Succeeding by Exceeding

Remember the good old days — you know, six or eight years ago — when your competitors were the other catalogs that landed in mailboxes along with your book? Today you face competition not only from other catalogers, but also from manufacturers, retail chains, mom-and-pop shops — in short, anyone with a URL. Thanks to the Internet and its prominence as a new sales channel, the direct-to-customer model has witnessed a renaissance.

With this renaissance has come a greater need for catalogers to differentiate themselves from competitors. At the same time, customer standards and service expectations have increased as well — again, due largely to the Internet, and its promise of near-instant gratification. But if you’re smart, you can use customers’ heightened demands to set yourself apart from the crowd — by surpassing their service expectations.

The shift from tactical to strategic

There is a shift in mindset taking place in the catalog industry, from tactical to strategic. Catalogers must approach fulfillment as a strategic business process that leads to sales and completes the catalog life cycle — ensuring that the right product gets to the right customer, at the expected time with the expected presentation, so that the customer buys again.

For years, most catalogers did not have a sense of brand, limiting themselves to thinking about merchandise, lists, catalog production, and mailing costs — the necessary mechanics of running a catalog business. While a sense of brand importance was already growing by the time marketers began using the Web as a business tool, you can argue that the branding of catalogs on a broad scale coincided with the Internet bubble.

Thinking about your catalog’s brand forces you to think strategically in addition to tactically. Brand strategy has affected the graphic design of catalogs, merchandise selection, fulfillment practices, customer care policies, and more.

Accompanying this focus on brand strategy is the renewed emphasis on customer satisfaction. Internet marketers typically boast about their transaction counts, but few of them discuss their customer counts. In contrast, catalogers continually talk about customers, both active and inactive: How can we keep our customers coming back? How can we persuade customers to spend more with us?

Catalogers can — and often do — debate for hours about the factors involved in developing and retaining loyal customers. Is it the list or the market segment? Is it the product? Is it the offer? There’s no doubt that all of these are important. But they are more critical in customer acquisition than in customer retention and development.

The primary factor in keeping customers and increasing their loyalty is customer satisfaction. A white paper published by ForeSee Results in December notes that the primary predictor of a customer’s likelihood to purchase again from any company is his satisfaction with his last purchase.

So what are the components of customer satisfaction? For starters, the customer has to be able to easily find the product he’s looking for and to conveniently order it. Once the product arrives, it has to at least meet his expectations in terms of quality and appearance. Likewise, the way in which he receives the product — the packaging, the delivery time — needs to at least meet expectations as well. And if for some reason the customer wants to return the item, the process of doing so must be as easy as ordering the product in the first place.

Fulfillment as part of branding

A need for more differentiation among marketers has called for a renewed focus on exceeding customers’ expectations. The expectations surrounding fulfillment vary for every brand, a point that is critical to embrace. A low-price catalog, for example, may set expectations for its brand to include very simple packaging, slow but low-cost shipping methods, and limited inventory availability.

Most catalogers, however, seek to position themselves as providing superior value and convenience with above-average, if not world-class, customer service. Once you get a shopper to test your brand by purchasing a product from your catalog, how you satisfy that test will be the measure of your success.

Here’s a checklist of points to consider to ensure that your fulfillment services are serving your brand strategy:

  • Was inventory available?
  • If an item was back-ordered, did you tell the customer when it would ship?
  • Did you notify the customer in advance of any other anticipated delays?
  • Did you ship the order as quickly as you could, so that it arrived when the customer expected it (if not earlier)?
  • Did you package the order so that it arrived in pristine condition?
  • Did the package look as if it came from your catalog?

The idea of a catalog order life cycle is certainly not new, but companies have traditionally relied on marketing to reverse sales declines and customer dissatisfaction. Yet much of the contact between a company and its customers occurs after the marketing takes place, when the customer has decided to consider buying or to actually buy the company’s product or service.

As catalogers act more strategically, the mechanics of capturing orders — albeit very important — should take a backseat to touching customers and making sure they are satisfied throughout the order life cycle. The point is not to minimize the importance of sales and marketing, but rather to highlight the importance of contact with customers after they say “yes.” By viewing each step of the catalog order life cycle from the perspective of how it affects the relationship with customers, you will be more likely to meet their needs and keep them buying. It is when customers’ needs aren’t met that they go elsewhere; happy customers will buy again.

