The Impending “Do Not Market” Threat

Peter DeHaan: Author, Blogger, Publisher, EditorBy Peter DeHaan

Have you heard about the onslaught of Do Not Market laws proposed at the local, state, and federal level? You haven’t? Well, there is good reason that this pending legislation has caught you unawares. The fact is that it doesn’t exist – per se.

However, in reality there is a plethora of existing laws and proposed legislation that serve to significantly restrict how we all market our products and services. In total, these well-intended but overreaching and imprudent bills combine to effectively amount to one massive Do Not Market law. What is at stake is our ability to promote our businesses and make sales. Once these restrictions are placed on every business, the future of the U.S. economy and its viability as a nation will be in jeopardy.

Less you think this is hyperbole, consider what would happen if you were effectively prohibited from any and all marketing activities. You would be forced to rely on a “build it and they will come” approach to sales. In effect, this would reduce your sales and marketing departments to the mode of reactive order-taker. What would happen to your sales numbers? Most likely business would decline, maybe even going into a free fall. You would stop hiring and begin laying off staff; capital investments would be put on hold; expansion plans would be terminated. This would ripple through the economy, and a recession would follow.

Okay, I admit, this is a tad bit reactionary. But if we truly couldn’t do any marketing, this becomes a dreadfully real and inevitable scenario. Surely, you say, our elected officials wouldn’t go so far as to legislate our economy into disarray by prohibiting all forms of marketing – would they? Let’s review:

  • For several years, we have been prohibited from sending unsolicited faxes. What was once viewed as an efficient and cost-effective alternative to direct mail was summarily made illegal. Nix the fax.
  • The bellwether bill was the national Do Not Call law and its numerous state counterparts. This devastated calling consumers. Given its immense public support and self-serving political expediency, we should also expect similar future limitations placed on contacting businesses via phone.
  • The CAN-SPAM Act of 2003 (yes, it was four years ago) put onerous restrictions on email marketing messages and solicitations. Since enforcement of this act is both challenging and cumbersome, it has yet to make a dent in spam, its intended target, which continues to grow unrelentingly. It has, however, given conscientious businesses pause in what content they include in email messages and to whom they send them. The honest have been dissuaded, while the crooks continue unabated. Plus, with the implementation of spam filters at numerous junctures along the path of an email message, there is serious doubt as to how often our carefully crafted and legally compliant messages actually get through to the intended recipient. To make things even more cumbersome on the law-abiding, there are proposed Do Not Email bills floating about.
  • Consider direct mail. The postal rate hike was discouraging enough, but many Do Not Mail bills are in the works as well. So, even if we can afford it, mailing promotional items may become moot.
  • Many other forms of marketing are facing restrictions on a local or regional basis, including billboards, the use of spotlights and PA systems, door-to-door selling, handing out flyers, the size and placement of signage, and so forth. Used wrongly, these can be deemed a nuisance by the buying public, but why should everyone be penalized for a few overzealous marketers?

What is left? Certainly broadcast marketing (radio and TV) is one option. With broadcast media, there are already many balanced, appropriate, and accepted laws on the books that govern ad content. Nothing more is in the works at this time. Unfortunately, radio and TV are not effective media for many businesses and out of the question for many marketing budgets. Besides, with the proliferation of DVRs (digital video recorders), how many viewers are zipping past those television commercials anyway? Concerning radio, be aware that more and more listeners are finding their music online, effectively bypassing commercial radio.

Perhaps the most viable remaining category is print media (newspapers, magazines, and newsletters). Like broadcast advertising, print media enjoys time-tested legislation that regulates what can and cannot be included in ads. Print media can be distributed according to a subscription-based model (readers pay to receive it) or an advertiser-based model (companies pay for it to be sent to qualified individuals).

There are two challenges with print advertising. The first is finding the right publication that addresses your target audience. The second is designing an effective ad. Herein is the painful reality of print advertising: a great ad makes things happen; a bad ad does nothing. Interestingly, the only threat to print advertising is not legal, but rather environmental, since no-longer-needed copies end up in the landfill. (This could be the impetus for future legislation.) To address the issue of paper waste, many publications offer electronic alternatives. Over 10 percent of Connections Magazine subscribers currently receive their copies this way; Byte magazine has been 100 percent online for over ten years. This is definitely a trend of the future.

