HSN and the Power of the TV Shopper

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At some point or another, you've stumbled upon HSN, the 24-hour television network in 96 million homes that's always selling something. Maybe you changed the channel after a brief glance, or maybe you got sucked in for a little bit longer, but you probably didn't stay long enough to actually buy something.

But a lot of other people have. Last year, HSN (once called the Home Shopping Network, now known simply by its initials) sold $2.5 billion worth of merchandise — one steamer, one blender, one treadmill at a time. The 33-year-old company knows what sells and, more importantly, who it's selling to. You'd be hard-pressed to find another company more loyal to, or obsessed with, its customer.

"We love her. We talk about her all the time. There's not a minute of the day that goes by that we're not thinking about her," Katherine Rush explains at HSN's St. Petersburg, Florida headquarters one morning in August. The VP of marketing is sitting across from me in one of the many green rooms usually reserved for on-air talent. "Everything we do and everything we curate is with her in mind."

This "her" is a woman over the age of 35 who is looking to buy everything from shapewear to kitchen appliances from a trusted source. She loves to shop, but wants to do it on her terms — which often means forgoing the mall for the convenience and reliability of HSN. The older she gets, the more free time and disposable income she has, and she's happy to spend both at her favorite retailer.

The channel broadcasts 1,344 hours of live TV per week, with midnight EST being peak viewing time. A 24-hour stretch that begins on Christmas Eve is the only programming that's completely pre-recorded. When HSN talent is in front of the camera, there are three monitors in their line of vision: one that shows what's playing in real time, one that forecasts the next shot, and another that shows how the viewer is responding to what's being sold. On this monitor, they can see how long a specific product has been on the air, how many people have it in their digital shopping carts, how many are speaking to live operators, and how many are on hold, waiting for their turn to talk.

"I literally know in real time how people are responding," E!'s Giuliana Rancic, one of HSN's many celebrity partners, explains between segments. She started selling over 10 hours ago at midnight, and will be appearing on-screen periodically throughout the rest of the day. "When the red bar shows up on the monitor, that's people on hold. That means the item is doing really well, and we can adjust how much time we spend on an item based on how much people are either liking it or not liking it." If an item isn't selling, it's on to the next one.

Presenters, shoppers, customer service reps, and control room supervisors are all in constant communication; there are no quiet moments. If an HSN phone operator receives multiple inquiries about the battery life of a point-and-shoot camera or whether or not a non-stick frying pan is dishwasher safe, you can bet it will be addressed publicly within minutes thanks to a swift transmission of information from customer to behind-the-scenes employee to on-air personality.

"The interaction is the best part of being on HSN," Real Housewife-turned-jewelry-designer Melissa Gorga says in the green room. In a few minutes, she'll film a segment with veteran host Lynn Murphy. "It's instant tweets, instant emails. It's, ‘Oh my God, we love that in gold. Can you give that to us in silver next time?'"

Seeing Gorga removed from the context, and drama, of her Bravo franchise feels strange. Backstage, she's relaxed in a hair-and-makeup chair, with her husband Joe planted on a nearby couch. She talks a lot about family and the women she sees wearing her jewelry: "I design for all ages — a working woman, a busy stay-at-home mom. I have three kids, and I like to keep myself together. I wanted things that would be easy; you can just put it on and you'll feel complete."

In addition to Rancic and Gorga, HSN's current celebrity roster also includes Jay Manuel of America's Next Top Model fame and supermodel-turned-beauty-mogul Iman; the company launched Melissa McCarthy's clothing line this summer and signed Wendy Williams on for an apparel collection earlier this year. HSN's customer already knows these sellers, or at least she feels like she does, having watched them on TV before ever seeing them on the channel — which, as far as tele-retailing (the industry term for selling on TV) is concerned, is the same thing.

"It's a relatability factor," Rancic explains. "It's authenticity. When people tune in and watch me on HSN and I'm talking about my new $59 premium denim, and I'm telling them that I have $200 designer jeans that are exactly like these $59 jeans, they believe me. They trust me because I am who I am on all the other shows I do, which is just myself. That's why I think this has all worked for me."

