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.

Relationship marketing…is it relevant Strategy Magazine January 06, 1999

I get a lot of mail. Probably because I go out of my way to get mail. But, I can count on one hand the number of commmunications I’ve ever received that you might call “relationship building”. Sure, I’ve had lots of newsletters and sample packs and special offers and shiny plastic cards and mailings trying to sell me more stuff.

But, remember we’re now dealing with consumers who are reducing the contents of their wallet to one piece of plastic and spending more time thinking about how to cheat on the next round of tax grabs rather than figuring out how many points it will take to “earn” a new set of tires?  Think about it. What’s the key to a good relationship? For starters, there’s the issue of what kind of relationship the two of you want. And, isn’t it also about conducting yourselves in a way that is relevant to what you’ve agreed the relationship will be?

I’ve often used the following bell curve to illustrate the different points in the “lifeycle” of customers during their tenure with a company. The relationship they have with you depends on where they “live” on the curve at any point in time. In a multi-product or services environment, a customer could be living at multiple stages. The problem is that most companies treat all customers the same. The solid line represents the current value of customers. The dotted line represents the objectives in targeting communications to each stage.

Here are some simplified examples of customer communications that address the stages on the curve. I don’t know about you but I’ve never received letters like these:

  1. Activation–

“Dear New Customer–

Thank you for selecting your new XYZ product model. We hope it performs to your satisfaction and you enjoy it for many years to come. Please remember that if you have any difficulty of any kind all you have to do is call 1-800-###-#### at any time. ”

That’s it. No sales pitch on more products, no special offers, no envelope bulging with irrelevant paper.

  1. Grooming–

“Dear New Customer (who matches the profile of your best customers)

(Starts with the same first paragraph, as above).

It might interest you to know that, along with the XYZ product you purchased, we offer a complete XYZ family of products. We’d be happy to send you more information about them. Just give us a call any time at (the same toll-free number) or return the enclosed postage paid postcard”

This way the customer let’s you know whether they want those glossy brochures…instead of wasting money (and trees) just mailing them out.

  1. Maintenance/Loyalty–

“Dear Best Customer

Thank you! We really appreciate the business you’ve given us over the past year (or six months or five years or whatever relevant time frame). To show our appreciation, we invite you to accept the enclosed gift (no strings attached and it’s not a coupon). You’re also invited to receive the following Best Customer benefits for the next 12 months. (Here’s where you can profitably give away all those goodies you’ve been wasting on the undeserving masses–newsletters, special services, gift with purchase offers, etc.–go ahead be generous). Only people like you, who have spent $500 per month for the past five years (or whatever you calculate as the appropriate criteria) will be eligible to receive these special offers and services. Because we only want to give these benefits to customers, like yourself, who truly deserve special attention, we invite you to call 1-800-###-#### today to let us know what you think of the Club and its benefits.”

Don’t you think this might get a customer’s attention better than one more tedious points program for everybody giving away nothing but margin in the end? And, what a great way to gather positive customer comments for future use in testimonials.

  1. Retention–

“Dear Customer (who matches the profile of best customers who’ve stopped buying at this point in their tenure)

Thank you! We really appreciate the business you’ve given us over the past “x” period of time. We hope you’ve enjoyed being part of our Best Customer Club and we hope you want to keep your special privileges. Remember, only people who have spent $500 per month for the past five years (or bought from you 35 times and spent at least $100 every time–or whatever you calculate as the profitable criteria) are eligible to receive the special offers and services in our Best Customer Club. To show our appreciation for your past business, please accept the enclosed special offer (this time it is an incentive to buy again) which you can use any time before (deadline date). If there’s any other way we can be of service, we’d love to hear from you at 1-800-…”

By the way, I’m curious whether any one else out there had the same problem recently as a friend of mine. He received a fancy new plastic card in the mail from Petrocan. He promptly, cut up his old Petrocan credit card (Isn’t that you’re supposed to do?) and next day found himself in the embarassing position of trying to pay for gas with a points program card. Why would any company (unless it also likes to burn money) decide it needed a separate points card for its credit card customers?

