Interactive and what hasn’t changed – Strategy Magazine February 13, 1994

It’s been said that the trouble with the future is that it usually arrives before we’re ready for it and, in interactive media, the future has started to arrive, heralded (as it usually is) by the unmistakable sound of money hitting the table.

If you’re looking for opportunities to grow your business via interactive media, the key word is opportunities. We’re a long way from a significant reality…and not just in the technology department.

Somebody finally thought to ask consumers what they think of it all. A study conducted by Advertising Age found that only 19.1% of US consumers are even aware of the concept of interactive media. 80.4% were not aware of interactive media at all! Despite the proliferation of front-page banner headlines, business news stories and hyper hype.

So, who’s going to be the home shopper of the electronic future?

Traditionally, 60% of shopping from home has been conducted by women, but when it comes to TV shopping almost 50% are men. Does that say men spend more time watching TV? It probably depends on the day of the week and the progress of the home team!

Not surprisingly, age plays an important role in TV shopping. In theory, retired people have the time, money and interest in TV to be good prospects, however, scarcely 11% of retirees actually shop from TV. Meanwhile, almost 45% of TV shoppers are under the age of 35. Compare this to traditional catalogue shoppers where less than 33% are under 35 while almost 14% are in the senior age bracket.

Traditionally, the majority of paper catalogs appeal to a, relatively, up-market crowd. Almost 40% of catalog-shopping households earn over $40 thousand. TV shoppers, on the other hand, have been decidedly down-market with almost 45% earning $25 thousand or less.

Given the billions of potential sales dollars all the articles about interactive tell us about, the gentrification of TV home shopping is to be expected. Upscale American catalogers are not jumping on the band-wagon to sell junk jewellery to housebound women from blue-collar households with overextended credit cards which is how traditional marketers have generalized home shoppers.

Interactive television and the super information highway has become the buzzword of the 90’s, but, by the time it all comes into existence, I’m afraid, we’ll all be tired hearing about it.

There was a wonderful cartoon in the Globe and Mail recently. The scene is a dark and stormy winter’s night. Snow is piled to the eaves of an isolated house. The first dialogue balloon says, “Another ferocious blizzard! No power! No phone! No TV! No computer! We’re totally cut off from the information superhighway!”  The responding balloon says, “Isn’t it wonderful?”

Despite all the news stories assuring us it’s just around the corner, at the moment, interactive TV is confined to some very localized testing in the US among a few thousand households. Predictions are that systems will roll out from 1996 to 2000 and that by 2000, $3.5 trillion in worldwide sales will be conducted through interactive TV. Meanwhile, the Canadian company, Videotron, has had a modest head start in Quebec since 1990 with the largest, most advanced system and 230,000 subscribers.

What does it all mean for marketers? For starters, don’t panic–time is on your side so let those with the most money iron out the bugs first. Likewise, don’t cancel your printing contracts. The paper media won’t disappear. It will  (or should) change to integrate with all marketing efforts in whatever media, so get ready for a metamorphosis. Tune in now to learn for the future. Get involved, if you can, in helping mold the products and services consumers will be offered. Build relationships with people, and companies who are in the fore-front of technological developments.

Since the superhighway is still in the future, in the meantime, try to learn how to use television. And, look for co-venture opportunities because it’s often too expensive to do on your own.

In the end, always keep in mind that it’s only the media that has changed. You still must offer high quality products at affordable prices, satisfaction and personal service.

Joel Barker, the author who made “paradigm” the business buzzword of the early 90’s said, “The best time to look at new ideas is well before you need them”.

And, I say, the time to start looking at interactive media is now But, look hard before you leap! Don’t forget about that 80% of people who have yet to figure out what interactive media means…and could care less!

Charles de Gruchy remembers how it was

Innovation is really re invention or is it just about the process! Direct Magazine June 15, 1996

At one point before I left graduate school I learned that the Peloponnesian War was really a precursor of one of our modern conflicts – the Vietnam War. I learned Napoleon marched his French troops to invade Russia, almost all of his troops died from frostbite, hypothermia and starvation. Hitler did the exact same thing. In the direct marketing industry we are constantly repeating ourselves but we don’t call it best practice and tend to be cautious about adjectives like ‘innovation’.

My partner and I were sitting around recovering from the day. I think it was about 11:00 PM and we were talking about calling it quits for the day.  But our conversation rambled on and into a discussion of analytics strategies. Our head of analytics, Steven Shaw, wandered over to put in his two cents in.  Of course he is a little biased in his point of view but his opinion is that the relationships between ideas, objects and numbers are all predetermined in one fashion or another.  There are no truly new ideas. What we represent as new is really the discovery of something that was already there.

