As we age I think we sometimes become more sentimental. The analyst in us looks back and tries to understand what has really changed. My consensus is not really very much. I’ve been in the direct marketing industry my entire career and the questions being asked today are much the same as yesterday. The answers, however, are much more complex — strategic alignment, 360 view of the customer, integrated systems, one channel view, etc. We all wanted these things 30 years ago and we still want them today with few companies (even today) actually realizing the goal. Surprising? Not really when you think about it. Of the companies I’ve worked for some have made a real commitment to customer marketing while for others it is simply the current thing to do and there was no investment. Worse still the digital guys thought they knew all about it and you know that story. This blog is about things observed a while back that are still relevant now.
“As a faithful reader of Direct Marketing magazine and of your column, I am surprised not to see a change of perspective.”
Well, it was sort of fan mail! What did he mean by this?
What Charles was suggesting specifically was that I cast my eyes across the lake to some of the bright young stars in the Canadian direct marketing industry.
In checking out the Canadian stars, Barbara Canning Brown’s name rose to the top.
When she was approached, she graciously agreed to the interview. She bubbled over the fact that this has been a particularly good year for her and that she had just been promoted to director of marketing for Regal Greetings & Gifts, she was just starting as chairman of the newly formed Canadian Catalog Council and she was about to take a trip to Guadeloupe.
As the interview began to roll, she described her life as a child, growing up on a 400-acre farm in Orillia, Ontario. Her father raised beef cattle and in the spring, eh made maple syrup from the trees in their maple forest.
She has fond memories of gazing at the starts, enjoying the country life and loving her pets. She chuckles about a picture of herself in a lace dress surrounded by 14 cats.
During grade school, she was a member of a church organization called “Canadian Girls in Training” (CGIT). She and her friends said t really stood for “Cutest Girls in Town!” As a member of this group, she received her early training in arts and crafts, piano and organ. Her leadership qualities surfaced during this period when she was elected president of the organization.
Because she lived in such an isolated area, her extracurricular activities in high school and college were limited. Heavy emphasis was placed on education. As a result, she was the recipient of numerous awards in history, French, Spanish and public speaking. When she graduated from grade 13, she received the high honor of Ontario Scholar.
It was so refreshing to hear about Barbara’s hobbies during her school years. They weren’t, as we so often hear, jogging, aerobics and bodybuilding, but back to the basics. She wrote poetry and painted. She attended the Royal Conservatory of Music.
As she was about to graduate from McMaster University with honors in English and fine arts, she wondered what she would do with her “non-useful studies.”
She picked copywriting and answered an ad for a junior copywriter position at Sears. She was tested and hired. A large portion of our industry’s superstars started in Sears’ school of copywriting and role to the top. She is no exception.
Her first stop was soft goods. She wrote about children’s bedspreads with ballerina and another with jungle scenes. Her headline was “How to Tell the Girls from The Boys.” When she got to fashion she described knee socks as “soxy”. When writing about brightly colored suede shoes with chunky soles, she name them “the Rebels.” This method certainly wasn’t the norm for Sears, and she constantly had to justify her style. The advantage she had was that she knew the current market, and her customers and she usually won the battle.
She quickly progressed from junior writer to senior writer in merchandise and direct mail merchandise promotions. Because of her constant thirst for challenge and development she was able to convince Sears to let her go forward. A promotion out of the copy department after one year was a major breakthrough.
Her new position was sales promotion coordinator. In this role, she was responsible for design and execution of monthly sales promotion packages to all of Sears’ national outlets.
After two years, she was promoted to creative group director of fashion and special projects. She had a staff of six.
During her free time, she picked up some free-lance assignments. One led her to a catalog showroom company in Montreal called Cardinal Distributors. She like the company and decided to accept their offer to join them as assistant advertising manager.
In this position, she was responsible for all catalog execution and sales promotion. She was the liaison with the advertising agency and also became involved in producing Eastern Canada TV spots. She loved her responsibilities, despite the difficulties of moving to another province with French as their first language.