This translates to sales, and in a very short period of time. On the day of our interview, a jacket from Rancic's collection was "Today's Special," an item that's offered at a discount and promoted by the seller for a full day, or until it sells out. When asked how selling on TV compares to a more traditional retail model, Rancic puts it bluntly: "Where else can a designer sell 40,000 of one jacket in a 24-hour period of time?"

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The HSN campus can be found off a Florida highway in a part of St. Petersburg that's sprinkled with fast-food chains, a Hilton, and not much else. HSN HQ is comprised of 10 different buildings, and it's an elaborate maze of office spaces and studio sets. There are televisions everywhere, from the cafeteria to the employee-only shopping emporium a few blocks away. The only place I don't see a TV is the bathroom.

Over the course of a year, HSN builds over 80 different sets across seven different studios, including an outdoor set complete with several fake porches and front doors that lead to nowhere. Wheelchairs can be found near each stage, as crew members use them to transport show hosts from one studio to another in as little as 30 seconds. This gets them in front of the camera when they need to be, and keeps them from looking flushed and out of breath.

Many of the show's hosts (the ones leading the segments, setting the pace and dictating the structure) and sellers (the actual faces of the brands) have been with HSN for decades. Bobbi Ray Carter is the longest-running show host, having worked there for 32 years. Lynn Murphy and Kathy Wolf, 23 years; Bill Green and Colleen Lopez, 21. Diane Gilman has been a seller with HSN for 21 years, and Joy Mangano — one of HSN's biggest names, who will be played by Jennifer Lawrence in an upcoming David O. Russell biopic — is celebrating her 15th anniversary this year. (Naturally, there's a coinciding sale.)

The HSN personality is the sales associate of department stores past: the person who had you in their client book, who'd call you when something they knew you'd like came in, who'd actually set aside some time and make an appointment for you to try everything on. Attentive personal shoppers — like Bergdorf's famed Betty Halbreich — are few and far between. As Gilman puts it, "There's no communication in retail. You ever walk into Macy's in New York?"

HSN's origin story is told like folklore to visitors at the company's headquarters. In 1977, a radio station in Florida owned by Lowell Paxson and Roy Speer was given 112 electric can openers by an advertiser that couldn't pay its bill. The men decided to have radio personality Bob Circosta sell the kitchen tools on-air for 10 bucks a pop to make up the money they had lost. The can openers sold out.

Soon, a regularly-scheduled sale-based radio show called Suncoast Bargaineers was introduced. By 1982, the show had evolved into an entire channel on Tampa public access cable. It went nationwide in 1985, and in 1986, the newly-renamed Home Shopping Network became a publicly-traded company.

It continued to grow significantly over the next few years, eventually attracting the attention of big-name investors. Years of complicated corporate reshuffling ensued. In 1992, Liberty Media Corporation bought a 23 percent stake in HSN. The company also owned part of competitor QVC; there were talks of an HSN-QVC merger, though negotiations fell apart by the next year.

Media mogul Barry Diller, who also owned a large stake in QVC, ended up purchasing HSN in 1995. Eight years later, after even more complicated reshuffling, HSN was a part of Diller's InterActiveCorp. A ground-breaking day of sales — $30 million on December 6, 2003 — soon followed.

An important thing to know is that QVC arrived on the scene the same year HSN went public. To many, the two networks are nearly synonymous, but diehard fans are quick to explain how they differ. (A thread on the HSN community forum titled "HSN vs. QVC" spans five pages.)

First, QVC — which stands for "Quality, Value, Convenience" — is ultimately bigger, serving six countries and 235 million homes across the world with $8.8 billion in revenue. The QVC brand roster also skews slightly more fashion-centric, with labels like CV by Cynthia Vincent, H by Halston, and Luxe Rachel Zoe in the mix, though there's a healthy amount of celebrity brands too (Kris Jenner, Jennifer Hudson, and the late Joan Rivers all have lines with QVC).

But one of the most notable differences is how each identifies its shopper. HSN talks frequently about its core customer, the middle-aged woman. Conversely, there's no such thing as the "QVC shopper," or so the company would have you believe. From its website: "Our customer base spans virtually all socio-economic groups. Because the audience for each QVC program is driven by product, demographics vary significantly from one hour to the next."

As it stands, QVC is in 85 million American homes, 11 million shy of HSN's 96. Though QVC is the global tele-retailing leader, HSN rules the American market. But it wasn't always that way. There was a time when HSN's innovation went dry and growth came to a halt. From 1996 to 2006, the company went through through seven CEOs.

