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Tuesday, October 25, 2005

How to Make Millions in eretail Sales During a Short Window of Opportunity: 5 Tactics

CHALLENGE Although has been selling costumes successfully year-round online since 1998, President and CEO Jalem Getz is ruefully aware that few consumers realize it.
Fact is, the overwhelming majority of consumers only shop for costumes once a year -- at Halloween. "The sales ramp up starts in August," says Getz. "Sales get rolling in September, and on October 1st a list switch goes on. We're going just gangbusters peaking just a few days before Halloween."

By November,'s satisfied customers have moved on with their lives. Aside from the few who desperately need a Santa suit, chances are most have forgotten entirely about the site.

The best way to build a known-brand destination site is with year-round consistency. Getz's problem is that, aside from highly targeted keyword buys on search engines (such as "Easter Bunny Costume" every spring), he couldn't justify paying for year-round advertising and PR campaigns to keep the general brand top of mind with consumers and affiliates.

Instead, they had to find a way to create such a high-impact presence during their big two-and-a-half-month selling season that sales would consistently grow year after year after year. How do you do that?

CAMPAIGN The team concentrated their efforts on five specific tactics, each of which they projected would be responsible for at least 10%-20% of the revenue pie.
-> Tactic A. Strong Affiliate Relations offers a slightly lower affiliate commission than competitors, and just like consumers, affiliates are in danger of forgetting about the site during the slow season. Plus, management set "extremely tight" rules about the types of email marketing affiliates could use, which cut the potential pool even further.
The marketing team had to work extra hard to compete for affiliates' investment and attention:
o No commission chargebacks, ever.
Affiliates get to keep their entire commissions, even when customers request refunds. Getz notes he's only able to make this offer because costumes don't attract high fraud; the site uses a great fraud detection system to stop problem orders before they go through (and are commissionable), and lowered bookkeeping and admin expenses make up for extra commissions.
o Contests with exciting prizes
Although Getz acknowledges that what affiliates really want is "money," every June announces its new line-up of affiliate prizes. Depending on your commissionable sales, you can win anything from a t-shirt to a Mini Cooper car.
"It's absolutely worth the investment for us because it's one more reason to contact affiliates." More contacts equals more relationship building. And even in this day and age of virtual business, personal relationships make a huge difference.
o Allowing all types of search marketing
According to MarketingSherpa's 2005 Affiliate Marketing Report (link below), 51.1% of merchants restrict search marketing for affiliates due to fears of PPC arbitrage, optimization competition, and/or brand diffusion.
However, many affiliates -- especially the individuals and mom 'n pops (versus the big rewards and loyalty sites) -- rely on search. In fact, 49% of surveyed affiliates told us they would not work with merchants who banned paid search.
Getz authorized his team to keep affiliates happy by allowing them to use any and all search marketing tactics, even including bidding on brand and trademark terms. Getz's in-house search marketing team focuses their efforts on mop-up activities, handling obscure and less profitable terms overlooked by affiliates.
"We drop out and let affiliates make the money. It's easier for us to manage when affiliates don't go after the words we do."
Getz justifies this radical departure from accepted wisdom, "I'd rather have my marketing people sitting down with new relationships than sitting all day bidding on keywords. And to be honest, I don't think an agency would cost less than our affiliates cost. These are small entrepreneurs making adjustments every day all day long. They're working hard because it's their money on the line. I think they can beat any agency out there."

-> Tactic B. Portal & Search Engine Deals
"Our portal relationship with MSN is massive," notes Getz. However, MSN and other portal deals are "outrageously expensive. It's a big, big risk, but we believed our business is a category killer. We have 10,000 products -- more than any competitor -- very high conversion rates, and very high retention rates. We can compete against Amazon in our space."
The team negotiates hard to get the most for their money, including requiring in-person meetings with portal reps who they spend a million or more with per year. "You must meet with higher-level people, go out to dinner with them, schmooze them. Show them there's two sides. We bring as much value to the table as they do. If your customers come to MSN in October and you're not featuring the world's largest costume retailer, they're going to go to your competitor."
Along with relentless a/b split testing of all creative, especially text-link wording and horizontal vs vertical banners, the team split overall online ad tactics depending on the nature of the deal.
o If it's a CPM or flat rate deal, they go for high clicks. So they might use terms such as "sexy costumes."
o If it's a CPC deal, they go for high conversions. So copy would focus more on factual information targeting serious costume shoppers. They also use dayparting to moderate bids and exposure depending on the time of day and day of week. "We adjust CPCs and raise bids automatically during higher converting times."