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

An Interview with Tony Keenan, President Regal Greetings and Gifts, Toronto Canada. Direct News May 14, 1991


President, Regal Greetings & Gifts, Toronto

Tony Keenan is president of Regal Greetings & Gifts, a mail order distributor of general merchandise. He is also one of the pillars of the direct marketing community in Toronto.  His support and guidance has helped the community of direct marketing professionals to define both their purpose and their values.

Charles: It’s a bright and sunny day full of hope.  Do you agree?

Tony: Hope is a good thing.

Charles: Do you have hope?

Tony: We have come a long long way.  Consumer acceptance had increased by leaps and bounds and, frankly, the economy is the only issue that’s inhibiting the growth of the direct marketing industry in Canada.  The economy aside the defining issue for our industry is the same now as it was when he entered the business 27 years ago: consumer acceptance.

Charles: What’s getting in the way?

Tony: A dearth of quality offers. There are just not enough quality offers in the marketplace to drive acquisition, support the direct marketing concept and to keep buyers coming back.  As much as I hate to say it the direct industry lacks credibility in the marketplace, and that’s not only in the catalogue business, but that applies to all direct marketing propositions out there.

Regal logo

Charles: So what’s the solution?

Tony: More quality product, better service and good prices. Right now that’s entirely driven by the US cataloguers now coming into the Canadian market like J. Crew and Lands End.  I think they’ve just started to figure out that our market will deliver a higher average order value and higher overall response rates.

Charles: But isn’t doesn’t our higher cost and tax base offset?

Tony: Yes, you’re right.  Our taxes are much higher across the board.  Our cost of labour is about 20% higher than in the US. It’s tough to be competitive.

Charles. How are our US friends doing?

Tony:  They are doing a reasonably good job coming across the border. They could do better, because the concept of charging for product in Canada in US currency doesn’t make any sense.  They should come into the country and do it right, instead of trying to skim off the surface from the outside. But all of that aside, that’s where the opportunity lies.

Charles: So, is this just the tip of the iceberg?

Tony:  Yes and to be frank I look forward to more competition from US cataloguers.  I see nothing but good things coming from some of these quality organizations coming into the marketplace and generating interest and credibility and, therefore, more names for me to mail to.

Charles: You’re walking into the Canadian list industry.  What’s your view here?

Tony: That’s my problem.  There just aren’t enough Canadians and the Canadian list industry reflects that challenge.  The numbers are so small that it really hurts growth.

Charles: What are your thoughts on the current trend to increasing privacy protection for consumers?

Tony:  It’s a good news, bad news story.  The growth of the direct marketing industry in Canada is still working in direct relation to the privacy issue.  There’s more pressure to have the government regulate our industry.

Charles: What about the CDMA?

Tony:  The key issue for the CDMA is to make sure we can maintain our self-regulation. The whole reason behind direct marketing has been the ability to reach a specific target audience very cost-effectively.  If you start to take that away, the whole premise upon which direct marketing is built the overall industry is weaker.

Charles: What’s the conflict as you see it?

Tony: There is a fundamental conflict between consumers’ desire to protect their privacy and their desire to protect the environment.  The ability to target is based on knowing factual information about clients and prospects.  With privacy restrictions, we’re going to have to mail more and not be as targeted.

Charles:  So the issue is not one independent problem really, but interrelated?

Tony: We just need better marketing data management, better analytics and more people like you partner Brian Salter.

Charles: Brian will like that.  What do you mean?

Tony: Our industry has been built by people like Dave Taylor, Brian Salter, Rich Basset, Marilyn Stewart, Steven Shaw, Mona Goldstein and so many others.  Through their hard work and effort we have built a remarkably innovative and energetic group of people dedicated to making direct marketing work better in this country than anywhere else in the world.  I think we are doing just that!

Charles:  Can you comment on data management.  What are the issues?

Tony: To move away from the inefficiency, you have to build better databases. While that raises more concerns over privacy it is the only way to move forward.  Database technologies are going to allow us to capture information about existing clients or prospective clients and, obviously, from the client’s perspective, there’s a fair degree of nervousness in terms of what it is we know about them and what we do with that information.  We have to make sure there aren’t unscrupulous marketers who are abusing their access to the information that is out there.  But that brings us back to regulation or self-regulation.

Charles: What’s the real answer here?

