Direct Marketing Works Best for Sharper Image: CEO Tells Shop.org Attendees

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NEW YORK - Direct marketing could not find a more ardent fan than Richard Thalheimer, chairman/CEO of The Sharper Image and keynote speaker yesterday at the National Retail Federation's shop.org annual conference.


The San Francisco retailer has been using direct marketing across print, television, radio, catalog, solo mailers, package inserts for most of its 25 years.


"I'm a direct-response advertiser, The Gap is a good example of a display advertiser," Thalheimer told a crowd of 350 e-commerce and marketing executives. "To me, I want to see a measure or source for every dollar I spend on that return on investment model."


The company last year spent between $35 million and $40 million on catalogs, $22 million on infomercials and $2.5 million on radio. Results to such an outreach are measured on a current basis, Thalheimer said.


"We expect to get a payback within 90 days,' he said. "If it doesn't happen, then we consider the campaign finished."


The monthly catalog is the biggest direct marketing vehicle for The Sharper Image. Seventy million copies are mailed out a year. And frequent attempts are made to refresh products.


Still, it is hard for the company to attribute sales to a particular direct channel or 118 stores nationwide. So, like many retailers, the emphasis is on a seamless multi-channel experience for consumers shopping across channels.


Of course, it helps that 75 percent of all Sharper Image products are unique to the retailer, developed internally. This avoids the need to compete with rivals on price points.


Thalheimer, who openly acknowledged Amazon.com and DVD rental site Netflix.com as his online favorites, debated the costs of selling on the Internet versus the catalog.


"It costs us about $50,000 a page to get a page out in the catalog in production and postage costs, and we estimate the life of the product is 30 days," Thalheimer said.


But that's because the catalog drops each month, he said. A page's costs rise to $80,000 in December because of the holiday. Still, that is $700,000 for a 8-inch-by-10-inch page, which will reduce to 7 ¾-inches-by-9 ¾ inches due to postage increases.


Online, that is not an issue for product pages on sharperimage.com, Thalheimer said. Only the initial investment is required for setup.


"That online page, the second month is free," he said.


His advice to the attendees is to have as many images and products on the page. This avoids frustrating U. S. consumers, most of whom have dialup Internet connections.


Moreover, consumers do not like switching back and forth between pages and prefer all information on a page - something the company keeps in mind in page design.


Retailers should also use e-mails more judiciously. The Sharper Image customers say they prefer contact no more once every four weeks.


Indeed, Thalheimer said outbound e-mails are considered one of the biggest irritants online. Good retailers and marketers should let consumers opt out and also be aware of not abusing the number of e-mails sent out.


"Some day there will be regulation that will stop it altogether," Thalheimer said.


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