By the time current CEO Mindy Grossman came on board in 2006, the network had fallen way behind. "HSN wasn't easy to watch," she explained in the Harvard Business Review. "It was very hard-sell. The aesthetics were dated. The products weren't aspirational and didn't seem very relevant. I could see from the numbers that HSN wasn't growing and was a very distant number two to QVC."

She was tasked with rebuilding the brand from the inside-out. Grossman studied the company closely before making any major moves, watching hours and hours of programming. During this time she caught a segment hosted by chef Wolfgang Puck that would serve as the blueprint for the new and improved HSN: "He was engaging and entertaining and he wasn't selling. He was inspiring and engaging customers and they wanted to buy his product because of that. The next day I went and had lunch with Chairman Barry Diller at the Four Seasons and kind of laid out this vision."

By 2008, Grossman had made a solid dent with HSN's first major revamp and taken the company public once more. She introduced a new class of higher-end brands, put on exciting shopping events, and built up the company's e-commerce presence.

A second big overhaul came in 2013, when HSN got an updated tagline ("It's fun here") and an ad campaign that wouldn't have looked out of place in a major fashion magazine. New hosts were introduced, packaging was upgraded. The overall tone of the company became fresher, more with it, more exciting. HSN went from a late-night guilty pleasure to a place you might actually buy something from. And buy people did: In 2014, HSN's sales grew 14 percent, while the average growth across the retail sector was just over 4 percent. HSN had officially bounced back.

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Diane Gilman is one of HSN's most prolific sellers. The "Jean Queen," as she's known, is 70 years old, though you'd never know it if she didn't tell you (and she will tell you — her age is an important part of her personal brand). When I meet Gilman, she's wearing a crisp white blouse ("from Net-a-Porter") and a smattering of gold jewelry paired with her signature stretch denim. It's clear from her entourage (two stylists, an assistant, and her personal makeup artist) and the flurry of visitors that cycle in and out of her dressing room that she's a big deal here.

Gilman designs for the women in their fifties and sixties that the retail world all but refuses to acknowledge. "Pharmaceutical companies take care of us — there's a drug for this, a blood-thinner for that, a sex pill for this, a gel for that," says Gilman. "But when it comes to clothing, absolutely nothing."

Gilman began selling jeans on HSN 21 years ago, back in 1994. She had been in the fashion game for a long time before that though. In the ‘60s, she designed jeans for Janis Joplin and Jimi Hendrix; in the ‘80s, she had her own line at Bloomingdale's. Then she lost the rights to her name after a deal gone awry and wasn't allowed to sell clothing under the Diane Gilman label in stores. So she started over at HSN selling washable silks, eventually convincing the network to let her design denim under a new label, DG2.

"They gave me a 5 a.m. time slot on a winter Sunday morning — when no one in their right mind would be up — and we sold out of 5,000 pairs in three minutes," she says. Since then, she's sold over 7 million; it's been widely reported that Gilman pulls in $150 million annually across all of her retail ventures, which includes a partnership with HSN in the US and deals with several international branches of QVC.

The success of DG2 is by no means surprising. The denim is affordable (most pairs are under $60) and sizes range from petite to plus-tall. It's inclusive, with fits and fabrics designed for an older customer. When DG2 launched, Gilman herself was in her early fifties, and her focus for the past 20 years has been dressing women her own age. Denim, she says, was a deliberate focal point: "I think buying a pair of jeans is deeply emotional, so is how we age, and how we feel about ourselves as we age. It's so much more than just fashion. Jeans are a lifestyle. And the minute you can't wear jeans anymore, what would you do? No one tells you. There's no road map."

Denim isn't the only thing the older female shopper craves, of course. HSN's product list is vast and spans every category imaginable: apparel and beauty, sure, but also home fitness equipment, kitchen appliances, craft supplies. If there's something she wants, odds are, HSN has it — and that she'll buy it.

"Really loving this customer and giving her what she desires has helped us weather tough economic times as a company," Rush explains. "We're very appreciative of her loyalty to us, and it really is because we rally around who she is. She's amazing. She's sexy."

