CATALOG AGE Benchmark 2001 on Operations

Mar 15, 2001 10:30 PM  By

Catalogers often talk about the importance of giving customers the convenience of shopping from a variety of channels. But with the emphasis on multichannel marketing, which entails balancing catalog, Web, and retail divisions, are scarce operational resources being spread too thin? If so, these depleted resources could undermine, rather than improve, customers’ shopping experience.

For example, 39% of participants in Catalog Age’s 2001 Benchmark Report on Operations handle an excess of calls by putting the customer on hold, up from 36% of last year’s survey respondents. And the mean call abandonment rate has increased since last year, to 3.4% from 3.0%.

Then again, only 16% of this year’s respondents do not accept overnight orders — not even on an answering machine. That’s a sizable improvement from 25% of last year’s respondents.

ORDER PROCESSING

For all the hype about offering customers the chance to order when and how they want, you might think that 24-hour phone ordering service would be a staple among respondents. Not so. Just 18% of respondents offer round-the-clock telephone ordering, including 31% of the consumer catalog respondents but only 4% of the business-to-business respondents.

Doing “more with less” is a familiar mantra in operations. The majority of overall respondents (64%) do not have a separate staff to handle e-mail orders, customer service, and correspondence. This includes 87% of respondents with company sales of less than $1 million, and 71% of respondents with company sales between $1 million and $9 million. What’s more, 90% of respondents say they cross-train telephone representatives both to take orders and to handle customer service inquiries. B-to-b respondents are more likely to keep their reps hopping, as 92% say they cross-train order-takers to handle customer service, compared to 88% of consumer respondents and hybrids.

CUSTOMER SERVICE

With competition fierce between retail stores and Websites, many catalogers rely on exemplary customer service. Offering a toll-free number for customer service would seem the bare minimum for service, and many catalogers do. Nearly 73% of all respondents offer a toll-free service line, including 68% of consumer catalogers and 79% of business-to-business catalogers. Then again, 63% of the total respondents don’t offer separate service and ordering lines.

An overwhelming majority of respondents (72%) offer an inhouse toll-free line for customer service; 26% of respondents offer an outside toll-free line, typically to a third-party call center. Not surprisingly, respondents with deeper pockets are more apt to spring for toll-free customer service. Among companies with annual sales of less than $1 million, 37% of respondents offer an inhouse toll-free line and 18% have an outside toll-free number. In comparison, at companies with annual sales of at least $50 million, 84% offer an inhouse toll-free line and 26% an outside toll-free line.

To improve the quality of customer service, 48% of respondents monitor calls for quality control and retraining purposes. Of respondents with sales of less than $1 million, 18% monitor calls; among those with annual sales of at least $50 million, the figure jumps to 87%.

INVENTORY MANAGEMENT

There has been a slight falloff from last year regarding fill rates. The mean initial fill rate that survey participants aim for is 90.8%, down from 93.2% among last year’s respondents. And the mean initial fill rate achieved is 85.3%, down from 89.2% last year. For the mean final fill rate, respondents aim for 95.1% (compared to 95.4% last year) and achieve a mean final fill rate of 92.8%, down from last year’s 93.3%.

As far as getting rid of excess inventory, 42% of respondents use the Internet, making it the most popular form of liquidation. Rounding out the top five liquidation methods: donating to charity (35%), package inserts (35%), special sale catalogs (33%), and catalog inserts (30%).

Given the costs associated with maintaining proper inventory levels, it’s surprising that more than half of survey respondents (54%) don’t use barcoding in the warehouse. But of those that do, 69% use it for inventory tracking. Even more — 73% — use barcoding to process shipments; 44% use barcoding to process orders, and 35% to track the productivity of pick/packers.

FULFILLMENT & RETURNS

More than 85% of respondents do not use third-party fulfillment firms. But 15% of respondents — including 17% of the consumer catalogers and 12% of the b-to-bers — are third-party services providers.

On the returns front, 70% of respondents report that their return rates are about the same as last year’s. Even better news: 21% of respondents are seeing fewer returns than last year.

More good news: The mean percentage of returns resulting from internal errors, as opposed to customer dissatisfaction, has fallen from 19.7% among last year’s respondents to 11.2% this year, the lowest level in three years.

Not surprisingly, 19% of respondents do not pay postage costs for returned merchandise, although 59% will pay for return postage if the return resulted from the cataloger’s mistake. Just 19% of total respondents pay for the cost of postage regardless of the reason for return, which is up from 16% last year.

METHODOLOGY

In November 2000, the Catalog Age subscriber file was sorted on an nth-name basis to extract a sample of 999 subscribers indicating job function as president, vice president, or fulfillment management. These subscribers received a letter of explanation, a 51-question survey, a $1 incentive, and a postage-paid envelope in which to return the survey. Of the 988 deliverable surveys, 171 usable surveys were returned, for an effective response rate of 17.3%.

“Do you staff your phone ordering lines differently on weekends than weekdays?”
Same hours 26%
More hours 2%
Fewer hours 72%
“What telephone numbers do you provide for ordering?”
Inhouse toll-free line 72%
Inhouse toll line 44%
Outside toll-free number 26%
Fax number 77%
Don’t have a telephone ordering line 2%
Total exceeds 100% due to multiple answers
Respondents with separate ordering and customer service lines
Consumer catalogers 46%
B-to-b catalogers 21%
“Do you use computer telephony integration (CTI) in your telemarketing facility?”
Yes 20%
No 66%
No, but we are considering it 15%
Total exceeds 100% due to rounding

For respondents with separate order and service phone lines, a mean 64.2% of calls to the order line result in sales.

For respondents without separate order and service phone lines, a mean 54.2% of total calls result in sales.

“Do you monitor calls for quality control and retraining purposes?”
Yes 48%
No 48%
No, but we are considering it 4%

Consumer respondents staff their customer service lines a mean 11.4 hours a day.

B-to-b respondents staff their customer service lines a mean 10.1 hours a day.

“What telephone numbers do you provide for customer service?”
Toll-free number 73%
Fax number 54%
Toll line 35%
No separate phone number 16%
Outside phone number 4%
Other 4%
“Are you using radio frequency for inventory management?”
Yes 13%
No 74%
No, but we are considering it 12%
Total does not equal 100% due to rounding
Percentage of orders resulting in backorders
15% or less 73%
16%-25% 13%
26%-35% 7%
36%-50% 4%
More than 50% 2%
Total does not equal 100% due to rounding
“Have you increased warehouse space in the past 12 months?”
Yes, bought/leased additional space 16%
Yes, moved to a larger facility 4%
Yes, added on to existing facility 12%
Yes, installed a mezzanine 1%
No 64%
Total exceeds 100% due to multiple answers
Percentage of returns resulting from internal errors (as opposed to customer dissatisfaction)
Less than 10% of returns 82%
11%-25% of returns 6%
26%-50% of returns 8%
51%-75% of returns 2%
More than 75% of returns 2%
“How do you charge for S&H?”
Based on total value of order 38%
Based on weight/distance 28%
Standard change per order 23%
Separate charge per item 6%
We don’t charge 2%
Other 3%
Mean percentage of orders shipping within…
24 hours 47.4%
1-2 days 20.3%
3-5 days 14.1%
6-15 days 10.6%
16-29 days 3.1%
30 days or more 4.5%