InformationWeek
Defining The Business Value Of Technology
August 2, 1999
Instant Marketing
New products let businesses deliver ads and offers to customers fast and inexpensively
By Jeff Sweat and Rick Whiting
Williams-Sonoma Inc., a retailer of cookware and other household goods, is testing E-mail
marketing software from Connectify Inc. to promote its new online bridal registry, as well as to
draw customers into its stores. In a trial promotion, 5% of customers contacted by E-mail went
to a local Williams-Sonoma outlet. A subsequent test was twice as successful. In both cases, the
response rates far exceeded the company's direct-mail campaigns. "It's all about communicating
with customers in the channel they want," says Pat Connolly, executive VP and general manager
of Williams-Sonoma's direct-to-customer business. That translates into a business advantage as
well. "We can use E-mail to increase store traffic," Connolly adds.
Other businesses are taking similar steps, encouraged by a new generation of E-marketing
applications that offers more feature-rich and easier-to-use personalization capabilities,
data-analysis tools, and integration with third-party sources of customer data. "For those of us
that have been in one-to-one marketing, the technology has finally made it fast enough and cheap
enough to fulfill the promise that we've seen all along," says Alexandra Morehouse, associate VP
of member-relationship marketing at the California State Automotive Association, the AAA
affiliate that covers California, Utah, and Nevada.
This week, Connectify will introduce its new E-mail marketing software, Connectify Direct,
which creates and executes segmented campaigns and tracks their success. DataSage Inc. will
introduce netCustomer, data mining software that analyzes customer data culled from Web
interactions and other business transactions and provides multidimensional segmentation for
target marketing and product offerings. Last week, Prime Response Group Inc. updated its
flagship marketing automation suite, Prime@Vantage. com, with support for E-mail and Web
marketing. The software can be used to build personalized Web pages and send E-mail messages,
and coordinate marketing campaigns across online and traditional channels.
E-commerce and customer-relationship management vendors are also branching into online
marketing via alliances or additions to their software packages. NCR Corp. last week introduced
Relationship Optimizer, a CRM and data-analysis suite with functions for marketing on the
Internet, in call centers, and at ATMs. Saratoga Software Inc. teamed with Rubric Software Inc.,
a marketing-automation vendor, to bolster its Avenue CRM suite with online and traditional
marketing capabilities. And Blue Martini Software Inc. and Edify Corp. bolstered their respective
E-commerce suites with modules that help businesses personalize electronic marketing and
merchandising for individual customers.
Beyond Banners
How are the products being used? Levi Strauss & Co. is deploying Blue Martini's
E-Merchandising software, which includes Customer Management and Micro Marketing modules,
to support customization at its Levis.com and Dockers.com Web sites. The Home Shopping
Network is using Edify's Smart Options software on its site, HSN.com, to track user preferences
and suggest products based on a customer's past activity and current purchases. CSAA, the
auto-owners organization, recently adopted E.piphany's E.4 marketing automation and analysis
suite to store and analyze customer information in support of its traditional marketing efforts,
and it plans to use the same platform online, making it possible to execute marketing programs
across media.
CSAA's Morehouse says online marketing has several advantages over other methods, including
speed, interactivity, and personalization. For example, while a traditional campaign is difficult
to alter once in motion, E-marketing lets a business analyze and fine-tune in midcampaign. "If
you put an offer out for 18- to 25-year-olds and it's tanking, you could change the offer," she
says. "In a direct-mail campaign, you can't react as quickly."
Online marketing blurs the line between selling and marketing by focusing the messages and
products a customer sees, making it more likely they'll see something they want. Gymboree
Corp., the Burlingame, Calif., children's apparel retailer, is using Blue Martini's software as the
foundation for a re-launch of its Web site, planned for this fall.
The revamped site will offer expanded, personalized services. One example will be the ability to
suggest matching outfits based on customer selections-something Gymboree and its 550 stores
are known for. "The goal is to provide service at least as good as customers get in our stores,"
says Susan Neal, VP of business development.
Gymboree's plan is to coax customers to register at the site, possibly using discounts and other
incentives, and provide demographic data, including the age and sex of their children. "We're
hoping that because Gymboree is a well-known brand name, they'll trust us to keep that
information confidential," Neal says. The Blue Martini system will also let Gymboree maintain
and analyze the purchase history of individual customers. Combining and analyzing all this
information will allow the company to, say, present customized Web pages for parents with
2-year-old boys and make product suggestions as they navigate through the site.
