November 2009 – Column: Fulfillment and Logistics

Fulfillment as a Profit Center

By Tony Sziklai

Most direct response marketers view order fulfillment as a cost center. It’s the ugly expense on the income statement that requires constant management to keep under control. This mentality is understandable. However, it can lead to missed opportunities and profits.

Fulfillment, which includes customer service, has more consumer-engagement points than any other service. Here’s how marketers can monetize each touchpoint to transform their back-end operations into a money-making enterprise.

Boxes
Each box that you ship can pay for itself. Companies will pay you to put their literature inside your box. So long as the box is optimized for freight and the labor cost of inserting the literature is reasonable, you can profit. Also, companies such as Zadspace, of El Segundo, Calif., will pay to have full-color ads stamped on the outside of your boxes. Called “Zads,” the ads are applied during the fulfillment process and are ideal for plain brown boxes.

Rush Fees
If you are shipping from multiple bi-coastal facilities, chances are you can make extra profit from your rush fees by shipping local rushes using a standard service. It all comes down to timing and customer expectations. Determine how much time you have to deliver a local rush shipment, then work with your fulfillment vendor to make sure that the standard shipping option can get it there on time.

Customer Service Calls
Many direct response marketers are skeptical about customer-service upselling, feeling that the environment is not conducive to sales pitches. However, most marketers are shocked by how much they can make from even the most basic back-end upsell. The best upsells, in my experience, are those that are germane to the product being sold, such as warranties. Third-party upsells can also make good money as long as the talk time for pitching them does not cancel out the revenue.

Save the Sale
Since generating profit is also about controlling costs, marketers should consider a save-the-sale campaign to reduce attrition from cancellations and returns. Clients can experience recoveries as high as 60 percent.

E-mails
Consider text- and HTML-based upsells in order, shipment, return receipt and refund confirmation e-mails. Customer service e-mail responses are also good ways to pitch a warranty or discounted second unit.

Web Order Look-up
If you have a web-based order status look-up page, you should consider adding upsells. You can accomplish highly targeted offers based on what the customer is looking up, and make your pitch using rich graphics.

Technically savvy fulfillment vendors provide these kinds of query tools and can customize them to optimize the upselling process.

If your boss asks you to get more efficiency out of your fulfillment operations, you might ask “how about profit?” The back end is gold for those who know how to mine revenue from traditionally under-monetized customer touchpoints.

Tony Sziklai is president of Moulton Logistics Management in Van Nuys, Calif. He can be reached at (818) 997-1800 or via e-mail at tsziklai@moultonlogistics.com.