Direct-to-Customer Commerce

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

The eighth step to multichannel commerce

Step 8 is marketing & promotion.

What a can of worms that is … or at least can be!  And obviously, in a single post, I’m not going to cover this topic.  This is a topic of unending variables.

I really only want to make a few points.  First recognize the difference between the channel or medium and the activity.  You can advertise by mail, market by mail and promote by mail.  Mail is a medium of communications.  Advertising, marketing and promoting are the activities.

Multichannel commerce, it seems clear, by definition refers to conducting commerce (which means generating sales) thru multiple channels.  So, I’m not taking about advertising, which is just sending a message.  I’m thinking about making an offer to a customer or prospective customer to conclude a transaction with me.

We have more channels than ever, for commerce:

  • brick and mortar stores (fact-to-face)
  • paper mail (flyers, postcards, letter packages, catalogs)
  • electronic mail
  • social media
  • web store
  • smart phone app
  • tablet app
  • telephone
  • direct response broadcast (radio, television)

… and I’m probably leaving something out.

So, in the ideal world, your marketing & promotion efforts will generate commerce transactions with your customers.  And it should be your customers choice to use any particular channel.  Your offers, products, promotions should all be visible to your customers across all channels.  And that takes no small effort.

Here’s the next important point:  If you can’t measure it, consider not doing it.  The beauty of direct marketing, direct commerce, whatever you choose to call it, is that it’s measurable.  And with technology you can almost measure everything.  But not everything is worth measuring.  But if you’re not measuring anything, you’re wasting a lot of time and money.  And if you’re measuring so much you can’t comprehend the data or analyze the data, you’re still wasting a lot of time and money.

So, be deliberate about what you measure.  The most basic and most useful things to measure are:

  • customers who got an offer
  • customers who bought
  • how much they bought
  • how many they bought
  • what it cost to make the offer
  • what it cost to fulfill the offer

You’ll know a lot, if you keep these six data points for every channel and every promotion.

Think about this … it’s a lot to think about.

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Filed under: Ideas, multichannel commerce, , , , , , , , , , , , , , ,

Acquisition Spending, Direct Mail on the Rise: Winterberry Report

Acquisition Spending, Direct Mail on the Rise: Winterberry Report.

Interesting market analysis and forecast for 2011 by Bruce Biegel, managing director of Winterberry Group, interviewed in Chief Marketer.

In general, direct and digital marketing are not the dominant advertising channels, as compared to traditional media.  Paper-based direct mail is making a little comeback, expected to rise 5.8% in 2011.

Worth reading the whole piece.

Filed under: Direct Commerce, News, Opinion, , , , , ,

e-marketing verses p-marketing?

That’s short for electronic marketing verses paper marketing.

I’m raising the question of what is the balance between electronic marketing (in the form of email, etc) and paper-based marketing (in the form of direct mail or catalogs.

As a rule of thumb, I sense a general agreement that response rates from electronic marketing is about 10 percent of similar paper-based marketing efforts.  Obviously some do better; some worse.  Comparisons are difficult.  Because the market segmentation is less strictly enforced for e-marketing efforts — since cost is so minimal, compared to the cost of p-marketing.  Therein lies one of the more significant issues.

When the focus is on acquisition, any new customer is valuable.  So the low cost and similarly low response rates seem to be a non-issue.  However, when attrition rates are considered, part of your strategy must be to maintain and grow the size of the current customer file.  Can you rely on e-marketing efforts alone to meet your customer acquisition goals?  It’s certainly more difficult.

When the focus is on customer files, finding this balance becomes very important, because customer marketing is generally the source for the most profitable sales revenue.  And if response rates for e-marketing are 10 percent of p-marketing, profitability of e-marketing efforts must be about 10 times higher than p-marketing, to maintain profit goals — as sales revenue declines.

How likely is that?

Certainly possible — but not always a likely outcome.

In my view, this calls for more of a balance between these two marketing strategies that I generally see in the marketplace.

Personal anecdote — when I get a paper catalog, I routinely drop it on the reading table where I watch TV.  Then often, while watching/listening to the news (or some other equally mind-numbing program), I flip thru the catalogs.  I never know when something will catch my eye — something I can no longer live without.

I can’t do the same thing with e-marketing — at least not yet.  Maybe when I get an iPad, that will change.  But Apple has only sold a couple of million iPads, so market penetration of iPads is still small.

Several years ago, we heard catalogers talk about the “shelf life” of their catalogs.  That is, how long did a customer let the catalog sit around before they trashed it.  A few days ago I noticed one blogger write about the “half-life” of a marketing promotion.  Both terms get after the same point.

Back to business:

e-marketing seems to require a bulls-eye shot to produce revenue.  While a paper catalog or other p-marketing efforts have the potential for a much longer shelf-life.

We need more balance.  I think it will produce more loyal customers, more revenue, more profits.

Filed under: Direct Commerce, Ideas, Opinion, , , , , , ,

Kevin Hillstrom: MineThatData: 16 Multichannel Marketing Myths

Kevin Hillstrom: MineThatData: 16 Multichannel Marketing Myths.

This is a great post, which you should read in detail.  I picked it up from a consultant friend, Ernie Shell, who blogs at Direct Commerce Systems.  Kevin’s post, in effect, reminds me of how much the direct commerce trade press struggles to report real information, rather than the self-interested sales pitches of companies who will benefit from promoting their view of what builds sales via the direct channels.

