Support Services: The Support Report1 Aug, 2011 By: Doug McPherson Response
Support services are working to keep up with an ever-changing direct response landscape. Teleservices remain relevant despite growing purchases from the Web. Payment processing is going mobile. And fulfillment companies are getting retail savvy.
Even though Bob Dylan’s words are nearly a half-century old, they may be just as relevant today as they were in the tumultuous 1960s. No doubt, many in the DR support services space agree. Take teleservices as an example. The simple fact is this: More people are buying products from the Web. You might think this would worry Jim Speidel, vice president of new business development for Omaha, Neb.-based West Direct.
After all, if more people are buying products from the Web, they’re not calling into telemarketing firms. Speidel’s not sweating.
“We don’t see Internet migration as a combat situation,” Speidel says. “The Web is another channel in helping our clients sell products to consumers in their preferred method of communication.”
Mary Shanley, president of Chicago-based TTC Marketing Solutions, agrees. “That’s business — it’s constantly changing, upgrading and getting easier for consumers,” Shanley says.
Teleservices Expands Its Offers
That includes her business, too. “Most teleservices companies have expanded their services beyond just providing sales for clients,” Shanley adds.
That services menu includes customer reactivation, inquiry conversion, callback confirmation, upsell programs and — as a sly response to more Web purchases — abandoned cart callbacks. “These are all outbound call programs that provide clients with additional revenue,” she says.
She adds that whether a teleservices firm calls back an abandoned cart prospect or handles a consumer who called in and didn’t buy, conversion can and does happen. “It depends on the product value, price and offer, but we’ve experienced conversion rates of 5 percent to 15 percent on callback programs.”
West’s Speidel, a member of the Response Editorial Advisory Board, concurs. “Calling back consumers who inquired about a product can provide a lucrative revenue stream for our clients,” he says. “Many consumers appreciate the subsequent contact to help them complete their purchasing decisions, as they may have needed just a little more information.”
And Shanley isn’t ready to toss in the towel for inbound calls. “There are still a lot of people who want to talk to a live representative to answer questions. So we continue to take a lot of orders in response to DRTV or DR radio,” Shanley says. “It’s all about being relevant, having great offers and taking care of your customers.”
Mark Swanson, director of business development for Tele Resources Inc., an outbound teleservices company in Duluth, Minn., agrees with Shanley and Speidel and says the teleservices industry tends to be good at adapting to change.
“Many call centers are working on the outbound side of things to help conversions. On many campaigns, only 20 percent to 30 percent of the customers who call in actually convert. Smart marketers today are taking that extra 70 percent and calling them back. The number is captured, and there’s a 90-day inquiry window,” he says. “Offering something as little as payment options or free shipping can be the difference between another sale and a lost prospect,” Swanson says.
Many of the changes Swanson says he’s seen focus on reaching price points that make sense to the call center and the customer.
“There are often very thin margins, and sometimes you have to enhance the revenue,” Swanson says. “Conversion is too important to be ignored. Direct marketers are very good at getting people to visit the site, and getting much better at getting them to order, but for every person who orders, there can be 10 to 100 who don’t.”
Laura Noonan, vice president of marketing and corporate communications at 800response, a teleservices company in Burlington, Vt., says that although more folks are using the Internet to research and buy products, the need for teleservices and vanity numbers remains strong.
She cites a Wall Street Journal article (“With Customer Service, Real Person Trumps Text,” April 25) that found 90 percent of people say they still want their inquiries handled by live representatives over the telephone as opposed to online communication avenues.
“Online communication does not always provide as much information, and can’t correct problems the way a live two-way phone conversation can,” Noonan says. “This is good news for businesses that use a phone number in their advertising campaigns as a consumer response and lead-generation tool. With consumer reliance on toll-free numbers to contact businesses, and the fact that consumers prefer to have live communication with the companies they do business with, toll-free vanity 800 numbers will remain key components in advertising campaigns to reach consumers and generate response.”
|More and more companies are designing solutions for payments to be made remotely using a cell phone or contactless card, according to Eureka Payments LLC.|
Christy Brugger, vice president of sales and marketing for CustomTollFree, a teleservices company in Mill Creek, Wash., says the Internet can’t replace the value of a real person in building a relationship with clients and loyalty to a brand, and that there’s still no better way to track response to individual campaigns than with toll-free numbers.
