The Message is the Medium
Sending the right signals to customers online is crucial to retailers such as JCPenney, a $30 billion a year business whose 1,148 storefronts have been struggling, but which saw better than expected online sales of nearly $70 million in 1999. Building relationships online is key to the company’s future, say executives, and JCPenney has created one of the better retail sites on the Web. Its huge online catalog has images of 10,000 items, and gets 1 million hits per week.
Eighty percent of JCPenney’s customers are women, shopping mainly for clothes for themselves and their families, as well as for gifts and household goods. The home page highlights clothing such as camisoles and pantsets, letting a visitor link to a closer view and size chart. Next to the picture of the item, visitors are invited to “Send a product-gram to a friend!” General Interactive’s EchoMail also handles this feature, sending the friend a picture, product description and a link back to the JCPenney site. The retailer gets the friend’s e-mail address, and a potential new customer.
The site encourages customers to interact. For instance, by clicking on a store department such as Home and Leisure, visitors can send e-mail asking advice on home decorating, which EchoMail routes to the appropriate department for a human reply. E-mail to the maternity site contain “all sorts of personal questions,” according to Thomas. From the home page one can join clubs such as “Just 4 Me,” where larger women can size and select clothes, or link to a Lucas-owned Star Wars page to play games and order theme merchandise.
The site’s goal is to “surprise and delight” visitors, explains Ron Hanners, executive vice president of JCP Commerce Solutions, the retailer’s e-commerce arm. As the visitor moves through links, he says “the experience should become an emotional surge” that leads to a purchase. But the sale is only “the first part of the loop,” according to Hanners. He says JCPenney must make a “return loop” by speaking back to that customer, “offering them additional products at a fair price and added convenience.”
According to Paul Sonderegger of Forrester Research, direct e-mail marketing is shaping up as a powerful way to close the customer loop. A survey by Forrester of 47 marketing managers ranked Web banners and buttons as least effective in drawing visitors to a site, while e-mail to customers’ inboxes was ranked most effective. And though “simple campaigns” with text e-mail now predominate, Forrester found doubled response rates from graphical e-mails in HTML format. With interactive e-mail, says Sonderegger, companies “are in effect initiating a conversation with the customer. When that customer responds, they are engaged in a dialogue.” That dialogue can turn casual surfers into repeat customers. Hanners confirms that the JCPenney site gets “two or three times greater” response from e-mail promotions than from online ads.
Hanners says EchoMail also saves money by “multiplying our personnel’s effectiveness.” At the time of the “Ellen” furor, JCPenney received about 1,200 e-mails per month. By late 1999, the number had grown to 30,000. Yet the Internet customer service staff run by Thomas still numbers just four people. Back in Cambridge, General Interactive staff have conducted time-motion studies that show the cost for humans to read and compose an answer to a single e-mail averages $4.23. Shiva’s company charges a fee of $100,000 or more to set up and customize the system-which the client leases and runs on General Interactive’s servers in Waltham, Mass. After that, General Interactive gets paid between 50 cents and $1 for each message successfully decoded and replied to automatically. The client, according to Shiva, saves at least $3 per message.