Cover Story: Tailored Deals Bank Sales
With company-record net income of $58.4 million and sales gains of 15.2 percent (including comparable store sales rising 8.9 percent) for its fiscal year that ended Jan. 31, JoS. A. Bank was a rare 2008 success story.
The good fortune has carried over to 2009, with first quarter net income and total sales for the men's tailored and casual clothing integrated retailer up $1.7 million and 11.4 percent, respectively.
So what's the 104-year-old, Hampstead, Md.-based marketer's secret formula? It started with a shift in philosophy that came from examining what was going on in the marketplace, then attacking it with a promotional market- ing strategy.
"We had to get creative with our marketing and promotions, and learn how to vary our promotional activity to keep our customers satisfied," says Bridget Owens, JoS. A. Bank's director of catalog merchandise and production. "It was mostly about building their confidence — that they could shop with us relatively risk free."
One such creative effort was its "risk-free" suit offer. Consumers could buy a suit at the discounted price of $199, and if they lost their jobs after purchasing the suit, they not only got a full refund for their purchase, but got to keep the suit as well. Add in "BOGO" (buy one, get one) sales on suits, and it's easy to see how JoS. A. Bank has motivated consumers to continue to shop with it.
Offered across all of JoS. A. Bank's selling channels — retail, catalog and web/email — the promotions have increased sales and strengthened relationships with customers by establishing mutual loyalty, Owens says.
"JoS. A. Bank found an angle during a tough economic environment: A suit is typically an investment for men," says Jean-Yves Sabot, vice president of the retail group of Abacus, a division of Epsilon Targeting, which provides market research and housefile modeling for JoS. A. Bank. "It removed the stress of making this 'investment' by offering its job-loss promise. That strong message, combined with targeting the right buyers, helped it trigger a positive result."
JoS. A. Bank's promotional format also proved timely. In rewarding multiple purchases, the company gained wallet share and increased average order values. Customers gained a one-stop-shop outlet where they got a great deal, while at the same time supporting JoS. A. Bank's sales and therefore profitability, Sabot says.
Single Database
To most effectively integrate its selling channels, JoS. A. Bank has a single database for the 2.4 million customers on its 24-month housefile that incorporates its retail, catalog and internet files. A group of in-house database analysts segments that file to optimize catalog circulation and other marketing efforts.
"Catalog, retail/direct mail pieces and email marketing are all derived from the same place," says John Lewis, JoS. A. Bank's director of database marketing. "We know which contacts customers are getting when we're doing coordinated sales."
This requires in-depth analysis to determine which customers are multichannel shoppers, although JoS. A. Bank customers tend to be all the same, regardless of channel. Because they're "very scarily the same," Lewis says, this presents great opportunities.
"We can look and ponder, 'How do we increase the value of customers?' because this catalog customer is the same as the internet customer vs. the retail customer. And 'How do we get them to come across and shop in a multichannel environment?'"
To foster multichannel shopping habits, JoS. A. Bank collects contact information at the retail level by leveraging one key advantage: Customers frequently need their suits tailored. So before customers leave the store, JoS. A. Bank collects complete contact information, including email addresses, so they can be alerted when their suits are ready. Most multichannel retailers don't take such extensive information.
Retail Boom
Although many retail concepts are failing these days, JoS. A. Bank's 467 store locations prove the retail model still works, with retail sales accounting for 91 percent of total sales in the 2008 fiscal year. Seeking to capitalize, the company plans to aggressively expand its retail presence in the coming months, with a goal of 600 stores total. The company credits the following three factors for its success in an area where so many others are struggling.
1. Location. JoS. A. Bank strategically analyzes where to place stores based on the recommendations of its store development team, which takes into account the demographics of geographic areas to optimize performance.
2. Staff. The company hires knowledgeable sales staffers. "They know our product inside and out," Owens says. "They know how to fit you for a suit; they know how to suggest something for you to buy; and they know what matches with what. This is their livelihood. This isn't just a job to them; it's their career. And they're compensated for that."
3. Marketing. JoS. A. Bank's recent promotional efforts and value message have resonated with consumers. The company also credits its catalog for promoting its brand image in all channels, including retail.
Brand Consistency
Despite its shift to more promotions over the past 12 months, JoS. A. Bank is quick to note that it still offers the same quality products, as consumers demand value in their purchases. With so many consumer touchpoints across its marketing channels, JoS. A. Bank strives to convey a consistent brand message in all communications: quality products at a great value.
JoS. A. Bank accomplishes that in the following ways:
- Photography. Shot initially for the catalog, the same photos are used for all channels. An image you see on the front cover of the catalog could appear on an in-store sign and/or the homepage of JosABank.com. It could be used in emails and direct mail pieces as well, Owens says. This keeps the brand message visually consistent.
- Consistent value message. The value emphasis doesn't change, no matter what channel the customer prefers.
"Because we have so many stores in so many states, a website, a catalog, and national TV and radio campaigns," Owens says, "when you see all that photography consistently and you hear that value message over and over, that's really key to maintaining our brand image."
Getting Social
Intent on sustaining its success, JoS. A. Bank continually listens to its customers to learn anything it can to help better serve them in the future. In June, the company launched Facebook and Twitter pages. It's also evaluating the merits of mobile marketing. What's more, the company routinely emails its customers, sending one retail-centric and one internet-centric promotional message per week, on average.
"We're climbing the learning curve and making these new marketing tools a significant part of the JoS. A. Bank customer communication strategy," Lewis says. "But we continue to be sensitive about its impact on the customer experience in any negative way. We're very savvy to if the customer is getting promoted to too many times." The company offers an opt-down strategy, for instance, where its customers can request to get emails at a lower frequency.
With retail expansion plans in place and a strong commitment to its catalog and website, JoS. A. Bank is positioning itself for continued growth. But that won't come without challenges, Owens says. In addition to having to creatively vary promotional activities to motivate consumers to shop with it during this down economy, finding prospects has become more of a challenge as industrywide catalog, online and retail housefile growth has slowed. The company also is dealing with a channel shift from call center to the internet, and how that impacts its operations, metrics and strategies.
But Lewis et al will take these and other challenges in stride. "We sit down at the beginning of each year, and then again we re-evaluate as the year goes by," Lewis says, "with all areas of marketing reporting into one central location. We'll coordinate our marketing strategy, either by changing promotions, increasing marketing spend or even decreasing marketing spend according to what's going on at that time. And then that strategy is disseminated through the different channels on a consistent basis."
