Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

The Changing Demographics of Direct Mail

I carefully chose the phrase, direct mail, rather than “direct commerce”, in part to make the point that the difference between these two is growing.

Personally, I’m certainly from the paper mail generation. But I’m also an early adopter of new technology, so I have all the latest gadgets (or at least, some of them) and I often prefer electronic mail to paper mail — even for invoices and bills. I send fewer paper greeting cards and more and more electronic greeting cards. But I still enjoy getting paper catalogs and flipping thru them. That still seems more natural than browsing an on-line store.

But I’m unconvinced my grandchildren will continue these habits.

As a result, I wonder how direct marketers should be modifying their marketing channels based upon the demographics of prospective buyers.

Teenagers must still often be reached via mail, because they have to “sell” their merchandise preferences to parents who may not be as technologically astute as they are. And this may stretch thru the college years, as well, up until young adults become truly independent of their parents.

But at what point is that transition complete? When should you start trying to reach customer more exclusively on-line and via email?

And perhaps even more difficult, is how to market new merchandise to previous buyers. Less of a problem if your SKU base is small. But if you have a large SKU base, how do you select the SKUs / styles / products to highlight in your electronic promotions?

That’s the inherent conflict between electronic promotions (which need to be more narrowly focused) and paper-based promotions (which may be more broadly inclusive). Electronically, we can only highligt a few products and hope we hit the right button, or the customer decides to proceed to browsing. On paper, we have to pick the cover and high visibility pages, but we can sell multiple items on multiple pages — a much wider margin for errors in judgement without leading to poor results.

Remember, a web store is still more of a buying channel, than a shopping channel. And email is easily and often ignored.

There is movement in the list industry towards appending email addresses to buying history, just as we have paper mail addresses with buying history. This is a very important trend, but we have a long way to go.

One conflict between good email targeting and “privacy” is that, in response to privacy concerns, we have “self-regulated” our industry into a box where email addresses are never shared, so our customers get blasted by junk email at a level that’s even worse than the junk paper mail they complained about for so many years.

As an industry, we need to make sure we’re as diligent about collecting email addresses as we used to be about collecting paper mail addresses — and we need them linked to each other.

And frankly, I suspect new technology devices will make it as easy to truly shop at a web store as it is to browse thru a retail store or flip thru the pages of a paper catalog.

Time will tell. But isn’t if fun to speculate!!

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Filed under: Direct Commerce, Uncategorized

Branded Operations

I was with a client yesterday and was reminded about an article I wrote a couple of years back, entitled, Branded Fulfillment. My client and I were discussing the perspective that marketing types bring to the table when discussing prospective outsourced solutions.

Regrettably, all too often, both marketing and operational executives view outsourcing only as a way to cut expenses — and if you can’t cut expenses, then just continue to do it yourself.

And equally regrettably, many outsources see their business the same way.

The result is that prices for outsourced services are under immense pressure to at least stay flat, if not move downward. And I understand that, and think it’s fair — up to a point.

The responsibility of Operations is not just to execute or deliver whatever Marketing wants, it is to deliver on the promise of the Brand. I admit, if your Brand is not important to you, then just go for lowest possible cost. But if your Brand has value to your business, then there are additional considerations.

  • What kind of experience do your customers expect of your Brand?
  • How tolerant will your customers be of operational errors, such as miss-picks, misships, damaged parcels? What are your current KPI’s in these areas?

Would expect LLBean to offer the same Brand experience as Nordstrom? or Saks Fifth Avenue? or Tiffany? Of course not.

And that one question should point out the need make sure your direct-to-customer operations deliver on that Brand promise.

Outsourcing can save money in some areas and may cost more in other areas by offering superior service at a cost that may be higher, but may be worth the price.

And the calculation of “effective cost” is much more complex than most accounting types appreciate. Here’s just one example of what I mean:

Let’s suppose for a moment that your current internal fulfillment operations have a overall shipped order error rate of two percent. That is, two percent of the orders you ship have something wrong with them when they leave the shipping dock.

It would not be unusual for that 2 percent to account for 10 percent of the customer service calls.

If an outsourced solution handles customer service inquiries at a cost that is 15 percent higher than your internal cost, but at the same time reduces the shipped orders error rate to 1 percent, then you save money (specifically, you save 57.5 percent of the customer service cost related to these calls).

So, just remember that calculating the cost to fulfill the promise of the Brand is more than just about dollars and cents, it’s about customer retention, customer satisfaction and customer expectations — if your direct commerce operations don’t meet those criteria, the cost in dollars won’t matter.

Filed under: Direct Commerce, Uncategorized

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