April 1997
Marketing Services Versus Marketing Efforts:
A Little Help for the Retailer
by Kenneth M. Culpepper
Direct Marketing Magazine, April 1997, pp.22-25
The growing cadre of consumers whose daily mission is to ward off all marketing efforts being hurled at them is significantly increasing. Do any marketers care about the receptions of their marketing efforts? Optimistically, the answer is, "Yes, of coarse." Most marketers do care about the reception of their marketing efforts, and have enough passion for their profession to continue finding ways to communicate a message that is received by their customers. The importance of this is crucial because customers' decisions to receive marketing communications always happens before they actually evaluate their response to the marketing effort. The marketing effort is why we as marketers do all the data mining, creative graphics and copy, source-data strategies, data modeling and analyses. We try to place the marketing effort in the best position for response. But in all the consulting, analyses and modeling, the actual receiving of our marketing effort before a response is made to it, is most often taken for granted. However, designing a personal engagement to receiving communications does wonders for the world of retail marketing because the customer begins receiving the marketing effort as a marketing service.
One new way to create a marketing service is through using computer telephony and Interactive Voice Response (IVR) strategies. Computer telephony is the integration of the telephone and computer systems by a written interface allowing them to work and interact together. Integration is implemented using the current phone and computer systems and is housed in a Phone Server, which is a powerful PC residing separate from the two communications technologies. For retailers, the primary piece of communications technology that makes computer telephony so attractive is IVR. An IVR strategy interfaces with customer databases allowing for automated outbound telephone interactions between the retailer and selected customers.
What Is IVR and What Does It Do? IVR is not a new concept. In fact, some of the larger utility districts and federal banks have been using it for years. However, now because of technological advancements, IVR is affordable, able to be customized by retail branch, product, product benefit, market, customer life-cycle, purchasing behavior and need. Recently, it is also interactive and justifiable to practically any retailer.
IVR usage is directed by customer database information and is just as significant for business-to-business marketers as for those marketing to individual consumers. It is a valuable tool for many businesses including physician practices, transportation, utilities, manufacturers, distributors, catalogers and retailers. For the retailer, IVR becomes a marketing service that allows for the creation, development and implementation of strategies that initiate multiple interactive marketing efforts by marrying communications and database marketing technologies. An example of an IVR script is located in Figure 1. Initial justification for implementing IVR strategies is usually their dramatic reduction of costs associated with postage and production for any direct/database marketing promotion planning to use a mail piece. Cost reduction is just one of several benefits from using IVR.
Prerequisites of IVR Implementation For retailers to effectively use IVR technology, there are three programmable elements that must be interfaced: 1) Telephone System, 2) Computer System (customer database information) and 3) Point-of-Sale System (any source-data strategy software that collects transactional information that allows the customer to be identified). The retailer's current telephone, computer hardware and software, and point-of-sale systems should be utilizable; however, there are significant amounts of programming involved to produce the synergy between these three elements. Current vendors must provide several necessary pieces of code and information. This usually is not an issue with any vendor because it is viewed as another valuable interface that makes their products more attractive.
Integrated Marketing With IVR For Retailers
Larger retailers (multiple locations) are the prime beneficiaries from IVR technology. Practically all retailers that send out mail pieces to drive customers into the store will benefit from IVR. This works by the following procedure:
1) As sending a mail piece, determine who we want to make a specific marketing service- offer to, or what segment of the retailer's database is more likely to respond to this specific offer. Data modeling will improve interactive-response rates, just as with most database marketing efforts. Once a few IVR responses have accumulated from the customer, more specific strategies can be applied.
2) As creating copy for a mail piece, create voice-copy for a marketing service-offer to be made over the telephone.
This requires some explaining. First, an IVR strategy is not a universal phone message that is offering another credit card, life insurance policy, long distance service switch, asking for donations or any other non-personal, prospecting solicitation in the middle of someone's dinner. And secondly, an IVR strategy is not a computerized voice! An IVR strategy is a personalized and targeted marketing service-offer to customers who have recently and/or frequently purchased by a specific product category or line item, from an identified retail branch location. When it is analyzed and produced correctly, the IVR strategy is received by the customer as a marketing service, when it is actually an offer. The best results usually partner IVR with the mail piece and success of this technology is based upon learning methodologies as with any database marketing effort. For example, some customers will not identify with the IVR strategy. These will tell you this and they should continue to receive only mail pieces.
