By Alicia Orr Suman
A variety of strategies—including delving deeper into acquisition lists, increasing space advertising and using the Internet—are helping Wolferman's reach its true potential.
Wolferman's catalog was a business with far more potential than was being tapped when Williams Foods purchased it from former parent Sara Lee Corp. in 1999. Steve Trollinger, vice president of Shawnee Mission, Kan. consulting firm J. Schmid & Associates, and someone who has worked with this specialty foods catalog firm since 2000, recalls, "Not only did Wolferman's prior management fail to take advantage of opportunities in building the business from a list perspective, they really were giving away the store, so to speak."
At the time, Wolferman's—which is known for its over-sized english muffins in addition to scones, tea breads, desserts and other gourmet delicacies—was damaging its cost structure by sending out various discount offers to both prospect and customer groups, basically with no rhyme or reason behind the offer strategy.
Offers were not being used judiciously, agrees Laura Brady, general manager of the Wolferman's catalog. Brady, who did a short stint inside parent company Williams Foods' marketing group, was named to run the Wolferman's catalog in 2004.
It was obvious to Brady and her newly appointed marketing team that, with Trollinger's guidance, they had to straighten out the cost structure through more reasonable pricing and offer strategies.
Trollinger explains: "We had to get the discounts in line with what made sense for Wolferman's products and their customers. In the past, the company had been, in a sense, training people to be bad customers, and we had to put a stop to that."
To "right the ship," as Trollinger puts it, Brady and her team charted a course that would better align offer
strategy, prospecting activity and retention efforts to reduce waste and maximize growth opportunities.
Getting Its House in Order
"We really focused on getting the house in order for the first couple of years, and it paid off," says Trollinger. In the first year alone, just by tweaking offer strategy, Wolferman's was able to add $500,000 to the bottom line.
Wolferman's revised offer strategy uses non-product incentives to play a key role in boosting prospecting response. Instead of giving product away at deep discounts, it now uses shipping incentives to get new prospects to order.
"We've utilized more shipping offers in the past few years, but tend to shy away from free shipping and instead focus on half-off shipping," Brady states. Of course, discounted shipping isn't quite as enticing as free, but it has proven to be effective for Wolferman's, she explains.
Wolferman's also keeps costs in check by mailing prospects the same catalogs as customers—it simply touts the special offers with an inexpensive black plate change on the cover form. Brady explains, "The [offer] we send to prospects might feature something more attractive in the form of a special shipping incentive highlighted on the cover."
Trollinger notes that Wolferman's makes the most of this production efficiency. "The cost of paper is going up and up. Printing is on the rise, too. It's very difficult for a mid-sized cataloger to do different versions for prospecting," he explains. "So instead, we take advantage of black plate changes. Simple messages and promotions can be stated for a few hundred dollars per change."
Another problem the catalog faced several years ago was a housefile list that was in a state of disarray. To an outsider, things might have appeared OK with 170,000 customer names in the housefile database. But, according to Trollinger, a deeper look revealed many duplicates. What was needed was a serious list cleanup and then some time to rebuild the list by investing in prospecting.
"Initially when we came to the project, we didn't dive into beefing up the customer acquisition right away because we didn't know where they were in terms of numbers," he explains.
Once Wolferman's started to examine the state of its list, things unfolded. What was a 170,000-name housefile in 2000 was knocked down to a 125,000-count file a couple years later through data cleanup efforts. "Some households were getting four, five or six catalogs. So there was a lot of room for savings. Discovering all of these duplicate customers might sound really bad, but it wasn't seen as a bad thing, but rather as an opportunity to cut waste," Trollinger says.
Pushing List Prospecting Up a Notch
Once it had cleaned up its database, Wolferman's was able to build fresh—and it's been doing that for the past couple of years with great success. From a low of 125,000 names in 2002, the cataloger has worked to build its 12-month housefile back up to a mailable level of 215,000 names at the start of this year.
