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February 2001 |
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How the smarter marketers at SmarterKids.com get inside customers` heads
By Andrea McKenna Findlay
The Internet gives retailers access to consumers and their shopping and buying behavior far beyond what they can learn in the real world, no matter how sophisticated their cameras that track shoppers through stores or their analysis of the images that the cameras produce. Tracking what consumers click through on a web site tells a retailer exactly where every shopper’s eyes are for every step of the process.
Gathering marketing information from consumer feedback, buying behavior and response to certain selling methods is giving some retailers an edge in the online marketplace. And on top of all that technical sophistication, the Internet also gives retailers the opportunity to gather information from their customers in ways that are inconceivable in the real world. Imagine, for instance, asking customers who walk into a toy store questions about their children and their learning abilities and styles. Most parents would walk out.
But give them a questionnaire on the web, and they are more than happy to spend 5 or 10 minutes filling it out for the prospect of receiving toy recommendations from a staff of learning experts. In fact, more than 165,000 online shoppers at SmarterKids.com have filled out the questionnaire. And that’s the base that Needham, Mass.-based SmarterKids believes it can build a successful toy retailing business on.
Rapport
While SmarterKids is in the same boat as most other big online retailers—it’s far from making money—the company has created rapport with its customers. And many believe that that will be one of the keys to success. With its questionnaires for parents, a patented system for matching educational toys with the learning needs of children, and a staff of teachers and educational specialists that evaluate toys, SmarterKids is building a blueprint for successful web selling. SmarterKids will “focus on those programs that bring us the most loyal customers,” executives said in the most recent quarterly report.
Basing product suggestions on the information that the SmarterKids’ customers provide is a unique strategy for an online retailer, analysts say. This level of personalization will become the status quo, rather than the exception as more retailers figure out how to cater to their online customer base. “They don’t just show you everything,” says Peppers & Rogers Group senior retail consultant Lucia Jansen. Jansen notes that a surprising number of retail sites do not segment products based on what the customer demands. “SmarterKids asks you who you are, what your needs are for your child and they show you products based on your requirements.”
Captain Hook
SmarterKids hooks customers on the educational toy genre by helping parents understand how their child learns. “Our whole company was founded on the premise that if you help a parent understand how his or her child learns you are doing a great service and adding to that parent’s life,” says Al Noyes, president of SmarterKids.com. “We’re helping parents find the right approach to educational toys by providing them with content that helps them measure their child’s learning levels and interests.”
And with such tools as grade level testing and personalized home pages, as well as its standard toy search questionnaire, SmarterKids.com is competing effectively against the large clicks-and-mortars as well as sitting right behind pure-play giant Amazon.com.
One of the keys to SmarterKids’ success has been the broad range of information that the web allows the company to gather on parents’ desires and their children’s learning styles and play needs. As Noyes explains, the Internet was not the end goal for the online store, but rather was simply the technology that enabled SmarterKids.com to provide educational tools and content for parents. “Before the Internet, this kind of educational content could not be executed cost effectively,” he says.
The company has found that its high level of personalization is translating into higher sales. In fact, parents who have personalized sites for their children buy 150% more than those who have not built a personalized site. “It’s important to understand your company’s objective, and ours is personalization,” Noyes says. “We built a web site that is focused on education and development and we deliver that, as evidenced by the fact that people continue to buy from us.”
Meeting the customer
To accompany its online content and personalized selling tactics, SmarterKids also uses a customer council comprised of more than 800 customers nationwide. A measure of the commitment that parents feel to the site is the fact that Massachusetts has an active chapter of 375 SmaterKids customers with whom executives talk regularly to gain feedback. “Once we get the feedback from consumers about how they use our site and what they buy, we focus on the metrics that matter and manage them closely on a weekly basis,” Noyes says. The marketing team meets once a week to see what features, trends and products are hot on the site and what is not working. “The toy channel is too dynamic to move more slowly than that.”
There are two ways in which SmarterKids evaluates and suggests toys for shoppers from among its 5,000 SKUs. The first is asking parents to fill out online questionnaires about their kids. “There’s a ton of information available to anyone marketing online and the details are really important,” Noyes says. Among the answers that parents provide on the questionnaire are their child’s grade level, learning styles, play preferences and educational needs. Parents who fill out the questionnaire then can store it on a personalized web page for their child. SmarterKids uses the personalized page to pitch age- and education-appropriate toys to the kids.
