PRESIDENT'S CORNER FEATURE ARTICLE CASE STUDY CIRCULATION TIP CREATIVE TIP multichannel TIP EMPLOYEE SPOTLIGHT—MICHELE SALMON AFFILIATE FOCUS—DATA MANAGEMENT ASSOCIATES, INC. NEWS BRIEF
PRESIDENT'S CORNER As I write this month's message, I am on the beach vacationing with my family. You may chide me for working while on vacation, but I also admit that I have been picking up my email daily and staying fully on top of business. I am not alone—almost everyone on the beach is talking on a cell phone and monitoring their Blackberries! In defense of this workaholic practice, I realize that I have a much more relaxing vacation knowing that things are going well back home, that my absence is not slowing things down, and that I will not face hundreds of emails when I return. My other realization is just how efficient we have become with our communication. In the past few years, email and our ability to send attachments has revolutionized the way our business operates. Communication efficiency has allowed our own offices and our clients to be spread seamlessly across the country and it allows our clients to use our services much as they would their own staff. It becomes transparent whether they are emailing someone down the hall or across the country. I predict that the biggest changes to our industry stemming from this ability to communicate more efficiently are yet to come—especially our ability to communicate and market individually to our customers. Current email marketing is rudimentary and for the most part "broad brush.” Websites are not yet tailored to the individual. Catalogs are primarily still "one flavor for all.” This will entirely change over the next few years. Emails will attempt to anticipate the needs of each single customer. Websites will be tailored to the specific customer based on their exhibited interests and past buying behavior. Likewise, catalogs will be increasingly personalized through selective binding and electronic printing. All of this will be driven by sophisticated databases that drive marketing decisions based on the individual customer. Circulation management as we have known it may become a thing of the past. Just as our office and yours can be a thousand miles apart and yet work effectively together, your marketing efforts can, and in many cases will, expand around the world. If “the world is flat”, as far as services are concerned (such as offshore call centers and worldwide package delivery), your customers can and will be anywhere and everywhere. Over the weekend, I came across an interesting website where you simply type in something and it translates into any language you select. Expansive technology like this leaves little reason your websites, emails, and other communication cannot be in many languages and your market extended tenfold. At LENSER, we are constantly developing programs to meet these changes and the challenges they will bring. In the coming months, we will announce new opportunities for database marketing that will move circulation management to new levels of sophistication. Our partners will work with you to achieve greater synergy with the integration of marketing channels. Who knows, perhaps you can improve your communication and efficiency to the point where you can successfully run your entire business while lying on the beach!FEATURE ARTICLE Make sure your website is optimized for easy catalog response. Let’s take a lesson from call center practice and see how your website stacks up: A phone center operator often says, “May I have the item number of the first product you are ordering?” The reason this question is asked up front is that many customers already know what they want and have the catalog in front of them. This makes having a quick order window on your site imperative. Most web designers assume that the customer will know to put the product number into the search window, but many customers do not realize this function is available. The solution is to have two boxes—one labeled ‘Search’ and the other ‘Quick Order.’ Under ‘Quick Order’ instruct “enter product number or name.” That way the customer will know exactly how they can get to the item they want with the fewest key strokes. Companies with multi-line orders may want to include another link on the left-hand navigation that is labeled ‘Easy Order.’ This leads to an order form page that will allow multiple items and quantities to be easily entered. This page should be set up just like the order form in the catalog to accommodate customers who have used the catalog form to organize their order. The Search and Quick Order boxes should be located on the header section of the website so the customer who has a catalog in front of them while browsing can go back to ordering mode any time they wish. The Easy Order link should be on the portion of the left-hand navigation that is carried over to each product page. Ensure that your website will accommodate those who prefer to pick up the phone. Many catalog shoppers will go to your website to see additional products that are not featured in the catalog. Once they have found something they want, they may prefer to pick up the phone to purchase. For this reason, the 800 number should be present on the catalog header that appears on every page so that the shopper can easily pick up the phone and order the item they see in front of them. Some misguided marketers feel that they should not go out of their way to accommodate phone orders and seem to think that by making an order line available, they will be increasing their cost. This is backwards thinking. If someone is at the decision point of ordering, the slight additional cost of taking a phone call is wildly less than the loss if the customer gets frustrated and decides to leave your site. For all these reasons, it is imperative that the order line phone number be available at the top of every product page. And do remember to label the number as an ordering line, so there will be no doubt that the customer has it available for use and is welcome to call. Make sure your catalog facilitates web shopping. Include the URL on the incoming phone routing and hold messages at the call center to give customers the option to use the web after hours or during busy times. Also, customers can be researching your site while they are waiting. This is a better use of their time than giving them ‘elevator’ music. Does your website make catalog shopping available for shoppers originating on the internet? The big payoff—by making it easier for your customers to interact with you on their terms, you are creating more valuable buyers. CASE STUDY It is important to differentiate between the Channel of Demand Generation (i.e., Catalog, Email, Paid Search, Organic Search, etc…) and the Channel of Transaction (i.e., Call Center, Website, Mail, Fax, etc…). All too frequently, we multichannel merchants refer to channels as Catalog, Web, and Storefront to describe marketing efforts. In fact, this is really a mix of marketing and transaction terms, and any generalization made with respect to this mix of channels can be somewhat misleading. This study specifically looked at the value of buyers by Channel of Transaction, in this case being phone (call center), web, mail, and fax. Specifically, we studied the value that new buyers generate, defined as the gross margin less variable transaction and marketing costs. We looked at the value of the first order the new buyers placed, as well as the value of additional orders, if any, generated by those new buyers in the first 12 months and 24 months after they placed their initial order. In addition, we separated the buyers by the channel they used to place their first order to see if there were any differences. General Background: This study was based on an analysis of transactions over the last several years. We observed that there were some orders of value over $2,000—enough to skew the average order values significantly, so we eliminated all orders over $2,000 from the study in order to get more meaningful “average” values. The data was summarized by account number and the initial transaction contribution was separated from the 12- and 24-month contribution totals.