TV remains HSN's bread and butter, but more than nearly any other legacy company, it has adapted to the current retail environment shockingly well. Its strategy is entirely data-driven and e-commerce now accounts for 43 percent of sales; a sophisticated social media plan is also in place to deepen its relationship with shoppers.

Take Facebook, where HSN did away with advertorial posts after realizing the Facebook fan just wants to be entertained. "Now we're doing tip videos that don't have anything to do with sales, and behind-the-scenes images of our celebrities when they're here," says Matt See, HSN's director of social media and games. "On Facebook, we're half her favorite TV show and half her favorite retailer."

"We're competing with people's births and weddings," he continues. "We have to really think about what people really want to see. Do they want to see a stylized model with a sales pitch? No, they want something that resonates with them, and that's where we're trying to go."

In 2011, HSN launched an unexpected feature on its website to further connect with its audience: an arcade. MarketWatch reported that, as of May 2015, 1.2 million users are registered on the platform. Even though it's completely unmonetized — you don't pay for tokens or any other extras like you do on other gaming sites — it has strong potential to lead to sales. Customers who actively play games on HSN's arcade visit the site three times more frequently than other shoppers.

"Our core customer loves games," says See. "The shoppers in their forties, fifties, and sixties are playing games on their phones or laptops, and we know she's playing those games while she's watching us as well." The arcade is a safe space for HSN shoppers who want to stay connected to the brand but aren't necessarily looking to buy something at that very moment. Grossman told MarketWatch that "our ability to create that one-on-one engagement with a customer is a point of differentiation and a strategic advantage for us."

HSN also knows that its customer loves channels like The Food Network and shows like Top Chef, so it's incorporated food programming into its lineup. Kitchenware can be bought from chefs like Dominique Ansel, Lorena Garcia, and Wolfgang Puck, and culinary segments are meant to emulate those of TV's most popular food shows.

HSN Cooks! is a 24-hour program that's one of the network's biggest annual events. "Every time we do it, we try to do it differently," says Jen Cotter, HSN's EVP of programming. "We've had chefs work together that never get to do that. It's really fun and our customers love it." Major holidays are also another opportunity to blow out cooking content that appeals to middle-aged women with families.

But none of this would matter if not for the extreme customer confidence HSN has built. Loyal viewers know that each and every product is rigorously tested before making it to air.

HSN's quality assurance department is a force to be reckoned with. Before an item arrives at your door, it's essentially vetted twice: once, presumably, by the vendor it came from, and then again by HSN. Frying pans get the "standard egg test." Dishwasher-safe plates are run through a dishwasher three times. TVs are "burned" for 72 hours. HSN also executes a "heavyweight drop test," in which packed shipping boxed are dropped at various heights, and a "random vibration test" simulates the vibrations of a 53-foot semi truck. Matt Demers, the VP of quality assurance and product information, explains, "If it arrives broken, it turns a positive experience into a negative one."

The QA lab is unlike any other area of the campus in that it's almost eerily quiet. Employees sit at long tables with product boxes stacked all around them, meticulously examining each one. Is the packaging up to par? Are all of the assembly pieces included?

An entirely different team of experts examines products well before they're stocked by HSN. Next to Jan Radcliffe, HSN's resident gemologist, there is a binocular microscope, a refractometer, and a polariscope she uses to inspect every piece of jewelry the company might choose to sell. In the fit studio, Kim Dixon compares different brands for sizing consistency. But the best job belongs to Christy McDonald: it's her responsibility to test craft kits. Most months out of the year, she's covered in glitter: "My husband thinks I'm very festive."

Beauty products are also rigorously assessed in the QA lab by "quality evaluators" (all of whom have science backgrounds), and then again — in a different way — on live TV. HSN's advantage, better perhaps even than in-person product testing and certainly more preferable than online testimonials, is its split-screen demos. Beauty segments are built around the ability to show a product's effectiveness in real time. What does it look like when you dab one side of your face with an anti-wrinkle potion while the other side remains untouched? A five-minute demo like this is what prompted me, an HSN novice, to shell out $49 for two tubes of Serious Skincare's InstA-Tox wrinkle-smoothing serum. At the start of my phone call, 3,109 sets had already been sold. By the time I hung up six minutes later (so fast! so easy!), that number had increased by more than 500.

