It’s perhaps surprising to see people so attentive to their work at a company known for emptying out when there’s good surf to be found at a Southern Californian beach not five minutes away. But a walk through the Ventura, Calif.-based headquarters of Patagonia reveals a close-knit staff readily engaged in designing, testing and marketing this outdoor cataloger’s apparel and gear.
Then again, perhaps it’s not all that surprising, given that the catalog’s founder, Yvon Chouinard, in his book “Let My People Go Surfing,” (The Penguin Press, 2005) wrote:
“Work had to be enjoyable on a daily basis. We all had to come to work on the balls of our feet and go up the stairs two steps at a time. We needed to be surrounded by friends who could dress whatever way they wanted, even be barefoot. We all needed flextime to surf the waves when they were good or ski the powder after a big snowstorm or stay home and take care of a sick child. We needed to blur the distinction between work and play and family.”
Here’s a company that embodies dedication to its employees. In turn, employees are dedicated to the business of running the catalog and supporting its mission of sustainable, environmentally friendly growth.
In fact, from the clothing recycling programs it runs to the donation of 1 percent of its annual revenue to environmental causes, Patagonia’s hallmark has been doing more with less. In order to grow the business and sustain these environmental programs, “Patagonia’s [people] have to be smarter, faster and better than everybody else to make it work, because they don’t have huge marketing budgets,” Chris McDonald, executive vice president and general manager for Abacus North America, observes about his client. “They accomplish more using less than any company I’ve ever seen.”
Getting more with less isn’t always easy. Mistakes along the way are just part of the game. But in the past few years, Patagonia has used enhanced Web marketing and a new relational database to make the most of its limited resources, all the while ensuring that employees have myriad reasons to give their all in the pursuit of sustainable growth.
The Pursuit of Web-iness
An early adopter of e-commerce, Patagonia has been selling on the Web since 1997. But it’s just in the past few years that customers really have shifted their shopping preference to the Internet.
“About five years ago, we realized that the Web was a powerful vehicle, and it had the potential to be much more accessible than either our retail stores or catalog,” says Chris Todd, former global Internet marketing manager at Patagonia, who left the company shortly after our visit earlier this year. “Before we realized that, it was hard for people interested in our products to find us. If you didn’t have a catalog, you really couldn’t get one.”
To bring those customers who might be interested in Patagonia’s products to the site, the cataloger has invested heavily in both search and affiliate marketing. But there were lessons to learn along the way.
Early on, Patagonia purchased general outdoor-related search terms, such as “bicycling” and “climbing.” But return on high-cost, low-specificity terms like that didn’t provide a particularly high conversion. These days, the company buys more multiword search terms, such as “high-performance climbing apparel.” “We’re trying to refine over and over, and go after exact intent, rather than go after a shotgun blast,” Todd says.
Which isn’t to say that Patagonia buys fewer keywords either; the keywords are just more specific. Todd notes that the company manages more than 10,000 keywords across multiple search engines.
Keeping with the theme of narrowly targeted campaigns, Patagonia’s Internet marketing team accepts referrals from relatively few affiliate sites. Rather than working with thousands of coupon or comparison sites, Patagonia works with upwards of 500 affiliates, most of whom provide information of interest to its customers. Most of the company’s affiliate sites describe techniques in an outdoor sport or discuss environmental issues or environmentally friendly products.
Patagonia’s remarkably Web-savvy customers have had much to do with the company’s success in buying multiword keywords and using niche affiliates. “If you look at the technographics of the customers, they’re usually cutting edge in terms of computer systems; we have a larger percentage of Mac users than average, and more current operating systems,” Todd says. “They even have larger computer screens than average.”
Coupled with the fact that 75 percent of its direct sales come in via the Web, these technographics have encouraged Patagonia to build a flashier site. Relying on the faster connections and larger screens of its customers, Patagonia’s site contains wider images and “heavier” site design. Heavier design implies larger files or images that would take longer to load on a slower Internet connection.
Data, Data Everywhere
One of Patagonia’s direct marketing team’s proudest accomplishments is its new relational database. Built using Abacus’ ClearEDGE technology, this database tracks the recency, frequency and monetary value of Patagonia’s customers, as well as each customer’s path to purchase, e.g., whether the customer received a catalog before performing a Google search that led to buying high-performance long underwear.
