A Look Inside Appleseed’s World and Its Customers’ World

In the September (print) issue of Catalog Success, I discussed the opportunity catalogers and multichannel merchants have to aggressively pursue the older end of baby boomers, some of whom are now in their 60s. In Portland, Maine, on Sept. 20 for the fall NEMOA Conference, I was taken by the opening presentation given by Claire Spofford, senior vice president and chief brand officer for the Orchard Brands unit of Golden Gate Capital, (formerly Appleseed’sTopCo).

Having joined Appleseed’s earlier this decade to bring a retail and brand accent to the mature women’s apparel cataloger, Spofford now presides over a thriving multititle multichannel business that’s as in tune with aging baby boomers as I’ve witnessed. There’s much for all readers to learn about the “five factors of fitness” that Spofford discussed in her session, which focus on understanding the Appleseed’s and The Tog Shop multichannel customer.

First, a quick recap of how Appleseed’s ownership changed hands. Golden Gate Capital, which also owns Spiegel Brands and other catalogers, bought Appleseed’s in November 2005, shortly after Appleseed’s had launched an internal program to focus on better understanding and serving its customers. Appleseed’s also was considering launching a new catalog prior to the Golden Gate deal to extend its reach to the 50 to 75 market.

But as it turned out, The Tog Shop, which reaches this older market, became available and Appleseed’s bought it, re-launching it later that year right around the time Golden Gate acquired them both. Now, they’re both by Orchard Brands. Other Orchard Brands titles catalog include Norm Thompson, Solutions, Sahalie, Gold Violin, Wintersilks and Haband.

In her session, Spofford focused on her efforts with Appleseed’s and The Tog Shop. Her “five factors” provide a neat capsule of how the company has been able to fully understand its customers and market to them.

1. Focus on your core customer. “Know their hearts and minds,” she said. “Direct marketers have so much rich and wonderful data at their fingertips. But it’s often internal data and how your file’s doing, and less about the external marketplace and potential customers for you.”

Three years ago, Appleseed’s conducted research to gain a picture of its customers through more than mere demographics. The research uncovered several different customer profiles.

* One type revealed such key customer attributes as having a bold style, enjoying shopping at malls and department stores (and Chico’s in particular), being fashion-conscious, updating her wardrobe often and enjoying sales help.

* Another Appleseed’s customer is more traditional, conservative and value-oriented, only shops when necessary, is not fashion-conscious, updates wardrobe based on needs, and prefers sales associates leave her alone in stores.

* Then another type of customer prefers a classic, tailored and prefers specialty stores, although she feels that Talbots has passed her by.

In discussing her first fitness factor, Spofford advised other catalogers to gain insight, know your market and segment your customers. What’s more, maximize your customer knowledge by leveraging your transactional data to tailor programs, offer the appropriate assortment and communicate well.

She strongly urged other multichannel marketers to maintain an ongoing dialog with customers. Appleseed’s conducts focus groups every six month. “They remind you what you should pay attention to,” she said. “You can get their reactions, stay in touch and gain more personal information. We’ve never done a focus group and not gained something productive. Focus groups don’t have to be fancy and overly expensive.”

Segmentation Study

As part of its focus group efforts, a few years ago Appleseed’s did a segmentation study customers by speaking with 800 of them, ranging in age from 50 to 75. “We sought how to grow and position ourselves for this demographic wave coming this way,” she said.

Spofford offered somewhat contradicting theories on the lengths of customer surveys. Although she suggested that you keep your questionnaire to no more than 25 questions, the average talk time in Appleseed’s phone surveys was 43 minutes. “We had no abandonment problem,” she recalls. “That means women loved talking and love shopping.”

Specifically, Appleseed’s asks a lot of “hearts and minds” questions. This led to four key segments among its customer base:

* 38 percent like to stay a standout;

* 24 percent are content conservative;

* 21 percent are sporty shoppers; and

* 17 percent are confident classics.

From these four segments, Appleseed’s created two hypothetical composite customers. “Kate” is a 60-year-old baby boomer, who’s confident, classic and wants to be comfortable in her clothes. She wants to feel up-to-date and look attractive. She doesn’t feel like she’ll ever be old, but is realistic about it.

“Bev” is between the ages of 65 and 75 and of the World War II generation. She’s conservative, classic, and relies on the brands and products she trusts to make her feel comfortable and neatly put together.

Together, Spofford said, the two customer profiles require “the Appleseed’s hug,” the marketer’s service model on the phone, in stores and on the Web.

2. A healthy diet with plenty of nourishment and little fat. Spofford discussed the benefits of being part of a multititle conglomerate. “We have a shared database with our sister companies,” she pointed out, “and we believe we have 65 percent of the names of women 55-plus who shop direct. We have full transactional history and the ability to model internally.”

With that data, Appleseed’s and The Tog Shop both have “fit circulation,” meaning the company focuses on making sure it’s not overcirculating catalogs. “We put profitability before growth,” Spofford said. “We’re constantly talking about that balance of profitability vs. growth and are very clear that we’ll circulate for profitability.”

As part of its profit-driven circulation, Appleseed’s has a streamlined product line. “We’ve developed a central artery process, linking from financial planning to inventory planning, and a merchandise assortment plan,” she said. “We make sure every product has a reason to be, because it costs a lot to build products that are unproductive. The energy level and activity around every SKU is big.”

3. Cross-training and developing muscle groups. “We’re working hard to become a true mulitchannel business,” Spofford discussed. The company has opened seven Appleseed’s stores over the past three years and intends to open more over the next few years because 90 percent of dollar volume in the mature women’s clothing market is done at retail.

But citing that its multichannel customers are two to three times more valuable because they shop more than single-channel customers, she noted, “we’re still trying to keep our catalog business productive.”

The company also is catering to its older clientele being less inclined to adapt to Web ordering than younger consumers. Just 20 percent of Appleseed’s customers and 10 percent of The Tog Shop customers buy via the Web. But Orchard Brands is forging ahead with multichannel branding, having conducted a denim (jeans) sales event last spring that communicated the same message across all its channels.

4. Tightening the belt. Appleseed’s has a systematic approach to cost savings. “We make it part of the culture,” Spofford said. “Profitability teams deliver $1 million-plus in annual savings.”

She discussed how profitability enhancement is about how to do things more profitably. “It’s not just about cost savings,” she said. “It’s something we [always] do, like breathing.”

How? The company benchmarks relentlessly with its sister companies, both from a best-practices and how-to-do-as-well-as-you-can approach. “We bring the team together, find out how we can join forces, what we’ve learned, etc.,” she said. “It’s a big part of the activity across Orchard Brands.”

5. Steroids: Strength from scale. Orchard Brands has used its power as a group to negotiate very aggressively and effectively with its vendors. “We do this on a coordinated basis,” she said. “Culturally at Orchard, it’s not acceptable to go off and do your own thing.”

Specifically, the company has negotiating power with printing, paper, shipping, merge/purge and other key areas. “We’ve gotten together, gone out and tried to consolidate efforts to negotiate.”

As a group, the company obviously gains economies of scale in such areas as its distribution center and call center operations by leveraging staff functions. Each brand has a distinctive front-end focus. The value comes from Orchard’s shared services organization, which consists of call center, distribution center, IT and finance.