SmarterKids.com also employs five full-time educators and some freelance research experts to evaluate toys based on a predefined list of 200 attributes. The attributes are based on information from standardized achievement tests and the Howard Gardner theory of learning, a CD-ROM program that the company also sells.
Noyes says most toys in the database have up to 15 attributes that best describe their uses. Attributes include such things as which subject the toy teaches (math, science, reading); whether it is suited for travel; whether it will help a child who is, for instance, a musical learner; and what grade levels the toys are suited for. The evaluators also rank the effectiveness of how a toy teaches a subject. For example, a toy may help with math, be geared towards a musical learner and be ranked 4 out of 10 for effectiveness. The evaluators assess fun level, ease of use, approach (such as drill and practice), instruction, and exploration and discovery, as well as the reviewer’s opinion of the product.
Eliminating the guesswork
SmarterKids.com’s proprietary SmartPicks program combines the information from the parents’ questionnaires and the toy evaluators to match the right toys for each customer. The toys that consumers see on the web site first are the ones that most closely match the information they requested during each visit or are based on the home page parameters. The toys are updated each time a customer opens the home page. And shoppers can change the parameters of the home page at any time, which then brings up a new set of toys for the child based on the new needs.
Clearly, the value of SmartPicks is that it bases its toy suggestions on what the shoppers say they are looking for. “We don’t base our suggestions on what people have bought in the past,” Noyes says. “We use the data consumers provide to us. We don’t infer anything. We’re trying to take the guesswork out of buying educational toys in order to accomplish our mission of helping kids learn.”
With such customized technology behind the database-driven site, SmarterKids.com is able to offer interesting content along with personalization. A major feature is its My Kid’s Store, in which parents can create a home page based on their child’s interests and style of learning. The survey to build a home page gives parents options on styles of learning (musical, interpersonal), learning goals (developmental, social-emotional abilities), favorite school subjects (math, reading and writing), skills tests and access to state standardized tests to allow parents to evaluate their child’s educational level.
With such parameters, the page will use the Smart Picks program to put out suggestions, such as Friendship Bracelet sets or books dealing with emotional subjects.
The Lessons
SmarterKids also relies on a variety of customer feedback to determine how its web selling is going. The company tracks what it calls attitudinal feedback. It generates that feedback by tracking where a customer moves around the site before buying and by surveying customers via BizRate services after they’ve bought.
And the company actually talks to up to 30 customers per month. “We track about 100 hot spots to see where people are clicking and what kind of blockades they face when shopping on the site,” Noyes says.
No matter how well retailers think they know their customers, they’ll always surprise them, and that’s the benefit of closely watching what customers are doing. “Amazingly enough, people were more likely to click on school supplies than on gift ideas,” Noyes says, “and in October people cared more about finding activities to do with pumpkins than in getting a free pumpkin-carving kit.” When shoppers don’t behave as the marketers expected them to, change comes right away. “If people are not clicking on site features, we either change the wording to make it more compelling or we don’t run it,” Noyes says.
So far, critics favor SmarterKids.com’s target marketing strategy. After a major shakeout in the toy industry in 2000, the company succeeded not only in maintaining its educational niche, but also in holding its ground against bigger competitors, such as Amazon.com and Toysrus.com. And even though those two giants have combined, SmarterKids.com still ranks among the top general toy retailers based on its level of user-friendliness, customer service and especially personalization.
Forrester PowerRankings continue to praise SmarterKids.com, most recently ranking them No. 2 behind Amazon.com, while Gomez Advisors ScoreCard ranks SmarterKids.com as the top educational toy retailer and the third top toy site overall, behind eToys and Amazon.com. Gomez says key benefits of the site include the personalized home pages, a Family Resource Center with suggested activities, teacher chats, news articles, and a live customer service chat feature.
One-way ticket
Barrett LaMothe Ladd, senior retail analyst at Gomez, says the site’s level of personalization is paying off, as 25% of consumers have created home pages for kids. “It has a very low product return rate (less than 1%) due to the type of products they sell and the extensive information they provide,” says Ladd.
In 2001, SmarterKids.com plans to keep digging for more information and possibly new markets. “We’ll improve our focus as we learn more about our customers,” Noyes says. “After the holiday season we can make hard decisions on what customers care about and focus on areas in which we can get a reaction. Also, we will figure out how to apply this functionality to other markets, such as elementary schools.”
Many teachers already use the web site on their own. “We want to develop a program that increases our exposure to schools,” Noyes says. “That might mean marketing to educators or partnering with someone who is in the education business.”
If history is any guide, SmaterKids will quickly learn what teachers want. 
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