Telephone accessories marketer Hello Direct is testing whether it can cut the cost of marketing to its customer file by offering its print catalog on its Web site.
Visitors to HelloDirect.com can download the full catalog or select page ranges in PDF formats; later this month, they will be able to link from those pages to its online store.
Hello Direct currently mails 30 million catalogs each year in 13 drops to the names on its house file, which totals almost 2 million customers. Earlier this year, the cataloger intended to cut its print circulation by 4 million, but executives have since changed their plans.
“We need to test the frequency of mailing as opposed to cutting catalogs. The catalog is still the most cost-effective way of acquiring customers,” said Michael Young, chief information officer and chief e-business officer at Hello Direct Inc., San Jose, CA.
Meanwhile, because the company doesn't track which drops generated orders, “cutting back catalogs is … a risky decision. How do we cut back catalogs, reduce costs but not impact sales? Part of that [cutting costs] would be the e-commerce customers,” Young said. “Maybe we could mail [someone] seven or six [catalogs, instead of 13] and reduce the cost of the lifetime maintenance of that customer.”
Hello Direct made a profit of $3.9 million in 1999 on $81.1 million in revenue, compared with $2.7 million in profits on revenue of $68.7 million the previous year.
Twenty percent of the company's sales are generated via its Web site. Young said it may be able to cut a fraction of its overall costs — possibly 5 percent — by mailing fewer books to those customers. “Still, 5 percent of 30 million catalogs is a significant amount of cost reduction,” he said.
Also, the downloadable catalog enables Hello Direct to learn more about its customers and prospects and helps the merchant to target them more effectively.
Young said that between 3,000 and 4,000 customers have downloaded either the entire book — which can take as long as two hours to print — or parts of the catalog in the last three weeks.
“I know which pages of the catalog they've looked at, and now I can target specific marketing campaigns at those folks so I can give them special promotions and special incentives,” Young said. “I can tailor my product presentation to what they're interested in.”
He added that knowing which products customers want makes up-selling and cross-selling more efficient.
Hello Direct is promoting its downloadable catalog on its Web site and in its e-mail newsletter. In the fourth quarter, the company will begin to promote it in the print catalog, once it updates its Web site this month with links connecting the online catalog to the online store.
“We'll be able to actually sell stuff through the online catalog as opposed to just having people look at it,” Young said.
It is difficult to track the return on investment directly from the online catalogs, according to Young, but the company does track, via key codes, the response to targeted, bimonthly e-mail promotions.
The downloadable catalog is a good way of marrying online and offline creative efforts, said Bill Dean, president of W.A. Dean & Associates, San Francisco.
“A lot of people have done a rather poor job of marrying the look and feel of their catalog on their Web site,” Dean said. “Their Web sites tend to be very standardized, very stagnant. No matter what Web site you go on, it seems merchandise is always presented almost equally from site to site to site. It's almost like Amazon set the standard, [but] selling books is a lot different than selling phones or sweaters, so this is a definite improvement to be able to make people aware of the editorial and the creative flavor of the [print] catalog.”
However, Dean said, “it's highly unlikely that there are going to be a hell of a lot of people that are going to go to the trouble to download the whole [catalog].”
Though many visitors to HelloDirect.com register on the site, they're not required to do so to print the catalog or parts of it, but “I'm thinking about making that mandatory,” Young said.
The online catalog is an exact mirror of the print catalog, but Young said the company plans to test changes to the PDF version. The merchant will inform its customers about updates to the online catalog using its e-mail newsletters and the Web site's home page, in addition to inserts that will be included in orders shipped to non-Web customers.