A little over a year went by when Cardinal was bought out by Consumer Distributing. There wasn’t a fit for her at Consumers so she took the opportunity to move back to Toronto and form Barbican Advertising.
Barbican was a creative boutique offering services in creative development, media placement and strategic development and planning for packaged goods marketers, as well as retail. The company was also involved in POP direct mail solicitation and public relations projects.
Thirteen months into Barbican, she had to make a choice. Consumers Distributing came after her, offering position as sales promotion manager. Her decision was whether or not to return to corporate life. In the final analysis, the answer was ‘yes’. She wanted to return to her true love, the catalog business. Her new position at Consumers gave her invaluable experience in administrative responsibilities and corporate communications.
During this time, she was instrumental in bringing in on-line typesetting system whereby copywriters worked on terminals with telephone lines that went directly to an off=site typesetting service. This allowed the writers to control the typesetting process and they would get the copy back within minutes. This was extremely innovative for the time.
Her four years at Consumers were enjoyable, but she didn’t see any room to grow.
In 1984, she seized on an opportunity with lots of potential for growth. She had her hands full when she came to Regal Greetings & Gifts as catalog advertising manager.
Her department desperately needed systems, reorganization and credibility. There were schedules, but no one followed them. What systems there were, they were not used. There were outstanding bills from suppliers, but no one knew what they were for.
Their production system was to take a catalog page and have everyone take a run at it.
After she fixed those problems, she was promoted to marketing manager, where she was responsible for media advertising, promotions and sweepstakes, new customers, catalog creative, production and mailings.
Most recently, our subject was promoted to director of marketing…no small challenge in a $64 million company.
She is thrilled with her promotion and extremely proud of how the company has turned around and grown. She attributes this success to Tony Keenan, who came on board three years ago as president.
When she retires, among other plans, she wants to return to astronomy and know the names of all the stars. When you get there, Barbara, look up, your name will be there.
Karen Gillick is president of Karen Gillick & Associates, a national executive search firm specializing in direct marketing. Her knowledge of direct marketing comes to her through her father, Bob Stone. Gillick may be reached at 980 N. Michigan Ave., Ste. 1060, Chicago, IL 60611 – 312/337-0345
The scene is childhood in the 1950’s. You’ve just come home from a trip to the supermarket with your mother. She passes you a sheet of little green stamps and a book to stick them into. Finally, after weeks of collecting and licking and sticking stamps enough books are full to warrant sitting down with the catalogue of all the neat stuff you could “buy” with the books of stamps.
For those of us too young to have participated in that primordial, philatelic pastime, let’s fast forward to the mid ’80’s. In droves we joined the ranks of”frequent flyers”, flitting from airline to airline to take advantage of the latest promotion for triple miles between Oshkosh and Oshawa. It was fun…for awhile.
Then came the ’90’s sales slid…costs climbed…profits peaked.
Suddenly, like a virulent contagious disease that remains undetected until the emergency wards fill up, the dernier cri was unleashed on an unsuspecting consuming public…customer loyalty programs! Things to collect like membership cards, points and more points. Stuff to receive like newsletters, free samples, special services. Places to belong like clubs and circles. Wonderful words to describe you like Premium, Select, Priviligé. You and your peers, whoever they are, from kids to seniors.
Cookies, coffee, cat food, credit cards or cars, it seems no product is immune (or not for long) from the scourge of customer loyalty programs. In fact, I’m sure it could be a full-time occupation just keeping up with them all.
” But, but, but…”, I hear the marketing managers sputtering. “We have to get customers to stay with us. We have to compete. We’re building a database that allows us to track customer behaviour around the clock. We have all this information at our disposal. Look at this powerful new program, these prestigious new premiums, our bountiful new benefits. We’re giving away gifts. We’re giving away goodies. We’re giving away margin…”
You’re giving away the farm.
Know why? Loyalty can’t be bought. At least, not for long.
Not to mention it may all just be getting to be a teensy bit much too much for people to take. In medicine, when the disease takes over the patient dies. In marketing, when the customer reaches overload…you know what happens next.
