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Macy s click-through rates on emails featuring items on the Web site averaged 10 percent, with 2 to 3 percent of those clicking making a purchase. When customers make a purchase at the macys.com site, a pop-up window asks them to rate their Web experience. The company found that many customers left the site quickly if they did not nd what they wanted in the search window. As a result, when a search failed, Macy s visitors got a window showing the address, phone number, and directions to the nearest Macy s store. Of ce Depot introduced Web ordering for its catalog as Of ce Depot Online. It has been pro table since day one. The company soon discovered that catalog customers who ordered through the Web spent 33 percent more than other catalog shoppers. In 2001, Of ce Depot Online sales grew by 30 percent to $1.5 billion, representing 14 percent of all Of ce Depot sales. Of ce Depot, like Dell, set up Web pages for special customers such as Bank of America. By 2001, 85 percent of Bank of America s of ce supplies were provided by Of ce Depot through the Web. These Web pages permitted Of ce Depot to make special volume price adjustments for large customers, which it could not easily arrange without the Web to keep track of the hundreds of thousands of individual orders.
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The Internet has opened up a range of new opportunities for personalization that may lead many catalogers to reconsider their attitude toward database marketing. Amazon has shown us the way. Amazon uses emails and its Web site to suggest books and movies to customers that they might be interested in, using collaborative ltering to come up with the suggestions. Collaborative ltering is provided by www.Netperceptions.com, among others. It consists of software that makes use of a client s database of customers and their previous purchases. The goal of the software is to determine what a person s lifestyle and preferences are and then to nd other customers within the database who have similar tastes. Whatever the cataloger had sold to those similar customers might appeal to
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you, so the cataloger suggests it to you. One of the most convincing uses of collaborative ltering was an experiment tried with Great Universal Stores (GUS), the largest cataloger in the United Kingdom. Before collaborative ltering, GUS customer service reps were getting a 20 percent cross-selling rate on orders placed from the paper catalog. That means that in one call out of ve, the rep was able to sell the customer an item from the catalog that the customer had not intended to buy. Netperceptions.com introduced collaborative ltering into the GUS call center software, using the huge GUS customer database. The suggested next best product showed up on the customer service rep s screen as soon as the rep typed in the rst purchase requested by the caller. The company s previous success at cross-selling was due to the customer service rep s native intelligence. If a woman ordered a dress, the rep might suggest matching shoes, a belt, or a handbag. The suggestions from the collaborative software were described by the GUS reps as spooky. The software might suggest selling towels to the woman who ordered the dress. Towels What was the relationship of towels to the dress There was none except that the software had found similar women in the GUS database and had found that many of them also bought towels. The amazing thing about the software was that it worked. After getting used to it for 6 weeks, GUS customer service reps were getting a 40 percent cross-selling rate double what they had been getting before. Now that is database marketing, folks. Collaborative ltering is used by more than 200 American companies. It requires a large database and super fast software. It is not for the mom-and-pop catalog operation, or for the timid. In the past 2 years, I have probably spent more than a thousand dollars with Amazon, some of which was the result of Amazon s collaborative ltering suggestions. One email that I received a year ago has stuck in my mind. It said: Two years ago you bought Dark Sun by Richard Rhodes. You may be interested to learn that Richard Rhodes has just had a new book published called Why They Kill. To learn more about this book, or to order it, click here.
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