki, founder of the Chicago-based specialty food catalog, said the company is shifting gears slightly to focus more attention on customer retention while doing limited prospecting efforts in the corporate sector.

Lobster Gram ships live and cooked lobsters and lobster packages as well as other food items, including steaks, appetizers, desserts and shellfish accessories.

"For years we've focused on getting new names and not as much attention as we would have liked on doing other things," Zawacki said. "Now that we have a database of names, we feel we have to focus more attention on them."

While the cataloger rents a few lists, the majority of its prospecting efforts in the past 14 years have been through radio advertisements and endorsements by radio personalities, including Howard Stern.

Zawacki has found that customers who come via radio often stay with the company, making multiple purchases throughout the year. He was unable to provide details on customer retention rates, however.

Lobster Gram has a database of 200,000 customers and mails catalogs once a year, in October, to the entire list. Throughout the year, especially during holidays, the cataloger sends direct mail pieces to generate sales.

Now that the company has shifted gears to focus on customer retention -- a move expected to begin prior to the fall drop -- Zawacki plans to be more selective in catalog mailings, which could result in weeding out names that are not performing well.

The biggest initiative is creating incentive programs for the top 20 percent of its house file.

"We're putting together right now a new program called Club Lob, where we'll offer [customers] things such as, if they buy so many packages they'll get a free package for themselves," Zawacki said. "We'll also do some give away items, such as stuffed lobster dolls or lobster key chains -- the kind of fun things to tell them, 'Thanks for being our customers.' "

Zawacki admits the program is not unique but said it is a start to offering bigger incentives.

Lobster Gram's customers are age 25 to 54, college educated with middle to upper-middle incomes. The average sales order is $130. Customers also participate in sporting events, including golfing, skiing, sailing and tennis. Women make up the majority of Lobster Gram's database, although men tend to order larger product quantities.

While Zawacki said he is not placing heavy emphasis on prospecting efforts, he is doing some prospecting in the professional and corporate sectors. About 30 percent of the company's business comes from corporate sales, and Zawacki is considering a separate corporate catalog. Currently, all customers order from the same book.

The 2001 Lobster Gram catalog contains 32 pages in color and features more than 250 SKUs. Customers can order packages such as live Maine lobsters with cooking pot, butter and bibs for $99 and cheesecake for $10.50.

Each page includes brief editorials on the products as well as customer comments.

"We wanted the catalog to be personable, and we've found that customers really enjoy these little tales," Zawacki said.

Lobster Gram also inserts self-addressed, stamped postage reply cards with every order that ask customers to comment on the service. About 25 percent of customers submit the cards, Zawacki said.

"We've found that it works very well because that's how our customers communicate to us on how we're doing," he said. "We've gotten replies on what we're doing well, what customers would like to see and on any problems with their orders."

Three months ago, customers sent in reply cards saying that the coolers that stored the lobsters had arrived broken or cracked.

"We went to our cooler guy and found out something was wrong with their [packing] machine," Zawacki said. "Surprisingly, we didn't get any phone calls about it, just those reply cards. People felt comfortable using them because they know we'd respond."


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