January 2005 - Beauty Club Secrets Revealed

Cosmetíque of Chicago partners with SendTec to increase its beauty club sales through e-mail marketing.

By Alexandra Harrington

While many companies ponder branching out into new marketing channels, national direct-mail beauty club, Cosmetíque, took the plunge. This Chicago-based beauty company figured out how to achieve its goals with minimal risk by partnering with SendTec, a direct marketing company based in St. Petersburg, Fla. With a savvy marketing plan, the two companies have shared great successes.

Founded in 1974 by entrepreneur June Giugni, Cosmetíque now serves over 1 million new customers per year. The company offers its members specially priced beauty collections featuring a variety of cosmetics and fragrances. Members join the beauty club through introductory offers found in national media. In looking to branch into other forms of media, the cosmetic company turned to SendTec.

Cosmetíque’s previous working relationship with SendTec Chairman and CEO Paul Soltoff spurred the direct-mail beauty club to seek the direct marketing company’s assistance in exploring Internet sales in September 2002. The cosmetic company had two objectives. The first was to explore opportunities in Internet marketing. “The second and main objective was to see if we could get customers to pay by credit card,” says Patti Venturini, director of new business for Cosmetíque. The beauty company was previously unable to secure credit card payments through its other channels such as direct mail, telemarketing, magazine ads, FSIs or package inserts.

SendTec President Eric Obeck believes that Cosmetíque selected SendTec because the company was willing to truly share in a partnership rather than creating a straight vendor approach. “There is a lot of upfront marketing risk when exploring new channels,” says Obeck. “The fact that SendTec was willing to share in that risk made the offer more palatable. And to the extent that the new medium is a success, SendTec will share in that success,” he continues. Venturini confirms this. “What made SendTec so appealing was their willingness to work on a cost-per-order basis,” she says. With upfront media costs so expensive, Cosmetíque was only looking to partner in this fashion.

With the devil often in the details, Obeck notes that the first step of the process was to figure out what needed to be accomplished and what needed to be built to reach those goals. “In this case, we needed to start from scratch with the Website, creative and offer structure,” he says. After face-to-face meetings and phone consultations, SendTec developed the creative for the e-mail campaign. The partners created two offers: a “bill me” offer where customers did not submit their credit card information; which was a huge success, and an offer where customers did provide credit card information; which was a great success. “Even though there was a different response level between the two offers, we knew the supplied credit card offer was the one to go with,” says Venturini, further explaining that Cosmetíque has never had success securing immediate credit card information previously.

SendTec’s Obeck concurs; pointing out that “bill me” campaigns are a challenge online. “There are too many people chasing free stuff without quality retention for a ‘bill me’ structure online,” he claims. The group then developed control offers testing ads on different kit premiums such as product offers, free gifts, makeup bags and different retail values for their product and skincare club.

Along with producing new creative, SendTec also developed a new Website with acquisition functionality and hosted the site, tying this new site to Cosmetíque’s credit card processing and fulfillment. In terms of a time frame, Obeck estimates it took a month to figure out exactly what needed to be done. After a week of contract negotiations, the site launched six weeks later.

The only project glitch Venturini notes was the passage of the Can-Spam Act, which brought about changes in e-mail marketing laws. While the company was already offering its customers an opt-out function, many of the media companies they were working with went out of business. “From what I understand, our vendors did not have the revenue to make the necessary programming changes to comply with the law,” she says. After finding new vendors, Venturini estimates that subsequent to Can-Spam’s passage, six months passed before Cosmetíque returned to its 2003 sales volume.

For SendTec, the largest challenge was seamlessly tying the online acquisition engine to Cosmetíque’s credit card processing and fulfillment. However, Obeck notes that SendTec’s full-service information technology group dove in and handled it. By using specially written code, Cosmetíque customers could move seamlessly from ordering and becoming a member to fulfillment and credit card processing in real-time without having them jump through manual hoops. “Having everything work seamlessly was the emphasis in this challenge,” says Obeck.

New customers were reached through varied online marketing methods, including search engines, e-mail, co-registrations and pop-ups. “We’ve been exploring the search function more in the last few months, and we’ve found that it generates the most volume,” explains Venturini. She adds that they don’t buy marketing lists due in part to their ineffectiveness.

Estimating a 25-percent growth in sales based on this partnership, Cosmetíque’s Venturini notes, “The project has been very successful for us. We’ve gotten more profitable customers which, in turn, has given us the opportunity to test other channels based on the increase in volume and sales.” While Obeck didn’t comment on hard numbers, he notes that, “the end result of the campaign was hundreds and thousands of new customers/members for Cosmetíque.”

Venturini ascertains the importance of testing this channel, but warns that companies should find vendors willing to work on a cost-per-order basis due to the high start-up costs associated with Internet marketing. In fact, when asked if she recommends paying the upfront costs to explore this channel, she readily responds, “No.”

Obeck’s advice for other companies looking to go through this process is to pick a good partner. “Find a partner who is willing to structure your agreement in such a way that both partners have common goals of acquisition and retention,” he notes. “Retention is key in continuity programs,” he continues. “It’s one thing to acquire a customer but to acquire and retain a customer allows for adequate ROI, which is critical.” He further comments that the potential partner should have a history of successful programs, which were not only historically structured for retention, but will be in the future.

What’s next for the partnership? SendTec is developing the creative for the beauty company’s Internet advertising on www.makeupfree.com. Further, SendTec and Cosmetíque are currently running on-air tests for a DRTV commercial, which is expected to roll out in January. Venturini notes that it is a slow process but she is very optimistic.

Alexandra Harrington is a contributing writer to Electronic Retailer magazine. We would appreciate your feedback. To submit comments, point your browser to bclub.marketing-era.com.


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