It’s hard to ignore the market opportunity just north of the U.S. border. Canadians are key prospects because of the similarities we share with our neighbors to the south. We consume the same media and want access to the popular brands that are world famous and widely available in the United States.
We also are savvy Internet users. Canadians rank in the top three of high-speed Internet connectivity worldwide and are second only to Germany in Internet banking. Canada’s e-commerce sales this past holiday season were record breaking, rising 30 percent to $18.1 billion (Canadian), according to Nielsen//NetRatings.
Growth has been noted in the catalog channel, too. A 2004 study by Canada Post found only 35 major titles in circulation. But at the end of 2005, twice that number were mailing and prospecting in Canada. Still, this figure is dwarfed by the 13,000 titles circulated in the United States.
Major U.S. retailers long have known of the Canadian market’s potential but have been reluctant to pursue Canadian business because of challenges in maintaining the integrity of their brand experience with foreign customers. Navigating Canadian customs, the logistics challenge of last-mile delivery and simply finding the right customers are barriers that midsize and tier-one retailers share.
In my conversations with this industry’s leading direct retailers, the No. 1 deterrent for those in charge of market expansion is the perceived lack of internal resources to enter the market effectively. However, in reality, all that stands between you and borderless growth is as little as 20 hours of IT programming.
Canadians read 74 percent of their direct mail on average, and their response to direct mail offers is 25 percent higher than their U.S. counterparts. The challenge is to find the best prospects who match your customer profile, market to them effectively and achieve measurable results. Let’s face it: With limited budgets and resources, the margin for error is narrow.
Be warned, though. The infrastructure to support the Canadian direct retail industry isn’t nearly as developed as in the United States and is still in its infancy. Extensive recency, frequency and monetary value data are not widely available, so your predictive modeling results and response rates can be volatile.
Abacus’ entry into the market is a testament to the growth of the Canadian catalog industry. It joins other list brokers like Cornerstone and ICOM that serve the Canadian market. Together with services such as Snapshot – our consumer segmentation system – U.S. retailers can assess the risk and potential ROI when planning marketing strategies.
Snapshot scores the entire Canadian population of 32 million into five major buying groups. The groups are isolated down to the postal code, like a U.S. ZIP code, representing 10 households each. Borderfree uses Snapshot to identify specific spending habits, lifestyle and media preferences. U.S. retailers then work with Canada Post’s direct marketing experts to develop strategic circulation and integrated marketing plans based on those behaviors.
More than 100 retailers partner with Canada Post or use the Borderfree technology as part of their retail operations in Canada, including Lands’ End, Guess, L.L. Bean, Brookstone and Crate & Barrel. Though employing a multichannel approach will increase the value of your customers, simply using your online presence or prospecting with your catalog can generate awareness of your brand, increase sales revenue and subsequently act as a planning indicator for bricks-and-mortar operations in the future.
A leading beauty retailer partnered with Borderfree in 2002 to offer Canadian customers access to 250 leading brands of beauty products as well as a Canadian checkout that displayed a fully landed cost and in Canadian currency. The overwhelming response from Canadian shoppers prompted the company to accelerate the opening of its Canadian flagship location by 18 months.
Similarly, Brookstone is expanding its efforts in Canada. As a result of offering a Canadian customer experience through www.brookstone.ca and using Snapshot to develop marketing plans to circulate its U.S. catalog, Brookstone’s Canadian revenue increased 35 percent in 2005.