Case in point: returns

Dealing with returns is one area in which catalogers can “save” a customer. A customer who feels the need to make a return is most likely dissatisfied with the product. But if you simplify the returns process and accept returns graciously, you can leave this customer feeling satisfied with the process — and hopefully, with your company.

Most nonstore marketers struggle with the returns issue. It’s not difficult to find catalogers and others whose policies — requiring that the item be returned in the original, undamaged packaging, for instance — are clearly designed to make it tough for customers to return purchases. Such companies are not building loyal, satisfied customer relationships.

Multichannel marketers have the opportunity to let catalog or Internet buyers return unsatisfactory purchases to their stores, which is a good solution. A few catalogers are including prepaid return shipping labels with their outbound packages. Airborne Express, Federal Express, and the U.S. Postal Service offer such labels to their shipping clients, and virtually all the small-parcel carriers allow customers to create shipping labels on a Website. Few catalogers or i.merchants have integrated such a service into their own Websites, though, and there is still a lot of room for improving return convenience.

The thought of having to return a catalog or Web product via mail can deter prospects from placing the order in the first place. But if you address this concern directly with a generous and easy-to-execute return policy — and deliver on your promise — your customers are likely to keep coming back.

David P. Himes is senior vice president of business process solutions for NewRoads, a fulfillment and customer care services provider based in Greenwich, CT.

Capturing Loyalty

The key to capturing customer loyalty is to consistently exceed the customers’ expectations. Here are a few suggestions:

  • Provide unexpected rewards for increasing lifetime value. Don’t announce a big promotion or a frequent-buyer program; instead, simply begin providing the rewards. For instance, when a customer buys $1,000 worth of merchandise, give him a gift certificate worth 10% off. When he passes $2,500, give him a check for $100. Of course, the rewards and the dollar thresholds depend on your catalog’s price points and average order sizes.

  • Provide order-sensitive rewards. When a customer places an order valued at more than $100, for example, give him free ground shipping. For purchases over $250, give free express shipping.

  • Provide category-sensitive rewards. Analyze what each customer buys, and try offering incentives to order merchandise from his favorite product categories, as well as incentives to order merchandise from other categories.

  • Provide free personalization or gift-wrapping to the top 20% of your customers. The rule of thumb is that 20% of your customers generate 70%-80% of your revenue. Therefore you can’t do enough for those best customers.

  • Offer a 10% discount to first-time buyers if they buy again within 30 days. This will encourage new customers who are just “trying you out” to become real customers.

  • Offer a 10% discount on the second line item on an order. When customers buy more than one item at a time, the fulfillment cost per unit decreases, so why not pass on the savings?

  • Give your best customers a special customer service number. I’m a frequent flyer with one particular airline, and I have a toll-free number to call with any questions or concerns. In the past year, I can recall only one time when I did not get an immediate answer to my call. Aren’t your best customers worth the extra cost? Besides, the cost isn’t all that much, because most automated call distributors (ACDs) can prioritize calls by dialed number identification service (DNIS), so that anyone who calls that number gets moved to the front of the phone queue.

  • Capture “ship to” addresses used during the holiday season and send reminders to your customers next fall. You could even turn this capability into a gift reminder service.

Secrets of Success

Everyone has his list of principles to be a successful cataloger. Here is mine, for your reflection:

  • You can’t persuade people to buy; you can only turn shoppers into buyers, so look for shoppers.

  • Remove all the barriers to simple, convenient ordering. Accept an order any way a customer wants to give it to you — mail, phone, fax, e-mail, or Internet.

  • Provide incentives to motivate the shopper to buy. It’s easier not to buy than to buy. You’ve got to give the shopper a reason to buy today, right now.

  • Do a better job at fulfillment than your customer expects. Fulfill the order faster, in better packaging, with better information than he thought you would give him.

  • Make it easier to return merchandise by mail than it is to return the product to a store.

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