Gift-Order Business That Keeps on Giving
Gift orders can be a gift to the bottom line of your business. And contrary to what you might think, you don't have to sell food or flowers to get in on this corner of the direct marketing world.
It's true that some companies' products are a natural fit for gift purposes, while other marketers will never be able to position their merchandise to look good with a gift bow. It's not likely that someone will send a hosiery club membership to their Mom for Mother's Day or order a bottle of vitamin E capsules for a friend at Christmas.
But many companies offer general merchandise that easily could sell as gifts, says Steve Trollinger, senior vice president of client marketing, J. Schmid & Associates. They simply need to make the suggestion to customers.
Sure, it requires extra effort, planning and resources. But when you consider that gift buyers often have a much higher average order value than customers who purchase for themselves, it certainly seems worth the investment to dip your toes in the gift business waters.
According to Gary Hennerberg, founder of direct marketing consultancy Hennerberg Group Inc., what makes the gift business a benefit for direct marketers is getting year-in, year-out business. While you satisfy customers'
expectations in the gift ordering and fulfillment process, you might snag some long-term, repeat ordersespecially when it comes to corporate gifting.
In the publishing arena, gift subscription customers used to be golden. Paul Goldberg, president of direct marketing consultancy P-J Promotions, remembers when gift renewals were the most cost-effective promotions you could mail. Recent years have brought a decline in repeat gift business for publishers, and in gift subscriptions overall, he notes.
But there are some publications making it work. One example is a client of Goldberg's, The Christian Science Monitor, a daily newspaper owned by the Church of Christ, Scientist, known for its independent voice.
"Gifts account for approximately 10 percent of the Monitor's circulation/revenue, and are a valuable way of introducing the Monitor to new readers. They also allow readers a means of supporting the Monitor instead of, or in addition to, their own subscription," says Brook Holmberg, the Monitor's circulation director.
As Holmberg points out, it's not just the initial gift order you get, it's the future customers and new gift orders generated that can have an exponential effect on your business.
Who to Target
Previous gift-givers notwithstanding, you can find a reason to test every customer in your housefile. But some variables will help you determine which customers are more likely than others to respond to a gift-order offer.
For example, Hennerberg looks for customers with high average order value, since this characteristic tends to predict strong response for all types of offers and signals a larger order size that could possibly contain a gift.
Another tactic is to analyze transactions for ship-to addresses that are different from the bill-to addresses, says Trollinger. Then determine what percentage of orders were gifts, based on a different name for the package recipient.
With this information in hand, you can segment the group of gift buyers by purchase type and RFM (recency, frequency, monetary value). Once you have discerned a few patterns, you'll also have a good idea of which products to spotlight as gift items and which types of customers might be likely to be motivated by gift-order promotions, Trollinger explains.
As you get more comfortable with handling gift orders, you'll want to branch out beyond the obvious. Logically, your circulation plan will depend on your potential universe.
"Since our circulation base is small, we send promotions to all subscribers, as well as past gift donors, subscribers/
donors to other Christian Science Publishing Society publications, and [Church of Christ, Scientist] members," says the Monitor's Holmberg. "But prior donors (both subscriber and non-subscriber donors) work the best, obviously."
Goldberg suggests publishers annually drop at least one gift subscriber effort to the entire circulation file. If the expense of direct mail doesn't justify the return, he points to blow-in cards, bind-in cards and space ads for a more economical approach.
When it comes to corporate gift programs, Hennerberg advises marketers to be careful not to think too rigidly about whether customers in their housefiles are consumers or business people.
"You never know what hat your prospect is wearing when he or she views your promotion," Hennerberg says.
Keep sales opportunities open with a simple line of copy in the brochure or on the order form that informs prospects you can handle corporate gift orders. Also provide a customer service phone number. Be sure your customer service staff is trained to process these special requests.
If your company is not known by customers and prospects as being in the gift business, then you need to analyze what might be the best way to introduce this new positioning message to your brand.
Unless you have a clear history that shows a significant number of customers already ordering your products as gifts, a solo mailing could be a gamble, says Hennerberg.
Testing is the only way to find out what your audience will support, but Hennerberg advises marketers who want to play it safe to piggyback their gift promotion onto a regular customer communication.
If you go the piggyback route, the trick is to keep the message strategy very simple, says Trollinger. Too many offers in one package can be confusing, so be careful when launching new products or selling complicated products and offer matrices. You want the gift-order promotion to be a nice add-on suggestion, not one more variable the customer has to evaluate.
Some ways to incorporate gift-order offers into another mailing are by placing call-outs on product spreads in a catalog or by reserving one panel in a brochure to explain the special offer, says Hennerberg.
