Don’t Forget Building Preparations Before Holiday Season

Building preparation for the winter might not be atop most merchants’ to-do lists for the holiday season. But after last year’s brutal winter along the East Coast, many merchants are thinking about that now.

It’s “definitely something we are taking more seriously before holiday to avoid shutting down due to access or leaks in the building,” says Robin Bavin, chief operating officer for Stony Creek Brands, which includes the Cooking Enthusiast and Uno Alla Volta titles.

Since her company is based in North Branford, CT, Bavin saw how a brutal winter can impact operations. Overstaffing is a good thing, she says, especially due to inclement weather. Alone those same lines, prepared phone messages for a company closure are advised.

Among Bavin’s top challenges are inventory receipt delays due to weather or availability, transit delays due to weather, and being nimble enough to adjust to meet customer demands.

Don’t Let Analytic Software Fall Into Inexperienced Hands

Today’s database access tools provide marketers with the hands-on ability to access, manipulate and draw conclusions from their own data. But these access tools also have great potential for misuse when they fall into the hands of individuals with little or no analytical training. The result can be false insight, which is worse than no insight at all.

Marketers should think twice before tackling data investigation that requires the definition, creation, manipulation and comparison of multiple past-point-in-time views. But the unwary can also get into trouble with database queries that have nothing to do with multiple past-point-in-time views. Although the following example involves a business-to-business scenario, the concepts are universal:

The goal is to calculate re-order rates for certain types of consumable merchandise, so we can understand when to send targeted promotions. Intelligent discussion will raise important issues that will make the difference between true versus false insight:

  • The average re-order rate will be misleading if the variance is excessive. Therefore, distributions should be calculated, in the search for an actionable critical mass of re-order behavior.
  • It will be important to determine if there are overlapping re-order distributions that cluster around multiple critical masses. For example, if small businesses re-order every five months on average, and large businesses every month, then sending a promotion corresponding to the overall average of three months will be perfectly timed to interest almost no one.
  • Extending this line of thinking, we should take care to find out if re-order rates vary by other factors besides how large the business is, such as the size of previous orders. Calculating the ratio of the two might prove insightful. Also, seasonality must be considered.
  • Single-buyers should be eliminated from the analysis because, by definition, they have no re-order rate. Including them will guarantee false insight. But, perhaps there is something we can do so they can be included in the promotion. Also, how should residential customers be handled?
  • Finally, what about production considerations? If, for example, postcards will be employed to generate additional demand, how will the drops tie into the existing production schedule?

I learned this last lesson earlier in my career, after analysis indicated that a specific line of highly-profitable merchandise had high re-order rates. So, I recommended aggressive cross-selling and creative line extensions.

The problem was that the specific merchandise line was manufactured in-house, and required custom-built equipment that was very expensive to manufacture and would require additional factory floor space that was not available at the time.

Jim Wheaton is a co-founder of Daystar Wheaton Group.

Don’t Give Up on Co-registration

Co-registration is working as an online customer acquisition tool in the world of magazine subscriptions, according to ePost Direct president Michelle Feit.

And if it works for that market, maybe direct merchants should piggyback their e-mail offers, she said last week at the Direct Media Co-op.

“71% of the U.S. population is using the Internet, so there’s more of an opportunity to touch our future customer online than ever before,” Feit said.

Co-registration is already a $300 million industry, and should grow tremendously over the next couple of years, Feit said. Which is why she feels merchants and advertisers need to learn the proper way to get on board.

So what is co-registration? In one sense, it’s co-mailing in the e-commerce channel. But unlike co-mailing, your partners don’t have to produce a mailing of equal sizes to take advantage of a partnership.

The process simply involves putting your offer on someone else’s Web site wherever the registration process is. The concept is while the recipient is signing up and giving their information to the primary merchant, you have the opportunity to put your offer in front of them and ask if they want to receive more information.

“And if they say yes, you get to own all that data about that individual,” Feit said. “It’s permission based, it’s opt-in, and it shows a higher level of interest.”

When that happens, an automated e-mail is sent to that individual that says yes, so you are in the recipient’s e-mail box immediately. You then own the lead and can own any and all components of the data, based on your goal of building your e-mail list.

But of course, the offer has to be something that would possibly peak your partner’s interest, yet not be a rival to the registrar’s core business. So for example, a seller of office furniture would have better luck doing a co-registration with a computer seller or an office supply retailer than with a sporting goods manufacturer.

“You want to get your offer to the appropriate people so you can get as much conversion as possible,” Feit said.

Don’t Be Shy About Making Conversational Marketing

Selling products and services through multiple channels offers a number of touch points where you can gather information from customers or potential customers. Most people in marketing clearly understand the importance of using this information to personalize communications with customers and perhaps even to customize products and offerings for them. The challenge is how to glean all the valuable information from shoppers without their feeling stalked or needlessly bothered.