Let’s put on our consumer hats for a minute. I ask, “Hey, Marketing World! This is not only about my loyalty to you! What have you done to deserve my loyalty? You’ve pushed merchandise at me. You’ve mailed me more stuff than I ever care to read. You’ve invaded my privacy. I’ve got a wallet full of every conceivable form of membership identification. Every breath I take, every move I make has been data captured, data processed and data based (or may be it’s de-based). Hello, out there. Anybody home?”
All I, and, I think, most consumers really want from a “loyalty program” is:
- To perceive that what you’re trying to get me to do has some genuine substance and relevance for me…personally. Too often marketers seem to assume people are just sitting waiting for their first next bright idea. Wrong. My life has context and texture and a lot going on in it. That wonderful database will tell you all about it. Now, what are you going to do for me that ninety-nine others won’t do?
- Not to have to work at this loyalty thing. Just make it easy for me. Don’t ask me to remember to carry goofy little cards around, or make me wade through encyclopedias of instructions and wait weeks and weeks before collecting “my rewards”. Relationships with my nears and dears keep me busy enough, thank you. Don’t ask me to go out of my way to work at one with you, because I simply won’t.
- A little love in your heart, as the old song goes. OK, that may be pushing it, so I’ll settle for a little empathy…human being to human being. The target market of one. What that looks like is well-researched, substantiated approaches, real thought put into the use of technology, delivered through tactics that aren’t intrusive in an obvious way.
- Delivery on your promises…and then some! You earn the right to receive my loyalty and maybe, just maybe, I’ll stick around.
Charles de Gruchy remembers how it was
The art and science of customer massage
There’s an old business adage that I used to see pinned up on office walls that goes “Quality, Price, Service–Pick Two”. Any business that still displays this (or, worse yet, believes in it) these days is surely an empty one with nothing left but the walls and the old maxims curled up and yellowing.
In the 90’s, product quality is quite simply the price of entry and price is, very often, negotiable, meaning you can hunt around till you find the price you’re willing to pay (or be a bully). As for service, if you haven’t learned any lessons from everything that’s been said and written on the subject in the last several years, then you’d better get busy because you could be facing an empty office, too some day soon. Why? Because quality of service is no longer a strong point of differentiation versus your competition either. Now, you might find this hard to believe, as I sometimes do when I go into some retail stores and can’t find anybody to take my money. Funny, how the windows of places like that seem to be getting papered over lately. Or, when I call up a business for information and get dizzy on the voice mail merry-go-’round.
In fact, according to research from the American Quality Foundation, a New York City think tank, less than 50 percent of quality practices add any tangible benefit, such as higher margins or faster turnaround times. What’s more, 30 percent of practices add no value at all. So, what’s next?
In a word–innovation. Now, there’s a challenge. Joshua Hammond, president of the American Quality Foundation believes innovation springs from a number of broad practices associated with outstanding companies. Among the most important of these practices is working to retain and recruit customers by building and maintaining relationships of trust. Enter direct marketing.
Now , you might be thinking, here comes that relationship marketing stuff. You’re right.
For example, why, when you’ve just spent an absolute fortune on a much-deserved ten days in the Caribbean do you not get a note, a call, a questionnaire or a carrier pigeon inquiring whether you were happy, had a good time, will ever come back again or have any ideas on how the holiday experience might be improved ? Difficult? No. Expensive? Not very, compared to a high-priced holiday. But, boy wouldn’t you feel differently about that travel company and, probably, use them again, next time?
Or, how about this one. You own a luxury car. It’s been making funny noises, so you take it to the dealership for service because that’s what you’re supposed to do. Right? . You leave it there at great inconvenience for a couple of days. You get it back. It’s still making noises. Two days later, on the weekend or in the evening, you get a polite, feminine phone call. (Of course, the luxury car company doesn’t do service on weekends or evenings. That would be too convenient!) “Luxury car company calling. How was your service?” Grateful for the attention you welcome the opportunity to provide feedback. “Lousy”, you reply at length. So, what happens next? You go through exactly the same cycle–several times. Why do you get the feeling that there’s a small army of sweet-voiced females calling people up just for fun asking them about their car service? Is this some new form of dating service?
