If you’re looking to drum up sales, jot your customers a friendly postcard. It’s not a new tactic, but one that with a few new twists has produced hundreds of thousands of dollars in sales for Coco, a high-end women’s apparel shop in Nashville, Tenn.
By tapping its extensive history of customer purchases to personalize the cards to each buyer’s preferences, Coco has taken the art of targeted, or “one-to-one” marketing to a new level – and doubled its annual revenue along the way.
“The whole notion that, as a small retailer, we’re finally able to deliver a series of advertisements to different folks, depending on the preferences they’ve told us, has been a goal of mine for over 20 years,” says CEO David Cook, who founded Coco in 1977.
In fact, according to the Peppers and Rogers Group, an independent one-to-one marketing and consulting firm in Stamford, Conn., Cook’s mailers are an example of a growing trend among small and large businesses: personalized advertising for individual customers. The benefits can be reaped using many approaches – e-mails and printed materials including brochures and magazines.
From a 5,000-square-foot, two-level boutique in the heart of Nashville’s upscale Belle Meade area, Coco sells designer wear from the likes of Anne Klein, Dana Buchman, Tomatsu and DKNY, with pricing and selection similar to Saks Fifth Avenue and Neiman Marcus. Cook spends at least one-quarter of his time working with technology to compile sales data, handle billing and mastermind postcard campaigns.
“The mad scientist part of my personality is an Oracle database programmer, so we track everything,” says Cook, who was among the earliest adopters of computers. He bought his first system in 1978 and taught himself computer programming. In fact, since the early 1990s, Coco has tucked away every snippet of marketing intelligence – including what each of its 25,000 customers purchased, how much they spent, whether they pay full price or only come to sales – into the database. Over time, Cook has determined his top customers buy at full price (70 to 100 cents on the dollar), shelling out an average of $850 per purchase. Some customers buy at sales, while others reserve purchases for major blowout events.
In 1995, Coco began its personalized approach with a three-pronged plan. The key, Cook says, is having a rich stockpile of customer purchase histories to draw on, a visual branding strategy and the ability to personalize smaller mailers in house using desktop printers and preformed card stock.
Says Cook: “I can say to my database, ‘Give me a list of full-price buyers who live within 50 miles, who like Tahari and Dana Buchman (designs).’ Then I’ll send a mailer to those customers who spend on those two brands.” Customers who tend to buy only at sales receive a different card as do full-price buyers who tend to shop when new merchandise arrives.
Cook uses his word processor’s mail merge function to mesh buyers’ names with merchandise preferences from the database. Cards sent to higher-end customers are printed in color. Black & white cards go to customers who spend less or shop at sale events.
When recipients open the mailbox, they instantly know the card is from Coco. That’s because every Coco mailer sports a slick, familiar style using high-end fashion photography. And, a customized message on the back addresses their buying habits. After being greeted by name, recipients are pitched a handful of their favorite brands, based on previous purchases. To top it off, each card is hand signed by the customer’s sales rep and stamped with regular postage, as opposed to bulk rate, for an even more personal touch.
Before Coco began sending personalized cards, its traditional postcard campaigns netted a response rate of 2 to 5 percent. Today, its customized mailings typically propel 10 to 12 percent of recipients to buy at the outfit’s single store.
Coco’s mailers typically target only a few thousand customers. Cook plunks down about $1,000 and half a day of his time to produce a 3,000-card mailer. The return on investment? “If I send the mailer to my top, recent, full-price customers, and I track it in the database over about three months, I can get a return of several hundred thousand dollars.”
“It’s a fabulous return,” says Eileen Shulock, VP of retail strategies at Knowledge Strategies, a marketing consulting firm in New York. “The technology to track what he’s doing in his store is available now, and very smart retailers are looking to leverage that technology, whether it’s small scale or a direct mailer like (Coco) did or entirely personalized Web sites,” Shulock says.
Printing Companies Can Help
Although most of its mailers are generated in-house, Coco outsources its major sales mailers: Twice a year, 20,000 cards are sent out. Image Builders, a Nashville printer specializing in custom publishing, creates a “shell” card, which includes the graphic image, using traditional four-color printing. The printing company then personalizes those cards by running them through high-output, computer-based printers using Coco’s database. The cost works out to a few pennies more per card than in-house efforts, but the process enhances quality.
Jason Altenburg, Image Builder’s VP of sales, says technology is allowing his customers to reach individual customers more readily. But the key is having a rich storehouse of customer information to draw from. “Working with David was phenomenal because he had complete records of the last 250,000 transactions in his store,” he says. And that’s something all small-business owners should be thinking about, especially as database software becomes cheaper and easier to use.
Likewise, printing companies are beginning to see possibilities to help retailers personalize their outreach. “We don’t see printing as a commodity anymore but as a service that allows us to be actively involved with a company’s marketing department to get better results.”
Cook says attention to detail is the key to his marketing strategy. “It’s like a big symphony – all the pieces have to work well together,” he says. “The image has got to be incredible, the right person has to sign the right postcard, with the right message to the right folks.”