A Seasonal Sensation1 Dec, 2013 By: Patrick Cauley Response
There’s no place like home for the holidays, especially for savvy marketers with a firm grasp on the convergence of direct response, online and retail strategies.
When pondering the hectic holiday shopping season, one of the first things that comes to mind is a scene from the classic comedy “Christmas Vacation,” where Chevy Chase’s iconic character, Clark Griswold, is shopping with his son Rusty. Amidst the hustle and bustle, the one retail display that manages to grab their mutual attention is a lingerie counter manned by a strikingly beautiful woman named Mary.
These days, more than ever — whether they’re shopping from home, online or in physical retail location — consumers are bombarded with distractions from all directions. Akin to Mary’s draw for the Griswold men, if marketers want to effectively reach holiday consumers, they need an innovative, well-executed retail campaign that will literally stop people in their tracks.
’Tis the Season
According to a new survey released by Deloitte, shoppers plan to shell out an average of $421 on holiday gifts this year, up from $386 last year. Moreover, they also expect to buy an average of 12.9 gifts, ending a five-year decline in the number of gifts they plan to purchase. Even when putting gifts aside, the amount consumers plan to spend on non-gift items for themselves or their families rose 14 percent from 2012, while expected spending on home and holiday furnishings jumped 25 percent from last year.
When thinking about the pertinent product categories that direct response marketers represent, these numbers should be music to their ears — even more so for the DR marketers that have embraced a strong retail strategy.
Response Editor-in-Chief Thomas Haire shed light on retail’s unarguable importance when he noted in a recent column that each of the Direct Response Marketing Alliance’s (DRMA) three finalists for the 2013 DRMA Marketer of the Year Award — Euro-Pro, Hampton Direct and TriStar Products — are all well-oiled machines in the DR-to-retail model. However, they’re not the only DR marketers keen on successful retail strategies.
“Our retail business on the DVD side has really exploded during the past few years, primarily because of a handful of high-profile, classic TV series. We acquire all rights to DRTV and retail. Ideally DRTV will work, but even if it doesn’t work, we know that we’re going to do good business with the titles at retail,” says Jeff Peisch, senior vice president of entertainment programming and marketing for Lifestyle Products Group/Time-Life.
Furthermore, the retailers themselves are hungry for products originating through DR. “Retailers love to take in DR products because they’ve already been proven as a success in a marketplace,” says Jill Draper, president of Parsippany, N.J.-based Marketsmith Inc. “DR marketers often go out with a long-form show and make sure that the product is a hit. Once they’ve achieved that level of success, then they say to the retailer, ‘Hey I have this hit, I’m ready to bring it into the retail environment. I’m going to be supporting it with short-form branding now,’ and it’s low risk for the retailer. It’s true market research that has proven out.”
However, the path to achieving that level of success is not always so easy. “It’s not the same marketplace as it even was a year ago. The ability to be able to break even on a product that’s not continuity based is becoming more and more challenging,” says Monica C. Smith, Marketsmith’s founder and CEO. “The ability to get to a break-even and sustain that in order to perpetuate retail sales is also a difficult formula. The ones that are probably doing the best right now are products that are coming from the larger marketers in our industry.”
In an effort to ensure retail success, Time-Life utilizes a multichannel marketing plan designed well in advance of each DVD set’s release. “Our first release is online-only because we appeal directly to the fans with the big set available on a pre-sale basis. The reason for that is, when we’re selling directly online, our margins are fantastic. It’s a good way to bring in a lot of revenue at the launch of a product. It also sets up a groundswell of buzz about a product. It purposely positions us for phase two of the marketing,” explains Peisch.
He elaborates that after four-to-eight months of building buzz, the online release is followed up with a slightly more limited collection through a DRTV offer with an upsell option to the full set. Then, after one-to-three months of brand building with the DRTV, they’ll release various smaller product configurations targeted specifically for retail. The reason for this: each medium appeals to a very different customer, especially when shopping for the holidays.
“Many people, to this day, do not buy DR products via the phone or Web. They just don’t feel comfortable doing it,” Peisch says. “With our Carol Burnett and Dean Martin projects we’re spending hundreds of thousands of dollars in media every single week. The awareness is considerable. If someone’s walking through a Walmart, Target or Costco and they see a great display for Dean Martin, in their mind they’re going to be saying, ‘Gosh, I’ve been seeing that infomercial.’ But they never picked up the phone because they’re just not the kind of person who will ever pick up the phone and call. But, it’s there right in front of them for $14.98, so they buy it. It’s a perfect promotional vehicle.”
Moreover, when it comes to the holidays, he contends that it’s essential to take advantage of all the DRTV media that’s available until the end of the year.
Smith agrees, adding, “Everybody benefits in the fourth quarter. No matter what happens, even if people aren’t advertising, all boats typically rise in fourth quarter because of the advertising that’s done mainly by a lot folks in the direct response area.”