Here’s another one. You had a different car you used to take to the dealership for service. They were very faithful about following up by phone after the servicing (just like the luxury car company) and, bonus, they always sent regular reminders about when service was due. Only problem is, three years have gone by, you sold the car two years ago and they’re still sending the reminder notices.
Unfortunately, all three of these stories are true.
In the case of the holiday, I guess innovation has yet to enter the holiday market. In the second instance, the notion of following up to check on service quality is innovative by many standards, but, hardly meaningful when the message evaporates into the ether. And, in the last case, the approach is reasonably innovative. There’s a resident database there somewhere (like you’re supposed to have) full of valuable information churning out letters at a regular and timely rate. Points for having the database. No points for the currency or value thereof.
Thoughts for today: innovation, customer relationship bulding, use of direct marketing techniques. Moral for today: use it, but, don’t abuse it. You’ll lose it. Your customer, that is.
Charles de Gruchy remembers how it was
Some of my best friends are list brokers
With more and more marketers shifting chunks of advertising budgets into direct mail, it’s going to be critical to have the best advice and assistance available. When it comes to direct mail, conventional (a.k.a. uneducated) wisdom would say get a list, mail it and watch the response roll in. Well, if you were born under the second star to the right that approach just might work for you. However, for the rest of us, who aren’t quite so lucky and have been plugging away in this direct marketing business for lo these many years, it’s a little more complicated.
Fortunately, there are people out there who make it their business to provide expert assistance on dealing with mailing lists. Although I have heard several uncomplimentary names for these people, in public places at least, they’re called list brokers. Among all the service providers who can help you control costs, achieve response breakthroughs and increase profitability in your mailing efforts, I’d hazard a guess that your list broker has the potential for having the most impact. That is provided you’re able to form a relationship with one who is truly interested in helping with your business and not just persuading you that more is better and leaving it at that. More meaning the more names you mail, the more money the broker makes! That approach might have worked in the eighties (eighteen eighties, that is) but now, even if you aren’t too sure what you’re talking about when it comes to all the ins and outs of the list business, you should still demand quality of service. And, get it. And, in the process, you’ll be able to learn a lot, too!
My purpose is not to rail against unscrupulous practices in the list business (If that was the case, brokers are probably the good guys! You should hear what list owners get up to sometimes!), but to help you understand what the responsible list broker of the nineteen nineties can and should do for you–from a mailer’s point of view.
Of course, the primary focus of your broker should be finding good lists and helping you get a good deal for them–pretty basic. And, what else? Certainly their knowledge of industry trends will be of value, particularly if you’re new to the mailing game. What lists are working well? What lists need updating?
A proactive approach to uncovering new markets and new sources of names is also useful. I’ve often helped this along by sending brokers sample mailings I’ve received and asking whether the lists are available on the market or whether , if it’s an American mailing, there are Canadian names available.
Needless to say, the level of service you receive has a significant bearing on how happy and productive your relationship will be. There’s something extremely unhappy making about running around on the day your mailing tape is due trying to round up the various lists you’ve ordered. That’s the broker’s job and delivering tapes on time is basic, basic! Another basic is access to and information about all lists that are available and (in my book) even those that aren’t. This is where more is better! What else? Knowing your industry is a big bonus. Now, granted, most brokers will be as versatile as they can possibly be. It’s in their best interests after all. But, you’re going to better served by the one who knows your industry, reads that market, knows the responsiveness of individual lists in your market, can give your actionable advice and can help you adapt to any changes in the marketplace. It will be a challenge for brokers to keep up as more non-traditional industries enter the mailing market. How much mailing went on in the automobile industry before Lexus?
Another thing your list broker can do to make your life a whole lot easier is to practice proven and accurate accounting procedures. Surprised I might think this is even worth mentioning? Then, you’ve not spent countless hours trying to reconcile multiple invoices back to original list orders. Or worse yet, your last three mailing are all lumped together on one invoice!