Another idea, says Trollinger, is to use special icons to denote merchandise suitable for gifting, or to put bows on selected items when conducting product photo shoots. You can simply add an insert to a package, too.
Don't forget that you need to configure your order form to handle separate ship-to addresses for multiple orders. It does you more harm to promote your products as gifts, and then not be able to process gift orders correctly.
If a solo effort fits your needs, remember that existing customers are already familiar with your company and your merchandise style. You may not need to create a large, acquisition-style package to be successful. The focus is on presenting the products as gifts and convincing customers that you can be trusted to deliver their gifts in a fashion that will make them look good.
A truly tactical move that shows you're committed to generating gift business is offering gift packaging and depicting it in your direct mail. Attractive packaging can be a very important selling and branding tool.
As with any kind of offer, testing is necessary to find the right balance between value for the buyer and profit for the seller. The main difference is that gift-order offers often include an incentive for buyers beyond the joy of sending a gift they think the recipient will like.
The top priority for gift buyers is knowing the gift will make them look good to the recipient, says Trollinger. The secondary benefit of what gift buyers get for choosing your company to supply the gift is still very important; this extra benefit can be a tie-breaker between your company and the many others that offer gift-quality merchandise.
For example, The Christian Science Monitor sells the benefits of shopping by mail or phone in its holiday gift efforts, say Holmberg, along with ease of a one-size-fits-all gift and delayed billing. It adds to these intangibles a discount on the non-gift rate and a wall calendar premium for both the gift recipient and the gift buyer.
The wall calendar, which features photography taken from the pages of the Monitor, has been offered since 1993, says Holmberg. He adds that "revenue has been steady or grown each year since then."
Outside of publishing, Trollinger has not found that merchandise premiums work well to encourage gift orders. The quality of the premium comes into play when it's going to be sent to the gift recipient; buyers worry that a trinket will reflect poorly on them.
A good gift-order offer is a win-win for everyone involved. But when you're aiming for this goal, you don't want to shoot yourself in the foot.
Trollinger cautions marketers to be careful with free offers, especially free shipping deals. For example, you could offer free shipping on the customer's own purchase when she places a gift order. Or, you could offer a flat discount on all self-purchases when the customer buys and sends a gift item.
What you're trying to avoid is customers shipping self-purchases to their office, neighbors or family members to get the free shipping deal. Any higher average order value you gain could be lost in shipping and handling costs.
But you're not trying to discourage customers from buying "gift" items for themselves. You never know when people will buy gifts that they intend to deliver in person to the recipient, Trollinger remarks.
And keep in mind that corporate gift buyers select items on price point. Trollinger suggests that any marketer that suspects its efforts might reach a corporate audience should consider creating a section of "gifts between $xx and $xx."
Early and often are the keys to successful gift-order promotion, says Hennerberg. Early is important because you don't want competitors to get to customers before you. Often is key because, "people order gifts year-round, not just at holidays," he explains.
When you run analysis on your housefile to help determine when gift orders have been placed, you want to pay attention to the timing of the order. This can be used as a trigger date for future gift promotions, says Hennerberg, even if these promotions are not stand-alone efforts.
Another benefit of enticing early gift orders before a big shopping season such as Christmas, is the ability to manage inventory and fulfillment more easily and accurately, says Hennerberg. Be prepared to give incentives to customers for setting up orders in advance, he adds. "We live in a deal-oriented world, where we need to [make the buying decision as pain-free as possible]."
When you don't have prior gift orders on which to base your contact strategy, the most relevant reasons for gift-order promotions are holidays. Relevant is the key word, says Trollinger, as in a coffee company might have a hard time making a Fourth of July gift promotion pan out.
Trollinger notes that companies testing a gift-order program can safely start with the Christmas sales season. If this major holiday performs well, look to see if you have a tie-in with the next tier of holidaysValentine's Day, Thanksgivingbefore progressing to lesser holidays.
When it comes to gift orders for periodicals, contact strategy differs. Once a gift subscription is given, it's good for usually a year at a time. Thus, gift renewals and new business efforts follow once-a-year cycles.
For example, The Christian Science Monitor drops its gift renewal efforts in August through October, and its cold gift mailings in September and October, says Holmberg.
Goldberg advises publishers to promote current gift buyers at the same time they placed the gift order the prior year. If two renewals do well, he recommends adding a third. For holiday-based offers, he starts the promotion process in September, follows up in October and makes one last-ditch effort in November.
But, he warns circulation managers to pay attention to the return on investment for each effort. These days, he's finding that gift-order promotions for periodicals just aren't the sure thing they used to be.