Read and learn from Kevin’s post.  It’s great stuff.

Filed under: Direct Commerce, Opinion, , , , , , , , , , , , , ,

The last step in direct marketing channel integration

I had lunch earlier this week with a old and tenured friend, who runs a personalized mail business.  As with many, if not most or all, direct mail production companies, his business is suffering some.

He asked me to peer into the future and tell me what I thought was going to happen to the industry.  I won’t claim that my insights are better or more predictably accurate than anyone elses, but here they are:

First, I think the efficacy of direct marketing is being publicly proven — again.  For example, as I posted earlier.  The DRTV business is growing in this economic downturn, because of the reduced price of network TV advertising.  General advertising agencies don’t have budgets from their clients to “over pay” for television time, so DRTV is proving how much stuff you can really sell over TV, rather than just advertise it.

Second, while retail sales are flat or down, ecommerce and mail-order sales are flat or increasing (this according to US Dept of Labor statistics).  Retailers continue to commit increasing resources to their ecommerce initiatives.  Chicos FAS even “replaced” their CEO because he had not devoted sufficient resources to their “direct” business, which was growing faster than any other segment.

Third, internet based retail stores are great “buying” channels, but poor “shopping” channels.  Even with ubiquitous broadband access, you cannot flip thru a web site the way you can flip thru a catalog.  Interestingly, the big catalog companies, such as LLBean and Lands End and others, continue to drive business to their web site by mailing catalogs.  And their web sites are continuing to grow as the point of origin for more and more of their total order volume.

Fourth, electronic-mail does not replace paper-mail (at least, not yet).  By all reports I’ve heard, response to email marketing is 10-20% of response to paper-mail marketing.  That means if you get 2% response to a catalog, you’ll get 0.2% response to an email effort — at best.

And even if the email marketing effort is statistically more profitable, the gross sales and net income remains dramatically lower than traditional direct marketing efforts.  So, all of these merchants who are trying to save money by shifting declining resources to electronic marketing will likely find they will have to return to a more balanced budgetary strategy.

The more difficult question is when will this rebalancing occur — almost impossible to predict.

So, here’s the question I think we need to be contemplating more:

How can we integrate the web as a response channel to paper-based direct marketing efforts, in order to document their efficacy?

And in my opinion, this integration should be more than back-matching orders to mailing files, or forcing customers to enter “source codes” from their catalog.

Let’s have a little creativity in response tracking

Filed under: Direct Commerce, Opinion, , , , , , ,

Direct Mail Fades As Mass-Marketing Channel: Winterberry

This is a headline in Direct, here’s a link to the entire article.

I pretty seriously disagree with the implications of the headline.  The jist of the article highlights how the total direct mail volume is declining — which has nothing to do with the headline.  There are fewer advertisers on TV these days — fewer on radio — fewer in newspapers.

The decline in advertising activity relates to the general decline in the economy, and has little to do with the impact of the medium itself.

While general TV advertising is down, direct response television is increasing pretty dramatically.

What is changing is the economics of the marketplace.  Companies who have not been managing themselves well are fading or disappearing.

On top of that, if anyone sees direct mail as a “mass marketing” channel, they probably should not have been using the medium in the first place.  Every competent direct mail person I’ve every known would have loved to eliminate every non-responsive name they could.

Jacking up mail volume, just to get big numbers is always a losing proposition.

Filed under: Direct Commerce, News, , ,

Millard Fuller, co-founder of Habitat for Humanity, dies

Some of you may wonder why I’m linking to this story in a blog about direct marketing.  Fair question, to which  there are two answers.

First, because I’ve been a volunteer with Habitat for Humanity of Northern Virginia, since 1991.  Even this past Saturday, I was out on a work site in Fairfax County, Virginia, where I live.  You should check out Habitat for Humanity International as well as Habitat for Humanity of Northern Virginia.

Secondly, Millard was a direct marketer.  He and Morris Dees (a very liberal guy who helped George McGovern’s Presidential campaign back in 1972; as well as led the Southern Poverty Law Center), started Morris & Dees, as a direct marketing agency while they were still in college.

One story was that they began selling birthday cakes to the parents of their fellow students — by mail, of course.  Good story, whether it’s true or not.  They’d sell the cakes to the parents and then deliver the cakes to the dorm rooms.

Millard was a good guy — had his flaws, like all of us do — but you only have to talk to one or two owners of Habitat for Humanity homes to understand how this idea has changed so many lives.

Pretty remarkable.

Filed under: Direct Commerce, News, ,

Where will the action be in 2009?

There’s an article in the December issue of Direct provides some of the answer to this question.  It’s based upon data from the DMA .

Here’s a chart of the data, showing Projected Sales by Direct Channel for 2009 (in $ billions).


What surprised me a little, when I first saw this data, was the relationship of Direct mail / catalog to Direct mail / non-catalog.  I was surprised the catalog numbers were so much lower.  But, at the same time, then I noticed the Web marketing / non-email numbers.  You might be tempted to think this web marketing sales number is based upon Search or Advertising, but it is also likely driven a lot by catalogs.

I don’t know about you, but when I order from a catalog, I often place the order on the catalog web site, just to avoid all the up-selling, which to many consumers is annoying.

It also seems likely that the Telemarketing sales number is driven a lot by catalog.  These three channels seem to be closely linked and almost impossible to differentiate.

This is great information for Service Providers who are assessing where to devote their marketing efforts to secure new clients.

Filed under: Direct Commerce, , , , ,

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