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Marketing From the Backend
Marketing is an investment.
Order fulfillment is an expense. These two statements create the greatest
illusion in the direct and interactive marketing industry. It began with
mail order. Drop a letter or catalog in the mail and folks send you money!
The more you mail, the more you receive. Mail order expanded into direct
marketing and e-commerce, but the fundamental belief remained the same.
Marketing drives sales.
So, invest in marketing and
fill your coffers. Except
the folks who send you money expect you to
fulfill their orders. The fulfillment costs add up quickly order
processing, product, packaging, service and shipping - and can turn
revenue into losses. It is little wonder that fulfillment is viewed as a
necessary evil!
Reducing fulfillment costs
becomes the driving force in many companies. Unfortunately, this creates a
dichotomy. On one side, costs are reduced, increasing short-term
profitability. The other side is a reduction of service that alienates
customers. It reduces growth and long-term profitability. The challenge is
to find a balance between service and expense.
The first step is to change
the way you view order fulfillment. Utilize your marketing models to
define your operational objectives. When you plan a mailing, there are
costs, projected response rates and average order values that determine
the results. Every good marketing manager reviews both immediate and
lifetime projections before approving a marketing plan. Costs are deemed
acceptable when the projected results warrant the expense.
The same process works for
fulfillment. Evaluate costs in relation to projected results. Look for
improvements in sales and efficiency. Too often, operational enhancements
are driven by external sources instead of unique corporate objectives.
Drive your decisions with the needs of your company, employees and
customers.
Next, define specific costs
and benefits associated with order fulfillment. When you can plan the
results, operational expenditures start to look like investments. Every
company must know their exact fulfillment cost. Evaluate enhancements by
the return on investment. Define service requirements by your customers
expectations. For example, timely shipments are necessary, but is 24-hour
service required or will 48 hours suffice? Customers think in weeks, so
orders placed this week and delivered next week will rarely receive WISMO
(where is my order) calls. How would shifting shipment turnaround to 48
hours affect your customers? How would it affect your costs? (Please note:
this is for standard shipments only. Air shipments have to be processed
immediately.)
Finally, invest in building
relationships with your customers. This begins with service dynamics. Find
the key service indicators by analyzing your customers history. Choose
the top 10-20% customers. How many had backorders? How quickly were their
orders shipped? How many had complaints? How quickly were the complaints
resolved? What are the service similarities? What are the differences?
Your top customers are the
ones that you want to duplicate. You will find that many (if not all) have
had problems with their orders at one time or another. The goal is not
perfection, it is quick resolution. Plan for challenges, because orders
will fall through the cracks. Resolve issues quickly. It will keep your
customers happy and reduce fulfillment costs.
Every customer contact is an
opportunity to reinforce branding and increase sales. Marketing and
operations must be viewed as equal and complimentary partners. Marketing
makes the promise. Operations fulfill it. This direct relationship between
service and sales can be leveraged into growth and profitability. Invest
your resources in understanding how everything works together. Use your
knowledge to inspire customer loyalty with every contact. Are you ready?
Integrate operational objectives into your marketing plan and watch your
company grow!
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