Progressive Distributor

Lab results

The nation's largest direct marketer of safety supplies finds success by expanding its reach into new product categories and new customer segments.

To outsiders, the direct marketing distribution model seems fairly cut and dried. Throw together a few product photos and simple product descriptions, organize them by category, print a few thousand catalogs and mail them to customers and prospects. Orders will soon start pouring in, right?

Successful business-to-business direct marketers, like Lab Safety Supply, however, know that the business is much more sophisticated and complex. With no field sales force to regularly gauge the ever-changing needs of the markets it serves, a direct marketer must find other ways to keep abreast of customer requirements. That becomes even more important when a company wants to expand into new product categories and customer segments.

Grainger subsidiary Lab Safety Supply, based in Janesville, Wis., offers more than 100,000 products in several product categories, including safety, maintenance/MRO, material handling, labware, spill cleanup, first aid and signs/labels. Although many people still think of the company exclusively as a supplier of personal protective equipment and other safety products, about five years ago it began to broaden its scope to include a wide range of industrial supplies.

“Our business was built on a solid customer service foundation. We have an excellent operational platform that we can leverage, so we started looking at other product lines customers told us they were interested in,” says company president Larry J. Loizzo.

The numbers help explain what keeps customers happy. Ninety-seven percent of product lines ship within 24 hours, and more than 90 percent of inbound calls are answered in less than 10 seconds, before the customer even hears a ring.

Safety represents about 40 percent of sales. The industrial lines represent 60 percent.

As the company added products to the mix, its primary catalog grew larger. As the catalog grew, it raised the possibility that it might become so large that customers would find it unappealing. By 1999, its general catalog reached nearly 2,000 pages and included more than 65,000 products. Some customers started to complain that the book was getting too big.

Over the next few years, the company selectively added new specialty catalogs, each targeting a separate market segment within a defined customer base. For example, a material handling catalog features carts, bins, shelving and just about everything needed to move, stack, store and organize material used in workplaces. A facility maintenance catalog includes tools and accessories, janitorial, electrical, plumbing and other supplies integral to keeping facilities running smoothly.

Acquisition plans
Another way Lab Safety Supply plans to expand its reach into markets it does not currently serve is through acquisitions. In early 2001, the company purchased Ben Meadows Company, a direct marketer specializing in equipment for the environmental and forestry management markets. The acquisition brought more than 40,000 new customers, added more than 12,000 products and provided entry into a new, $500 million market.

“After acquiring Ben Meadows Company, we have been very careful not to completely abandon the brand identity, look and feel that they carved out. While we improved what they did, we also tried to protect what differentiates them,” says creative services manager Brenda Frank.

Additional acquisitions are likely.

“There’s the option to buy in product categories we’re already into and strengthen our position,” says company president Larry Loizzo. “Or, we have the option to do exactly what we did with Ben Meadows Company, which is buy a business-to-business direct marketing brand in a market where we currently have low market penetration, yet is a logical extension of our current business model,” he says.

In the future, he says the company may become a multi-brand platform, meaning it could publish titles under the Lab Safety Supply banner or promote other established brands, as it did with Ben Meadows Company.

“We think multiple titles in multiple markets is the way to go,” he says.

Data mining
One way to maximize sales and minimize costs is to make sure every customer doesn’t receive every catalog, and that the right customer gets the proper sequence of catalogs. So, careful thought and research goes into each catalog.

Certain audiences, like industrial hygienists and safety directors, may need more technical information. Other people, who buy general maintenance products such as mops or cordless drills, may not.

Before deciding what to put into a catalog, data modelers and statistics experts on staff pore over data about customer buying habits.

“A lot of direct marketers have data but they don’t spend a lot of time looking at it beyond circulation. Or, if they do, it’s such a massive process it’s difficult to figure anything out by looking at it,” says Loizzo.

Lab Safety Supply tracks which catalogs customers use to place their order, how many times they’ve ordered, what they’ve purchased and other buying patterns.

“We don’t see our customers face to face but we know a lot about them based on this transactional data,” says Rob Malewicki, vice president of customer information.

Suppose, for instance, that someone from a chemical plant with between 100 to 500 employees buys something for the first time through Lab Safety Supply’s signs and labels catalog. Modelers compare that buyer to a profile of people within the industry who have bought similar products in the past.

