It may be awhile before Fingerhut generates tens of millions of dollars via continuity programs, but the direct marketer is taking its first step in that direction this holiday season.
Fingerhut customers are being targeted with a jewelry continuity program created by Holsted Marketing, New York. It is Fingerhut's first continuity program since Federated Department Stores sold the company last year.
“We were running identical programs for Fingerhut from 1999 to 2002 under the old management,” said Victor Benson, president of Holsted Marketing. “Previously we did it with jewelry and collectibles, and in 2001 we created revenues of well over $20 million for Fingerhut through these programs.”
The test targeted 200,000 Fingerhut customers. Two sets of direct mail pieces went out in the second half of October, each to 50,000 people. Another 100,000 customers were sent bangtails — offers attached to their monthly remittance envelopes. These went out with billing statements in early November.
The program will be evaluated in the first quarter of 2004 with rollout expected for the second quarter.
One direct mail piece measured 9 1/4 by 4 3/16 inches. It was split into two segments, with half receiving an offer of two surprise gifts and the rest getting an offer of a gift valued at $10.
“This beautiful ring is yours,” appears on the front of the mailer and described a free Cubic Zirconia Oval Band Ring on the envelope's Gift Voucher, which states, “Accepting this ring gives me the option to preview upcoming rings in the collection. If I wish to examine any of the other rings, I will do nothing.”
Eight more rings are sent, one every six to eight weeks, for customers who stay in the program. They are billed $39.99 plus $4.99 for shipping and handling for every ring kept with charges appearing on their Fingerhut credit card.
The second mail piece, in envelopes 7 1/2 by 4 1/8 inches, also was split into two groups of 25,000 each. Half received an offer that included shipping and handling charges of 99 cents while the other half paid $4.99. A free Sterling Silver & Yellow Cubic Zirconia Ring appeared on the front of the envelope while two surprise gifts were mentioned on the back.
Along with the gift voucher, other elements in the solo direct mail pieces were a business reply envelope, a sheet covering “frequently asked questions about our jewelry,” a color brochure, a letter explaining details of the program, and a no-obligation lift note.
The note states, “If you've decided not to accept this free … ring please read this … ” Opening the note reveals the heading “Executive Offices,” followed by, “Dear Fingerhut Customer: We can't understand why you would hesitate to take advantage of such a great offer. …”
Typical response rates for similar Holsted programs using direct mail pieces are 2.5 percent to 5 percent. Benson said that previous Fingerhut continuity programs using bangtails produced a response rate “above 1 percent,” higher than the format's typical response of 0.2 percent to 0.5 percent.
“I would expect that the bangtail will be over 1 percent and the solo direct mail will be somewhere between 2.5 and 5 percent again,” he said. “What makes the bangtail so profitable is the expense is about one-tenth of solo direct mail. On the test, the solo direct mail was 50 cents [per piece] to cover printing and mailing. And for the bangtail, the printing is only 6 cents apiece with no postage since [the remittance envelope] mails anyway.”
Shipping and handling for the bangtail offer was $3.99 and included two surprise gifts along with a free Sterling Silver Cubic Zirconia Ring.
“We were not only testing different offers, but also sensitivity to shipping and handling charges,” he said. “This also allowed us to test different types of products in different media. We're doing that to enable us to go into a full rollout as quickly as possible.”