Cover Story: Top Dog

When it comes to cross-channel marketing, PETCO is at the top of its game.

The specialty pet products retailer sells its merchandise in more than 1,000 brick-and-mortar stores across the country and an e-commerce website, regularly using its online channel to bring customers into its stores and vice versa. But the buck stops in the e-commerce department.

"While my department is e-commerce, our entire multichannel integration is run through it," says John Lazarchic, vice president of e-commerce for the San Diego-based company. "The offline marketing department knows how important the online component is to marketing and promoting our brick-and-mortar stores, so it usually comes to us to see how we can support its efforts."

Having a multichannel presence is important to PETCO, says Lazarchic. "We all know that multichannel shoppers spend more money and shop more frequently than shoppers who confine their buying to one sales channel."

Email as a Leash
To bring prospects into its stores, PETCO relies on online tools — most notably paid search and search engine optimization programs. These programs direct folks to either a pop-up window or PETCO.com, where they can sign up for monthly e-newsletters. The e-newsletters offer information about store events in their local areas, coupons they can print out and bring to local stores, and the PETCO Foundation (PETCO's nonprofit foundation).

"Consumers today are looking for value, so special offers and discounts are more important to the average user than ever before," Lazarchic says. "Email is an important way for us to communicate with our shoppers and distribute coupons and offers that bring them into the store."

PETCO takes a serious approach to email marketing. It offers targeted content in its e-newsletters — e.g., cat owners receive different information, specials, promotions and coupons than dog or bird owners. Also, when customers first sign up for its e-newsletter, they receive a sequence of five emails over a five-week period. According to Lazarchic, "The emails educate people and bring them into a relationship with the PETCO brand and each channel."

But PETCO also has a lot of fun with its subscribers. "From a content standpoint, PETCO understands that it's not just selling products, but engaging pet owners and building a community in its emails," says Chad White, research director of Smith-Harmon, a Responsys company. "Beyond highlighting products, PETCO's emails include helpful articles and promote fun store events and contests that allow PETCO customers to show off their pets to other PETCO customers. You get the clear sense that PETCO loves animals and wants to help pet owners — and that's powerful branding."

A "Naughty or Nice" campaign that ran last December is a good example of this, says White. Via an email marketing campaign, PETCO asked subscribers to share naughty or nice stories– and photos of their pets. Visitors could vote on the best stories, and winners received a $100 PETCO gift card and other prizes.

Voice of the Customer
While the campaign was fun and successful, it also allowed PETCO to add user-generated content (UGC) to its site. UGC, which includes everything from reviews and ratings to blog posts and stories, is a key part of PETCO's social media strategy.

UGC can benefit a company in several ways. It's a source of information for new visitors to learn about products and how real people feel about them. It's also a forum for marketers to get feedback and ideas from customers about their sites and product selections, among other things, and a place to answer customers' questions. UGC helps create a sense of community, offering customers a place where they can feel like stakeholders in a brand, and it enriches websites with free content that feeds search crawlers, a benefit particularly important to PETCO.

"User-generated content really helps us get at the top of search engines," Lazarchic says. "It's updated regularly and written by real consumers — two things that help get you placed high on Google."

PETCO also leverages UGC through its "Answer Den," a Q&A section on its site where members of the PETCO.com community can ask questions and share answers. Another plus: Visitors to the Answer Den purchase at a 72 percent higher conversion rate than visitors who don't use it, according to Lazarchic.

“We’ve worked with PETCO from the beginning and they do a great job of leveraging multiple types of UGC to drive measurable business results,” says Sam Decker, CMO of Bazaarvoice. “John and his team have structured their social commerce strategy to create an active and vocal community within their commerce site – not a cul-de-sac community detached from PETCO.com – and are reaping the rewards in terms of engagement and sales.”

The Social/Email Connection
Social networking is another area PETCO is putting a lot of focus toward. Like many retailers today, PETCO integrates its email marketing programs with its social networking efforts through share-with-your-network (SWYN) functionality.

These links enable subscribers to post email content to social networks such as Facebook, LinkedIn or Twitter. By clicking on that link, people can easily share content in places where it can start conversations. The hope is that all of this dialog about a specific brand will lead to new customers.

There are several ways to encourage sharing in email. Retailers, for example, can include SWYN links in the footers or headers of emails. They also can integrate SWYN into the messages themselves. PETCO has had success by incentivizing SWYN usage. Last August, for example, it sent a viral email campaign to its subscribers that offered them the chance to win 10 PETCO.com dollars if they shared a promotional code with their friends on online social networks. If a code, which offered free shipping on orders more than $40, was used the most during the time of the contest, that subscriber could win 500 PETCO.com dollars. Second- and third-place winners could walk away with 300 and 200 PETCO.com dollars, respectively. "The campaign was very successful," Lazarchic says.

"It generated buzz within the Twitter community and among industry experts, and 40 percent of purchasers were new to PETCO."

The campaign was brilliant on several levels, according to Smith-Harmon's White. "[This] PETCO promotion rewarded sharers while also allowing PETCO to identify sharers, which could be used in segmentation later in addition to the follow-up email delivering the reward," White wrote in his blog, The Retail Email Blog, on Aug. 24. "What PETCO has created is a two-tier promotion where sharers are rewarded for driving more sales from sharees. When some retailers are troubled by promo code sharing, this provides an interesting way to deal with it — make the code less valuable but reward the sharing."

What the Future Holds
PETCO is looking forward to a great 2010 and will continue to focus on many of the initiatives outlined here. "Our plans are to continue exploring using user-generated content as a consumer engagement tool to drive loyalty, brand awareness and sales," Lazarchic says. "We'll also continue testing social media tools, such as Facebook, Twitter and others as they appear."