“We use the data to see what has happened in the past and then predict what might be the best catalog to mail them in the future,” Malewicki says.

Such information also helps influence the composition, look and feel of a new catalog, says Brenda Frank, creative services manager.

“When we’re putting together a potential solution for a set of customers, that kind of information helps us know the best way to design, construct and target a given catalog,” she says.

Before introducing a new title, however, it’s normal to conduct market sampling.

“The nice thing about the direct marketing business is we can test various concepts in small, controlled ways,” says Malewicki. “For example, one region of the country may get a different cover treatment. We can test different ideas. It helps us refine our offering before we roll something out on a large scale.”

The sincerest form of flattery
In addition to customer feedback and sales results, there are other ways to track the effectiveness of a catalog. One way is to notice how quickly competitors tend to copy the look and feel of your catalogs. Another is to receive accolades from your peers. In 1994, Lab Safety Supply won its sixth consecutive annual catalog Gold Award for catalog excellence sponsored by Catalog Age magazine. It has since won several additional annual catalog awards, including an i.merchant Silver Award in 2001 for its Web site.

Ask an expert
Customer service representatives and technical support staff are another source of valuable information. During conversations with customers, they find out what problems customers are trying to solve, which industries they represent and other data. That input further aids in the development of new solutions and new media.

Twenty-five technical people answer questions on the phone from 6 a.m. to 9 p.m. every weekday. Called Safety TechLine, the toll-free hotline offers callers a chance to speak one-on-one with a safety expert who can answer their questions about regulations, compliance and product applications. The experts on the hotline come from a variety of technical backgrounds, including certified safety professionals, people with degrees in chemistry, biology, life sciences and other disciplines.

“Our tech people are very good at understanding the customer’s environment, asking questions about that environment and then, based on what the customer has told them, presenting the customer with alternatives so the customer can decide,” Loizzo says. “No purchase is required to have access to this free service and the caller can count on no sales pitches.”

A tech rep might field 50 or more phone calls a day. About half of the questions pertain to safety and compliance concerns, such as which cartridge to use with a particular respirator. Other questions deal with product specifications and applications.

The tech reps occupy cubicles on the fourth floor of the company’s impressive facility in Janesville. Each one sits in front of a computer monitor connected to powerful imaging system software that enables them to pull up catalog pages, diagrams, regulations, MSDS and other technical information. They can even fax information to the customer while the person is still on the phone.

“Tech people hate not having an answer,” says Allan Helgestad, customer support manager. “If someone calls and we don’t have an answer for them, all of a sudden there are four or five people working on a solution. We do a lot of research on proposed regulations so that when it does come about we have solutions ready to go.”

A new media emerges
Often, the technical service representatives point customers to the company’s Web site, www.labsafety.com, to find information they need. The Internet offers even more information than customers can find in a catalog.

“The Web gives us a vehicle to provide quite a bit more technical information than we can fit into a catalog, and it gives us the ability to immediately get information to customers,” says Helgestad.

Following the anthrax scare that worried the nation after Sept. 11, tech reps fielded a flood of calls from people looking for information about how to protect themselves. The Web site provided a vehicle to post factual, updated information from the Centers for Disease Control and other sources.

When appropriate, information is organized in a Web resource center, making it easy for customers to find what they’re looking for without drilling down page after page of screen shots. The Public Safety Resource Center, for example, is where police and firefighters and other first responders find the information and products they need to keep themselves and others safe.

The Web initiative piggybacks print vehicles aimed at a specific audience. For example, the public safety catalog is aimed at paramedics, firefighters and law enforcement officers. The catalog helps drive customers to the Web site and vice versa.

Data modelers are just beginning to get a feel for how customers migrate through the Web site. Tracking which page customers visit first, where they go when they leave the home page, how often they visit the technical section, and which products they tend to buy after doing so, provides another valuable source of data.

The data is useful not only to improve the content and navigation of the Web site, it also helps determine how much customers rely on print media. In turn, that helps the company decide how many copies of the catalog to print, which customers to target, and other useful information.

Sound complex? Now you’re beginning to understand the sophistication needed to survive in the direct marketing distribution model.