Lessons Learned: CuddleWorks Stresses Social Media, Satisfied Customers

“Lessons Learned” is a series where we ask ecommerce business owners to share their experiences and advice. For this installment, we interviewed Jim Richardson and Dave McCormick who launched CuddleWorks.com in Tigard, Ore. in 2007 with a combined 20 years of web design and ecommerce experience. CuddleWorks is the second ecommerce venture for the two veterans; they sold their first company in 2002 to a large corporation.

CuddleWorks sells a variety of teddy bears and stuffed animals, and the company’s mission is to “deliver smiles.” The passion for this mission is reflected in the quality of CuddleWorks’ website, product line, and in its customer satisfaction rate. With 2007 being its first full year in business, CuddleWorks has experienced steady growth and expects to double its sales in 2009.

Richardson offers his thoughts on their ecommerce successes and mistakes below.

Start-up and Experience

Jim Richardson

“With the exponential increase in ecommerce, it made sense to pursue a revenue model which didn’t rely upon a brick-and-mortar, static location. We chose teddy bears and stuffed animals because we simply felt good about getting behind and selling this type of product line. And, belief in our product is something we sincerely have.

“We opened up our first ecommerce website in 1998, which we built up and ultimately sold off. It taught us valuable lessons and gave us a long checklist of needs, but we stayed out of ecommerce [by agreement] for five years. Then, in 2007, we launched CuddleWorks.”

Shopping Cart and Web Hosting

“Volusion, the hosted shopping cart, provides our shopping cart software [with the] one-page checkout. I cannot stress enough how important a solid shopping cart and quick checkout is to the customer. We made sure the following criteria were met.

• Customer can easily adjust quantities and remove products from the shopping cart;
• Shipping charges for ground, priority, and overnight can be calculated on the fly and provided at the shopping cart page;
• Ability to enter coupons, promotional codes and gift certificates.”

Employees

“Four full-time employees, plus two more during peak seasons.”

Customer Service and Satisfaction

“Customer service inquiries are broken down into two categories: 1. Product questions are routed to customer service and shipping related questions are routed to our shipping department; 2. Returns are routed through customer service for an RMA [return material authorization] assignment, which is then entered into the customer’s account profile for an expected return.

“We offer a 100 percent guarantee, which originally started as a full refund including shipping charges. However, this quickly became abused with customers trying products out or basically borrowing our products. Since used teddy bears are considered complete losses, we were sustaining a substantial hit. The return policy was revamped to a stricter 20-day policy with full refund, minus the shipping charges. This drastically reduced our return rate while maintaining customer satisfaction.

“The bottom line is if the policy is reasonable to the customer and outlined well, a company has the opportunity to build customer confidence while mitigating risk.”

Web Design and Usability

“The overall look and feel of our website is controlled via CSS with our marketing materials, including banner ads and buttons, following the same color scheme. CuddleWorks employees create all images in-house. This allows for constant change and a fresh look regularly.

“Probably the most important feature is the simplicity of the interface. An example would be our latest release of high-definition video clips of our products. On the back-end of our store we simply inserted the link to the video clip and the website immediately updates the products with a new tab next to the product descriptions called HD Video. The customer is now able to click the new HD Video tab and watch a 360 degree video of the item they are interested in purchasing.

“A beginner with little or no experience in HTML would be able to use the interface and have a professional looking store up and running in no time. This is an advantage of going with a hosted store system/shopping cart over a custom HTML solution.”

Social Media

“CuddleWorks focuses heavily on social media. We currently run Facebook, Twitter, multiple blogs, and several websites directing customers back to CuddleWorks. Currently, the various blogs that we own are driving the most social media traffic to our website, with Facebook and Twitter following close behind. CuddleWorks’ goal is to be on the cutting edge [of social media] at all times. Obviously, social media is no substitute for solid SEO on Google, Bing, and Yahoo! We are closely monitoring the shift of traffic to Bing as Microsoft’s advertising campaign goes mainstream. Search engine traffic continues to bring the largest overall volume of traffic to our website.

“My advice to merchants is to not become complacent. Simply creating a store and getting listed in search engines is just the beginning. By being everywhere on the Internet your company can drastically increase its exposure rate. Currently you can find CuddleWorks on YouTube, Vimeo, Dailymotion, Motionbox, Revver, Twitter, Facebook, Polyvore, Kaboodle, WOMF, AboutUs, MerchantCircle, LinkedIn and many more, with constant submissions to reddit, Technorati, Delicious [formerly del.icio.us], Digg, and various other news and blog-related sites.”

Order Processing and Fulfillment

“CuddleWorks drop-ships our 32-inch and larger teddy bears. This is completed electronically directly through the manufacturer. The remainder of our product is warehoused.

“Each day our orders are batched at a designated cut-off time. All orders placed before the cut-off are processed that day. Orders placed after the cut-off time are processed the following day. During the holidays we switch to batching multiple times throughout the day depending on how heavy the order load is.”

Controlling Expenses

“We monitor pay-per-click advertising versus conversion rates very closely. It is easy to make a brand new company come out on top of the sponsored links in Google, but, depending upon the field of competition, you may be paying a significant amount for that position. When customers click on that advertisement, [the merchant wants] a rock solid conversion rate. The magic is balancing the advertising budget with effectively managed, targeted campaigns that result in the most bang for the buck. Meanwhile, the company should also be focused on improving their organic search engine rankings so PPC advertising can slowly and carefully be de-emphasized. This takes time. Be patient and follow your plan.”

Accounting Software

“Our recommendation to a start-up company is to make sure the accounting software you choose is compatible with the ecommerce host you select. The two should exchange data with little or no human interaction. This alleviates the chances of human error while reducing overhead expenses.”

Credit Card Processing

“We currently use Skipjack and GlobalPay.”

General Business Attitude

“We have one very important rule: always do the right thing. We work diligently to make sure that the customer is happy, even if it means losing money on that particular sale. If a purchase does not work out perfectly, we always try to ensure we did everything we could to satisfy our customer.

“Be patient. Ecommerce typically isn’t an overnight success; it is a slow evolution of small internal hurdles, a continued and unrelenting SEO campaign, and a constant refining and polishing of the customer experience. Combine these factors with a desire for customer satisfaction and, over time, you will succeed.”