July 2007 - They've Got Your Back

Discuss support services with the leaders in the field and a common theme emerges: the desire to be brought into the fold earlier. Too often, marketers spend ample time working on creative without realizing that much of their campaign’s success rides on the shoulders of those on the backend.

By Patrick Cauley

When Average Joe thinks about the direct response industry, he’s probably picturing singer Jessica Simpson discussing her erstwhile acne problem. The flashy, “but wait there’s more,” infomercials may grab the most attention, but there’s another equally important component to actually getting a product or service to a consumer.

Creative is obviously an essential piece of the puzzle, but it can be argued that it’s with the overlooked support services that the real conversions and ROI magic happens. Support services encompass everything from call centers and teleservices to payment processing and retail distribution. Taking a closer look and getting a deeper understanding of a few of the various support services may be just what you need to make your next direct response campaign a more cohesive success.

If a good job’s been done on the front end, the phones will ring-and that’s where an effective call center steps in to seal the deal on a campaign. “Our clients have made a significant investment before that first TV commercial airs. It’s critical for us to do everything possible to sell our customers products; while we can’t make the phone ring, we can treat every call as an opportunity to sell,” says Ron Elinkowski, director of new business development for Cincinnati-based Convergys.

Those involved with this aspect of the industry will argue that almost any issue that may arise regarding a campaign can be adroitly handled by a call center. “The call center is the eyes and ears for the client. They are the ones who speak directly with the end user, the consumer,” says Loren Crannell, vice president of sales for Van Nuys, Calif.-based Moulton Logistics Management.

Across the board, various teleservice companies and call centers provide technologies to help convert leads into sales. Live agents are yielding to IVR (interactive voice response) and DTMF (duel tone multi-frequency) technologies, at least with traditional hard-offer products. Higher price point and soft-offer calls, those that may need further explanation or convincing to complete a sale, are still handled mostly by live, at home or offshore agents. Convergys has a program in place called “strategic routing,” whereby these crucial calls are put through to the top 20 percent of agents, if they’re currently available.

“Clients with traditional hard- offer campaigns are moving increasingly toward IVR where it’s a more cost-conducive transaction, but they’re also making more intelligent decisions about what they upsell on the transaction, as well, by using Smartsell technology,” says Rod Kempkes, executive vice president of direct response for West Corporation in Omaha, Neb. “The Smartsell system has a propensity scoring and likelihood analysis for offer arbitration. In other words, it knows if a certain customer or others from the same geographical and economic cluster have called before and what actions they took.”

When searching for the right call center, you need one that offers choices and consults with you to determine the right ingredients for success. “Believe it or not, I still receive the occasional call from someone telling me to only send them pricing information. It’s so important for me to understand their product or service so I can send them information that’s relevant to their campaign,” says Elinkowski. Some of the most successful campaigns Elinkowski has dealt with were ones where the prospective client involved the call center early on in the campaign. If a client is still finalizing the creative, they can ask the experts at the call center what sort of questions they would anticipate getting from callers based on where the creative stands. This knowledge can certainly identify early avoidable problems on the front end.

“We test many programs, and the more successful marketers have defined all their test parameters in advance, so that when they run the test, they’re not in a reaction mode and have determined statistically valid variable testing. They already know what their success or failure limits are in each of the parameters for their test. We have become very knowledgeable and assist clients in defining accurate test parameters,” says Kempkes.

One misconception Elinkowski would like to quell is the notion that a busy signal is a bad thing. “While unacceptable in customer service, a busy signal can actually send the message to a potential customer that many people are calling for this great product, and they will call back,” he says.

It seems the technologies in teleservices will only continue to grow more efficient in converting sales and making upsells. “Today, we’re using a lot of predictive analysis on consumer attributes to make decisions during specific transactions, whereas before you picked up the phone and read the script,” says Kempkes.

It almost goes without saying that payment processing is the lifeline of the direct response industry. Direct response transactions occur without an exchange of cash at a brick and mortar location-the typical customer and cashier scenario. “By taking credit cards in a non face-to-face environment, we control the funds transfer, take the electronic order and turn it into cash,” says Shane Bradford, executive director of sales for Omaha-based TransFirst ePayment.

Reiterating that each support service is an essential piece to the puzzle, Ross Federgreen, EVP of Jensen Beach, Fla.-based CSRSI, breaks down why marketers must pay special attention to payment processing. “Very rarely does a client have a single problem in one area of their electronic payment that doesn’t affect marketing, pricing strategies, etc.,” he says. He goes on to describe the high risk factor that card processors endure when dealing with direct response. Direct response involves higher risk because, unlike with a brick-and-mortar retailer where a customer is handed the goods as their card is swiped, there’s no absolute guarantee in DR that a product gets to the person who ordered it. As a result, direct response is even considered a higher risk by MasterCard and Visa.

