Many women may be loath to admit it, but the song Marilyn Monroe made famous, “Diamonds Are a Girl’s Best Friend,” has more than a ring of truth today. Although in 2000, a woman’s best friends also include her executive position, stock portfolio and a significant other who is supportive – intellectually and emotionally – she still yearns for gorgeous, expensive jewelry. “When a woman puts that ring on her hand, she is in Jamaica, she is getting ready for the ball, it’s an aspirational product,” says Mike Maasen, division vice president for direct marketing at Helzberg Diamonds, Kansas City, MO.
The unsung story is that of her husband or boyfriend. But theirs is a ballad retail jewelers such as Helzberg know well. They should. Men make up 60% of Helzberg’s customers.
“In our business, men make the majority of purchases, but the purchases are heavily influenced by women,” says John Goodman, vice president of marketing.
Using direct marketing techniques, the purveyor of diamonds as well as gems and gold jewelry is able to court, seduce and win men as lifelong customers.
Helzberg’s database is the cornerstone of its customer retention program. Admittedly, the database’s size doesn’t set it apart. With 208 stores, most in shopping malls, a 3 million name active customer file doesn’t sound that large. And, like many retailers, Helzberg collects customers’ names and addresses at the time of purchase, then joins this information with transactional data that includes product purchased, where purchased, amount spent and how the customer paid for the purchase.
But, while other retailers claim to persuade 60% to 80% of their customers to give over their name and address at the point of sale, Helzberg boasts a success rate of 92%. More impressively, Helzberg has been collecting and modeling transactional data for 20 years.
That experience serves the company well. The jeweler, which started as a family business in 1915, has tracked some families’ business for generations. The typical customer is more likely to be a man, but women between the ages of 25 and 44, who are in the middle to upper income range, make up a growing segment. The jewelry is priced between $19 and $8,000.
The transactional data is coupled with lifestyle and demographic files overlaid onto the house file. Subsequently, Helzberg caters to between 35 and 50 different customer segments. In addition to recency-frequency-monetary models, Helzberg creates more stratified models such as one for boomer men – who are renowned as last minute shoppers.
At holiday time, these men receive the catalog. Then, two weeks before Christmas, they get a postcard listing the top 10 gifts for women.
“These men are very busy; we have to make their lives simple,” remarks Maasen, adding that boomer males also settle on a higher price point for gifts at the 11th hour.
Pretty precise information for a company like Helzberg – purchased in 1995 by Berkshire Hathaway, Omaha, NE – a dyed in the wool retailer that didn’t even have a means for its customers to order direct until it launched the e-commerce portion of its Web site last September.
Indeed, the purpose of direct mail at Helzberg is to build the brand, encourage awareness and motivate customers to enter the store. Stan Braunstein, president of information management firm MBS/Multimode Inc., observes: “They are probably the best in the business at it. They know their customer well, make good use of their database and pay attention to the results. It’s a very old fashioned way that works.”
Beyond customer relationship management, the database determines company strategy for mass media and direct advertising as well as merchandising decisions. Company executives credit the database with helping Helzberg take advantage of the robust economy to add 11 stores in 1999 and enjoy its “strongest earnings performance ever” in 1998.
“The database is the engine behind our business decisions, but the information we retain on the database is the result of the relationship between the store sales representative and the customer,” insists Goodman. “It’s that relationship that keeps the customer coming back.”
The role of direct mail is to remind the customer how nice that relationship is. “Direct mail is the primary controllable medium in retaining customers,” Maasen adds.
Most years, eight catalogs are mailed, tied to specific gift-giving holidays – such as Christmas, Valentine’s Day, Mother’s Day – the hottest times of the year for Helzberg. In addition, 1.5 million first class pieces are sent for national promotions around those gift-giving times or to advertise locally about store openings. Postcards usually target the low end buyers.
Store managers and sales associates tend to their own customers’ specific needs by sending about 20 million handwritten notes a year. “I know your wife likes sapphire. I hope you’ll stop in to see the new sapphire earrings that have come in,” a card might say.
The creative challenge with the catalogs and first class mail pieces is to define and maintain the brand as an old, trustworthy company, while demonstrating that Helzberg understands its customers’ lives.
The Christmas catalog enclosed hint tags so a woman could subtly slip a Post-it Note by her jewelry choice and place the catalog where her man would see it. Online, she may send a hint e-mail.
“Our collateral looks like it came from a much more upscale jeweler,” says Pam Rodriguez, creative director, referring to the high quality paper and full color photographs. “The personality of the entire creative is wry, witty, with a good sense of humor and grasp of what goes on in people’s real life without being sappy.” Both these intentions are evident in “The Guy’s Engagement Manual,” for example, a pithy guide to the engagement process that helpfully supplies 20 proposal ideas, ranging from the warm and fuzzy to the karaoke inspired.
“The whole guy’s guide is really a good example of us being a friend to the guy,” Rodriguez continues. “The motivation is we’d like you to come into Helzberg and make a purchase, but we’ll help you to get you through the experience.”
Helpful information is the theme of Helzberg’s bridal business. Wedding guides for the woman and the man are available online and off. The bridal headquarters on the Web site (www.helzberg.com) provides facts about how to choose a diamond and a plethora of tips on planning a wedding. The idea is to ply the prospective groom with as much information as he desires, and then, during his visits to the store, answer his questions and gently guide him to the point to which he’s ready to make a purchase. “Percentage-wise it’s not the biggest part of our business, but it is the foundation of our business,” Maasen says.
That’s not because newlyweds are likely to buy another diamond ring anytime soon, but they are likely to become lifetime customers. “Once you trust someone with the most important purchase of your life, then you’ll trust them with a gift for Aunt Sally,” Maasen explains.
The importance of maintaining customer confidence may be why e-commerce is of minor importance on the 3 year old Web site. “The purpose of the Web site is to extend the brand and provide information to our customers,” says Monica Ausburne, interactive marketing manager. “We want to be there if they want to come online and purchase.”
Most customers who buy online live within 20 miles of a store and do so for convenience, online surveys show. The company is testing e-mail campaigns and trying to collect e-mail addresses along with postal addresses at point of purchase. Plans for 2000 include making the site more personalized and sticky. But adding an e-commerce channel to a traditional retail operation is daunting, time consuming and expensive. “Your systems are set up for a store,” Maasen says. “You make this monstrous effort for something that may be only 1% of your business. That’s just the way it is right now.”