Jack Schmid
Straight to the Source

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Straight to the Source

Catalog and Internet marketers historically have pooh-poohed the use of customer research. The reasons for this disdain are numerous. Here are some of the excuses I’ve heard:

• We don’t need it.
• Research won’t tell us anything we don’t know already.
• It’s too expensive.
• Direct marketing is really better than research; let’s just test and read the results.

But thinking about research is changing. Direct marketers always have prided themselves on knowing and understanding the analytical side of their business. They know what happened with every mail or e-mail campaign and can accurately spew metrics on direct mail, catalog mailings, Web performance, search engine optimization or e-mail campaigns. It’s too bad that these same marketers often have little clue as to why customers respond to one marketing effort and not another. Customer research can help multichannel marketers know their customers better and learn how they’re perceived by various customer segments.

What do today’s multichannel marketers want and need to know about their customers? Here’s a list of critical customer information I would want to know about my customers beyond the recency, frequency, monetary and product category information I can extract from my database. Each item on this list is followed by a real case study to demonstrate how the marketer used research to its advantage.

1. How did the initial transaction go for first-time, new-to-file buyers, and what is the likelihood that they will return for a second purchase?

An electric utility that sold consumer products via its catalog and Web site wanted to know how well it had done in receiving initial orders and fulfilling product. To control expenses, the utility opted for a one-page, two-sided bounceback in all box shipments to new-to-file buyers who had purchased by phone or mail. Web customers received the same survey via an e-mail. The research asked questions pertaining to:

• Ease of placing the order (via phone or Web).
• Knowledge and courtesy of phone operators in answering questions.
• How various aspects of merchandise, pricing/value, shipping and handling charges, etc., compared to other catalogs from which customers had ordered.
• Ease of navigation of the com-pany’s Web site.
• Likelihood that customers would return to purchase again.
• Key demographic information pertaining to age, gender, education, marital status, presence of children at home and household-income level.

The reverse side of the bounceback was stamped with a business reply indicia so customers simply could fold the survey and mail it back to the company. The response rate consistently was in the 30 percent range for phone and mail customers, and slightly higher for Internet customers.

2. Who are your customers, and how do they perceive your brand?

An upscale gift and apparel com-pany with catalogs, a Web site and retail stores mailed a four-page questionnaire at about an 18-month frequency. The research went to four customer segments:

• Best—multibuyers (three or more times) who purchased in the last 12 months;
• Good—multibuyers (two or more times) who purchased in the last 12 months;
• First-time—new-to-file buyers who purchased in the last six to 12 months; and
• Lapsed—inactive multibuyers (two or more times) whose last purchase was more than 12 to 18 months ago.

The customer segments were further divided by primary buying channel—catalog, Internet or retail. The survey was mailed First Class to a random sampling of each of the four customer segments whose primary buying channel was catalog or store. Internet buyers were sent the survey by e-mail. Response rates varied by customer affinity to the company. The greater the customers’ affinity, the higher the response rate. Several customer segments responded at nearly 40 percent. Other segments responded at as low as 10 percent. Incentives for completing and returning the survey were used to enhance response. The type of information this survey attempted to track and measure included:

• The competition: How do customers shop—catalog, Internet or retail? What companies are their favorites?
• How does the company stack up against the competition in such areas as: unique, distinctive merchandise; quality of the products; value (price-quality relationship); prompt delivery; ease of returning merchandise; ease and convenience of ordering, via all channels; and accuracy of the order.
• What factors would heighten customers’ interest in repeat ordering?
• Customer demographic information.
• Psychographic questions, such as magazines read, television shows watched, Internet sites visited, etc.

3. What are customers’ perceptions toward a new branding and catalog creative effort?

A multichannel marketer decided to gauge its customers’ perceptions toward a re-branding effort that included new merchandising as well as catalog creative. A survey went only to elite multibuying catalog and Internet customers. Telephone calls and an e-mail effort were selected as the most efficient and timely methods of researching customers’ perceptions. A minimum of 100 completed calls and 100 e-mail responses was the goal to provide statistical relevance.

In an ideal world, the company might have done a head-to-head test of the old creative design against a new catalog presentation. That option was not pursued because of the cost of producing two versions of the book. The research was conducted about seven to 10 days after the anticipated in-home mail date of the catalog. Since this survey was going to the top, elite multi-buyers, the company was interested in receiving a relative quantitative read on such issues as:

• Did customers recall receiving the catalog?
• Have they had the opportunity to read/review it?
• Did customers recognize that new product categories had been added to the catalog?
• What did customers think of the new product categories?
• Did customers recognize that the design had changed dramatically from previous books?
• What is their impression of the design change? Positive, negative or so-so?
• Did customers recognize the re-branding? What is their impression? Positive, negative or so-so?
• Does the catalog seem approachable or is it too elite?
• What types of offers will motivate best customers to further action?
• Customer demographic infor-mation.

4. What format, size and creative presentation is best served in a new catalog start-up by a retailer?

Several years ago, a national retailer wanted to undertake a major catalog-feasibility study, including financial analyses and five-year projections. With a positive report of the market opportunity, it elected to conduct a series of focus groups to answer a number of questions. The brand image and identity of the store were extremely well-conceived, and the focus group research was viewed as a means of fine-tuning the catalog offering and creative presentation. The focus research was planned for three cities in which the firm had strong store concentration. Two groups of customers were invited to focus group sessions in each city: 1) known repeat-buying store customers in the corporate database who lived within a 10 mile radius of a store; and 2) non-buyers who also lived within a 10 mile radius of a store, fit the demographic profile of good customers but weren’t in the corporate database.