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The Web will continue to expand rapidly
into all businesses and into more and more households. It will be as
common as the telephone or television in a few years.
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The fact that less than 1% of retail
transactions today are on the web is unimportant. For commerce, the
web is primarily a business-to-business vehicle, and will probably
remain so. Many consumer retail web sites being launched today will
probably fail or be absorbed.
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The Web is the greatest direct
marketing vehicle ever invented. It makes one-to-one marketing a
serious possibility.
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Any marketer who ignores the Web today
is making a big mistake.
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The real money to be made right now in
the Web is in customer relationship management. Let me explain the
way it works.
In the 1980s all
mid-sized and larger businesses acquired toll free numbers so that
customers could contact them. At first, they had no idea what to do when
the customers actually called. Anyone who doubted this had only to dial
up the toll free numbers on the products that they bought in the early
days. They got a bewildered customer service rep who didn’t know what
to say.
Eventually firms found
out what customers wanted to know. They equipped their customer service
reps with computers that had access to the relevant information. FedEx
pioneered with their package tracking system so that any customer could
call the toll free number to find out where their package was.
Soon, database marketers
realized that these customer calls were ideal vehicles for building
customer relationships. They added individual customer purchasing
history to the reps’ screens so that they could know who they were
talking to, what they had purchased.
Banks went one step further. They computed customer profitability
on a monthly basis and segmented customers into five categories, from
gold down to lead. They discovered that more than half of their
customers were unprofitable. But they also began to realize that their
gold customers were terribly important to the bank’s future. They
added Caller ID, linked to their customer database, so when their
customers called, they could route gold customers automatically to a
dream team. They soon understood that customer retention was partially a
function of the number of products owned. So they added “Next Best
Product” to the customer reps screens so they could have something
profitable to talk to the customers about when they called. Catalogers
did the same. Talking to customers became big business.
But toll free numbers are
expensive. The main costs are not the phone calls, but the salaries of
the agents who manipulate computers to find the answers to customers’
questions, reading the answers off their screens.
Then along came the
Internet. FedEx was one of the first to realize it’s true potential.
They put their entire tracking system on the Web, so customers could
dial up and find the status of all of their packages at any hour of the
day or night, without talking to an operator, or getting put on eternity
hold. Anyone who has used
the FedEx tracking system knows how useful it is. What the customers may
not realize is that it saves FedEx millions of dollars a year. The Web
accomplishes three feats simultaneously: it makes customers happy, it
builds loyalty and it saves money.
What is the principle
here? I call it “Letting
them come behind the counter.” Just
about every company in the world has a sign on the wall someplace that
says, “Authorized personnel only.”
You don’t let customers go back into the accounting department,
or wander around in your warehouse. But the web has changed all that.
Companies have learned that they can give customers access to the kind
of information that their customer service reps are reading off their
computer screens. They have written the software so that customers can
manipulate their keyboards and mice to act like company employees:
reading technical information, wandering through warehouses, looking up
their own shipping and billing information, and placing their own
orders. They can eliminate hundreds of rep jobs.
Some business-to-business
companies have gone one step further: vendor-managed inventory on the
Web. With this system, a manufacturer keeps track in his computer of the
inventory in his customer’s warehouses. As each item is taken off the
customer’s shelves for use or resale, daily automatic electronic
notices are exchanged between customer and manufacturer. New products
are automatically shipped to keep the shelves at optimum levels. Optimum
quantities are automatically revised based on usage. Product
obsolescence is eliminated by automated, quarterly return material
authorizations with no restocking charge.
Purchasing and receiving paperwork is almost eliminated.
Customers have lower inventory costs. They never run out of needed
items.
So what are we
accomplishing by “Letting Them Come Behind the Counter”?
We are making customers happy, building customer loyalty,
increasing sales, saving millions of dollars, and making the world a
better place to live. What more could you want?
Arthur Middleton Hughes is Vice President of The Database Marketing Institute. Ltd. (Arthur.hughes@dbmarketing.com) which provides strategic advice on relationship marketing. Arthur is also Senior Strategist at e-Dialog.com (ahughes@e-Dialog.com) which provides precision e-mail marketing services for major corporations worldwide. Arthur is the author of Strategic Database Marketing 3rd ed. (McGraw Hill 2006). You may reach Arthur at (954) 767-4558 .
The articles on this web site are available to the general public to read, enjoy and for limited business use. If you want to reprint more than one or two of them for resale or use in a business or educational environment, send an email to Arthur Hughes at arthur.hughes@dbmarketing.com. He will give you permission by return email. The cost, depending on the number of copies you want to reprint, is very inexpensive.