So I asked what does that mean in the end or is this just the blather of three agency hacks. Oops, sorry Steven I shouldn’t have included you!  Brian, my partner, jumped in to say that none of this is really meaningful in that the new idea or the idea of the moment is just that. Where it might have emerged from or been adapted to is more often forgotten or simply considered old fashioned news of another generation.  We’re cool aren’t we?

Steven brought us back to reality and an analysis we were working on for Holt Renfrew. The objective was to understand the characteristics of best customers. The strategy was simple – figure this out and find more.  Not complicated from an analysts perspective but a challenge in the Toronto market where the top end of the file is measured in tens of thousands rather than 100s.  The approach he followed was to first cut the file based on an Arthur Hughes standard view with a ranking of Recency, Frequency and Monetary.  But he knew, in and of itself, that wouldn’t be enough to meet the objective of the analysis.  What emerged was a three step approach: first with RFM; second, to build persona on RFM and third, enhancing the result with modeling to asses specific points of propensity within the best customer group.  He asked the question whether there was any innovation in the process.

My quick off the mark response what that the steps in isolation were standard stuff of our business but the integration of the steps into a strategic progression of understanding of a group of customers behaviors is a significant innovation.  It’s the process that’s the innovation not the parts and pieces.

Brian jumped in to add that as corporate culture continues to degrade from the disciplined strategic planning methods lead by the packed good industry to something closer to organized ad hoc decision it’s the creation and management of process that will deliver a company a strategic point of difference.

Steven and I laughed but we knew he was right!

Things in Toronto were changing and changing rapidly. Business as moving south as quickly as it once came to the city.  Marketing departments were being dismantled with the center of gravity moving to New York and Chicago.       With change came ambiguity and dysfunction to a marketplace that was, frankly, the best run in North America.

Steven again pulled us back on track. We had executed the RFM analysis for Holts. Brian and I both wondered why they hadn’t done this themselves.  Is it that hard? Steven laughed and said no not hard but complicated.  It’s not so much the analysis that’s the challenge it’s the application across customer tough points that’s the problem Holts was a little more confused than most retailers because they believed that monetary was the key driver of next purchase rather than recency.

Steven then remembered a story from his good friend Lester Wunderman – there are a multitude of steps in any direct to consumer program but success isn’t in any one single step but is in the collective.  In other words it’s a successful process that delivers profitability.

Planning - core CRM strategy overview

So the process becomes the innovation today.

Our ramble ended at about 1AM. We know that the Holts project would work.  We were less optimistic about where the practice of business was headed.

Build customer relationships before it’s too late! DM News October 23, 1994

Why is it that some companies have to be attacked by stiff competition before they start paying attention to their customers? Nowhere is this more evident than in Bell’s current frenzy to introduce a myriad of offers, services and options. It leads me to wonder how we were ever able to live without all these wonderful things, once upon a time, when the choices for voice communication were between Ma Bell or two tin cans and a piece of string. Why didn’t Bell care so much about our business then? Need I ask? They say, a little competition is healthy for everyone. At that rate, Bell must be getting healthier every day! I’ve never had so much attention from them. Just the other day I got a wonderfully warm and friendly letter that went like this:

“Dear Customer”: (even though the address was personalized), “My name is Sandy Davis. I’m a manager with Bell Customer Service Centre and I’m writing to you for several reasons. The first is to thank you for using Bell Call Answer Services…I want you to know that you’re important to us and we really appreciate your business”. So, Sandy, it’s nice to be appreciated. What took so long?

There was more.

“Secondly, we’d like you to think of us as a resource, as well as a supplier. At the Bell Customer Service Center, we want to respond to the needs of our customers. In order to help you better, we’d like to make our relationship more interactive. I think you’ll agree that we’ve found an interesting way to make this happen”. Now, it is nice to be appreciated but, Sandy and I, we’d only just met and this seemed like rushing things a bit , although, I must say, by this time I was beginning to wonder. Is this Sandy a man, maybe? Tall? Good looking?

The letter went on, “My problem right now is that I don’t know how to help you specifically. We haven’t had the chance to talk”. Why not? Sandy, dear, you have my number! ”

My hopes were soon dashed. (Besides, I’m happily married. )

Sandy continued, “I don’t know as much about your business as I’d like to. I certainly don’t want to just send you a shopping list of all our services…but I do want to see if there’s some meaningful way I can augment your business…That is why we’ve created a brief response form designed to help us learn more about your needs and preferences”. After more friendly phrases about  sharing experiences and viewpoints and thanking me repeatedly, Sandy signed off with “I’m looking forward to receiving your response and to the opportunity of getting to know you better.” Did this mean Sandy was suggesting, dare I say it, forming a customer relationship?