"Over the past two years, alternative media and increased outside list acquisition efforts have played major roles in boosting Wolferman's prospecting and increasing its new customer base," Brady says.
For the five to six years prior to Wolferman's acquisition by Williams Foods, it wasn't doing much customer acquisition beyond limited ad placements in the local gift guides—for example in the Kansas City Star—Trollinger says. In addition, since the product was sold in some grocery stores, customer acquisition also took place in that retail channel through some on-package promotion of the Web address, which had driven Web site activity.
"We [still] promote the Web site on the Wolferman's packages, and people are fairly sensitive to that," he adds.
Currently, Wolferman's mails 10 million catalogs a year, with approximately 80 percent, or 8 million of those, dropping in the fall/holiday season. Wolferman's prospecting is about 90 percent catalog mailings, 8 percent to 9 percent space advertising, and about 1 percent Internet, Brady says. (It tested telemarketing a few years ago, with some modest success, but is not pursuing it any longer.)
Wolferman's has added a million names to its prospecting effort this past year. Where did the cataloger find all these names? When it comes to prospecting lists, Brady says, "We mail other food companies [lists] and continually test lifestyle and apparel lists as well; the Abacus co-op and other models work very well for us, too."
Trollinger says three outside list acquisition strategies have performed especially well for Wolferman's:
1. Knowing what it knows about food lists, Wolferman's is mailing deeper into those files that have always worked well in the past. "We've tried to rely on a lot of list intelligence there. So we're trying to get as much as possible out of the best lists. In some cases, perhaps we were not mailing enough previously to really capitalize on the full rollout potential of our best lists. Now we are. We are loosening our selection criteria to take as many good names as we can from those lists that work well for Wolferman's," Trollinger says.
2. On some of its alternative lists—the more fringe lists—Wolferman's is using enhancement data to take non-traditional files and optimize their performance. By taking a Z-24 enhancement on an apparel or general merchandise list, for example, Trollinger says, "We'd try to match the characteristics of the prospects on those lists to some of the characteristics we find in [Wolferman's] buyers."
3. A third way Wolferman's is expanding its list reach to draw in more prospects is looking at the inactives on its better rental files to see whether it can tap into those names to mail deeper. "On our cream-of-the-crop food lists we might look at the 13- to 24-month names and even consider doing an exchange. In some instances, a two-for-one swap might be worked out when it comes to exchanging the older vs. current names," Trollinger reveals.
In addition to acquisition lists, Wolferman's also uses co-op databases, such as Abacus, to help model its file. This has been especially useful in the gift recipient business, Trollinger says.
Brady explains the process: "Being a food product, with such a large holiday business, we have a huge gift recipient database. The question was, what do we do with these names? Some catalogers can mail all the gift recipients quite successfully. We have too many to do that cost-effectively right now. So, instead, we decided to have Abacus model our gift recipient file to help us determine which ones are worth mailing as catalog prospects."
Since these prospects did recently receive a Wolferman's product as a gift, out of courtesy, Wolferman's doesn't mail them until the following season, effectively skipping one mailing cycle.
Taking a Bite Out of New Media Sources
To supplement its list prospecting activities, Wolferman's began a more extensive space advertising program in the fall of 2003. According to Brady, ads were tested both in newspapers and Parade magazine publications. "And what we found was that not only was space successful in bringing in new customers, but that those customers purchased again a year later. So we expanded the program in 2004 and were honestly shocked at the high response rates we got."
Based on those successes, Wolferman's has increased circulation on those programs this year. "Of course, we know we'll see some drop off in response on the expanded circulation, but that's to be expected," says Brady. "But overall, we've been really pleased with how this medium has performed for us for new customer acquisition."
Overall, says Trollinger, the space ad strategy has performed at double the forecast in 2003 and right on forecast in 2004. "As a result of the positive results, plans are to expand the use of this medium further this year, with more full-page newspaper ad placements and Sunday newspaper FSIs in select regions across the nation," he notes.
