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E-tail Evolution

A sticky interface and good content aren’t enough to keep customers. To give them what they want, decoratetoday.com CEO Steve Katzman says give it to them the way they want it. Here are his three principles for attracting and retaining customers.

This April, it seemed the only surefire dotcom survival technique was to become something else. B2Cs morphed into B2Bs or P2Ps — some more convincingly than others. Other consumer sites, however, stuck it out in the e-tail space and began to redefine the definition of online retail. In the summer of 2000, online women’s retailer lucy.com started a mail-order catalog. OurHouse.com, a Web-based home-improvement site, established 800-numbers to service its customers better. It seems these sites are learning a lesson decoratetoday.com CEO Steve Katzman mastered long before the spring of 2000: Give the people what they want.

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Now the largest home-furnishing company on the Web, decoratetoday’s genealogy stands in stark contrast to a standard e-tailer’s history. Katzman’s company can be traced back half a century to two family-run home-decorating chains in the Detroit area dealing in tile, wallpaper, blinds, and other home furnishings. The Katzmans went virtual before the Web even existed: In 1987, they gave up the store and opened American Blind and Wallpaper Factory, a virtual company that sells direct to customers using 800-numbers and back-of-magazine advertising.

In March 2000, American Blind and Wallpaper opened the doors of decoratetoday.com, which closed a $26.5 million mezzanine round of financing this June. Compare that DNA to the created-from-nothing furniture.com and Homeportfolio.com, two dotcoms struggling in the same sector.

Part of decoratetoday’s success lies in its niche: The fragmented home décor industry is accustomed to shipping custom orders direct to consumers. Katzman has had no inventory for more than a decade. Instead, he deals with 45 different factories that handle all the packing and shipping of orders — that’s an advantage even e-tail giant Amazon.com must envy. Here, Katzman passes along time-tested lessons for other dotcoms trying to stay afloat in the sink-or-swim e-tail sector.

Practice Makes Perfect

The pre-Internet business world may be ancient history to today’s digerati, but Katzman insists that decades of brick-and-mortar expertise give him an edge on the Web. “We’ve been able to develop very sophisticated systems for order processing, order tracking, and customer relations,” he says. “There is no off-the-shelf software for this type of business. Our systems have evolved through trial and error over 15 years.” That time and diligence have paid off: Katzman hopes to sell to a million customers this year.

Katzman may have a singular pedigree, but everyone can emulate the constant refinement he employs. Decoratetoday.com has 22 developers and programmers on staff — pretty substantial for a company that expects to make less than half of its $125 million revenue on e-sales this year. And Katzman’s always searching the Web for ways to improve the site. “We change it every single day to make it more user-friendly and efficient, and to bring in more sales,” he says. “I surf the Web competitively. I dissect Web sites that make significant revenue and figure out what they’re doing right. I’m not trying to reinvent the wheel. If I find a site that’s successful, I emulate it and try to go one step better.”

Have It Their Way

According to Katzman, 60% of decoratetoday’s customers return, and 25% refer others. But, he says, it wasn’t that way initially. “We disappointed a lot of customers at launch because we thought they’d do their research and then call us. But Internet consumers have much higher expectations for product information and service.”

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So, Katzman changed the site: “We now have 125,000 images of wall coverings online. A user can enter ‘butterflies and kittens and tulips’ or ‘wrestling,’ and — boom! — wallpaper with those designs pops up.”

But even that level of service proved insufficient. “Customers told us, ‘I want you to find the designs and send them back to me,'” Katzman says. “So we now do just that. We get thousands of requests for patterns every day. Consumers are the kings and queens of our world. To be successful, you must transform your business to accommodate their needs.”

Katzman keeps service in mind all the time. “The other day,” he recalls, “I ordered a book from Amazon. It was on back order. I got an email the same day, indicating the book was delivered to my home at 5:10. At 5:20, I called home. The UPS guy was still there talking to my wife. That tight integration of customer service and ease of navigation is what’s going to win.”

Open All Channels

Katzman doesn’t leave customer satisfaction in the hands of his programmers. He employs 700 in-house customer service representatives — a part of his effort to let customers contact decoratetoday any way they choose. When American Blind and Wallpaper Factory initially went dotcom, Katzman figured the days of 800-numbers were over — in the new world, email would be the only communication tool necessary. He was wrong.

“You must open up all the available channels,” he says. “I don’t care how you want to communicate with me — inbound 800-number, instant chat, fax, snail mail, email — I’m here for you. I mean, as great as Amazon is, if you dial Amazon’s 800-number and say, ‘I want to buy the latest John Grisham novel, and here’s my credit card number,’ they can’t process an order for you. Even Amazon has a way to go to be 100% customer-centric.”