-> Tactic C. Public Relations Stunts
"We've done some crazy stunts," says Getz. "One October I dressed up in a different costume every day and customers could vote to choose the next costume I wore."
The team hired a PR firm the first year to get the ball rolling. Then they took PR in-house. "It's myself, a couple of interns, and a marketing director," says Getz. He selects staffers to appear on TV and radio spots based on their ability to convey a passion for costumes. "It's not that I'm not passionate, but I'm not that exciting when it comes across talking in interviews."
The PR team have created a list of more than 4,000 media contacts, but they never ever send out a generic mass release to the list. Each media outlet is treated differently. And competing media outlets, such as major morning news shows, are offered different exclusive features.
These pitches usually start with a call (and sometimes costume mailings) to show schedulers in August for spots in October.

-> Tactic D. Past Customer Reactivation Programs
Although Getz's team tested direct postal mail and email campaigns to third party lists in the past, they've pulled back to what's guaranteed to work -- email and catalogs to former customers.
The team has tested segmenting the customer file by type of past purchase and sending catalogs with varying covers. For example, someone who bought only kids' costumes might see a photo of a child on the cover.
They've also tested alternating the personalized cover offer based on when the customer purchased in the holiday sales cycle the past year. The goal is to get customers to purchase earlier so there's less chance of a competitor snagging that costume sale during peak season.
Past customers who opted-in during the check-out process also received about a dozen emails per year. The majority of these efforts arrived during the top sales season. Off-season names only received a little email (just enough to clean the list of hard bounces and unsubs.) hoped this would their more profitable on-season messages get past filters (ISPs will slam down their gate if you have too many bad addresses per thousand names.) Also, you can't accurately forecast response if you don't know what percent of your names are still live accounts.

-> Tactic E. Year-long Tests to Raise Conversions
Enough shoppers visit off-season for the team to continually test and refine the conversion process. Getz wanted to avoid the all-too-common mistake many eretailers make of launching a major site revamp just in time for the peak season. If your revamps fail, you're in big trouble.
His design team focused their tests on the most critical pages of the conversion process, especially all stages of the shopping cart.
But metrics can only tell you what people are doing, not how they wish your site was different. So Getz's team added an ongoing survey to the home page of the site. (Link to sample survey below.)
To encourage responses, the survey offer is centered above the fold, with a $5 discount incentive, and a note saying "no email registration required." Every week to 10 days, the marketing team changed the questions they asked. However, the one thing they never asked was, "How did you find this site?" Why ask stuff you can find out using your site logs?
Instead they asked questions such as "Are you shopping for children's or adult's costumes?" Then they compared the data to actual sales results to see if there were any disconnects. For example, of 50% of shoppers claimed to be looking for kids' costumes, but only 25% of sales were for kids' costumes, that might indicate inventory or search problems.
RESULTSLast October was ranked as the top four apparel sites in terms of visitors. During one week, only eBay apparel surpassed its traffic. (Getz says triumphantly, "Tell that to the Gaps of the world!") The MSN deal alone drove 9.5 million potential shoppers to that month.
The site's affiliates account for 20-25% of sales off-season and can ramp into the 30s for peak season. Super affiliates (loyalty and rewards sites) didn't blink at the rewards offers, but the site's thousands of smaller affiliates loved them.
Getz notes that you should not mistake an affiliate's small company size for small sales potential. His top selling affiliate for last season was an individual who almost hit the million dollars in sales required to win the Mini Cooper.'s parent company, BUYSEASONS, won a 2004 Commission Junction performance marketing award for "inspiring greatness in others" based on the tactics it used to build affiliate relations.

Creative tests on portals have shown that text-link copywriting tweaks you might consider inconsequential can have profound impact on clicks and click-value. The team has also learned to vary their copy every day on portal pages that get heavy repeat visitors. A line that works well one day may not catch attention when repeat visitors see it for the second day in a row.
PR works better every year as the team build ongoing relations with reporters and mass media schedulers. For example, last year the Today Show did a fashion show, Regis did an exclusive plug for's high-end kids' costumes, and Good Morning America ran news segments on the site's poll of which presidential candidate's Halloween mask was selling the best. (It was Bush's.) Site staff also did a "staggering amount of radio interviews."
Catalog tests have proven that while it's worth segmenting your customer database for a few generic cover variations, it's probably not worth creating zillions of different covers. The team has cut down to two different catalog covers (one for people who spend mostly on kids, the other for people who spend mostly on adults.)

CyberSource - the online credit card processing security service uses to reduce fraud

Commission Junction - the affiliate management service uses for all affiliates

PPC Management - the search marketing bid management tool uses to handle its in-house campaigns

1 comment:

  1. I was just browsing various blogs as I was doing a search on the word halloween, and I just wanted to say that I really like what you've done with your blog, even though it wasn't particularly related to what I searched for. I appreciate your postings, and your blog is a good example of how a blog should be done. I've only just recently started a Posters website - feel free to visit it when you get a chance if you wish. Much success, antonio.


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