Cover Story: Taking Care of Business
SBD also delivers every order more than $50 for free, and puts a huge emphasis on customer service — two factors that are very important to small business customers. "Our customer service recovery is very good," Perozek says. "If something is wrong with an order, we're very good at making it right for the customer."
Channel Building
As mentioned above, about 75 percent of Staples' customers shop only in its stores. As a result, a huge part of Perozek's job is getting these in-store shoppers to buy in other channels as well. In fact, 50 percent of SBD's marketing plan is attributed to this task.
"In my division, we call acquisition anyone who has never had a Staples product delivered," Perozek says.
Staples wants to promote its additional channels to its store shoppers because multichannel customers have proven far more loyal — and profitable — than customers who buy from a single channel.
"At Staples, if a customer buys a product only through our stores, they're worth X," Perozek explains. "If they have a product delivered, they're worth something like one-and-a-half X. And if they buy through both stores and have it delivered, then they're worth something like two-and-a-half X. So it's a huge multiplier."
Staples isn't, however, trying to get customers to shift channels.
"What we're trying to do is get customers to experience Staples in as many ways as they possibly can so that they can become more and more loyal to us," Perozek says.
The remaining half of SBD's marketing budget goes towards share-of-wallet initiatives and customer retention.
"We're also making sure that customers who bought last month are buying this month, and that if they bought products from two categories last month, that they're buying three categories this month and four categories next month," Perozek says. "We find that the more product categories from which customers buy, the more loyal they're likely to be, the higher the likelihood they are to retain, the higher the likelihood that they'll repurchase, and so forth."
Marketing Mix
SBD uses a variety of marketing techniques to get its messages across to customers and prospects. Targeted catalogs and direct mail, for example, are effective tools for the retailer, along with email marketing, paid and natural search, display advertising, and social media.
SBD uses targeted catalogs and direct mail primarily to acquire customers. "We target businesses that have up to 50 employees, some of whom we've done business with in the past but are no longer doing so, some of whom have done business with our stores but not Staples Business Delivery," says Perozek.
The company also relies on lists. "One thing about Staples is that we're a direct marketer with many, many, many years of experience and, as a result, have a lot of models that have been built and refined over the years," Perozek says. "We're very good at knowing what the good external acquisition sources are, and which sources perform better at different times of the year."
One thing SBD doesn't use lists for is email marketing. "One place where we haven't been successful is with list sources for email," Perozek notes. "They never, ever, ever perform and are far too expensive."
SBD's online marketing efforts are also focused on acquisition, but they're looked at a little differently than catalog and direct mail. Perozek, for example, compares display advertising to buying television advertising. "We look for the demographics of the different networks," she says. With regards to paid and natural search, "it comes down to how you optimize for the product categories that are delivering the highest value for your business."
