How Grainger Gets 12% of Its $4.8 Billion Sales Online

CHALLENGE

If you think your marketing career has been stressful, just imagine being Mark Wollney who through twists of fate found himself laid off by various Grainger dot-com ventures not once but twice in a row.

Grainger is W.W. Grainger (NYSE: GWW) the 75-year old Fortune 500 distributor of more than 220,000 maintenance, repair and operating supplies to over a million business customers.

About 18 months ago, when Wollney started working for Grainger for the third time around (this time as eBusiness Marketing Director), he was over the whole dot-com thing. No more different ebiz dress code, no more working in ebiz offices more than five miles down the way from Grainger's HQ, no more planning for the separate dot-com IPO.

It was time for integration. For the Web to become just another one of many channels customers could use to communicate, research and place orders.

Just one problem. Customers had visited the site Grainger.com, in droves. Not all visitors were "sticking." Many went there once or twice and then never visited again. What to do?

CAMPAIGN

Wollney and his team decided to take a step back and look at this integration idea from the customers' perspective. What did customers really want from the online channel anyway?


#1. More respectful use of email communication

The Grainger site had been collecting permission to email customers for a long time, but no one really used the list until 18 months ago. Then in a big sales push, they started emailing it like crazy. Customers were receiving two-three untargeted email promotions a week.

Wollney says, "The mindset was, 'Let's keep sending messages and sooner or later we'll find the right products for you.'" Opt-out rates climbed precipitously almost immediately. Within six months the Web team pulled back to reconsider tactics, "We stopped the madness."

The team decided to test two, much more cautious, email tactics:

- Occasional marketing promotional mailings, rarely more than one a month, which offer free gifts such as tools or camping gear to customers who purchase more than $250 from the site for three months in a row.

- A new regular email newsletter, sent every 60 days, that features useful articles on topics such as workplace safety, and educational notes about how to use the Grainger site to make purchasing easier. Although issues contain some promotions, they are more geared toward usefulness than selling. (Link to sample issue below.)


#2. A home page that downloads far more quickly

In order to support the site, Grainger had already put a team of ebusiness reps into the field to accompany sales reps on sales calls. Wollney's team gathers invaluable information on how real-life customers use the site through weekly teleconferences with these reps. Plus, reps are also asked to comment on site revision plans before changes go into effect.

The biggest fact Wollney learned from them was the site's home page loaded far too slowly for many customers.

"Not all customers are on T1 lines. On the shop floor they may be on 56k. We had 47 images on the old site. When the sales rep went out showing the site to customers, loading it up took forever. You have all this quiet time, 'The site is really good… once it loads.'"

Earlier this year the design team removed about 50% of the home page's images and download speed increased significantly.


#3. Making the home page easier to navigate

Even after the home page loaded, customers were having a hard time navigating it, because there was still so much stuff on it. Option after option had been added as the site grew over the years.

Wollney's team studied click stream analysis to discover which options customers actually used, and which were mission-critical for the home page versus being placed deeper in the site. In the end they removed many of the "gizmos, bells, and whistles" including links to a lighting wizard, a motor matching tool, a caster matching tool, etc.

"We had four links on the home page to repair parts. You could see how it made sense at the time as the site evolved. For the first time we circled back to look at what makes sense for customers. How to rearrange it so they can find what they need. They need to log in, search, and buy. It's that simple. We were making it much harder than that."

Aside from removing extras, Wollney's team also tested rewording key navigation links to make them clearer to the average customer. For example, "About Us" was relabeled, "Company Info."


#4. Making it easier to place orders through the site

"Our customers don't all spend all day in front of a computer," Wollney says. "A purchasing manager may walk through the shop floor and end up with two pieces of cardboard with SKU numbers on them, a few post-its, and an actual broken part 'order me a new one.' Then he goes back to his desk and thinks, 'How am I going to get that order in?'"

