CRM pays off all year
Hallmark Gold Crown’s loyalty program examines shopper data to determine best candidates for offers
How many times a year do you buy a HoneyBaked Ham? How about greeting cards for your friends and family? If you answered, “once or twice a year,” you have plenty of company.
“We are very seasonal,” admits Tim Kiss, director of one-to-one marketing for HoneyBaked Ham of Georgia. “Our catalog business sees 90% of its sales happen between Thanksgiving and Christmas.”
Judging by the number of Americans still working off the excesses of the holidays — both on their checkbooks and their waists — people certainly choose to indulge between November and January. Companies that sell seasonal treats work to take advantage of these once-yearly spikes by maintaining loyalty and encouraging returning customers, for as long as 11 months after their original purchases. These companies need to maintain hundreds of thousands — and sometimes millions — of up-to-date customer records so that they can reach these consumers with the right message at peak times.
“Almost all 14 million [members] are contacted during the holidays, but the timing and content is tailored to what we know about their holiday shopping behavior,” says Jay Dittmann, VP of marketing strategy for Hallmark Cards Inc.
The Hallmark Gold Crown loyalty program is a card-based CRM program that drives most of Hallmark's direct-to-customer communications. Crown Rewards has been around since 1997, but was revamped in 2007 to include different tiers of shoppers — from the Platinum members who buy hundreds of cards a year to the basic members who may buy just one or two. Hallmark signs up most of its Gold Crown members in stores, then uses the information gathered there to push direct mail, e-mail and special offers to shoppers based on their tier, interests, and, of course, the time of year.
“Crown Rewards is a major focus of our CRM efforts throughout the year and particularly during holidays,” Dittmann says. “We are definitely driven by the spikes in our business. We have the major seasonal spikes: Valentine's, Easter, Mother's Day, Father's Day, and then a gap, and then Christmas.”
HoneyBaked Ham of Georgia, too, processes a large number of its customers over the holidays: Around 1.7 million people visit the company's 200 stores throughout the year, and meals purchased for Thanksgiving, Christmas and Easter represent more than 65% of those retail sales.
Like Hallmark, HoneyBaked depends on smooth in-store operations to keep customers happy and add information to its databases. It asks in-store customers only for their telephone numbers, capturing the numbers of about 70% of in-store shoppers, whose average order is around $50. Later, the company reverse appends those numbers to get names and addresses. HoneyBaked also recently started using only the names off of customers' credit cards to find customers within a certain radius of the store.
HoneyBaked uses its massive consumer database, built from information gathered during store visits and through online and catalog orders, to grab customers' attention when they are most likely to buy.
“It's really hard because people see our product as something only for the holidays, which we try to push past,” Kiss says. “In many cases, we have to identify and remind customers at a key timeframe. About 65% of our retail sales fall within six weeks of the year, but within those there are Christmas-only customers, Easter-only and Thanksgiving-only. We only see them and remind them at each holiday and try to contact them at the right time and keep up with them.”
Kiss adds that the company tries to push more frequent buys, but with such a large product, people really only want to make purchases at times of family gathering. On the bright side, the company's close association with the holidays makes consumers emotionally attached to it and draws high response rates for holiday mailings.
Though HoneyBaked keeps more than 10 million phone numbers in its database, it only actively markets to about one or two million current entries. It uses older information to better understand customer demographics, buying patterns, and other interests.
“Good direct marketing involves two things: an understanding of the customer, and segmentation of customers,” says Kiss. “To truly segment our customers, we need to be able to identify every transaction and, once we do that, we want to talk to them individually.”
In 2008, HoneyBaked Ham's Christmas campaign mailed six different versions of a direct mail piece, created by agency Harte-Hanks. Each was sent to several of 32 different customer segments. HoneyBaked recently updated its database capabilities, which also included a stronger focus on Web analytics, as HoneyBaked's retail operations have shifted to its Web site.
Dittmann shares Kiss' view on the importance of analytics. Hallmark works closely with SAS to analyze shopper data and form predictions about future behavior.
“It's a major analytic process to understand consumer behavior and project and predict who we think will be the best candidates to purchase in a certain period,” Dittmann explains.
For the holidays, for instance, Hallmark divides its communications into early, middle and late segments to match individuals' shopping habits. Early-bird types, who tend to get their cards and keepsake ornaments at the start of the season, receive holiday-themed mail at the beginning of November. Other waves go out around Thanksgiving and then closer to Christmas.
Communications throughout the year help keep Hallmark front-of-mind for shoppers. In a strategy called “Calendar Flip,” Hallmark targets messages to customers at the beginning of each month, when they are marking their calendars for upcoming events. The company also uses its analytics and mailing programs to incent people to join higher shopping tiers, sending messages like, “You are only 10 cards away from becoming Platinum!”
Hallmark primarily uses direct mail, but e-mail, TV, print and online ads are all used to drive non-members to the store. Crown Rewards members have been known to respond at rates of 50% or more for certain mailings and generally have double the purchase volume of non-members.
“It's not only who we talk to but when we present the message,” says Dittman. “We have to give consumers the need and make sure it's relevant during the time period.”