How Norm Thompson (Very Thoughtfully) Made Almost $20 Million in Online Sales

CHALLENGE
Norm Thompson, which owns the catalogs Norm Thompson Outfitters, Solutions and Early Winters, has been profitable since the early 1950s by being careful about marketing investments. VP Marketing Steve Jones explains, "Every decision you make as a direct marketer is essentially a financial decision."

So, despite the pressure of Internet hype and the fact that several competitors launched aggressive online divisions early on, the folks at Norm Thompson decided to take their time evaluating the opportunity. This thoughtful pace went against the prevailing "land grab" wisdom of the 90s (and it would have driven most caffeinated dot-commers crazy); but Jones stuck to his guns.

His goal was to take the company online, without losing money and without neglecting the tried and proven print catalog business.

CAMPAIGN
The first tough decision was domain names. Like many companies in the mid-90s (such as Readers Digest which bought more than 400 domain names) Norm Thompson bought "a whole lot of domain names" to keep their options open and as a preventative measure. Unfortunately Amazon had already scooped up the rights to one of the important ones -- Solutions.com -- so Jones had to be content with SolutionsCatalog.com.

Jones wondered, should he start a new online brand (as many others were doing) or should he make the Web an extension of Norm Thompson's current brands? It was a difficult decision. He chose to go with the established brand names; and in fact ended up allowing the Company's ownership of many of the other domain names to lapse.

Jones decided that Norm Thompson wasn't getting into a new business. So it didn't need a new name. The Web, and email, was to be wholly integrated into the current brands as another "customer touch point." He says, "Every customer touch point is a way to reinforce the brand overall, on the phone, in mailboxes, online, we are channel agnostic. We are where ever the customer would like us to be."

This key decision went beyond simply the names of the sites. Norm Thompson was going to be online/offline integrated on every level and in every medium, including pricing, products, staffing, departments, databases, sales tracking, inventory management, etc. Jones knew this would slow down initial development, but he felt it would be worth it. He says, "It's not like we have a Norm Thompson department and an Internet department. You can maybe move faster in the short term if you're structured that way with the Internet separate, but in the long term it's about the brand and the customer, not the channel."

Internet Marketing Manager Debbie Hess and an assistant are the only Internet-specific marketing staff, and they spend the majority of their time coordinating with other departments, such as brand managers and customer service. Plus, all Norm Thompson employees are encouraged to put in their two cents on site design and development. Hess says, "We do a lot of sending Web pages, emails, articles, amongst ourselves. People in the company will email me 'I bought something online and I loved the way their site worked' or 'I hope we don't ever do anything like this!'"

The Company launched its three, full throttle, Web sites in late 1999, and immediately increased its use of print catalog real estate to plug the site URLs.

Although they carry different products and are designed to reflect different brands, each site shares an overarching strategy that Jones describes as, "How do we make sure the Web is every bit as effective and customer friendly as the other channels?" So, the sites are similar in five ways that enhance the brand and buying experience.

1. Quick loading time: Hess says, "We went through a huge exercise to speed loading time, and then we got more advanced tech, and went back and did all the hard work again, re-optimizing every single image. It's a lot of work, squeezing every single byte that you can out of those, but it's really important for a nice customer experience."

2. Thoughtful loading order: While it's not possible on every single page of the site, Hess is often able to choose which images are loaded first (i.e. which parts of a page a customer will see first as they are waiting for the whole page to come up on their computer screen.) She advises, "Always think about the loading order when you put things up, so if they want to jump ahead they don't have to wait for all 12 items to load and then move on. You can help customers maneuver quickly and that's a good thing to do."

3. Very little scrolling: Norm Thompson's pages require less scrolling (even at a low screen resolution) than about 90% of the sites on the Web today. Hess says, "We had a huge discussion about above-the-fold and how can we possibly get better. Sometimes you can't. There are tradeoffs between having to push another button or scroll. We analyze every single decision -- is it best to have them go to another page or just add to this page and have them scroll? A lot of thought goes into that."

4. Shipping costs revealed earlier: Hess says you don't want customers going all the way through the shopping and shopping cart process only to discover shipping charges at the very end. "Egads, that's $15? I had no idea!" Instead, "give them an alternate way to look it up ahead of time."

