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May 16, 2007

Secret Behind Office Depot’s Online Success (Hint: They Listen to Their Customers. Yes, Really)

SUMMARY: Last time we checked, Office Depot's ability to integrate multiple channels had their ecommerce engine humming to the annual tune of $3.1 billion. Well, that was 2004. They've since upped that number, reaching $4.5 billion in 2006. Sounds like they didn't get to be the #1 online office supplier without doing a few things right.

Let’s peek at this leading retailer’s key multichannel strategies, which are constantly being honed not only by the marketing department -- but also by the customers themselves. You see, Office Depot is all about CRM.
Noah Maffitt, Director Ecommerce, Office Depot, attributes his company’s online growth -- 29% of total sales and increasing rapidly -- to the constant collection of customer feedback at various touchpoints, letting that intelligence seep into nearly all of their initiatives. The data they collect onsite, via email, through surveys, in call centers, from focus groups and retail stores shape their multichannel vision. Nor do they allow room for online/offline politics to get in the way.

“The growth is absolutely the collective result of all those things,” Maffitt says. “It’s about our ongoing focus on the customers. And it’s about not only meeting their expectations, but also exceeding them. It is difficult to scale as aggressively as we do, but that’s where we set the bar.”

With 1,158 retail stores in North America and a website that fulfills more than 1.4 million purchases every month, that’s an understatement. Still, Office Depot execs were riding the horse of multichannel integration long before others were using the term. “Early on, people thought the Web was cannibalizing sales from other channels. Now, people across the industry look at online as an integrated piece to the larger marketing effort,” Maffitt says.

Their big-picture strategy is rather simple -- they collect the data, integrate it and use it to enhance targeting across all channels. Still, in the past year and a half, they’ve shifted toward an even more complex view of customers:

-> Step #1. Proactive about collecting feedback

Maffitt and his team think feedback should be *generated* more than simply collected as it comes through the door. Before setting up test pilots for onsite features, they tapped customer opinion in numerous ways. Here were six of the top methods:

- An in-house, outbound quality assurance staff makes thousands of calls a week. Order accuracy and delivery timeliness are among the topics that get covered in these follow-up conversations.
- Similar to a focus group, they bring in what they call a “customer advisory panel” to discuss issues about their multichannel effectiveness.
- They conduct ongoing user-ability tests to get human feedback (rather than just site analytics data) on how the website is performing.
- Field reps file reports to gauge the needs and wants of their business-to-business customer base.
- Behavioral analytics are mined from the consumer and B-to-B sites, as well as from their email campaigns.
- They encourage store employees to collect surveys from in-store customers.

“Behavioral targeting to us is more than if they just looked at chairs last time they were on the site,” Maffitt says. “It’s where customers are in their internal business or consumer cycles.”

-> Step #2. Print-on-demand accounts

Based on the various strains of feedback, they launched a system last year that’s similar to what Kinkos or Sir Speedy offers, letting customers create logos, business cards, envelopes, promotional items and other marketing materials. The source creative can be stored in personal online accounts, and the printing jobs can be sent to stores around the country for pickup. Some locations even offer work or home delivery.

Maffitt and his team made the service simple to use and needing as few clicks as possible. On the home page’s left-hand nav bar, users could choose from four choices in the Design, Print & Ship section:

o Print on demand
o Design service
o Custom imprinting
o Promotional products

The next page offers a button to let users start uploading documents immediately or select from design and custom imprinting services. A “print preview” allows users to view the documents they loaded in the same dimensions, fonts, line-wrapping and other formatting.

“The design and print initiatives have been extremely successful for us,” Maffitt says. “It’s the integration between the offline and the online worlds that we are proud of. We know from research that the more channels a customer goes through, the more loyal they are, the more profitable they are and the better experience they have.”

-> Step #3. Supplement empty web category pages

Surveys indicated that consumers wanted a more complete section of electronics to make the ecommerce site a one-stop shop. Therefore, Maffitt and his team added thousands more SKUs -- computers, televisions, MP3s, cameras, etc. -- to launch new product categories or to bolster existing ones.

-> Step #4. In-store assistance leads to online purchase

They also allowed store patrons to customize computers (according to their hardware and software preferences) with a sales expert before going home to complete the order online. Once again, based on customer suggestions, the idea was to more flexibly serve those who needed more time to ponder the micro-decisions involved with such a complicated purchase.

These customers received an instructional printout to help with the at-home process. In the end, the instructions included a code that gave credit to the individual salesperson and the appropriate store from their 1,174 locations.

This also encourages the reps to massage the sales process until the customer was completely out the door (or in some cases, off the phone once they got home). “The offline experience complements the virtual one,” Maffitt says.

-> Step #5. Targeted emails to nonconverters

Office Depot’s email campaigns have long targeted offers based on online purchase history. But now they made the product pitch to center on various activities, including online, catalog, call center and in-store (of course, well within the boundaries of database marketing best practices).

“If we see a customer investigating our furniture offerings and don’t track an order or a call to customer service, maybe there’s something in the offering they didn’t see online,” Maffitt says. “Perhaps, they didn’t get to that critical page that really outlines the information that’s important to [the purchasing decision].”

-> Step #6. Answer requests for online “paper” catalogs

Because of customer feedback, Maffitt and his team (like other retailers in recent years) have been testing the so-called “virtual paper catalog,” which flips page-by-page onscreen.

The virtual catalog offers online shoppers access to monthly catalog-only offers, free gift with purchase, new product launches and exclusive sales. To see a product close-up, users can click on an item, and a pop-up box opens with another image, cost and product details.

The test began last fall, and they’re still continuing, but results have been strong enough to suggest that it appears headed toward permanency. “There are still a lot of people out there who prefer a more-tactile experience,” Maffitt says. “We’ve given them more options -- they can thumb through pages as if they have the catalog in their hands.”

-> Step #7. Inform readers of new features

As part of a major website update last year, Maffitt and his team incorporated several changes, including:

o Adding dropdown menus to their nav bars
o Giving repeat users faster access to their accounts and previous orders
o Enhancing their internal search functions to let users search based on product features

To let users of the changes, they created a landing page listing the new features and they included a survey to get customer feedback.

Noah Maffitt will speak at the eTail 2007 conference Aug. 6-9 in Washington, DC. For more information, go to:

Useful links for this article

Creative samples from Office Depot

Past Sherpa article -- Four Basic Tactics Behind Office Depot Online Success: $3.1 Billion Expected for 2004:

RichFX - provides Office Depot’s virtual catalog:

Office Depot:

See Also:

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