Retail Benefits of IVR
There are several benefits to using IVR for retailers:
1) It is a cost savings technology. This is a new way the retailer can use database marketing strategies while dramatically reducing the postage and production costs associated with mailing. For the price of a local phone call, each retail location has a produced marketing service-offer to selected customers. Some retailers are able to use one IVR Phone Server for all branch locations in a given market. This is dependent upon the market's long distance geographic break-outs.
2) IVR also helps marry direct marketing and retail, soothing the traditional animosity between them over the corporation's customers. An IVR strategy does not sell, collect for, exchange or distribute a product/service to the customer. It only creates store traffic to make the transaction.
3) The response to the offer is estimated immediately. When mailing an offer, there is an amount of time that needs to be given for customers to receive the offer and then another block of time to respond to it. However, with IVR some customers' intent is immediately measured and shortly thereafter confirmed. Therefore, time-frames of response measurement for most projects are greatly reduced.
4) Learning is accelerated. This is due to making and measuring more relevant service- offers to customers more frequently. With more learning and more service-offers comes more revenues.
5) IVR is a market research tool. It is capable of collecting other valuable information about customer purchasing behavior, consumer contact points, product benefit believability, competitor benefits and the perceptual effects of most products or product categories.
6) IVR gauges inventory stocking needs, by each store location, for each offered product by the customers' initial intended responses.
7) When IVR is researched and produced correctly, it is received by the customer as a marketing service, when it is actually a marketing effort.
Rules and Regulations
Telemarketing rules and regulations vary by state for any telemarketing efforts. Because IVR is a computer generated telemarketing message, some states have even stricter regulations regarding its use. However, there are three main rules which should be practiced while using any IVR application. First, IVR should never be used for prospecting. Providing a marketing service to prospects usually has a negative reaction and low response rate because there isn't any purchasing behavior to direct the type of products or services that currently interest them. IVR should only be used with customers because it is much too valuable as a marketing service methodology with a selected segment of established customers. Secondly, telemarketing hours for using an IVR strategy with customers should be derived accordingly with any state telemarketing regulations and what also makes good business sense for any specific industry or targeted segment. For example, it may be legal to telemarket until 9:00 p.m., however, calling this late in the evening would not be courteous to your customers if the targeted segment is comprised of family types with children, who around this hour, are usually in the middle of bathing children or getting them to bed. Underestimating the importance of the timing of an IVR strategy will take away the advantage of it's being received as a marketing service by the customer. Lastly, IVR cannot be used for the collection of payments for an outbound order, a previous sale or any balanced owed. It should only be used to create store traffic for retail or for automating inbound purchase orders. Rules and regulations about collecting money from a computer generated message may vary from state to state, but because of consumer protection rights against any harassment for collecting money, it is wise to never use IVR in this way.
Purchase Orders and Customer Service
IVR is currently in use in many applications for automating inbound phone orders for products. Usually, this is centered around a catalog. Some organizations even have IVR provide a customer mailbox for identifying line of credit balances and limits, 24 hours a day order and shipping status, and an extension that is used only for giving product and service information while collecting new prospect information. While it is usually an afterthought, customer service after the purchase of a product from the retailer is another immediate justifier of IVR implementation. Just as using an IVR strategy for outbounding a marketing service to a targeted segment of a customer database, the retailer can create another IVR strategy to call back all customers who have recently purchased and collect satisfaction feedback about their most recent retail shopping experience. For the cost of a local phone call, the retailer can also perpetually measure how their customers are perceiving their products and services as close to the time of purchase as they wish.
Conclusion
IVR technology doesn't replace the necessary face-to-face meetings between retail personnel and the customer, nor is it the answer for those retailers wishing to reduce communication with their customers. However, when it is properly produced and has communicated the retailer's marketing service to customers, it strengthens the retailer/customer relationship. IVR takes a few days to install and requires about 30-60 days for a user to develop a comfort level. The price to implement IVR varies by the application and can be quantified to fit multi-locations and selected market implementation. All retailers have different approaches to communicating with their customers. Understanding the importance of these approaches is crucial because customers' decisions to receive marketing communications always happens before they actually evaluate their response to the marketing effort. How the retailer chooses to communicate with their customers is a perception of professionalism for the entire organization.
Ken Culpepper is president of Integrated Marketing Solutions, Inc., a
knowledge-base marketing firm that
integrates tactical marketing strategy with management of multiple contacts
of businesses to their customers, prospects and channel customers. IMS incorporates
marketing business planning, long-term corporate ROI strategies, and marries
knowledge-based marketing with e-commerce strategy and systems. IMS has
offices in Atlanta, GA (770) 390-9199 and Nashville, TN (615) 782-0461.
(Web: migmar.com/ims)