A Talk With HSN’s Bill Brand

Posted by Carol Spieckerman on September 21, 2011

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At last week’s LIMA Retail and Branding Conference, I had the pleasure of meeting Bill Brand, EVP of Programming, Marketing and Business Development at HSN. In his presentation, Mr. Brand provided compelling insights into how HSN has built an enviable level of engagement that has transformed the retailer into a true lifestyle network. Following the event, I had the opportunity to speak with Mr. Brand and further explore how HSN will continue to connect its content with commerce and to cultivate a new generation of customers.

Carol Spieckerman: You talked a lot about the demographic sweet spot for HSN, which skews a bit older. Your HSN Arcade gaming platform is targeted at over-30 casual gamers as well. Do you have a strategy for capturing the attention of a new generation of HSN shoppers?

Bill Brand: Our strategy is much more about the psychographics than the demographics because it’s really about what’s going on in a customer’s life as she’s approaching her 30s, and what is changing. She has a lot less time. She’s married and having kids. And she doesn’t have the free time to wander through an entire mall and hit all the specialty stores so she’s shopping the end-caps. She’s shopping with us at that point because she can do it on her own time at any time, and on any device.

Spieckerman: So it’s the convenience factor that really resonates with that customer.

Brand: It really comes down to convenience and the idea that she trusts us because we have curated a collection that is appropriate for her. Our digital customer’s average age is several years younger than a TV shopper and at the same time, we continue to bring new customers into our experience who are in their early 30s. They continue to bring that replenishment factor.

Spieckerman: So instead of having a goal of customers growing up with HSN from cradle to grave like many traditional retailers, you’re looking at a constant refresh of your core customers, who are really open to the brand and get a lot of benefits from it.

Brand: Exactly. It’s a constant refresh and we’re in 96 million homes. We have just shy of five million active customers within a twelve-month period and there is an incredible upside within our current 30-plus target group that currently does not shop with HSN. There is still a significant upside in our sweet spot in terms of tracking new people to HSN and putting HSN in their consideration set.

Spieckerman: I loved it when you said at the LIMA conference that you now consider a first purchaser a trial rather than an actual customer. I think that you said that it is like you’re “dating” and not yet in a relationship with the customer and therefore treat her differently. Can you tell me more about that?

Brand: I think that sometimes we jump right to the end and think, “Wow, the customer’s here and they love us for everything we’re doing” when they don’t even know us yet. Let’s get to know her and try to make her more comfortable. For example, we might use acronyms and say, “We have a TS.” Well, what is a TS? Our loyal customers know that’s “today’s special,” the best value of the day. But that doesn’t mean anything to a new customer. She knows that she really loved the necklace that we offered today and that she couldn’t wait to get it home. Over time, as a jewelry customer, we’ll introduce her to the entire assortment and let her know when it will be on, so that she can find it more easily. It’s really having a direct two-way conversation with this person over time as we grow the relationship and educating her about the benefits of shopping with us. But the idea that all of a sudden, she’s going to be in the door and be a best customer –- that takes years to develop. We provide her with tailored marketing tools. For example, if she came to us through the Home category, we offer her a home guide so that she is more familiar with the brands that are in line with her category of interest.

Spieckerman: So you’re not taking anything for granted.

Brand: Absolutely not. And what’s interesting is that we can tell by the first purchase what her lifetime value potential is depending on which category she comes in through, and even her form of payment. Our customer segmentation points to levers that we can pull to encourage the behavior that we seek and we are then able to see how likely it is for her to continue with us. It’s about determining and leveraging the best customer pathway.

Spieckerman: What brings that trial purchaser to you? Is it brand affinity, programming, or marketing? Is one of those proving to be more effective in terms of entry point?

Brand: It all revolves around brand awareness and the idea that we create events. An event can be a great celebrity or a cooking show that our customers love to watch on television and online. On the social side, we are working a lot with affinity groups.

Spieckerman: For your loyal customers, the ones who shop with you several times per month, do you track their migration, not only between your channels but also between other retailers?

Brand: Absolutely. As part of the customer segmentation work that I mentioned earlier, we’re seeing where else our customers are shopping, the types of magazines they’ve subscribed to, and other television programs that they love to watch. We know that our best customers spend somewhere in that 25%-30% range of their retail spending with us, and we have increased our best customer segment consistently over the past two years. Our customers are very loyal and that’s a reflection of the brand equity that we have in HSN and also the individual brands that we carry.

Spieckerman: What, if anything, are you doing on the global e-commerce side? Is that a big part of your strategy? And if so, are there any markets that you believe are particularly well-suited to the HSN brand and to the brands that you have in your portfolio?

Brand: Currently, we’re not distributed internationally. We’re always looking for ways to strategically grow the business but at this time, we’re not looking globally. The way the digital commerce business continues to evolve, and with us at the forefront of innovation, we see huge upside potential here in the U.S.

Spieckerman: HSN is connecting content and commerce in ways that many traditional retailers are still trying to figure out. When you shop with those retailers, what do you think is missing? What should they be doing, based on your experience and all that you have accomplished at HSN?

Brand: Great question. Two things stand out for me [as] a very active shopper. When the leadership change took place at HSN five years ago, creating a great customer service experience was the top focus. I don’t know when the last time was that I had good service in a regular store. You and I were just in New York and, when I was there, I did quite a bit of shopping. I don’t think I spoke to one sales person other than checking out and asking for my credit card. Maybe a couple of associates were at the fitting room and there was a lot of finger pointing for direction. No one asked “Did they fit?” “Do you need another size?” “Is there another color you’d like?” There was nothing. And I think that you see that across the board. If you go to a big box store and you’re looking for a television and you ask the differences between models, they’re not going to be able to tell you the features and benefits and bring it alive the way that we do and the way that many people are starting to do in the digital space. If you can get some help, they’re only going to tell you the price. The second thing is the overall shopping experience. The only example I have of a cool retail experience is the Apple stores. We’re focused on creating those experiences and that’s why we do big events with movie studios and have Tony Bennett perform. We’re creating these events to keep customers excited and delighted about shopping with us.

Spieckerman: It’s been delightful speaking with you. Thank you.

Brand: And with you as well, Carol.

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