Taking this opportunity to paint a picture of the ideal broker/client relationship, I would add to the evaluation whether your broker is willing (or, better yet, volunteers) to help suggest test patterns, comment on your promotions and assist in analyzing and interpreting the response you get. Some of this depends on you. You know when you get into bed with someone you have to be willing to share the covers (we’ll leave it at that) so you’ll both stay warm. Likewise, you have to share all your little business secrets. Which makes it all the more important to have a solid, professional relationship with your broker founded on mutual trust fostered through an ongoing, interactive exchange of ideas.
Sound like a lot to ask? You bet. But, like your mother said when the dessert went around–if you don’t ask, you don’t get!
Last month it was noted that only 26% of Canadian adults have shopped by mail in the last twelve months versus 52% of Americans. Part of the gap was attributed to the difficulty in achieving economies of scale in Canada and the lack of mail order catalogs coming from Canadian retailers. Meanwhile, a survey conducted by Canada Post Corporation in 1990 indicated 57% of adult Canadian consumers actually welcomed catalogs from mail order companies and 74% welcomed retail catalogs.
So, what’s the difficulty? Why isn’t the catalog business in Canada booming?
According to a study prepared for the Canadian Direct Marketing Association, industry growth between 1977 and 1985 was a relatively healthy 7% annually, but since 1986 had stagnated at a compound annual rate of only 3.2%. In 1986, in order to reduce the demands on customs officers, Revenue Canada introduced the Postal Remission Order/Courier Remission Order (PIRO/CIRO). Under the PIRO/CIRO, any item shipped into Canada by mail or courier with a value under C$40 entered duty free and tax free. According to the study, the impact of PIRO/CIRO acounts for the growth gap. And, that’s not all. The change in the import remission policy also: cost Canadian catalogue firms an estimated $260 million in sales; resulted in the loss of over 4,000 job and created a competitive disadvantage for Canadian catalogue firms in the under $40 price point market. On the other hand, Canadian consumers benefited by getting a price break on goods under $40. As of July 1992 that all changed. The $40 cutoff was dropped to $20 and a $5 fee is payable to Canada Post for the collection of any duties and GST. A senior federal official was recently quoted in the Globe & Mail saying that “Dutiable mail-order cross-border shipping would appear to be down at least 25 per cent in the past year.” That’s good news for Canadian cataloguers and none too soon. But, there’s one other problem. That’s what’s going on south of the border. “Catalogue glut” is the term most commonly used. “Saturation” is another. So, where are American cataloguers’ looking for growth? You guessed it! International marketing programs. According to a study conducted annually by Catalog Age magazine, 37% of them already are active or are testing overseas marketing programs plus 20% are considering it. In 1992, 75% of them saw Canada as the most attractive market! The change in the remission order may have slowed their momentum, but, in the long run, it isn’t going to stop the charge. For all kinds of reasons, Canada is simply too attractive as an expansion market.
I think my own exprience with catalogue shopping illustrates the challenge Canadian cataoguers face. Being a fairly busy person and a self-confessed catalogue junkie, I entertain fantasies of doing all my shopping, particularly at Christmas, by catalogue. This past year, I was determined to pull it off. Since catalogues hadn’t been pouring into my mailbox since the end of August, I first had to make a concerted effort to find or send away for current Canadian catalogues in the product categories I wanted. Just to be safe, I placed most of my orders in early November, some by phone, most by fax. The results? Well, let’s put it this way. I think I could now write an off-Broadway play about mail order customer service in Canada. Only thing is, I can’t decide whether it should be a comedy…or a tragedy! All I can say is, if my own adventure is indicative of what other Canadians are experiencing trying to shop from Canadian catalogues, then it’s no surprise to me only 26% of us are masochistic enough to try it!
What’s the problem? Canadian cataloguers just don’t seem to know how to do it right. In one case, they charged my credit card for the whole order, only delivered half the items and never let me know when,if ever,I would receive the rest(until I called to find out). In another case, I was told up front which items were not available but wasn’t shipped the items that were in stock. Calling the week before Christmas to find what was happening, I was told the whole order had been lost and nothing I wanted was left in stock. That wasn’t all. There was more of the same.
