Retention Strategy May Signal Start of Second Wave Online

New York tobacconist and cataloger Nat Sherman International unveiled a redesigned Web site this month that some say represents the next generation of database-driven retailers on the Internet.

The site at now employs a software package called Constant Contact, which has features aimed at keeping customers coming back. Among them are a gift-reminder service, order-status-change alerts, a re-order reminder for regular cigar consumers and a service that remembers past orders to make re-ordering easier.

Nat Sherman will, for instance, send online customers who regularly order a certain type of cigar an e-mail reminder with an embedded link to a Web page with an order form already filled out. The upscale cigar seller also plans to e-mail customers specials based on personal preferences.

Although Web pioneers such as and CDnow are well known among Internet shoppers for their personalized product recommendations and order follow-up techniques, traditional merchants such as Nat Sherman who don't view Web sites as core business units are just beginning to move past simply going for the online transaction, said Stan Dolberg, director of commerce technology strategies at Forrester Research, Cambridge, MA.

Of the 40,000 new storefronts that Ernst & Young says have appeared online in the last six months, “most of the sites where you can buy anything are 99 percent transactional as opposed to [employing] true outbound, ongoing relationship management,” Dolberg said. “By and large, most of them are competing on price with commodity-type products and not picking up on why somebody would come back.”

However, Dolberg said, Nat Sherman represents the second wave of customer-retention strategies online.

“The leaders who are doing some really cool things can be measured in the low tens,” he said. “This is the group right behind the leaders.”

Alec Stern, vice president of sales and marketing for Constant Contact's creator, Roving Software Inc., Boston, said the driving force behind this second wave is the high expectations that traditional catalogers and leading-edge online retailers have created with consumers.

“What [Web merchants] are finding is that customers are starting to expect this sort of follow-through,” Stern said.

Stern said that his company charges per server and that mid-size online merchants can expect to pay between $30,000 and $50,000 to outfit their Web site with Constant Contact.

Bill Sherman, executive vice president of Nat Sherman, was short on specifics but said his company's site re-design “allows us to be a lot more interactive with our customers.”

Sherman said the company is pleased with results of a site promotion to its house file for Father's Day, but declined to say how many e-mail addresses the Nat Sherman database garnered as a result.

Jeremi Karnell, vice president of Nat Sherman's Internet agency One To One Interactive, Boston, said that one reason old-timers such as Nat Sherman are just behind and CDnow in online relationship management is that, unlike its Web-based counterparts, Nat Sherman views online sales as a secondary source of income.

“We've seen a lot of these things with the high-end sites,” Karnell said, “and I think what we're seeing now is that the other distributors whose business model has never been centered around online distribution are beginning to invest in these technologies because of [recent] benefits they've seen.”

For instance, Karnell said, Nat Sherman's Web site drove $250,000 in sales last year, up from $30,000 the preceding year. The site is projected to achieve about $500,000 in sales this year because of its emphasis on database marketing.

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