Cataloger's $5-Off Deal Is a Moneymaker
From a cost standpoint, the $5 discount is balanced by a savings in processing costs of $3 to $5 per online order compared with taking orders by phone.
"The strategy with the bursts has been to incent consumers to shop online instead of phone or mail due to the labor costs involved in taking orders over the phone or through the mail," said Geoff Smith, president of the e-commerce division and new business development at Personal Creations. "We've done these bursts for consumers who have not shopped online yet. Once they have shopped online, they don't get the burst any longer."
Fifty-one percent of orders for the cataloger of personalized gifts are coming at its Web site, personalcreations.com, following the mailing of its spring I catalog last month. That's up from 41 percent last year.
Judy Nelson, director of marketing for Personal Creations, Burr Ridge, IL, said the benefits go beyond "fixed costs" such as the cost of taking orders.
"On the Web we can get the customers' e-mail addresses, allowing us to re-market to those customers at almost no cost," she said. "We've looked at the $5 off, balanced against the savings of taking a phone order, plus the re-marketing efforts, and it more than pays for itself.
"We've also seen that it increases our overall business. Our sales per book are higher from books receiving this offer than those not receiving the offer. [This also gets] ... them accustomed to the site so they can shop any time."
Roughly 80 percent of the 1 million spring I recipients got the $5-off burst, which is good on orders of $40 or more. The company did a similar burst last year, when it sent the offer to just over 90 percent of the 1 million spring I recipients.
Smith said other factors contributed to a rise in online sales.
"I credit a lot of it to the launch of our redesigned site in early October of last year," he said. "That has had a significant impact on what we're seeing, and it's improved our conversion rate."
The conversion rate has risen from 4.5 percent to 6 percent since the site relaunch.
Smith said the redesign grew out of a study in fall 2001 regarding how consumers interacted with the site and what drove them to purchase.
"We implemented a lot of [what we learned from] our study to improve the navigation in order to get customers to the best-selling items as quickly as possible," he said. "We redesigned the creative look and feel of the site to enhance the display of the products and communicate that we are about personalized gift giving. We can merchandise the pages very quickly based on what's selling well."
Personal Creations cut its mailings to prospects 7 percent this year compared with the same drop a year ago "due to performance reasons [as the] house file has been doing better for us and prospecting has fallen off slightly in terms of performance," Nelson said.
Buying e-mail lists has not proven successful.
"We've tried buying e-mail lists, and they don't work for us at all," Smith said. "E-mail marketing involves our house file and our requesters. I don't think the lists have well-enough-qualified buyers on them the way a catalog list does."
The cataloger's target audience is 85 percent to 90 percent female, focusing on young, married homeowners with pre-teen children. Sixty percent are ages 25 to 50, with 80 percent homeowners. About 60 percent have incomes of $35,000 to $75,000 with most of the rest above $75,000.
The spring I book reached homes March 11 to 13 while last year it was timed to reach mailboxes at the end of February.
"Our First Communion and confirmation categories have been showing large growth," Smith said. "There's a later Easter this year, so we're targeting First Communion, Easter and Mother's Day in this year's book all at once."