“Using unique URLs that incorporate superfluous forward slashes, hyphens and random numbers throws off many consumers and technologically savvy users bypass all that and head straight for the homepage, which makes accurate tracking impossible,” Brugger says. “And these types of URLs are tough to remember or write down accurately, so this works primarily in print advertisements but not as well on TV and certainly not on radio or billboard advertisements.”
To simplify things for prospective customers, Scott Richards, CEO of Dial 800 in Los Angeles, urges marketers to consider getting creative with their toll-free numbers. “Direct marketers want to be able to attribute inbound telephone leads in order to optimize their media, what we are seeing more of is the use of hybrid numbers and numerically memorable numbers,” Richards says. “A hybrid is a combination of numbers and a word (e.g., 1-800-585-CASH). The reason has to do with how short-term memory works. Most people can remember three or four ‘chunks’ of information, so obviously a word like CASH acts as one chunk. This is also how numerically memorable numbers work. For example, a number like 1-800-940-7000 is far easier for the consumer to recall. We’ve seen such numbers increase response by 20 percent or more over toll-free numbers comprised of random sequences of digits.”
Another trend Richards identified is the use of call routing. “Call routing allows marketers to route calls to multiple call centers so that the center that performs the best gets the lion’s share of calls,” he says. “Also, if there is a natural or manmade disaster, calls can easily be routed to an alternate center. Since leads are perishable, marketers want to make sure they have their bases covered, and call routing allows them to do that.”
Payment Processing Goes Mobile
Payment processing is another support service that’s adjusting to changes. It has little choice when you consider the popularity of consumers using their smartphones to pay for goods and services.
According to a March 2010 report by Generator Research, the worldwide market for mobile payments will grow to $633.4 billion by 2014, up from $68.7 billion in 2009. The same report predicts the number of mobile payment users will grow 600 percent, to 490 million by 2014.
Curtis Kleinman, director of business development for Swipe Payment Solutions, a payment processing company in Los Angeles, says the benefits are obvious so it’s easy to see why smartphone technology is the target for many software-as-a-service (SaaS) developers.
“It’s only a matter of time before the PC is displaced by the smartphone as the dominant application of choice for everything from search to purchase and everything in between,” Kleinman says.
Tom Pouliot, payments evangelist for Lowell, Mass.-based Litle & Co., adds, “Smartphone commerce and payments are pushing us to the place of ubiquitous ‘card’ acceptance points pretty much anywhere in the world. We now have ‘credit card’ terminals everywhere. What’s important in smartphone commerce is that we have an opportunity to create trusted payment terminals for consumers.”
But Kleinman says smartphone technology must overcome a few obstacles. Smartphones need to sync seamlessly with the PC along with other appliances and applications. He says the PC has taken many years to mature to the feature rich and robust platform it is today, especially when it’s used to collect and display information.
“The PC, unlike the smartphone, has long established its platforms, and has standardized around several key application platforms that deliver a robust user interface which is optimized for how people work with PCs. This has led to a vibrant marketplace and thriving user community,” Kleinman says.
He adds that smartphone users, unlike PC users, are often distracted. “Applications for smartphones have to provide a solution that supports this intermittent lifestyle,” he says.
Kleinman proposes creating a panel of industry experts “to develop an interoperable, nascent, global mobile marketing and payment application solution.”
But Pouliot thinks that marketers and retailers are already on the job, in a way. “Consumption behavior shifts also have some here-and-now implications for payment processing today,” he says. “Cart sizes are smaller as more consumers are buying individual items via mobile. There’s greater opportunity for impulse purchase as daily-deal and other direct response brands, e.g., Gilt Groupe and Tiger Direct, are developing deep, ‘we-know-you’ relationships with consumers.”
|Many teleservices companies are expanding their business beyond just providing sales for clients to keep up with consumers’ growing interest in the Web.|
Despite obstacles, Ken Musante, president of Eureka Payments LLC, a payment processing firm in Eureka, Calif., says mobile will continue to swell and that big companies such as Google are designing solutions for payments to be made remotely using the consumer’s cell phone or contactless card.