Enclosed was a one-page survey form

The first question asked me to rank the relative importance to my business of areas such as generating new business, building customer relationships, providing quality service, controlling costs and managing time. I guess Bell must have the luxury of choosing among these issues and, besides, how will the fact that all of the above are extremely important to me help them get to know me and my business better? The survey went on to ask such as things as whether I viewed the role of telecommunications in my business as operational, strategic or both, what my business growth outlook is over the next 18 months, how many calls I receive in a day and how often someone is available to take calls and, oh yes, how satisfied I am with my relationship with Bell. Interestingly, the only choices given for answering the latter were Somewhat, Moderately or Extremely–behind that one the operative philosophy must be that no bad news is good news.

Not one question asked me directly anything about my business telephone needs. And, here that rascal Sandy led me to believe that, at last, somebody really wanted to know what I, as a customer, wanted. Oh well, maybe next time.

Or maybe there won’t be a next time. No matter what the sector, the message from today’s competitive environment is simple. If you’re not making friends with your customers before somebody else comes along and does it, you’re probably too late. And, if you really want to know what your customers really think, don’t be afraid to ask them questions the answers to which you may not like, but, you’ll know the truth! Why wait till your customers vote with their chequebooks?

 Charles de Gruchy remembers how it was

Loyalty — I’ll be back! Strategy Magazine December 13, 2007

Everywhere you look it seems someone is talking about building customer loyalty and using database marketing. What I don’t see is very many people doing anything meaningful about it from a consumer point of view.

Recently, I experienced an example that gave me new hope.

But, first, scene one…the flip side.

I have been a faithful customer of the same hair salon for at least a decade. But, I’ve been faithful in physical form only because, in one way or another, I’ve left after almost every visit feeling irritated. It always took several hours. Everybody moved at a snail’s pace. The place was rampant with prima donnas. Not to mention that they had the worst and oldest selection of magazines with which to kill the inordinate waiting times! And, it seemed as though just about anything was more important than serving customers…talking to friends who happened by, taking the dog for a walk, finishing lunch, going outside for a cigarette…believe it or not, I’m not exaggerating, these things actually happened. Complaining had no effect.

And, in all that time, not once did I receive anything in the mail, not once did I receive any special treatment, not once did anybody ask whether the service was satisfactory.

So, why did I keep going back for so long? Habit…inertia…procrastination…masochism…who knows?  But, aren’t those all wonderfully positive loyalty-building attributes?

So guess what finally happened? I switched to another salon.

Scene two: first visit to the new salon. I was asked to fill in a form with my name and address which were entered into the computerized appointment system. I was told how long I might be waiting. The stylist brought me a choice of beverage and a selection of recent magazines to look at while he worked on my hair. Every hour an attendant came around selling snacks for those (like me) who might have missed lunch to fit in a hair appointment. But, all that is not the best part. My appointment was on a Thursday afternoon. The following Tuesday I received a mailing from the salon. All black and white. Good quality paper but nothing fancy. The note inside was dated the preceding Friday: Dear Mr. de Gruchy: I would like to thank you for visiting our salon recently. I trust that your service and experience was a pleasant one. We welcome any comments, positive or negative and hope to see you again in the near future. I am enclosing a scale of charges for you indicating the range of services and prices we offer. Also, if you present the enclosed business card on your next visit, you will receive a free bottle of MK shampoo. “The note was hand-signed by the owner. It was enough to make me think they valued my business and really wanted me to come back again! And, guess what? I will.

I use this simple example to illustrate that building customer loyalty and using a database in a marketing mode requires neither rocket science nor alchemy.

Let’s look at the elements:

  1. Timeliness: My experience at the salon was still fresh in my mind and within less than week I was reminded of it and pleasantly surprised by the speed of the communication.
  2. Acknowledgement and appreciation of the customer’s business: Thank you is such a simple thing.
  3. Request for feedback: Remember, the average business never hears from 96% of its unhappy customers and the average customer who has a complaint will tell 9 or 10 people about it. 13% of them will tell more than 20 people! On the other hand, 95% will return if they feel the complaint is resolved quickly and they’ll tell an average of 5 people about that. And, asking your customers for feed back doesn’t mean you formulate a self-serving questionnaire that only gives you the news you want to hear. Recently, I examined the feedback survey used by a major hotel chain. My conclusion was that they didn’t want to know what I really thought otherwise they would have asked different questions. Be careful your questionnaires and surveys don’t just tell you what you’re prepared to hear.
  4. Invitation to re-purchase: Turning a one-time buyer into a two-time buyer is a direct marketing adage is as old as the hills and twice as enduring. Not to mention that the only way to finance the cost of constantly acquiring new customers is by having sufficient profitable repeat customers.
  5. Suggest additional products and services: Every communication with a customer is a selling opportunity. There are those who may have trouble with the notion of constantly selling customers, but keep in mind that today’s consumers are looking for information and, in the case of my salon story, they were simply letting me know something that I wouldn’t have known otherwise. The result is that I am now a better informed customer.
  6. Incentive for re-purchase: Keep it simple. Make it relevant. Give it value. A bottle of shampoo for a salon visit. Bingo.
  7. Accountability: Here’s one that many forget. Untold dollars are spent writing glowing customer service letters which are then signed by a non-existent, made-up person. The president or owner doesn’t have to answer all customer correspondence personally but it sure leaves a warm fuzzy feeling when he/she cares enough to personally endorse the outgoing message to the customer.