The database allows the catalog to explore a vast array of segmentation options and shed light on mistakes made with respect to circulation, says Morlee Griswold, Patagonia’s director of direct marketing. Early last year, following research that showed most of Patagonia’s direct customers bought via the Web, she cut catalog circ by one-third, thinking that the book wasn’t all that important to the buying process. Following the cut in circ, sales dropped immediately, even after increasing spending on search and e-mail, Griswold recalls. After some database analysis, she determined that it wasn’t simply that sales overall had decreased. The biggest drop in conversion happened with Patagonia’s very best customers, who were buying elsewhere when they didn’t receive catalogs as frequently.
That realization led to an immediate shift in contact strategy. By this past January, circulation was back to normal.
In addition to allowing Patagonia to refine its marketing mix to drive conversion, the database also is a great resource for determining line extensions. Griswold notes that two recently added product lines, surf and shoes, were the result of using the database to determine what products customers were buying from other companies.
All Comes Down to Team
What’s most striking about a visit to Patagonia’s headquarters is the relaxed atmosphere throughout each department. Certainly, the lack of an employee dress code doesn’t hurt. But there are other reasons. You wouldn’t necessarily assume that every person at an outdoor apparel company actively engages in outdoor activities, but it certainly seems that way. From the catalog director who takes part in ocean kayaking competitions to the e-commerce manager who contributes to a cycling blog, just about everyone at Patagonia has some connection to outdoor sports. That certainly jibes with the attitude of Patagonia’s founder, Chouinard, whose first direct mail piece was a flyer that contained a list of products and the warning “Don’t expect prompt delivery during climbing season.”
And that enthusiasm for outdoor activities goes hand in hand with Patagonia’s commitment to preserving the environment. So rather than allowing these outside interests to become a distraction, Patagonia management encourages employees to take part in programs that foster environmental causes.
In fact, after a few years of service at Patagonia, employees are allowed to take a two-month paid leave of absence to intern for any nonprofit organization that supports the environment. Griswold spent her internship at a foundation focused on redistributing its donations from social to environmental causes. A coworker went to Kenya to work with a Nobel prize winner, who’s developing a tree-planting effort in arid regions of that country.
Patagonia also frequently brings events to the workplace. A film festival recently played at the company’s headquarters, and employees were encouraged to leave their work behind in the afternoon to attend. A frequent lecture series brings prominent speakers, such as environmentalist Jane Goodall, to the workplace. “It’s just the integration of your life and your work,” Griswold says. “You don’t leave everything behind and go toil at a desk for eight hours, then go home.”
While these events and activities make Patagonia a great place to work, it also requires a certain type of employee. “You have to hire responsible people who won’t let down their teammates,” Griswold notes. “We do take off and go surfing if the right conditions are there. But not if you’re leading a meeting with 20 other people. You’re responsible for yourself and people around you.”
That responsibility, both to the environment and successful cataloging, is the driving force behind Patagonia’s longevity and sustainability.
Headquarters: Ventura, Calif.
Year founded: 1973
Merchandise: outdoor apparel and equipment
Average order size: $150
Annual circulation: about 6 million
Mailings per year: 11
Retail stores: 22
# of SKUs: 600
# of employees: 1,000
Customer demographics: active, high-income men and women, in their mid-40s
Channel breakdown: 50 percent wholesale; 25 percent retail; 25 percent direct
Direct channel breakdown: 75 percent Web; 25 percent call center
Annual sales: more than $250 million
Printer: Arandell Corp.
The Web as a Testament
Patagonia’s Mission Statement: “Build the best product, do no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”
Dedication to Saving the Environment: “For us at Patagonia, a love of wild and beautiful places demands participation in the fight to save them, and to help reverse the steep decline in the overall environmental health of our planet. We donate our time, services and at least 1% of our sales to hundreds of grassroots environmental groups all over the world who work to help reverse the tide.”
Honesty in its Pursuits: “We know that our business activity — from lighting stores to dyeing shirts — creates pollution as a by-product. So we work steadily to reduce those harms. We use recycled polyester in many of our clothes and only organic, rather than pesticide-intensive, cotton.”
Matt Griffin is a Philadelphia-based freelance writer. He is the former Associate Editor of Catalog Success.