With progress made in the offline world, Wolferman's turned its attention to the Internet. It began using search engines to drive more traffic to its online catalog Web site last August. It already had launched a redesigned Web site in November 2002, and that now stood ready to handle any increased traffic that search engines might generate. eOne Group, an IBM partner based in Omaha, Neb., handled the Web design. So last summer, Wolferman's purchased a variety of keywords on three search engine sites: Google, Overture and Find What. Wolferman's chose keywords such as english muffins, scones, christmas food gifts, crumpets and holiday gift baskets to connect with online shoppers looking for these kinds of products.
On the Internet, Wolferman's is getting a conversion rate of visitors to buyers of about 10 percent, compared to an industry average of 2 percent to 3 percent, Brady says. This performance is encouraging the cataloger to continue with the program, even though the overall Web sales numbers remain small.
"The Internet is a slightly less easy read when it comes to the success of the medium, mainly due to the fact that the customers' average order value is typically lower online," Trollinger comments. "Online buyers seem like they have a need for something—they're looking to buy, and need to get in and get out."
But due to the low cost of Internet advertising, and the positive response paid search engine marketing activities have yielded in bringing new visitors and new buyers to the Wolferman's catalog Web site, it still looks like a worthwhile opportunity, and one that the company will continue to pursue.
Creative Catalog Changes
From 2003 to 2004, Wolferman's decided that it was time for a little creative refresher for the catalog to bring it up to date with all the other changes taking place in the company. "We really took a step back and said it's time for a creative re-mix for the catalog. It needed a fresh look," says Brady. "We didn't have anyone else telling us this. But when we looked at the data [on] what was selling, it was the products on the themed pages and spreads, and not products just slapped haphazardly on the page."
As a result of this self-analysis, Wolferman's further expanded the theme concepts with the creative and merchandising mix. Explains Brady, "We added some new designs for the products—more themes like the holiday plaid and the lodge pattern."
Around the same time, the company also determined its photography needed improvement. "We decided it was a good idea to upgrade the photography to better showcase the new themes and the food in the catalog," Brady says. "So we hired a new photographer—and what a difference we could immediately see with the new shots."
An Appetite for Success
"I'm happy to say that Wolferman's was a mature catalog that's now experiencing a rebirth due to a refocusing on the marketing issues, an overhaul of its catalog creative and a little fine-tuning of its merchandising," Trollinger says. Overall, last year, Wolferman's was able to increase its catalog circulation by 4.5 percent to 5 percent. And, according to Trollinger, that size of an increase would normally yield a 2 percent to 3 percent increase in catalog sales. Wolferman's had even greater success: Sales increased 12 percent last year, so the efforts are paying off.
But Wolferman's isn't just resting on those successes. Its strategy is to continue to invest in the business and to pursue further growth. Brady says plans are in place to "continue to focus on our space ads and our prospecting lists. In 2004, we expanded our newspapers to more cities, giving us a broader reach. We're planning to increase the space advertising circulation again this year."
In the catalog, notes Brady, "We have to continue to refine our merchandise assortment—combining designs that speak to consumer trends with the high quality food products that consumers expect from Wolferman's."
Founded: 1888, as a corner grocer
Parent company: Williams Foods
Company headquarters: Lenexa, Kan.
# Employees: 120 employees at Williams Foods; Wolferman's has 25 full-time employees, plus additional seasonal help
Annual direct mail volume: 10 million
Total number of catalogs: 6 fall, 7 spring
Catalog consultant/designer: J. Schmid & Associates
Retail stores: no stand-alone stores; product sold in some regional grocery stores
Fulfillment center: in-house, in Kansas City, Mo.
Telemarketing agency: Proxy Communications
Housefile size (12-month): 190,000-name rental file; 215,000 total names
List manager: Mokrynskidirect
List broker: American List Counsel
Web designer: eOne Group
Alicia Orr Suman is a freelance writer covering the direct marketing and catalog industries. Contact her at firstname.lastname@example.org.