The Web team focused on four projects to make purchasing manager's jobs easier:

- A human-friendly online registration form. The form used to be four pages long. Now it is just one page and there are plenty of handy help prompts next to each item that might be confusing. (In fact, we highly recommend everyone with an online registration form on their site take a look at the ultra-clear instructions at Grainger's!)

- The ability to keep lists of items ordered on a regular basis, so users do not have to search the catalog for frequently purchased items every time they visit the site.

- Easy access to order history.

- The ability for buyers wishing to purchase items above their authorized spending level to have their request forwarded for approval to another approved buyer of their choice within their organization.


Despite these email and site design improvements, Wollney realized that true success would only come from online/offline integration. Neither customers nor sales were served by a disconnect between Grainger the brick and mortar and Grainger the online business.

This integration process began in four key ways:

a. Brand name. This January, the Web team took the ".com" off of the site's official name and logo. Now the site has the exact same name as the Company.

b. Replacing the photo of Grainger's catalog with a photo of Grainger's box on the home page.

Wollney explains, "Brand studies came back showing that when customers see a Grainger box arrive on their desk, they know their job is done. They needed a part to repair something, and here it is. They know they can count on Grainger for it." While a thick catalog implied work, a box implied a task already accomplished easily.

c. Adding educational information about the site in a prominent place in Grainger's annual print catalog. "This February we got a couple of pages near the front for the first time," says Wollney. "The prior year we were on the back of the index page."

His team was careful to use these two pages to focus on educating customers about how the site can make their jobs easier. "You need to tell them how you're going to help them as opposed to a promotional spin."

d. Adding educational messages about the site to Grainger's on-hold phone systems for customers. Again, instead of pushing a particular promotion, the phone messages focus on a benefit of using the site for purchasing. Each month Wollney's team changes the message so frequent callers hear different things.

He notes successful messages are "succinct, to the point and relevant."



RESULTS

Despite the economy, Grainger's online sales rose from almost 10% of total overall sales in 4th quarter 2001 to about 12% of total overall sales by the end of 2nd quarter 2002. Total 2001 Grainger revenues were $4.8 billion.

The Grainger.com division became profitable for the first time in 2001.

In a speech to shareholders this April, Grainger's Chairman and CEO Richard L Keyser said, "We’ve found that customers who purchase online are much better customers. They spend more, buy more often and buy from more product categories than traditional customers. Last year, we saw 11% incremental growth from customers who’ve converted to online procurement. Because the customer does most of the order entry for us, online orders are less costly to process."

Wollney also shared these results details:

- Customers tend to save their email newsletter issues for months so they can refer back to them. The unusually valuable content is definitely paying off. (Link to sample below.)

- Approximately 40% of customers request text-only for all email communications including newsletters and promotions.

- The first week after the team changed the wording on the navigation bar from "about us" to "company info" that link saw a 42% increase in clicks.

- The shorter online registration process (from four pages to one page) has caused a significant decrease in the site's registration abandonment rate.

- 30% of active site users are using the personal list service to keep notes on frequently ordered items. The average personal list user has two lists.

Aside from sales and site usage growth, Wollney's favorite result is the fact that Grainger as a company is becoming truly integrated.

He says, "When Grainger.com launched early on, we were public enemy number one. Everyone was scared the Internet would take away business from them. But now we're starting to get buy-in."

For example, the Call Center is very happy that their inbound lines are not tied up answering so many basic questions such as what hours the Company's branches are open, or order shipping status.

This corporate integration means the Web team are now being integrated into ranks of regular employees. Wollney now reports to a traditional head of marketing, not a dot-com businessperson. Wollney's office is in the main building, and by 2003 the rest of the Web team will also should be moved into the main building instead of being isolated five and a half miles down the street.

He says happily, "We've been accepted into the fold. We get to sit at the big kids' table now."

Link to sample copy of Grainger's email newsletter
http://www.marketingsherpa1.com/grainger/sherpa_grainger.html
http://www.grainger.com