How did a 93-year-old company that got its start selling black raincoats to funeral directors by mail wind up as a big winner in affiliate marketing?
Blair did it by building an innovative affiliate marketing program that does just about everything you’d want it to. And the effort is paying off handsomely. While year end results weren’t available, the program appeared on track to generate about $14 million for 2003.
Blair, like thousands of other corporations around the globe, is learning quickly that a low-cost affiliate program can help offset slipping revenue in other sales channels. It’s a strategy that helps Blair maintain its position as the 8th largest U.S. clothing retailer, competing with the big chains like J. C. Penney, Wal-Mart and Sears and the catalogue icons like Eddie Bauer, Spiegel and Land’s End.
“As we work to more fully integrate our offline and online marketing initiatives into a seamless cross-channel experience, our affiliate program is well positioned to play a key role in our growth,” said John E. Zawacki, CEO of the Warren, Penn.-based merchant.
The beauty of the typical affiliate arrangement for Blair is the high return on investment in the program. “There is some overhead associated with managing them, but in the grand scheme of things, it really isn’t a lot,” said Jeff Parnell, Blair’s vice president for e-commerce.
To be sure, affiliate sales still make up a small fraction of Blair’s total revenue, which totaled $568.5 million in 2002. The company generates most of its sales through its traditional catalogue operation. It also operates four retail stores – three in Pennsylvania and one in neighboring Delaware. But the rapid growth of the affiliate program combined with the increasing importance of other online activities is helping Blair adapt to a shifting market.
Like the majority of large companies, Blair grew fascinated with the potential of e-commerce during the late 1990s. The reality was clear. Blair’s traditional customers were getting older and the company had to appeal to younger, more active shoppers in new ways in order to attract new business. The Internet, management was convinced, was a pathway that would lead the company to its next level of success.
Blair’s most popular offerings appeal to older women who order mostly through the catalogue. To attract more baby boomers, the company put more emphasis on Blair .com and also created a hipper new brand, Crossing Pointe, with its own catalog and Web site. As a result, Blair put itself in place to compete on price and style through catalogues, retail stores or the Internet.
During the first quarter of 2000, Blair made significant progress in its strategic plan to establish an interactive e-commerce Web site. The new site would become a key part of the company’s program to capitalize on the rapidly expanding market of online shoppers, boost sales and shrink operational costs. Blair launched the site with plenty of time to get the bugs out before the vital holiday shopping season.
It was a good start. But a lot of companies took similar steps during the dot-com craze, and many of those efforts floundered. What set Blair apart was its almost uncanny ability to make just the right moves as its strategy began to unfold.
There are always things that can be improved. For example, we wondered how Blair.com would rank against competitors on Google. So we asked 10X Marketing, a firm that specializes in search engine optimization, to find out. Neither Blair nor Crossing Pointe showed up in the top 200 sites. An archrival, Coldwater Creek, ranked ninth, and an affiliate site called Blair-Clothing.com showed up at 148. Clearly, Blair could work on that (see chart on page 26).
However, in our look at Blair, we noted eight distinctions that set Blair’s effort well above many competitors. None is rocket science. In fact, you’ll see most of these strategies recommended in other parts of this magazine. But Blair’s revenue growth is proof that they work when executed properly.
1. Effective Promotions
Chris Park, who manages Blair’s affiliate program, said affiliate marketing works for Blair because savvy affiliates are “able to market some promotions, percentage-off savings and reduced price or free shipping” all bona fide inducements to the target market.
Those are just the right perks to attract repeat online buyers, according to the 2003 Retail Consumer Retail report from Jupiter Research. The report shows:
- Discounted shipping and handling continues to be consumers’ favorite online promotion.
- 33 percent of buyers often or sometimes make unplanned purchases to take advantage of a special deal or promotion. For the foreseeable future, retailers will still have to provide incentives to influence these purchases.
- High or hidden shipping and handling charges have led 44 percent of buyers to reduce their purchases at certain stores, and 36 percent of buyers have stopped buying because they have been required to register at certain stores.
“It’s one thing to put a banner (ad) up,” said Park, “but it’s quite another to say, ‘You’ll get $50 worth of free shipping.”‘
2. The Right People
Park’s presence at Blair is, in itself, a sign that Blair’s pro-gram is on the right track. It isn’t enough simply to have someone in charge of online sales. Running an affiliate marketing program at a large company is a full-time job.
“Chris is able to give affiliates his hands-on attention. He is in constant contact with them about upcoming offers and promotions – two key components to a successful AM program,” said Parnell.
“One of the biggest keys is to have at least one person dedicated to it,” said Shawn Collins, author of Successful Affiliate Marketing for Merchants. “One of the biggest mistakes I see is that people assume it’s a magic bullet all by itself, but you have to dedicate staff to it full-time.”
3. The Right Products
Time is precious to affiliates, and most won’t promote a product unless they believe in it. Blair’s longevity bespeaks the quality of its goods. Clearly, no catalog company could survive so long without products that please consumers.
“You’ve got to have value,” said Parnell. “If the products don’t sell on repeat business, the affiliates don’t want to work with you. The fuel in the affiliate marketing program engine is the merchandise.”