“Recently MasterCard and Visa imposed a significant rate increase in credit card processing across the board. Marketers should budget two and a half to three percent of their average transaction costs,” says Bradford. Having a merchant processor that understands direct response is imperative, especially given the current climate on Capitol Hill. Payment Card Industry (PCI) Compliance is a set of security standards created by the major credit card companies to protect consumers from identity theft and security breaches.

“If you’re not going to be compliant, in a very short period of time you won’t be able to accept credit cards. Companies need to know that they can’t act as though PCI standards don’t exist. Everything is secondary to that,” says Federgreen. As a processor, it’s essential to have specialized expertise in how to manage everything from both a risk and customer perspective. According to Federgreen, going down to the corner bank and asking someone who doesn’t understand the DR business to take their credit cards is the worst mistake a marketer could make.

One might assume retail distribution-shipping goods to retail chains-would be as simple as putting goods into a box and placing them onto a truck. One would be wrong. “I believe the misconception is that you put a label on a box and ship it,” says George Fanolis, vice president of business development for Fosdick Fulfillment in Wallingford, Conn. On the contrary, retail distribution is an intricate process that, in Fanolis’s case, has an entire department devoted to keeping a keen eye on the many aspects associated with material handling.

A full-service retail distributor has to be able to take the basic product and reconfigure it however the particular retail chain wants it, and still work out of one inventory. “Each has a routing guide, and unfortunately, no two retail chains-whether it’s JCPenney, Sears or Target-have the same routing guide. They all have their own idiosyncrasies of how they want the goods packed, marked, shipped and palleted,” says Hal Altman, president of Motivational Fulfillment and Logistics Services based in Chino, Calif. Altman’s entire inventory is radio frequency, which means it is live to both the customers and the chains at all times. Ninety percent of what he ships out of his warehouse, whether it is direct to a consumer or to a retail chain, is either a pick-and-pack, or has a value-added service where the configuration has changed.

When a marketer is looking for a retail distributor, three main elements should be paramount: quality information and reporting, the ability to re-pack and change configurations to different retailer specifications, and the ability to negotiate the best freight rates for clients. Costs for retail distributors will vary depending on where they’re shipping. “It depends, because a Wal-Mart takes greater hand work, more re-packing and finishing than a JCPenney. Costco, for example, will only take a brand-new pallet, where Target will take a used pallet,” says Altman.

One thing’s for sure, retail distribution is not an area of support services in which to cut corners. Goods not prepared the right way will either come back, be refused or have massive charge backs. “If you consider a charge back times how many cartons you send out, that adds up quickly,” says Fanolis. Both Fanolis and Altman describe a future of retail distribution where the human hand is involved less, and where electronic tracking will continue to gain speed and importance.

One of the lesser talked about, but currently booming, support services is catalog services. Curtis Clarke, CEO of Fairfield, Conn.-based Catalog Solutions, travels to nearly 400 different mail-order catalogs, showing them new and unique items. Clarke, whose company works on commission, has a vested interest in the products he chooses to pitch to catalogs being successful. The implementation of picking a product and placing it in a catalog is free of charge; payment comes once products begin to sell in the catalogs. There are a variety of things to consider when choosing an item that’s proper for catalog use: pricing structure, the offer, copy, weight and art are all elements that require special focus.

“Many people don’t understand the artwork that’s needed. They’ll try to pull art from their video after the spot has been shot. We tell them to bring a camera to the set while filming their spot so that they can take still shots for a catalog,” Clarke says.

As with the other categories of support service providers, Clarke agrees that the sooner his company knows about a full campaign roll-out, the better. “Once a DR product is tested and it tests well, they should notify us. The lead time for us to place a product in many of these catalogs is four to six months,” says Clarke. He also contends that the viability of the catalog is brighter than many may assume. “There are a lot of customers out there that are still hesitant to buy off of TV, but if they’ve been receiving a catalog for the past 20 years, they feel very comfortable buying. That’s why DRTV products do well in this space,” he says.

The fact is, from the moment a consumer sees or hears your infomercial or spot, the fate of the sale is no longer in your hands. Have you spent the appropriate amount of time courting the various support service providers? Did you shop around to find the one that fits your campaign’s unique focus? Did you bring them to the drawing board early enough in the process to avoid making costly mistakes? Answering these questions in the affirmative ensures you of a longer-running, more lucrative campaign.

We would appreciate your feedback. To submit comments, please e-mail the magazine at [email protected].


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