How Neiman Marcus tackles channel conflict issue
One of the challenges of creating a multi-channel strategy is getting store associates to buy into the web concept. That’s particularly true at a high-end, high-touch retailer like Neiman Marcus, where the stores sales personnel are highly knowledgeable professionals selling high-priced products and making a good living on the commissions. “We had a bit of conflict there in terms of the associates,” Michael Crotty, vice president of online and catalog marketing for Neiman Marcus, delicately put it at the eTail 2003 East conference this week.
One of the challenges was to gather customers’ e-mail addresses for marketing and customer relationship purposes. The company offered incentives to the associates to obtain the e-mail addresses. And it offered customers the chance to win a $2,000 online shopping spree. It tested the programs in three stores and it did very well, Crotty said, although he did not provide details. It also offered free shipping on an order to customer who gave their e-mail addresses.
Crotty notes that even with all the spam concerns, Neiman Marcus’s opt-out rate in its e-mail list remains low. But he cautions strongly against overdoing the e-mail marketing, even though it can produce hugely successful results. “E-mail marketing is kind of like heroin, you do it once and it’s great. But you can get hooked on it and that’s not good,” he said. He said Neiman Marcus limits its mailings and provides not just marketing pitches, but content of interest to customers as well. “Our unsubscribe rates have not grown even as we’ve expanded our e-mail programs and conversion rates have remained extremely good,” he said.
Neiman Marcus senior management also educated store personnel to the benefit of multi-channel shoppers. Like other retailers, Neiman Marcus customers who buy in more than one channel are more loyal customers who spend more. “The message has filtered down through the organization that the multi-channel shopper does more business at the store,” he said. “And other channels are now more interested in working together with us.”
“The word of mouth about the web is getting around and it’s fostering a much healthier relationship between channels,” he said. “When sales associates get together and start talking about all the customers who are coming into a Neiman Marcus store with a web page in their hand, word of mouth spreads in the organization about the benefits of the web.”
In addition to the higher spend by existing customers, Crotty notes that Neiman Marcus has achieved another benefit in that 50% of online customers do not live within driving distance of one of Neiman Marcus’s 36 stores. “There’s a lot of geography we don’t serve because we don’t have stores,” Crotty said. “But those markets have a lot of high-end customers that we want to target.”
The web site now is an integral and successful part of Neiman Marcus, Crotty said. “It’s gone from nothing three and half years ago to the largest store we have in the chain,” he said.
The online customer is younger, though not dramatically so, he said. “A whole new generation of people are doing things online and it’s easier to adapt them to the web than the old-line Neiman Marcus customers,” he said.
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