“Also, younger demographics are increasingly more comfortable with mobile payments and expect retailers to sell product at points of display,” Musante says.
What’s more, Musante adds that mobile payments are less expensive to process — typically 0.7 percent to 0.5 percent less to process over keyed transactions. And the equipment costs for mobile payment devices have come down. “And connectivity is now more available than ever,” he adds.
Fulfillment of Retail
The old saying, “Be careful what you wish for, lest it come true,” could fit perfectly if your product ends up on retail shelves. Yes, sales will hit the stratosphere, but only if you find the right fulfillment house to make it happen. If they fail, you fail.
Nicola de la Salle, executive vice president for international and vice president of strategic sales and marketing for Neenah, Wis.-based Thill Logistics, says, “Marketers need to be familiar with their existing inventory turns in their current channels of distribution as well as their respective reorder points before considering retail. Adding a new channel of distribution to the mix without having a robust inventory management system can be suicidal.”
However, the opportunity for success is extremely appealing. Hal Altman, president and CEO of Motivational Fulfillment & Logistics Services in Chino, Calif., says a successful TV item has the potential to sell as many as five to seven times in major retailers. “Profits and margin are greater, and the out of pocket dollars for buying TV time are no longer necessary,” Altman says.
But he agrees with de la Salle that the possible negatives are out there. For instance, a single retail chain, or combination of chains, could place orders for merchandise for same-time delivery. That would require the marketer to manufacture a tremendous amount of product to deliver at the same time.
Altman says do your homework and visit the companies. Review their physical space, reporting systems, electronic data interchange knowledge, warehouse procedures and the track record they have with the major retailers.
Also, see if they produce their labels and printers that can “label verify,” which measures the ink coverage and density of the bar coding to avoid chargebacks by many of the large chain department stores. Find out what other major companies the fulfillment/logistics companies currently ship for and to what accounts.
“Retail outlets or chains are independent in both the way they order merchandise and the manner it is shipped to them,” Altman says. “We shipped to more than 400 retail chains and each one has its own routing guides and electronic data interchange requirements. A fulfillment company that ships to retail chains must have a compliance department and the staff to handle all the compliances retailer demand.”
De la Salle says a fulfillment house’s technological capabilities are of the utmost importance. “The first layer is a complete real-time ERP (enterprise resource planning) system that encompasses order management, finance and accounting and CRM to ensure that marketers understand the full spectrum, potential and limits of their existing business,” she explains. “The EDI technology is layered on top of this to ensure the standardized transmit of documents relating to retail orders. This software is used to transmit documents through trading partners including orders, advances shipping notices and invoices.”
But she also believes that strong relationships between fulfillers and retailers can play a major role in how a DR product does in stores. “Our preference is to maintain a relationship with the retail buyer,” de la Salle says. “The stronger the communication with the retailer from all three parties — the marketer, retailer and fulfillment company — the more streamlined the process will be.”
This can also help when it comes down to a retailer measuring a marketer’s — and their fulfillment partner’s — success. Companies like Bed Bath & Beyond, Altman says, keep a scorecard on the logistics companies that ship to them. “You want to scrutinize these report cards to see if the company you’re going to choose meets the highest standards they demand,” he says.
Ayal Latz of a2b Fulfillment Inc., a fulfillment company in Greensboro, Ga., agrees and says fulfillment for retail “is quite different” from direct-to-consumer fulfillment.
“Retailers have plenty of requirements: how the product is packaged and labeled, how information gets communicated — the requirements are very detailed and complicated,” Latz says. “And many large retailers require advanced shipping notification, which means you have to tell the retailer what’s being shipped, how it’s being shipped and when it should arrive.” Latz says failing to comply with these requirements can result in a chargeback from the retailer. “Some might charge $100 for every label that’s not right.”
Many retailers have routing guides that explain all the details, but Latz says some retailers are using the requirements as “a profit center.”
“Some retailers are looking to capitalize on the chargebacks and have become more and more aggressive with this,” Latz says. “It’s gotten so bad that some marketers have stopped selling to some retailers.”
The bottom line, Latz says, is that retailers need to be able to move the goods through their network very efficiently and the requirements need to be met.