At Gymboree, online sales could even set the pace for store sales. Managers will analyze online
sales data to spot best sellers, information that will be used to make product placement
decisions within stores. "We'll be able to see very quickly what products people are buying and
what outfits they're creating," Neal says. "We're really looking for ways that we can use the
information to help us serve customers better and promote what's hot once customers vote
online."
Outpost.com, a Web computer retailer in Kent, Conn., is pulling together marketing automation
software from Rubric, E-commerce and personalization software from BroadVision, and the new
customer segmentation software from DataSage. Its goal is to increase the chances of selling to
a customer, by E-mail and on the Web, by offering products and promotions that demographics
and past transactions indicate will interest the customer. DataSage's netCustomer will be used
to segment customers into groups with similar characteristics, then re-segment them on a daily
basis as their profiles change through new purchases or actions. For instance, if a longtime PC
user suddenly buys an iMac, DataSage will signal the Rubric and BroadVision apps to shift the
mix of offered products toward Apple.
Such marketing can become even more finely honed as new information accumulates in the
system. "The longer you do this, the more profitable it becomes," says Brett Lauter, Outpost's
director of customer-relationship marketing. Lauter says the response rates on Outpost's E-mail
and Web campaigns have been several factors higher than those for direct mail or untargeted
E-mail campaigns.
Not Perfect
That's a concern for Williams-Sonoma, which sends E-mail only to customers who ask for it.
"Our fall catalog can cost us a dollar. E-mail doesn't cost us anything-but it can cost us the
relationship if we mail customers too much," says Connolly.
But the push into online marketing shows no sign of slowing, and it has sparked a flurry of
activ-ity in companies with roots in direct marketing. Last week, Naviant Technology Solutions,
a supplier of customer-relationship management tech- nology and services, revealed plans to
acquire IQ2.net, a direct marketing database company, for $46.5 million. And MessageMedia, an
E-mail direct-marketing company, disclosed that it's buying Revnet Systems, an E-mail list
management company. Earlier this summer, Web traffic-analysis vendor DoubleClick Inc. merged
with Abacus Direct Corp. in an effort to combine Abacus' consumer catalog database information
with DoubleClick's advertising data.
Analysts say the moves are an attempt by direct-marketing vendors to transform themselves
into E-marketers. For example, Acxiom Corp., a database marketing company, recently paired
with E.piphany, whose software runs targeted Web-marketing campaigns and performs analysis
of customer data. Betsy Reagan, Acxiom's marketing VP, says the E.piphany deal is the first of a
series of E-commerce-related services Acxiom will be unveiling in the next few months.
The combination of IQ2.net and Naviant will let businesses target Web-site ads at visitors
according to demographics and lifestyle, rather than by how those users navigate the site or
search using key words, says Charles Stryker, president of IQ2.net. (Stryker will become
president and CEO of Naviant when the acquisition in completed.) Naviant will leverage IQ2.net's
"High-Tech Household" database-covering some 14 million households, including information
about the consumers, the hardware and software products they bought, where they bought them,
how they use them-in its product and service offerings.
One company already combining the Naviant technology and IQ2.net database is 24/7 Media Inc.,
an Internet media company that sells advertising for some 3,000 Web sites. Naviant is building a
database of Internet users for 24/7 using the IQ2.net data and Web-site registration information
from 24/7's clients. The work is expected to be completed late this year and contain
demographic data on 15 million to 20 million people.
The Web promises to let businesses of all sizes and from any industry better understand their
customers and tailor marketing messages based on their idiosyncrasies. That's the promise. The
new online marketing tools are what make it possible.
Related links:
atabase marketing, the low-tech, back-office operation that generates piles of junk mail, is
being transformed into a modern medium with a more immediate message. A new class of
products lets businesses deliver customized advertisements, product offers, and personalized
service over the Web and via E-mail-faster than traditional approaches, and at lower cost.
Electronic marketing is becoming a staple of E-business. It's also changing the way companies
deal with customers offline.
The new products make it possible to go beyond simple banner ads and basic personalization ("If
you like this CD, you might like these, too.") on Web sites. For example, NCR's Relationship
Optimizer and Prime Response's Prime@Vantage. com apply powerful data analysis to customer
interactions-and do it to a wide range of data, including click-stream data traffic, other
customer interactions, and demographic information from direct-marketing databases. As data
is processed, some of the new products can launch complex individualized Web and E-mail
campaigns, personalizing everything the consumer sees, from content to products.
There are still some problems with E-marketing. For one thing, not all prospects are online,
meaning that E-mail and Web campaigns can't possibly reach all potential customers.
E-marketing also evokes concern over consumer privacy. Companies that use demographic and
historical data to personalize campaigns risk offending customers. Also, E-mail campaigns, if
overdone, can actually drive customers away. 
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