Support in Tough Times16 Aug, 2010 By: Doug McPherson Response
No doubt the economy has left a good-sized dent in DR, but some believe support services can help smooth out at least some of the damage.
Feats of Fulfillment
With fulfillment, insiders say savings is clearly within marketers’ grasp.
One area that’s often ripe for potential savings is shipping. For example, vendors typically have negotiated rates across all their clients with UPS and FedEx, Altman explains.
Dieter Ammann, founder of Fulfillment Express Inc. in Pico Rivera, Calif., uses standard carriers like UPS, FedEx and the U.S. Postal Service, but also uses FedEx SmartPost for packages over a pound and UPS Mail Innovation for packages under a pound. “Using our least-cost routing service, we may be able to save our clients between 50 cents and $4 or more per package,” Ammann says.
Ayal Latz, with a2b Fulfillment in Greensboro, Ga., says the “most dramatic and long-lasting cost-saving opportunities” exist by combining increased service with lower cost solutions.
For example, a2b started offering a same-day shipment guarantee or it’s free program, which Latz says had led to reduced customer service costs for DR clients. “Calls about order status, or worse yet, cancellations, are greatly reduced when you can deliver the shipment confirmation and tracking information quickly,” he contends.
Bob Lawrence, founder of United Fulfillment Solutions Inc., a fulfillment company in St. Louis, says the fulfillment industry as a whole has seen a “tremendous transformation” during the past five years and will “continue on that path” for the foreseeable future.
Part of Lawrence’s path involves adopting voice command technology to increase accuracy, improve operational efficiencies and reduce costs. This technology, which has been upgraded for the fulfillment and distribution industry with powerful speech recognition and text-to-speech engines, will add “continuous layers of accuracy and efficiencies that will strengthen order processing … increase processing times, and this will continue to make fulfillment an affordable outsourced solution,” Lawrence says.
Reporting is another money-saver, Altman says.
“Reporting can help you manage costs more proactively by understanding returns, write-offs, collecting on installment payments; reports can provide that data in a good format so you can take action to improve your bottom line to save sales and get more sales per customer,” she adds.
Sziklai says another trend he’s seeing is more back-end data analysis. “Direct response marketers are realizing that the data they’re getting from their media buyers and telemarketers is not enough, especially if the goal is to reduce attrition and maximize profit,” he claims.
He adds that fulfillment houses are a “treasure trove of data” because they maintain order disposition, customer satisfaction and customer lifetime value information.
“There’s definitely a trend toward more fine-grained analysis of this data,” Sziklai says. “It’s becoming more common for marketers to back their cancellation, decline, return, reshipment and bad debt stats into their media buying stats to compute net media efficiency ratio and cost-per-order. When they do this at the station level, they’re able to determine which stations are performing and which ones aren’t.”
Speed of reporting is another factor. Nicola de la Salle, vice president of sales and marketing for Thill Logistics, says when orders are being received in real time, the reporting should also be in real time in order to provide accurate reporting and crucial analytics.
“Reaction times are crucial for a developing campaign and being able to make smart, detailed, accurate and fast decisions on the direction of a campaign through the analysis of results can be the difference between success and failure,” she says.
Speed is also paramount, de la Salle says, and real-time processing can mean the difference between a happy customer and a not-so-happy one.
She adds that with the absence of delays, consumers are less likely to experience buyer’s remorse and call customer service to cancel or change their order — and that gives the marketer a higher average revenue-per-order and fewer additional charges per customer. “A happy customer is a long-term purchaser of a brand and less likely to vent his or her complaint on the Web,” de la Salle says.
When it comes to payment processing, Valentine says consumer disputes are always a front-running concern and should be considered an important performance indicator for the success of a DR campaign. She says it makes sense that the same consumers who are initiating a dispute with their card-issuing bank are complaining to consumer advocacy groups.
“Chargebacks should be considered a tool for identifying potential marketing or operational issues in a campaign and then be used to strengthen your overall customer experience,” Valentine says. “Too many times, merchants accept a 1- to 3-percent dispute ratio as acceptable based on a bottom-line mindset without understanding the real impact on their reputation and processing relationships as they grow their volume.”
Valentine says the challenge of maintaining an overall customer satisfaction rate of 99 percent can seem daunting, but she says payment processors accept the challenge.
“That’s the expectation of the payment brands when it comes to consumer disputes,” she says. “The complexity of DR that allows for more profitable campaigns can also open marketers up to more vulnerabilities when it comes to fraud, buyer’s remorse and service delivery expectations, leading to more consumer disputes than other E-commerce and mail-order verticals.”
Payment processors, Valentine says, ultimately hold the liability for your processing and they have a vested interest in the success of campaigns. “Open communication and a consultative approach are key to establishing a long-term and profitable relationship,” she says. “Use the resources available to you in your processing partner and seek advice on how business changes could affect your merchant account.”
Travis Gomez with CambridgeCommerce, a payment processor in Vista, Calif., says many marketers think of credit card processing as a commodity.
“If you can buy it anywhere, you might as well get it for the lowest price,” he says. “The truth is your payment processor provides the lifeblood to your business: cash flow. Choosing the wrong processor for your business can literally put you out of business.” n