The clinical term for the practice that causes people to withdraw is psychological reactance. This reaction, or the fear of it, could help explain why some companies will not actively engage in interactive or conversational marketing.

Conversational marketing is the ability to take what the customer says, remember that information, and then give it back to the customer in a way that the customer finds meaningful and is likely to respond to. As a technique, conversational marketing is a proxy for an actual discussion about what customers want and what you are able to offer to meet their needs.

Conversational marketing benefits both you and the customer by facilitating personalization. To be able to offer personalized service, you must know just enough about your customers to make friendly suggestions about what else they may like to buy without crossing the line where an interaction gets so personal that it makes shoppers uncomfortable.

Personalization most often occurs in the communications channels. Customization is an added twist, as it is a product-based activity. Customization also requires a database of customer information, usually collected directly from the customer during the sales process. The process of customization requires taking the information at hand and creating an entirely new product for the customer. Brooks Brothers does it with suits and shirts. American Girl does it with dolls. Lands’ End does it with jeans, by asking for, remembering, and building a customized suggestion from customer data.

Starting the conversation
Before you can even consider establishing healthy and productive personal communications with customers, however, you must address several issues. A customer analysis is the first step before building a personalization and customization program. You need to determine if the customer base can be segmented in such a way as to make personalization and customization viable strategies for your company. One-to-one personalization may not be cost-effective for you, and you may end up choosing to use traditional targeting and segmentation techniques to create personalized communications and offers for groups of customers rather than for individual customers.

Adequate customer data is the second requirement. Conversational marketing requires a customer database and the ability to access customer information across sales channels in order to get a complete view of the potential buyer before executing marketing programs. Without such data, you cannot analyze and segment your customers by RFM (recency/frequency/monetary value) or other characteristics.

In their 2003 study of 209 firms, Debra Zahay of Northern Illinois University and Abbie Griffin of the University of Illinois at Urbana-Champaign found that customization requires sales-oriented and specific customer information, and personalization requires specific marketing information, such as response to particular marketing offers, and the ability to share information throughout the firm.

In some cases, a little imagination and hustle can make up for the lack of adequate customer data. In many other cases, the problem is old-fashioned data segregation. Data obtained from different channels get stored in different “silos” or databases that cannot be integrated. That problem can also be remedied, however. For example, it is now possible for enterprise software systems to use a common set of data across channels within a single data schema. This type of technology is used to share data across other systems and replicate it throughout the company when changes are made in one place and makes it possible to acknowledge customer information regardless of the interaction mechanism.

Shared data collection and integration, by the way, are integral to excellent customer service as well as to personalization. Say a customer buys a shirt online, tries it on once it’s delivered, and finds that it doesn’t fit right. Instead of boxing it back up for a return, the shopper brings it to the local mall for an exchange. That particular store may not have an exact replacement, but the clerk is quickly able to tell the customer that the item is sitting at another store and proceeds to have the item shipped directly to the customer’s home.

Conversational marketing and personalization, when implemented correctly, make the shopper feel special. People like being taken care of in this manner. It makes them feel special. Once you provide personalized service, people will start having conversations about you.

Conversational marketing creates possibilities for upselling and cross-selling, maximized revenue and profit, and loyal customers. That’s why all aspects of the organization must be involved in personalization and customization as viable business strategy choices. Top management must be involved and give support to the organization to accomplish these tasks.

Brian Carpizo is the CEO of Junction Solutions, a provider of software for multichannel commerce.

Don’t Lose Profit to Online Requesters

Because it is so easy to request catalogs on the Web, catalog requesters are yielding lower conversion rates and declining in value, says Jim Coogan, president of Sante Fe, NM-based Catalog Marketing Economics. For that reason, he suggests segmenting those who requested via the Web from your other requesters.

Web requesters respond differently than traditional catalog requests, Coogan says. If you don’t convert a Web requester in the first month, you probably aren’t ever going to convert him. Since Web requesters need an immediate contact, send them an e-mail at the same time as they receive the catalog—or even earlier. “Program the e-mail so that it’s like an order acknowledgment,” Coogan says. “Give them an offer to order right away, even before they receive the catalog.”

You should also segment requesters by the number of contacts (both catalogs and e-mails) you’ve sent them to try to convert them. If you segment them by date range (for instance, 0-3 months) you risk combining requesters who’ve received a single catalog from you with requesters who received three or more catalogs, leading to muddy results.

Coogan also advises running the requesters through a cooperative database “to suppress the ‘tire-kickers’ who don’t respond to catalogs and just like to get mail.”