Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
SmarterKids is no dummy when it comes to knowing its customers. And it gains the knowledge from the customers themselves who fill out surveys.
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.
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.”
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.