What should Canadian cataoguers (or marketers contemplating mail order) be thinking about? Service, service, service! And, they shouldn’t wait for the Americans to show them how…because, they will.!
According to various sources, there are about six hundred Canadian catalogues. Six hundred!? Have you had even a dozen different catalogues drop through your mail slot in the past year? Even counting American catalogues? Probably not. So, where are they all? Simply put, they’re invisible to the public eye. Unless, of course, your name crops up on a mailing list, then, presto, changeo, there they are! But, it’s still not a deluge. Why don’t we get more catalogues in our mail? The price of entry for one thing. Starting up, and more importantly, building up, circulation, is an expensive proposition. Some experts would say that, unless you can raise a million dollars to work with, don’t bother trying to start a catalogue. That said, I’d guess 80% of the six hundred in Canada were conceived through the mating of a brainwave and a shoestring, born on a kitchen table and are being raised in a basement or garage.
According to a survey conducted each year among Canadian cataloguers by Catalog Age magazine, over 60% of Canada’s catalogue companies report annual sales of less than $1 million. A survey, commissioned by the Canadian Direct Marketing Association in 1990, put the total size of the Canadian catalogue industry at $2.2 billion dollars in sales. Compare that to the U.S. estimate of $74 billion in consumer and business-to-business sales in 1991 Applying the 10% rule, provides ample potential for the Canadian catalogue business to more than triple.
So what’s getting in the way? Economies of scale for one thing. Look at it this way. Suppose it costs $1 million to produce a catalogue to be mailed to all adults aged 35 to 54. That’s about 7 million people, according to Stats Canada. Suppose half of the cost is fixed (design, copy, type, photography, film, print set-up, etc.) and half is variable (mailing lists, paper, printing, postage). That makes the per unit cost of this hypothetical catalogue 14 cents (seven cents in fixed cost and seven cents in variable cost). In the US, there are about 59 million people in the target group. The per unit cost to mail them all would be 8 cents (one cent in fixed cost and seven cents in variable cost). In other words, mailing a Canadian universe that’s 88% smaller, costs 43% more per unit. Now think about profitability. Let’s set parameters that catalogue cost is 18% of gross sales, margin (sales minus product cost) is 40%, operating cost is 12% and the before-tax profit target is 10%. In the Canadian scenario, it takes 44% more in sales to cover the catalogue cost of 14 cents each and achieve the 10% bottom line. Is it any wonder there are so few “visible” Canadian cataloguers? Likewise, is it any wonder American cataloguers see opportunity in mailing to Canada? Their additional fixed costs are minimal and the remainder of the cost is variable. Besides, they tell me they get higher response rates and larger orders here than they do at home.
There’s something else at work in Canada. That’s a lack of mail/phone order catalogues from retailers. Catalogues designed to produce sales in their own righ as well as drive additional traffic to stores. Why not? There might be an attitude problem. The president of the Retail Council of Canada was quoted recently as saying, “(Direct mail) suffers from not being able to live up to the instant gratification aspect. It has to obviously be a planned purchase, not an impulse purchase and you don’t really know when the product is going to arrive. For many people, that’s too long to postpone the satisfaction.” Instant gratification? Wasn’t that an 80’s thing? Aren’t people now looking for genuine value, convenience, better, more personalized service, ways to reduce stress in their lives? Or, is that a mythical tale spun by the seers of the future? Faith Popcorn and her futurist cohorts predicted the “stay-at-home” nineties. Whether you call it burrowing, barricading or boredom, supposedly, the resulting shopping trend is out of the mall and into the mail box. US retail mall traffic is now less than half what it was in 1986. In 1992, 52% of adult Americans had placed an order by mail or phone in the previous 12 months. According to a study done for the National Task Force on Cross-Border Shopping in March 1992, the comparable Canadian number is 26% of which 3% ordered from the US. This means over 5 million of our sample target market of adults 35-54 are still waiting to either receive a mail order catalogue and/or one that excites and incites them to order. That’s