Omaha Steaks first began selling over the Internet in the early CompuServe days back in 1990. The company's first website was launched in 1995 and the company is now well established as an online brand, including a dedicated AOL site with AOL keyword "steaks'. The company's marketing strategy for its online business remains consistent, building upon its offline brand recognition through a series of direct mail campaigns, offline advertising and targeted TV spots. This year Omaha Steaks has complimented its AOL deal with a similar deal on Yahoo! The deal with Yahoo! was put in place in the first quarter of 2000, but the company will have to wait until the end of the holiday season before it can determine how good an investment this was. As Todd Simon, Vice President of Omaha Steaks puts it, "we are always looking for a better return on investment. It's our first time out, so we haven't perfected exactly what our strategy will be. We went into the deal with a strong return on investment target." Omaha's relationship with AOL also continues to be a strong revenue generator for the company. "The AOL customer base is pretty tuned in to online commerce." Although Simon still reserves judgment on whether the company is getting a good return on its investment with AOL. The central part of Omaha's marketing effort remains its outbound email marketing to 600,000 customers. Its email efforts keep the company in front of its customers and help drive customers back to the website. "Customer retention is the single most important metric that we look at," adds Simon. Omaha Steaks has recently upgraded its website, improving the user interface to make it faster to navigate, thanks to the implementation of an e-commerce application called J-Commerce from eOne Group. The site also includes a new 'members-only' section, reserved for registered guests who are willing to part with their personal information in return for access to special merchandise offers. The company has also adopted video presentations to enhance the site's content. Unfortunately, visitors are forced to navigate through the cookbook to find them. The videos become very repetitive if you watch more than one or two during a single visit. They seem to highlight the fact that there are only so many ways you can cook a steak! [No BAM! here. Ed]. According to Simon, it is too early to tell if the changes to the site have improved sales, but he does say, "they have not hurt sales." Read into that what you will. Because Omaha came to the Web with an established direct marketing brand, their experience of what marketing strategies work best is different from pure play eRetailers. Despite investments with AOL and Yahoo!, Simon does not list these relationships in his top three ways to attract customers to an online site: "Have a strong name brand. Branding is so important because there are trust issues online that can't be overcome with just text." [Easy to say if you already have an established brand]. "Offline advertising," e.g. traditional TV, radio and print advertising. "Strong promotions to encourage trial. Making someone an offer they can't refuse." [The hook 'em and reel 'em in approach can be expensive - the classic examples of this are emails and direct mail promotions that offer substantial discounts to new customers].
Simon believes the company gets its best return on investment from offline advertising and email marketing. Omaha has a well-established affiliate program, which is managed through LinkShare. "It is consistently in the top ten of programs that generate revenue for us, and we are always looking to expand it," says Simon. Omaha Steaks has learnt that an affiliate program requires constant management, even when using a service provider such as LinkShare. They now have a dedicated affiliate program manager within the online team. Privacy PolicyOmaha Steaks has a loosely worded privacy policy that appears to let them share customer information with third parties. The policy includes the following wording: "When you supply us with your postal address or phone number online you may receive periodic mailings or phone calls from us with information on new products and services or upcoming events. You may also receive mailings from other reputable companies." This seems to imply that personal information is either given away or sold as a result of providing an address, e.g. when purchasing product from the company. Simon says Omaha Steaks has not felt any impact of tightened concerns over privacy yet. "It's trust in your brand that is the primary determining factor in whether a customer feels comfortable doing business with you." Unfortunately, Amazon.com recently found out that this is not always true. With one of the most trusted brand names on the Internet, and a more tightly worded privacy policy the Omaha's, Amazon.com found that it is not enough to rely upon the integrity of the brand itself when it comes to consumer privacy. Omaha Steak's eRetail critical success factorsWe asked Simon what he felt were the fundamental critical success factors for any eRetail site: "Merchandising is the number one critical success factor; you can't just put up a list of products and prices and expect people to buy them. eRetailers can't forget that they are retailers and that the number one thing that they need to be doing is merchandising product. You have to display, make offers and have compelling copy, and do all the things that real merchants do." "Having a flawless backend. I'm a firm believer that marketing is not what drives this business. Marketing is always a component, particularly to attract new customers. Once you've attracted that customer, the cost of keeping them drops substantially if you do the basic things right like backend fulfillment and customer service."
Reasons for dot com failure?Simon believes the reason for so many dot com failures in 2000 can be put down to companies "spending too much money on marketing." He suggests many companies have not had a sustainable business model. "That's why catalog marketers continue to be successful in ecommerce, because we didn't have to spend the same kind of money on infrastructure to grow our business." TechnologyFour Dell servers running Linux with Apache web server
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