Tony: Consumer education! We want to put it into consumers’ hands that they have choices about direct marketing, if they want to receive an offer or not receive an offer.  We have to show consumers we are taking into consideration their quality of life and that there is a recourse for consumers if they feel they are being abused, e.g. that their names are being passed around without their consent.

Charles: What about the ‘open dialogue’ concept that being discussed so much recently.

Tony: Yes, there has to be open dialogue between direct marketers and consumers. You can’t hide anything from the consumer, otherwise you’re asking for trouble down the road.

Charles: So what’s your biggest concern right now?

Tony: Lagging behind US!

Charles: Can you be more specific:

Tony: Canadians are lagging behind the US in technology, and that is a big hindrance to the growth of direct marketing in Canada.

Charles: Are there any specific audiences the direct marketing industry needs to focus on?

Tony:  We stand to lose out on a lucrative source of income if we fail to increase their understanding of the various groups within the seniors market.  It’s very easy to alienate seniors by labelling them seniors. The CDMA could help by creating a forum at its next conference to focus on seniors marketing.

Charles: Do you have other concerns?

Tony: Consumer cynicism.

Charles: Anything else?

Tony:   Our market is just so small.  We need to make free trade work and to support efforts by people like Barbara Canning Brown to push cross border trade.

Charles: I think you and Barbara are both involved in that effort

Tony: Yes, and she’s been doing a tremendous job.

Charles: Speaking of tremendous jobs. I want to thank you for taking the time today to speak with me.  I also wanted to thank you for making Regal the remarkable place it is today.

Tony:  You and Salter, de Gruchy have done so much for the business, for the CDMA and for new talent working its way through the system.  I hope you’ll continue the good work.

Charles: Whose interview is this?

Tony: Mine, of course.

Charles: Thank you, Tony.

 

Charles de Gruchy, June 12, 1982
Charles de Gruchy, President Salter, de Gruchy Inc.

Charles de Gruchy is President of Salter, de Gruchy a direct marketing agency in Toronto, Ontario with clients in retail, healthcare, and technology focused on building exceptional customer experience for their customers and value for their shareholders. Salter, de Gruchy’s offices are located in Toronto and New York. and he can be reached at 416 589 1600.

BCB and Associates Launched by The Toronto Globe and Mail — Gordon Arnaut, February 1995

Barbara Canning Brown launches the “first of many of her firsts!”

According to Gordon Arnaut of The Toronto Globe and Mail.   Barbara was the featured speaker to a gathering at the Toronto’s Design Exchange in February 1995.  That evening, for her, it was an opportunity to talk about her favorite subject — “Database Marketing and the application of advanced analytics like RFM to build a healthy business”, and how “customer lifetime value analysis can be the key to a successful tourism industry”.

Barbara presented a coordinated speech with partner firm — Salter, de Gruchy and speaker Charles de Gruchy.

Launch of BCB&Associates 1995

Barbara Canning Brown — Elected Life Member

For her outstanding contributions to the growth and development of the direct marketing industry in canada and the united states.

The Board of Directors of the Canadian Direct Marketing Association, now the CMA (Canadian Marketing Association) elects Barbara Canning Brown to LIFE MEMBERSHIP.  Barbara’s efforts to support and grow the direct marketing industry included launching the Canadian Catalogue Council; creating the CDMA ethics committee; launching CDMA mentorship program; launching the CDMA analytics committee with Dave Taylor, Mona Goldstein, Brian Salter and Steven Shaw; launching with Tony Keenan the key strategic Canadian Government initiative to create a “borderless” catalog industry as part of the NAFTA negotiations.  The Board of the CDMA noted that without question Barbara’s contribution to governance has been “the most significant to date”.

John Gustavsen, President of the CDMA, noted at a Strategy Magazine luncheon held by the  Direct Marketing Association of Toronto that ” Barbara has managed to engage the entire industry in her efforts together with her partners in business including Mona Goldstein of Wunderman, Charles de Gruchy of Salter, de Gruchy, and Marilyn Stewart of Ogily and Mather.  We don’t know how to thank her for bringing together such a powerful team!”

Presented to Barbara Canning Brown 1994
Presented to Barbara Canning Brown 1994