 Charles de Gruchy remembers how it was

What is Direct Marketing. Direct Marketing Strategy, August 15, 1993

Like opening Pandora’s box (http://en.wikipedia.org/wiki/Pandora%27s_box), putting the question “What is direct marketing?” to those who call themselves “direct marketers” unleashes myriad definitions and points of view. In fact, is it an industry? Is it a strategy? Is it a marketing tactic? Just what is this “thing” that takes the various shapes and methods of traditional mail order, catalogues, outbound and inbound telemarketing, computer bulletin boards, TV shopping channels, late-night infomercials etc., etc. In contemplating the question, it seemed the best way to come up with a definitive answer was to ask those people who work with “it” every day.

John Gustavson (http://www.the-cma.org/newsroom), President of the Canadian Direct Marketing Association says ” Direct marketing is a marketing technique that allows the consumer or business to respond directly to the supplier of goods or services from offers presented by mail, telemarketing, direct response print or broadcast advertising.” His answer flagged one of the key ingredients of direct marketing–“respond directly”.
A more succinct definition came from Brent Hollister (https://ca.linkedin.com/in/brenthollister), Vice President, Catalogue for Sears Canada Inc. “A selling technique designed to generate an immediate response from a customer for a product or service.” Yes, direct marketing is definitely a selling technique and one that is growing quickly as a look in your mailbox will illustrate.

Had we reached a true definition, yet? There was the reply from Dave Taylor (http://strategyonline.ca/1997/07/21/16736-19970721/), Chairman of Taylor-Tarpay Direct Advertising, “In my opinion, direct marketing is rewarding, frustrating, misunderstood, misused, too often misdirected, complicated, simple, challenging and fun!” Yes, and so is training ducks to walk on water., but had we’ve yet to reach a consensus Taylor then went on to add, “Direct marketing is, above all, an approach to marketing communications that has to involve the objective of producing immediate, measurable response to a communications message in one or more media.” That’s better, “measurable response”, the one element totally unique to the discipline of direct marketing.

But the conundrum continued when Brian Fetherstonhaugh (http://www.ogilvy.com/About/Ogilvy-and-Mather-Board/Brian-Fetherstonhaugh.aspx), President of Ogilvy & Mather Direct quoted from Drayton Bird’s book “Commonsense Direct Marketing” Acknowledging that common sense is the most uncommon thing of all…according to Drayton Bird direct marketing is “any communication or marketing activity which creates or exploits a direct relationship with your customer as an individual”. Finding notions of exploitation a little controversial, let’s choose the key words–“relationship” and “customer as an individual”.

What happens when you put these key words together? Direct marketing is a selling technique that produces a direct, measurable response and forms a relationship with customers as individuals.”

At the end of the day, it would appear that we were close to answering the question, until Peter Case (http://strategyonline.ca/1999/10/25/27041-19991025/), Vice President, Advertising, Royal Bank of Canada decided to throw a spanner in the works, when he said, “Maybe direct marketing is the commercial equivalent to a dating service!

When all is said and done, it would seem that what my colleagues, collectively, are saying is that direct marketing is a method of marketing, using various media, that matches products or services with appropriate customers who have an identified need for the product or service in a manner that the customer will respond to directly and that the marketer can use to collect information about that customer’s behaviours in order to offer continued, personalized communications and form a longer-term mutually satisfactory relationship.

Sound like a marriage made in heaven? You bet. Does it also look as though the answer to the question is long-winded, complex and about as easy to explain as why you left your car in the airport parking lot and took a taxi home? Right, again!

Bryan Weaver, Director, List Management, Harlequinn Enterprises Ltd., summed it up  best when he said, “Direct marketing is the marketing idea for the future. While it is an old form of marketing dating back, at least, to Benjamin Franklin’s time, modern technology and the terrific time pressures on today’s consumers, combine to make “it” the ideal method of selling for the ’90’s!” We should add to Bryan’s reasoning the high costs of mass advertising for ill-defined returns on investment, increasingly knowledgeable  and demanding consumers and the ever-present desire of human beings in an over-crowded world to be treated as distinct individuals. And, however difficult to define “it” might be, it would appear that the time for direct marketing has come.