Cover Story: Taking Care of Business
While most Americans are likely very familiar with Staples, the largest office supplies retailer in the U.S., they may not be as aware of Staples Business Delivery (SBD), a growing division within the Framingham, Mass.-based retailer's operations.
SBD is a unified selling channel that combines Staples.com and Staples' catalog business. Its main focus is to serve consumers who want to order office products, supplies and services from their home or business at their own convenience.
An important part of Staples' overall business, SBD accounts for roughly 25 percent of the brand's sales via call centers and its website. What's more, according to Staples most recently published earnings numbers, 2010 second quarter sales for the North American Delivery division (which includes SBD, Staples Advantage and Quill Corp.) were $2.4 billion, a 2 percent increase compared to the second quarter of 2009. In today's retail environment, a 2 percent increase is a leap.
Staples.com, from which 80 percent of SBD's sales come from, is vital to SBD's success. The award-winning e–commerce site features 30,000 products ranging from basic office supplies to the latest business technologies. It also offers tools that make it easier for small to medium-sized business customers to shop. Customers, for instance, can create "Favorites Lists," which list certain products they're interested in, or use "Easy Reorder," which provides a customer's purchase history so they can easily reorder. Both tools allow SBD's customers to buy with just a click of their mouse.
SBD's intense focus on its customers is how it differentiates itself from its competitors, says Anabela Perozek, SBD's vice president of marketing for business delivery.
"When you go on our website, we're all about small businesses," Perozek says. "[Visitors] are not distracted by apparel or all the random stuff that might show up on other websites."
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."
Storytelling To Create Well-Rounded Customers
A vital part of SBD's marketing program revolves around the use of promotional stories.
"Every season our two businesses sit down and talk about what will be meaningful stories for customers during that time of year," Perozek explains. "Then both the stores and SBD get together behind those stories so that we're integrated."
In September, for example, the main "story" of the season was the retailer's "50 Percent Off Case Paper" promotion. So when consumers approached a retail store that month, they saw a window banner promoting the deal. Then, when they picked up a copy of the brand's circular in the store, that deal was reflected again. And to tie it all together, when consumers went to Staples.com, the first promotional banners they saw were ones that spoke to the story. The same held true for company emails.
"We try to be very cohesive, and we achieve that about 60 percent of the time," Perozek says, noting that there are some distinctions between SBD and the stores' business that weigh that percentage down.
"With the delivery business, we can actually turn our stories around much more quickly," she notes. "So, you might find that over the course of six weeks, retail is focused on ink and toner, and we may be focused on that as well, but we may also have several additional substories going on at the same time. That's just because it's very easy for us to swap things in and out. A store environment is much more constrained."
Social Strategies
SBD also uses social media for some of its marketing initiatives, but Perozek isn't exactly sure of its effectiveness as a marketing vehicle.
"In general, we're experimenting with social media right now," Perozek says. "We think it's a great channel where you can connect with customers. Let's face it: Anybody tweeting with Staples is a highly engaged customer. But it's still a growing medium in my mind."
Using social media websites as a customer service tool is another story altogether for SBD, according to Perozek.
"We've been working very closely with our customer service team, and have found that Twitter is a really good way to get a pulse on things that are broken," she says.
Last year on Black Friday, for example, one of Staples' coupon codes was broken. The first place the retailer heard complaints about it was on Twitter. After that, it took quick action.
"We tweeted out a message that said, 'Hang on, we know this is a problem and we're working on the fix,'" Perozek recalls. "Then about an hour later we sent out another tweet that said, 'OK, for anybody who had this problem, here's the fix and here are the steps you need to take. If you have any questions, call this number.'"
Twitter, she says, has proven to be "a very quick way to address some customer service issues that could take a really long time to figure out."
SBD also uses Twitter as a forum to get feedback to some of its promotional ideas. "Oftentimes we run some promotional ideas by our followers and ask if they like them," Perozek says. "It helps us get some quick reactions for these ideas. I just think it's a good way to tap into what customers are thinking."
Going Mobile
Staples.com recently became m-commerce enabled, so visitors can transact with the brand from any mobile device. While this was an important development for the retailer, Perozek admits that SBD may have been a little late to the mobile party.
"When we did a survey of our customers prior to launching our mobile initiatives, we learned that something like 27 percent of our customers were already using a smartphone to either research or buy products," Perozek says. "That was very surprising to us because we had a sense it was more of a consumer play."
SBD also recently launched an iPhone app, which, while it doesn't have more functionality than its website, does provide a valuable service to its customers.
"As we see how people are interacting with it, then we'll look to add additional functionality into the iPhone app," Perozek says. Next up for Staples.com when it comes to mobile? Mobile search and mobile display. "Will these initiatives be profitable? Will those ads generate incremental sales? We'll see," Perozek says.
