Palm Pushes The Benefits of Pricey New Model

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Palm Inc. is using information-heavy direct mail and rich media e-mail to persuade its most loyal customers to switch to the most expensive handheld the company has ever produced.


The push for the $499 Tungsten T comes just ahead of the crucial holiday season, when the Milpitas, CA, company typically sees a spike in sales of Palm products.


"A major challenge we face with this is the education of the consumer, because it is such a new form factor and a new design at a fairly high price point," said Barry Peters, vice president of relationship marketing and evolving media at Carat Interactive, the San Francisco agency on the account.


Launched Oct. 28, Tungsten T targets professionals who previously upgraded readily from one Palm model to another. The handheld is equipped with a 174 MHz ARM processor and runs on the Palm OS 5 with integrated Bluetooth technology for wireless connectivity. It is Palm's most compact device.


E-mails dropped Oct.31 and yesterday to 4.5 million registered users on Palm's installed database. Another 115,000 consumers selected from that audience of loyal users also got mailers, the only direct mail in the campaign.


Both missives work to push recipients over the edge into upgrading to the Tungsten T. The agency took a linear, storytelling approach with the copy. That was reinforced with an audiovisual demonstration that conveys the benefits of the handheld.


Free overnight shipping was offered to certain premier customers, all mail recipients and, as an incentive test, 2 percent of the e-mail audience. The product is available at chains like Best Buy, Circuit City and CompUSA. Orders can be placed on Palm's store at www.palm.com, which is linked via the e-mail.


"It's not an impulse buy, so what we need to do with the communication is really get the user to get the full experience of the product," Peters said. "We know for a fact that there's a select few people that will get the mailer or get the e-mail, click on it and buy it because they're Palm fanatics.


"[But] we believe that a lot of folks are going to receive this, and this is going to be a highly considered purchase," he said. "So they're going to really want to touch and feel this thing."


Palm did not treat its e-mail list equally. Thanks to database modeling, some recipients got an awareness message and others received a stronger call to action to buy the Tungsten T.


In all, there were 16 different sells for positioning. So, an older Palm is compared with the newer, crisper model. Or an older, larger Palm is compared with the compact new version. The only offer tested was the free overnight shipping.


"To someone who has just purchased a [Palm] product in the last 90 days, we obviously weren't trying to upsell him to a new product," Peters said. "They're probably very happy with it. We didn't want to try and force them to spend more money to get the latest and greatest. These folks receive more of an awareness message."


By contrast, mail recipients got a common message to buy the product.


Palm entices newcomers to the brand with a low-priced product called Zire. In separate marketing, the company uses the $99 entry model to introduce them to the Palm brand.


"What we're trying to do is broaden the market with that device and get a more mainstream customer, bring them into Palm and then upgrade them within," said William Lynch, vice president of direct marketing and e-commerce at Palm.


Palm is the largest maker of handhelds in the United States and worldwide, followed by Sony, Compaq and Handspring. It accounts for almost half of the handhelds in the domestic market. About 22 million Palm handhelds have sold worldwide since they debuted in late 1993.


By virtue of its sales, Palm has built a sizable database of registered users. Lynch estimates there are 8 million e-mail addresses in Palm's records. About 4.5 million to 5 million of those names are from the United States. The mail database is about 6 million worldwide, 75 percent of those names from the United States.


Direct marketing was used to introduce the Tungsten T because it is cost-effective, Peters said.


"We could have easily recommended to Palm to go out and spend hundreds of thousands of dollars to do direct mail to their entire database," he said. "But what we found through our history with Palm and their users is that they're very receptive to e-mail. There is an extremely low unsubscribe rate and very high open rates."


For this effort, Peters expects "open rates in the high 50s and click-through in the low teens."


Palm has ambitious sales goals for the Tungsten T: 10,000 by yearend. The rich media campaign needs to hit the ground running.


"If the response goes as planned, we'll keep on track," Peters said. "If it goes less than planned, we'll turn up the volume a little bit. And if it goes better than planned, we'll scale back a bit."


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