But, putting television aside, online marketing is definitely taking more of a front seat. “We’re looking at all kinds of online methods: search optimizing, retargeting, even display ads — once again focusing on the gift giving aspect of those big sets,” says Peisch.
The Marketsmith team concurs. “We’ve seen that true omni-channel marketing is critical in the holiday season. We know that consumers are using digital channels and shopping online not just for ratings, reviews and price comparison, but for convenience. Convenience and selection are key drivers that they can get sometimes online more than they can get in retail,” says Draper.
In fact, the Internet will move into the top spot among holiday shopping destinations for the first time in its 15 years represented, with nearly half of consumers planning to purchase items online, according to Deloitte. Furthermore, the Google 2013 Holiday Shopping Intentions study (see page 8) finds that adults ages 25 to 34 will spend 19 percent more online this year compared with last.
Santa’s Little Helpers
In lieu of the elves in Santa’s workshop, there are some surefire things marketers can do to increase their holiday retail success. For starters, two days retailers should always have marked down on their calendar are the Friday and Monday after Thanksgiving — Black Friday and Cyber Monday, respectively.
Deloitte reports that 25 percent of consumers planned to shop on Black Friday and 24 percent planned to do so on Cyber Monday. “We may have special promotions gearing up to those specific days or we might have more spending around those days. We use them as retail guideposts, if you will,” says Draper.
Still, there are many other easy ways markets can connect with consumers. “Online offers like free shipping are critical. The average person spends 300 or 400 bucks a year on about 13 gifts,” Smith says. “The reason why free shipping becomes so important is because if you’re trying to get specified, unique gifts, and you have the pay the shipping and handling, that takes a chunk out of your budget. So, free shipping and handling is not only something that drives retail sales as a spike, but it’s actually a must have.”
New research from Retention Science shows that free-shipping offers trump percent-off offers for conversion. Moreover, 71 percent of consumers say they plan to take advantage of free shipping offers, according to Deloitte.
In fact, free shipping has become so imperative that marketers can now add “Free Shipping Day” to the growing list of retail designated holidays. That’s right, December 18, or Free Shipping Day, has been covered by mainstream media and already has the support of countless retailers nationwide. According to its official website, Free Shipping Day is a one-day online-shopping event when thousands of merchants offer free shipping with delivery by Christmas Eve. Someone better cue the reindeer.
While free shipping is a common adjustment that can be made to DR creative, sometimes holiday call-to-action changes are more drastic.
“It’s less frequent that a marketer will change their TV creative in regards to holiday, but you certainly do see that in some occasions. For example, Resurgence had a Mother’s Day campaign where they edited their CTA to specifically tout this as a Mother’s Day present. It is less frequent but it sometimes still done in terms of the creative strategy itself,” says Carina Pologruto, general manager and executive vice president of client services for Marketsmith.
Research shows that consumers are ready and willing to spend during the holidays. Nearly three-quarters of consumers say their holiday spending will be influenced by coupons or promotional offers, according to Deloitte. Consequently, even though it may seem obvious, E-mail marketing is one of the best tools for increasing holiday spending.
“It’s not just about how many sales, but how many opens you’re getting. You want to make sure in your holiday promotions that you’re not spamming; that you stay relevant, that your content is interesting,” says Smith.
Interestingly, new research from Retention Science says promotional E-mail offers should be sent in the afternoon when consumers are in more of a buying mood. Offers sent on Tuesdays and Fridays perform best, while weekend offers tend to perform poorly.
The Naughty List
“The one thing that we see declining year-over-year is the same item being purchased multiple times with a greater discount,” Smith says. “Since the recession, when people have decided to gift give, those gifts are unique and highly targeted to the person. So, I think they’re spending less per person and they’re spending on less people, but I think the gifts they’re getting are unique and specific. So therefore, multiple items per transaction have decreased and continue to decrease online and on the phone.”
Perhaps this means the “buy-one, get-one-free” (BOGO) offer may actually be losing steam with customers, at least when it comes to gifting.
Another avoidable pitfall comes when knowing your customer service and back-end execution are in line. “Part of the discipline in building a direct-to-consumer model — especially one that is subsidizing retail — is that you have to know when to cut off your sale. In the DRTV world, you have to know where your supply chain and your logistics can absolutely get you across the plate. You’ll see a lot of companies cutting off between Dec. 15 and Dec. 18,” says Smith.
For example, she contends that if you choose to pick, pack and ship on Dec. 20, the chances of getting that product across the country in time for Christmas could be limited. “If you upset someone on Christmas, it’s not like upsetting them on their birthday when they’ll have the product tomorrow or the next day. If you miss Christmas, it’s a mess,” warns Smith. ■