For this company, 46.3% of orders are placed through their website. A large percentage—18.3% —are placed by mail, representative of the characteristics of the buyers (lower than average income and greater than average age). The table also shows that multichannel behavior among the company’s buyers is quite limited, with 90.4% of phone buyers placing all of their orders only by phone, and 92.1% of web buyers placing orders only on the website. Mail buyers placed 9.6% of their orders by fax, the only buyers to use fax significantly as a transaction medium. 12- and 24- Month Contribution: Initial order contribution for phone buyers is 48.2% higher than for web buyers, as shown below. One interpretation is that this may reflect that buyers who place higher value orders want more assistance in placing their orders than what is available on the website. It may also be the result of customer service representatives, who are very knowledgeable at this company, doing a good job of adding on or upselling buyers.
12- and 24-month contributions for phone buyers are 22.1% and 26.3% higher than for web buyers. Note that 24-month contribution is the contribution made from the time after the first order up to 24 months later, so it includes the 12-month contribution.
Of phone buyers, 21.9% placed a second order in the first 12 months after their first orders, whereas 19.9% of web buyers placed second orders in the same period. So, while initial order contribution for phone buyers is significantly higher, web buyers are only marginally lower in their 12- and 24-month contribution than phone buyers (nominally 9.9%). Buyers who used mail to place their initial orders had the greatest 12- and 24-month contribution, suggesting that they may be the most loyal buyers. This company shows an average contribution of $46.99 for first orders placed across all channels, and an average 12-month contribution of $8.42. This suggests that, in prospecting, the company could afford to mail to prospects at a cost of up to $8.42 and break even in the first 12 months. Note, however, that for web buyers the breakeven acquisition cost would be $7.42, whereas for phone buyers it could be 22.1% higher, or $9.06. Conclusions: The results of a Customer Value analysis by transaction channel will be significantly different for different businesses because the types of products and types of buyers can be significantly different, so a study similar to this should be conducted before taking action based on these conclusions. This study is not the same as a channel of demand generation study, so it does not indicate what role catalogs should play as a demand generation medium. What the study does reveal about this client is that the level of use of multiple transaction channels by phone and web buyers is fairly small—less than 10%. The study also shows that the company is acquiring new buyers, on average, at a profit. It supports the notion that phone buyers are more loyal, or generate greater contribution over 12 and 24 months, consistent with observations we have made in other studies. The next step for this company would be to conduct a customer value analysis based on channel of initial demand using initial source, and to perhaps examine the contribution based on the product categories represented in the initial purchase (the company has several distinctly different product categories).CIRCULATION TIP While normal co-op models analyze just your buyers (i.e., responders) to produce prospects with similar RFM characteristics and buying patterns, custom response models take non-responders into consideration by profiling the mail file in addition to the buyer file. Customers supply positive correlatives, while those who never respond to your offer can provide negative attributes. When co-op database statisticians account for both positive and negative factors they are able, oftentimes, to deliver better performing prospect models. Considering that for most businesses the non-responders outweigh the responders by about 99 to one, this new view can be very useful. Once the statisticians have identified characteristics that are clearly correlated to non-responsiveness, they can add those to the model and generally improve it. We have seen great results from custom response models for clients of different sizes and different niches. Custom response models can supply incremental unique names to your mailing that your core models might never serve up. What do I have to do? You simply have to provide mail files for the same season from the previous year. Have your service bureau send them to the co-op. Remember, the co-op should already have your responder file as long as you have been sending regular transactional updates. Be sure to pad your mail schedule an extra week or two the first time you run a custom response model—the co-ops will need it, since it requires deeper analysis than their standard offerings. We think you’ll be pleased with the results!CREATIVE TIP The secret for success is what we call a micro site, also known as a mini-site, and sometimes called a landing page. Here’s how it works:
Sometimes the site needs to be more than just a landing page simply because you have more to tell and need to break it into steps to complete a purchase. A perfect example of this is if you’re promoting a specific product. Take, for instance, a situation where you’ve gotten a whole shipment of brand new chairs in stock. You’d email your customer list and make them an offer to look at and purchase the chair, or chairs. Perhaps you’d do a special such as, “Order four chairs and receive four chair pads free!” if they order by a certain date. From confirming the offer on the landing page to completing the sale, you may just decide to keep complete control by limiting the navigation and keeping them in the micro site, where they can place their order and complete the purchase right there. While you may think, “Why wouldn’t I want to have them order this in my standard site, where they can see and possibly order other things?” the answer is that the longer we keep the customer in a site, the higher the incidence of their dropping off without ordering. The advantage of keeping it all under control with the micro site is to get them to place their order right then and there, with very little time spent. To follow up, after they have planned their order and provided their credit card and pressed “place my order now,” you can then show them a thank you page with the query, “Would you like to continue shopping?” and even potentially make suggestions of things that would go with those chairs, such as a new table. But whether they move on to your full website or not, you’ve caught them with the micro site so that even if they move to your main e-commerce site and get distracted, that first order has already been placed. The good news about email is this: using the principles of good customer service you will send your customer a “Thank You” email with their order confirmation—and at that point you can try again to send them into the site with some suggestions for specific products they might consider to go with those chairs. There are other terrific uses for this dynamic duo of email and micro site, which I’ll cover at a later time. Or if you’d like to talk with us now about taking advantage of our expertise in this area, please feel welcome to give us a call.multichannel TIP
EMPLOYEE SPOTLIGHT—MICHELE SALMON When LENSER began to emphasize growth, it needed a marketing professional that had a variety of experience with the catalog and direct marketing industry. Michele’s unusually diverse background in both education and business is a great asset that, along with her array of talents and her network of business associates, has enabled LENSER to become more visible. John Lenser says, “Michele opens a door like no one else and this has aided our growth tremendously over the years. With of her knowledge of catalog business needs, she can talk the talk and explain to people why LENSER is a viable business solution.” Because of her remarkably positive attitude, Michele was the recipient of the LENSER Esprit de Corps Award which recognizes the employee who has demonstrated an unwavering dedication to LENSER’S overall success. This award meant a lot to Michele. “The last four years have flown by and I have loved every minute of it. We have the best clients in the world, I learn something new everyday, it is never boring, and I like being part of this cutting-edge team.” Michele goes a mile-a-minute during work, so it is safe to assume the same happens during her off time. She can be found gardening in her native Brisbane, in the bowling alley trying for that elusive 300, or most likely, hiking on San Bruno Mountain near her home enjoying the natural beauty that abounds in the rare and endangered habitat. So the next time you see Michele, be sure to stop by and say thanks because she is the engine that makes LENSER run so smoothly. To learn more about Michele, please visit her bio.AFFILIATE FOCUS—DATA MANAGEMENT ASSOCIATES, INC. There is no perfect system that fits every catalog and multichannel company’s needs but there are some that come pretty close, and one of those is LENSER Affiliate Data Management Associate’s MACH2K order management system. DMA has been in business since 1979 and is still innovating and thriving today. Why, when so many others have failed? “Knowledgeable service and support, that’s why. We know the software and we know the industry because we have all been in the client’s hot seat,” according to Larry Maher, VP of DMA, Inc. Indeed, Sharon Mackzum, Director of Training and Support, worked on the system for ten years as Operations Manager for a client before joining DMA in 1999. In addition, MIS expert Karin Amos was a client for many years before joining DMA as their Manager of MIS, Training & Support. DMA has a stellar reputation and a proven track record. “One of our clients, Sporty’s, has been using the system for over 25 years,” said Larry. “What good is software if it can’t grow with you without costing a fortune for upgrades? Obviously the proof is in the pudding and our software has grown to keep pace with our clients and their ever-changing needs.” If you’re currently using a home-grown system or a catalog start-up software package, you may think that the next step up is really a gigantic leap but, according to Larry, that is simply not so. “DMA’s MACH2K software is ideally suited for users frustrated with the limitations of their current catalog software and who need scalability to match their growth, high-level functionality to match business needs, and complete channel integration for catalog, web, and retail.” DMA clients run the gamut with anywhere from 10–200 workstations, up to 20,000 orders per day, up to 50,000 items, up to 26 warehouse locations and up to 24 POS retail stations. The system can store millions of customer records, and the MACH2K Internet component allows for unlimited growth.
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