January 23, 2002, 12:00 AM

How a 3-tiered marketing approach drove down FTD.com’s costs

An e-mail reminder system, beefed up catalog mailings and marketing agreements with airlines and hotels have helped reduce marketing expenses at FTD.com from 13.1% of revenue to 11.9%.

Gift-giving customers like to be reminded of significant dates. Michael Soenen, president and CEO of FTD.com, tells Internet Retailer that 60% of FTD.com’s customers have signed up for the e-mail reminder alert. “We think that’s outstanding,” he says. “This gives us access to the customer at a key time that we never could have with a catalog. We could never mail you a catalog a week before your anniversary.”

The e-mail reminder system along with a beefed up catalog campaign and agreements with other marketers of consumer products and services have contributed to reduced marketing expenses at FTD.com, Soenen says. For the quarter just ended, FTD.com’s marketing expenses declined to 11.9% of revenue, $4.8 million, from 13.1% a year earlier, $4.3 million. Meanwhile, revenue grew 24% to $40.4 million in the quarter from $32.5 million a year earlier. Marketing cost per order fell 8% to $7.67 in the second quarter of fiscal 2002 from $8.30 a year earlier. And the average order increased to $59 from $57.

One of the keys to success with an e-mail reminder system is not to overwhelm the customer with a reminder form that requires the customer to fill in 10 dates, Soenen says. Rather, FTD.com takes an incremental approach offering a pop-up window, for example, with a Mothers Day purchase asking if the customer wants to subscribe to a reminder for his mother’s birthday.

FTD.com also has increased the frequency of its catalog mailings, including mailing a summer catalog for the first time last year, in addition to its holiday catalogs targeting Christmas, Valentines Day and Mothers Day. The increase in catalog mailing is in contrast to what most online retailers expected in the dot-com world. “Something that was supposed to go away-the catalog-is now one of our most efficient vehicles,” Soenen says.

FTD.com also recently expanded its marketing with other consumer products and services companies by reaching an agreement with American Airlines to award AAdvantage miles for FTD.com purchases. It has a similar agreement with United Air Lines. It also has affinity agreements with American Express and Hilton Hotels. “Our customers travel a lot and this gives us access to them when they are on the road,” Soenen says.

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