FROM Direct Marketer to E-Commerce Business.

Lab Safety Supply, Inc. uses E-commerce as an extension of direct marketing efforts

HOW DO YOU GO FROM BEING A DIRECT MARketer for the past 10 years to an e-commerce business without compromising the service that has made you successful over the years? Even still, how do you incorporate seven separate catalogs with safety and industrial supplies into one easy to navigate Web site? The answers can be found at www.labsafety.com, where more than 65,500 products can be easily searched, industry information is quickly obtainable, and technical and customer service support is just a click away.

"One of the things we've been trying to do with the Internet craze that's going on now, is to design a Web site that reflects our overall value and brand that we have been building through our catalogs for a long time. We wanted to give our customers an alternative mechanism to order. So what we tried to do is really reflect the same look and feel of our company when we went online," explains Brad Herrick, manager of circulation and database analysis at Lab Safety Supply Inc., Janesville, Wisc. "Our goal is to have the most user friendly site that's the easiest to set up in terms of an account and the easiest to transact an order."

Actually it is their direct marketing experience that has helped them achieve a site that is customer-focused and service-oriented. "Since we have been a direct marketer since the early 1990s, we have had a focus on who our customers are and we understand what kind of products they buy and what their interests are. So that direct marketing expertise gave us leverage and efficiency on the Web compared to somebody just getting into e-commerce that doesn't necessarily understand direct marketing," observes Herrick.

The Lab Safety Supply site debuted in early 1998 as a complete e-commerce site with ordering transaction capabilities. The focal point is the seven catalogs: Maintenance Direct, Material Handling, Safety Essentials, Spill Cleanup, Signs & Labels, Labware, and First Aid Health & Wellness. Complementing the products are free e-mail newsletters that encompass safety and industry information, a technical support area, complete with an e-mail link to contact the company's technical staff, service frequently asked questions, and a customer feedback link. Their direct marketing flair is evident in the home page's "Save Big Products" banner that brings customers to a page of everyday personal protective wear at discounted prices.

"E-commerce for us is really just an extension of our continuing effort to be a direct marketer. There are still challenges we face going forward in terms of segmenting our customers. Right now, as a direct marketer, we've always had the opportunity to target who we really wanted to acquire. Now, we're still doing that, but the floodgates are somewhat open in terms of who wants to find us," Herrick explains of the worldwide outreach the Internet brings to the company. "We're watching very closely e-commerce and business to business to make sure we're leveraging e-commerce in a way that enhances our existing business model rather than distract from it, but at the same time addresses those new competitive issues that we're faced with."

In time, Herrick expects the site to influence Lab Safety's customer base. Since launching www.labsafety.com, the company has experienced almost instant savings by being able to remove customers who prefer to use online catalog shopping from its traditional mailing list and replace them with new prospects. "Lot of our customers are converting to online ordering so it's an issue of our meeting expenses and looking where we could serve our customers better and reduce expenses," he explains. "Our site right now in its evolution is more relevant to our existing customers and we're getting more bang for the buck by converting some of our customers to this method, or at least opening up this method as another opportunity for them to communicate with us. So that's where we're seeing the most success. From a prospecting standpoint, we are seeing some success, but it's been limited because the online mailing lists out there are not at the quality of direct mail lists."

Profiling accurately

That focus has forced the company to use the new technology available to them to do a more efficient job profiling its customer base. They had to make a distinction as to which customers preferred doing business online, which wanted to stay direct mail, and which preferred telephone sales. "We conducted a customer segmentation study in early 1999 in which we found that we have four different customer groups based on technology preferences. So we used some of the information to build questions into our system that would profile our customers up front. This will enable us to segment our customers so we're not mailing a catalog to someone who prefers to communicate with us only through electronic means," explains Herrick. "In just one year, we're already seeing a very subtle shift in our customer base and in our makeup. So what we're doing is making sure we segment those e-commerce customers as they come on so we don't integrate them within our traditional business at times when it may not be relevant."

When the site first premiered, Lab Safety had a separate department dedicated to the Web site. Because the company is finding the site is affecting their business strategy, a cross-functional department was created. The team is responsible for enhancing the company's online presence by focusing on both design and operational technical issues. "We made a conscious choice last year to make sure the technology and marketing direction are closely interrelated," says Herrick. The cross functional team is the core basis of implementation for our e-commerce strategy and is the leading directional force that drives the strategy."

On the one-year anniversary of www.labsafety.com, the company made its first major set of revisions. The changes, explains Herrick, were a mix of customer feedback and a representation of the company's business strategy direction for the Web. "Some of the things we've done is really try to improve the usability and searchability of our site," says Herrick. "And that's an ongoing challenge. Because of how data is fed from different manufacturers, we always have to make sure we have relevant descriptions and the search criteria that's most relevant to the customers we are serving."

Continual clarification

The first site revision also featured a revamping of the home page to further define products. "What we found from customer feedback is even though we had a very clear distinction on some of the products identified by catalogs, it was somewhat confusing to the customer," notes Herrick. "From an appearance standpoint, it looked very good with the individual catalogs, but the descriptions in terms of what safety products are, for instance, weren't as apparent to the customer who was looking at the site. They might be looking under the safety area for a product, but it might have been under material handling. Yet in their minds they're looking for a safety product."

The solution was an enhancement that included a search mechanism that identifies product by keyword regardless of the category. So now that customer who knows exactly what they want when they go to the Lab Safety Supply site can search for the product among the full family of catalogs.

Moving into 2000, the company plans to shift more aggressively into one-to-one marketing. "With the redesign of the site, we launched a Microsoft Site Server that will give us more added functionality to really personalize the content of our Web site," says Herrick. Also in the works is the creation of a customer panel on the Internet. "This user group would give us feedback on how we're doing and let us know, for instance, if the site is usable, if we have the information they want, and if our prices are competitive," he adds. "So we would have an ongoing live feed into our strategic process that includes the customer and by doing that I think we can adapt quicker and change our site to reflect customers' needs faster."

The Web site also is playing a major role as the company redefines its business strategy for the upcoming years. "Since we launched the site, it's taken on a purpose of its own and we're redefining our strategy as we look at the customers who are coming to our site, what they're saying and what they're doing. So what our original intent was when we launched the site is going to be very different from our strategy in 2000-2001 in really where we want to go from an e-commerce standpoint," Herrick explains. "Since we implemented the Web site, it's been a work in progress."