5. Clear privacy information: While other sites sometimes seem to hide their privacy policies, Norm Thompson makes its policies abundantly clear in warmly written English (not legalese.) Every single place where a visitor is asked for their email includes a brief privacy statement plus a link to the full policy.

Plus, all email is sent on an opt-in (vs. opt-out) basis. Jones says, "We really wanted people to want something, we didn't want accidental or inadvertent opt-ins." Jones has also carefully scripted the way telephone customer service request customers' email addresses, so that customers have both control and choices about how their email is used.

Jones, who is one of the key people behind the Direct Marketing Association's official privacy policy, says, "Everything mainstream direct marketing can do today, to promote responsible treatment of customer information and relationships, will go a long way toward combating fear, paranoia and legislation that's not in everyone's best interests."

The Company has been very careful in its use of customer emails even with this full permission. Hess says, "There's a real danger in over-marketing. If you get 10 catalogs a day in your mailbox there's no way you'll deal with them. When we started emailing, we really looked at the contact strategy in terms of when are catalog drops and how do we want them related to email. We also experimented with how many products to offer, how much text content, and how often to send them. We're learning as we're going and getting smarter."

One of the key things Hess learned was to avoid the copy trap of running email campaigns with commonly-used subject lines celebrating particular times of the year such as Mother's Day or Valentine's Day. She says, "I'll get three-to-four emails with 'sizzling summer savings' and I'm just cracking up. Did all three of these marketers get together? This stuff is so obvious."

Instead, the Company's email marketing subject lines tend to focus on a particular benefit. Sometimes it's special savings, but often it's useful information. Hess says, "We work hard at giving the customer something valuable, rewarding them a little bit for opening the email, versus in-your-face 'You should buy this!'"

Aside from catalog and in-bound customer service mentions, the Company has invested very little in acquisition marketing thus far. Jones says, "We're not aggressive -- we're focusing more on loyalty. We tested affiliate type stuff, online malls, and a small number of other programs. The thing is, you need at least 12 months data on what those people cost you to bring into the file and what they made you. Everything is related to costs and long-term value."

Hess adds, "Other brands are now getting lifetime value numbers and going, 'Ooh, that seemed lucrative because gosh we made sales, but they were terrible customers!' It's a tough world out there now. You can get new customers but we're still struggling with long-term data. We're in the middle of the road."

RESULTS
In less than two years, Norm Thompson's online sales as a percent of overall sales have gone from almost nothing to 10-15% per month. Jones says, "It varies by brand and season. Some days it's 7%, some other days 22%. We're at $175 million plus in annual sales for the company as a whole right now, so you're talking hundreds of thousands of online transactions."

Admittedly, not all of this 10-15% is new business. Jones says, "For some it's more convenient to shop online." It's an order the Company probably would have gotten anyway. However, Jones is also sure he's making incremental sales in addition to regular orders. Plus, the Company is seeing a cost savings whenever customers agree to have shipping announcements sent by email instead of postal mail.

Much of this success comes from sales driven by the email marketing program. The Company's opt-in file has grown rapidly, more than doubling in the past twelve months.

Average online order sizes are continuing to grow to match the size of the average catalog order. Hess says, "We're seeing a closing in the gap." Jones notes some of this is due to his customers being more comfortable online, "The length of time people are experienced in using the Internet is a key variable for their propensity to order and the amount they buy."

While the three different sites have different average order sizes, email marketing orders across all three brands are remarkably consistent. Hess thinks that's because it's simply easier to order from an email offer -- requiring just a few clicks -- than to arrive at a site and find a product you want on your own.

Both Jones and Hess are very excited about the future. Hess says, "We have big plans." She looks forward to expanding email marketing, site personalization and new client acquisition.

Jones is focused on being able to analyze all incoming orders from every media in order to market to customers more effectively in the mix and timing of media that suits each individually. He says, "We still have work to do in understanding what really drives each purchase. Ok you send someone email and they order $50, is that incremental demand or cannibalism? Let's say they would have ordered $100 from the catalog. The question in my mind is when the catalog comes later will they order another $50, or since they used the email already, are they done shopping with us for a while and we lost that $50?"

Luckily he's confidant that many of the new database tactics and technologies, the Company is implementing will help answer those questions. "In direct marketing you're always managing to the increment. As long as what you're doing is incremental, then that's great."