Prepare Your Operation to Cope with These Six Trends in 2006

Dec 15, 2005 2:40 AM  By

You may be preoccupied with family and friends this holiday season, but don’t forget that the marketplace isn’t standing still. Logistics expert Debra Ellis points to six trends that you can expect next year and recommends actions to deal with them:

1. Response from rented lists will continue to decline. The formula for success in direct marketing used to be (quality names from rented lists) x (mailing as many times as you can) = unimaginable profits. Time passed and the formula changed to (quality names from rented lists combined with cooperative database models) x (mailing as many times as you can) = more profits. More time passed and this model is ready for replacement. Rental names have diminishing returns. Why?

Reason one: Our world has changed. Promotional messages bombard us everywhere we turn. Our senses are so overloaded they simply shut down. Many new catalogs go straight from the mailbox to the recycle bin. Potential customers haven’t the time, energy, or inclination to browse unless they have an immediate need for your product or service. And, if that need is present, they will search the Internet for your competitors to see if they can get a better deal.

Reason two: Too much of anything is simply too much. When it was easy and profitable to duplicate successful mailings, the market was saturated. If you consider the total consumer base as a gold mine, then accept that it has been strip-mined. Companies seeking profitable growth must create an unbreakable bond with existing customers and incorporate that relationship into their marketing mix. Word-of-mouth is still the best form of advertising, and it travels faster in our electronic world.

2. E-mail marketing will lose its effectiveness. The early predictions for e-mail marketing promised great results at minimal cost. The visionaries’ crystal ball must have clouded over before they saw the profusion of spam and viruses that now jeopardizes all e-mail marketing. Every challenge inspires solutions. The current solution for eliminating malicious content is to reject e-mails from unknown sources. Even if you have permission to market to an individual, your e-mails may never hit their target. They have to pass ISP filters and dodge third-party “spaminators” before being dumped in an in-box overloaded with unopened mail. No wonder results are declining!

3. Competition for customers will intensify. Yahoo!, Amazon, and eBay are incubators for the next wave of competitors. These entrepreneurs have an advantage over established companies. Their overhead is low, their innovation exceeds resources, and there are no historical concrete boots to hold them back. You know those boots. They are named “Tried it, didn’t work,” “Too risky,” and “If man was meant to fly, he’d have wings!” If you believe that your unique consumer product protects you from the new competition, think again! Unless you have the cure for cancer or a comparable item, you are competing for discretionary income just like everyone else. You have to have something that makes you stand out from the crowd to win this battle.

4. Simplicity will rule. Time is a limited resource. Today’s hustle and bustle with work, family, and friends leaves little time for shopping. Yet, many businesses operate as though their customers have nothing else to do. Navigating through their website is tricky and treacherous, “operators are standing by” means they are waiting for customers to go through 37 options to reach a live voice that recommends shopping online, and checkout lines are places to meet new friends because you will be spending the day with them! Watch for customers to start checking out of this process. There will be a trend toward simplicity. The companies who provide service that supports that trend will thrive. Check every step that involves a customer or prospect to ensure that it is quick and easy. If you respect your customers’ time and energy while meeting their needs, they will be loyal to you.

5. High-speed Internet accessibility will increase. The U.S. has lagged behind other markets in high-speed Internet availability, but that will change in the year ahead. Technology that requires fast connections will be more widely available. Just be sure to offer a low-speed version until at least 80% of your customer base has high speed. Otherwise, you will be limiting your potential.

6. Customer-centric companies will dominate. If you want to capture your market, think like your customers! They are your lifeline. Make every decision with them in mind. The companies that recognize and fulfill their customers’ needs will increase their market share. Yes, service comes first. Create an environment where it is easy and fun to shop, and customers will keep coming back. Don’t fall for the better-technology mousetrap. Technology is a tool that should serve instead of creating challenges for you or your customers.

Let 2006 be the year that you find the business model that fits your organization. It requires challenging everything you know about operating your business. Eliminate activities that don’t generate a return on investment in revenue or goodwill. Spend more time innovating instead of duplicating. And document the results so you will have benchmarks against which to measure future successes.

Warning: Solutions proffered without the buzzwords of the day are often ignored. If you find yourself overlooked when you propose radical change, modify your presentation. You can frame it like this: “We are suggesting an UBM that incorporates CRM with BPM and maximizes ROI.” Hopefully this will have enough capital letters in it to pacify the naysayers until the results start rolling in. Then they can say that they knew it would work all along!

Ellis can be reached at 828-626-3756 or dellis@wilsonellisconsulting.com.