The new brand, Crossing Pointe, was closely tied to the Web strategy. The brand’s mission was to provide fashion items at moderate prices to the 37 million female members of the baby-boomer generation, those 36- to 54-year-old women who presented a huge opportunity for Net sales. It’s a crowded market and Crossing Pointe is unknown to many shoppers, but Blair relied on its traditional value proposition to build the brand.
“We’re not L. L. Bean when it comes to name recognition,” said Park. “We service middle-income America with value-priced clothing.”
4. Strong Partners
“Partnerships and alliances are key building blocks in today’s marketplace, so we are encouraged about our [affiliate] program’s short and long-term potential,” said CEO Zawacki.
Parnell, who came to Blair from Performics, hired his old company to provide the technology for tracking affiliate sales, but he opted to keep program oversight and the handling of key affiliate relationships under Park’s control.
“[Performics] is a very important partner and they are very visible and active in selling [affiliate relationships] in their own right, but we also enhance and synergize that effect,” Parnell said. “We do a lot of our own research and follow-through.”
5. The Big Affiliates
The mainstays of the affiliate program are the big online shopping malls that feature hundreds (sometimes even thousands) of consumer shopping options. To set itself apart from competitors, Blair has paid slotting fees for preferred placement on selected sites.
“This is similar to what is done in a grocery store where companies pay a fee to have their products displayed at eye-level instead of the bottom shelf, or to be next to the chips and pop section,” said Parnell. At CouponMountain.com, for instance, Blair.com, filled the top slot on the women’s clothing page. (When we looked, Gap was in the second spot.)
At ActivePlaza.com, another affiliate, Blair.com was featured in the top slot on the women’s clothing page in October. CrossingPointe dominated the right side of the page. At a third affiliate, IShopWorld.com, Blair.com’s link was prominently featured in the top-selling women’s clothing store slot. A rival, Coldwater Creek, received even better billing with an overhead banner ad.
Blair is regularly featured on a wide range of loyalty-based sites, like EBates .com, that offer points, airline miles, rebates and other perks to Internet shoppers. And then there are the smaller storefront sites that may feature only a handful of buying opportunities.
“Blair does very well with affiliates that offer something back, sites like MyPoints and EBates, where you get something back,” Park explained.
Advertising is fine, but personal relationships also play a key role in building sales at these very important affiliates.
“The relationship we have with Blair is so strong because of the communication they have with us,” said Chris Washburn, head of business development for CouponMountain.com. “Chris Park is my communication link with Blair, and he is always sending me information about deals and coupons, which, as you can tell by our name, are very important to us.”
6. Mom and Pop
“We do work with a lot of smaller sites and we literally have thousands of mom-and-pop operations in our affiliate marketing program,” Parnell said. And, by the nature of affiliate marketing, those thousands of affiliates instantly become evangelists for Blair. Of course, Blair is continuing to recruit more.
Becoming active on the affiliate marketing industry message boards run by IAFMA.org and ABestWeb.com is a great way to get more affiliates, according to Collins, whose full-time job is marketing manager for ClubMom.com, a membership organization for mothers.
“They (message boards) are great for recruitment, so it’s great to take an active role in the industry and show that you really care,” Collins said. “I track all of the links I post and a lot of recruiting comes from there. It’s an indirect way to recruit new affiliates.”
Is there any screening before affiliates can sell Blair merchandise?
“We retain the right to approve any affiliate marketer,” Parnell said, using words like “objectionable” and “polarizing” to describe the types of sites that Blair would shun.
The big affiliate marketing program companies, like Performics and Commission Junction, also have guidelines regarding the types of sites they will work with and requirements for affiliate marketing participants.
Through Performics, the mom-and- pops earn a 9.5 percent commission on Blair sales. At Commission Junction, the commission Blair pays is 8 percent.
7. Top Line Growth
Strategies are nice, but this is business. And the changes to the online program showed measurable results almost immediately. That’s a key for any corporate e-commerce effort in the aftermath of the dot-com meltdown.
“For the first complete year [after the re-launch of Blair.com], online revenue grew to $35 million,” said Parnell. “In 2002, that number went to $58 million. By the halfway point of 2003, online sales climbed to $36 million.”
8. An Open Mind
Blair aims to extend its marketing relationships and online partnerships wherever and whenever the opportunities present themselves – even if the payoff isn’t obvious or conventional. Parnell cites Blair’s relationship with Tide, the icon detergent brand from multi-product powerhouse Procter & Gamble, as an example of the latter.
“We’re working with Tide and they’ve got a link on our site as part of their Give Kids the World program,” he said. “That’s a good example of two companies working together in a different sort of way.”
A link from Tide’s home page sends interested parties to Blair.com to complete the purchase of a model car – a die cast 1/64th scale replica of the 2003 Tide #32 Winston Cup racer. Through a link from Blair.com’s home page, shoppers get a chance to learn more and support the program. In both cases, the Web page is also a platform for Blair to plug its latest set of email specials.
“Any business book you read today talks about alliances and partnerships and ‘co-opetition,'” Parnell said. “Activities like this simply give companies like us more opportunities to work together.”
And working together is really what affiliate marketing is all about.
FRANK THORSBERG, is a veteran business writer with experience covering finance, small business, technology, sports and investments for a wide range of online and offline publications.