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, , , , , , , , , , , , , , ,

E-Commerce and Retail

Kevin Hillstrom: MineThatData: Multichannel Wednesday: E-Commerce and Retail.

The link above takes you to an outstanding set of observations about how multi-channel customers behave in the various channels, and how you should adjust your marketing communications based upon the acquisition channel.

Great insights that are worth your attention

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, , , , , , , , , , , , , ,

What drives direct commerce?

This post is an exercise in reminding myself of the fundamentals.  And just like football, you’ve got to get the fundamentals right, before you move on to the more sophisticated permutations of the business.

The fundamentals of Direct Commerce are convenience, customer service and, sometimes, price.

Convenience
The reasons the direct marketing channels exist, at all, is because they are more convenient than the brick-and-mortar retail channel.  What is it about convenience?  Could be any of several things — which varies by the individual customer:

  • saves the time to drive to and from the store
  • avoids having to “rummage” thru a store to find what you’re looking for
  • avoids having to deal with untrained, poorly trained or rude retail clerks
  • avoids having to find a parking space
  • avoids having to “lug” stuff to and from the car
  • avoids the crowds at the mall — especially at heavy shopping seasons, like Christmas or Back-to-School
  • allows me to shop from anywhere — work, hotel, and now, with a mobile device, even from my car
How can you provide additional convenience to your customers and, just as importantly, to your prospective customers?
Customer Service
Customer Services has several components.

Pre-sale contact, when a customer is trying to learn more about a product so they can make a decision whether or not to buy, whether or not the product meets their needs or satisfies their desires.

Post-sale contact, when a customer is trying to resolve some issue which has arisen after the purchase decision.  This might be an exchange, a return, a simple “where is my order?” inquiry or anyone of about 20 or so typical customer service inquiries.
Finally, reliability and trustworthiness, which at the end of the day, determines if a customer wants to do business with you again.  Your customers need to trust that you’ll treat them right and that you’re not afraid to actually talk to them on the phone.
Have you noticed how difficult it can be to actually get a customer service rep on the phone?  Or, even get a reasonably prompt answer to an email?
A lot of companies spent a lot of time and effort trying to avoid dealing directly with their customers.  Ever tried to call Amazon?  It’s almost impossible to find Amazons’ customer service phone number.
Price
And I should emphasize that price is only sometimes a fundamental.   It seems to get more important as the product price points increase, but there is also a point at which price becomes irrelevant — either because the price is so high or the price is so low.
And the exact location of this price range varies by product category.
This is also why shipping cost is a factor.  My rule of thumb is that if shipping cost is more than 10 percent of merchandise cost, then the customer will at least “pause” to consider if it’s worth it.
So, be sure you spend a little time on the fundamentals each week — then move on the more esoteric stuff.

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

A Direct Marketing Strategy for a Weak Economy

I don’t want to suggest that I’m the only one who can come up with this strategy.  Any seasoned direct marketing person, who is thoughtful about it, would probably reach the same conclusions.

In a weakening economy, it’s typical for direct marketers to focus on promotions to their customer base.  After all, response rates from customers are dramatically better than response rates from non-customers.  Pretty obvious.

And, with what will likely be shrinking budgets, the pressure will be on to produce more with less — and leveraging the customer base is the easy solution to such pressures.

But every direct marketer knows there is constant attrition in the customer base.  And that attrition will likely increase in a weakening economy.  Under normal circumstances, we balance the customer acquisition efforts to at least offset the customer attrition, if not actually grow the customer base.

Thus, the conundrum of a weakening economy for direct marketers is how to acquire customers in sufficient numbers to offset customer attrition while maintaining profits from customer promotions, all with lower budgets, when most expenses are increasing.

Well, it should go without saying that you cannot do all of those successfully.  But you can have some traction in all those areas.  Let me suggest how that may be possible.

First a couple of working hypotheses:

  1. Your best customers buy thru multiple channels — they visit your stores, get your catalog, order over the phone and over the net.  They’re not just multi-channel buyers; they’re cross-channel buyers.  They use one channel to facilitate buying in another channel.
  2. Customers and Prospective Customers with disposable income are comfortable with email and web.  There are certainly some marketplaces where this is not true, but they tend to be marketplaces where cost the sole criteria for purchase — but even Wal-Mart has a significant web presence.
  3. There’s a difference between shoppers and buyers.  While it’s getting better, shopping on the web is still more difficult than buying.  By this, I mean, if I have some idea of what I want to buy, the web is easy to use to find something to buy.  Conversely, if I have no idea what I want, then the web is a difficult place to go to narrow down the possibilities.  This is one of the reasons that sending catalogs to customers and prospective customers results in online purchases.  I can browse the catalog for ideas and then go online to buy.
  4. Email and Search are so cheap it scary.  The problem, if you call it a problem, is that the response rates are 1/10th of response to paper mail; but the cost can be as low as $0.001 per message.  It may actually cost more to create the message than to send it prospects.  Natural Search has no direct cost (it’s all indirect, because it’s based upon how well you construct your web pages).  Paid Search only costs, when someone clicks thru, so you get impressions for zip.
Okay, with those working premises, here’s a strategy for you:
  1. Focus most of your marketing budget on your customer base with the goal of maintaining revenue streams and profit margins.
  2. Emphasize natural and paid search to identify prospective customers because the cost is so much smaller than paper mail.
  3. Construct an email tree of emails which takes a prospective customer from inquiry thru their second purchase.  This means sending multiple emails, each constructed to build on their prior response/non-response to take the prospect closer to buying.  It’s a weaker strategy to simply construct messages and blast the same email to everyone and their grandmother — you should still be concerned with Offer, Copy and List Segmentation.
What do you think?

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

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