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A big point of pride at HSN is its ability to launch new celebrity brands; brand exclusives, which make up 70 percent of HSN's total sales, are another. (HSN wants you to buy items from HSN first and HSN only.) While mass retailers like Target and H&M collaborate with the likes of Versace and Karl Lagerfeld, HSN frequently goes for what many consider low-hanging fruit: celebrity-backed clothes, accessories, and perfumes.

HSN has a deep bench of stars, each personality familiar and relevant to its customer. Vanessa Dusold, the company's SVP of apparel, explains that Rancic's line has been particularly successful because "the customer knows that she stands for style, and that she has access to a lot of great clothing, but her line is very translatable — it's something they can see themselves wearing and it's not so off-the-red-carpet." At the end of the day, if it's not something the shopper can wrap her head around, it's not going to sell.

Dusold says higher-end collaborations aren't off the table, and that there's "a lot of interest" in finding the perfect partners. "As of now we've been focusing on the Naeem Khans of the world," she says. "Two years ago, we launched an exclusive collection with Josie Natori. They're a brand that has recognition with the customer, but they're not as mass as a Missoni. We're constantly seeking out those right opportunities, but we're trying to figure out the right format and template to bring them to HSN."

While this may be the case, celebrity is still front and center of its retail plan, which is how I find myself at Serena Williams's New York Fashion Week show in September.

The line to get in stretches halfway down a city block. While Rodarte, Oscar de la Renta, Badgley Mischka, and Coach are all showing today, Williams is, without a doubt, the hottest ticket in town. Inside a big event space on Manhattan's far west side, personal style bloggers pose for photographers and PR reps usher editors to their front-row seats. Just as the lights begin to dim, Drake emerges from backstage to sit right next to Anna Wintour.

It feels like every other NYFW event that week, except it's not. The show is livestreamed on the HSN website and all of the products are shoppable immediately after. Instead of showing spring 2016 like the rest of the fashion world, Williams shows fall: black leather skirts, shearling jackets, and camel-colored sweaters that Vogue would later praise as "decidedly more posh than your typical HSN fare."

The timing of the show couldn't have been more perfect for HSN. Williams had already been in the news a lot that week, for her showing at the US Open (where she lost in the semifinals) and her rekindled romance with Drake. There was organic buzz around the tennis star before the first model stepped foot on the runway. It was a hit. Though HSN won't release exact figures, it says that sales "exceeded expectations"

The show was very much an exercise in expansion, one that targeted two audiences outside of HSN's target demographic in one fell swoop: the fashion set and the younger shopper.

While HSN isn't aggressively courting 20- or 30-somethings, that doesn't mean they won't flirt, using Instagram to sell to a younger audience, its customers of the future. The company's beauty brands, which includes Benefit, Smashbox, and Too Faced, are a main priority on the platform. Since the network's demo is primarily on Facebook, posting casually-staged shots of products from trend-focused brands on Instagram won't alienate the woman who swears by Lancôme.

See explains that the end goal is awareness: "A lot of times, folks don't realize that we have these great brands, and that a lot of times we sell them at a great discount. On Instagram, we're really focusing on that new beauty customer. What is she like, and what does she want from us?"

The strategy appears to be working. Before Nicki Minaj even arrived on set to promote her new HSN-exclusive Pinkprint fragrance, half of the bottles in stock had already been sold via Instagram, in a 24-hour span no less. When the Too Faced Chocolate Bar eye shadow palette was the big beauty deal of the day, it drove 9,000 visits to the site, 87 percent of which were from new customers, through a Like2Buy link on the company's Instagram.

But as Dusold puts it, "We have some barriers that we need to overcome." To lock in that younger customer, she says HSN needs to continue to "help her understand that our curated portfolio of brands and items are right for her. We can also help her understand more about how seriously we take product claims, like how true those skincare before-and-afters really are."

Though in many ways, it's irrelevant. HSN doesn't need younger customers to succeed, though it may need those younger customers to convert to HSN when they grow up. For now, sellers like Gilman are making a killing by catering to an underserved shopper using an old-school medium made thoroughly modern. "I feel like I just found my niche, and I don't think I could have ever hit that if it hadn't been for television," she says. "Shoppers talk to you. They want to tell you their stories."

Editor: Julia Rubin