Last, but certainly not least, is the Internet. In the World Wide Web there resides all sorts of interesting and intriguing promotional opportunities. Website sponsorships and banner ads are two prominent options. Search engine advertising is growing at a phenomenal rate. Certainly, having a company website is a requirement. Trying to market in today’s economy without a website is a foolish and shortsighted endeavor, filled with frustration and wasted resources. Increasingly, companies that lack websites are immediately dismissed by prospective customers, who view them as second rate or, worse yet, not even viable. For the progressive, future-focused promoter, consider how SecondLife, MySpace, and FaceBook fit into your marketing mix.

So faxing, calling, emailing, mailing, and broadcasting are increasingly limited marketing options (even when there is an “existing business relationship”). The remaining opportunities exist in the worlds of print media and Internet marketing, which may well become the final frontier of advertising and emerge as the only effective and successful marketing medium in the future.

Peter DeHaan is a magazine publisher by day and a writer by night. Visit www.peterdehaan.com to receive his newsletter, read his blog, or connect on social media.

The Future is Now: Learning from Netflix

Peter DeHaan: Author, Blogger, Publisher, EditorBy Peter DeHaan

Go back with me a few years. Internet-centric companies were the next big thing. It was purported that they would change how business was done, render traditional commerce models obsolete, and usher in a new way of valuating companies – at historically unfathomable and untenable levels.

They were the dotcoms! Their basic premise was insightful, if not somewhat simplistic and naïve. With the pull of the ubiquitous Internet and the support of massive server farms, their business models (that is, their technological infrastructure) would be infinitely scalable, while customer service would be strictly self-service. This would keep costs down and the employee count even lower. Page hits and profitability would be the inescapable conclusion. Unabashed euphoria was everywhere.

The problem was that most people were not ready for and did not embrace self-service via the Internet. Not surprisingly, the dotcom bubble burst. Stock prices plummeted, bankruptcies ensued, and computer hardware was peddled for pennies on the dollar. Most dotcoms dematerialized even quicker than they had materialized. Some companies tried to retool, admirably adhering to the faltering dotcom mantra; it was an effort in futility. A few insightful innovators listened to their customers and changed their paradigms, wisely supplementing their limited and lacking self-service Websites with full-service human beings. Call centers were built and staff was hired. The clamoring dim of the masses was largely satiated and these adaptable entities survived. Some even thrived, having found the perfect mix of massive computer technology and the personal touch.

But what about Netflix? Born in the dotcom era, Netflix embodies the highly scalable, self-serve model that had failed most. Not only has it succeeded, it has done so exponentially and most effectively. For the uninitiated, Netflix is an Internet-based DVD movie rental service. Members log into the Netflix Website, browse a selection of 70,000 titles, putting requested titles into their personal queue, where they prioritize their preferred delivery order. The first movie generally arrives via mail the next day. There are no due dates, no late fees, and no shipping charges. Once viewed, the DVD is returned via a prepaid self-mailer. Upon receipt, Netflix automatically sends the next movie in queue. Netflix’s 42 regional shipping centers manage 42 million DVDs and ship 1.4 million a day. Their website includes movie write-ups, reviews, member ratings (1.5 billion of them), and recommendations for titles similar to what has been enjoyed by that member. Interestingly, Netflix customer service is 100% self-serve. [Netflix does have a toll-free number for prospective customers and an email address for media queries – which is how I found out about the toll-free number; I never did find it on their Website.]

With Netflix, there are no call center agents, no email support, and no text chat options. Its Website does have a help section; it is actually helpful. Its list of FAQs are truly questions that one might want to ask (I did); there is also context specific hints, instructions, and explanations. The site is quite intuitive and easy to use.

Given all this, is Netflix an anomaly or an indication of what is to come? Although it is currently atypical, it is also a model on how to effectively and successfully design a Website, support customers, and engage visitors. It is, or at least it should be, a peek into the future.

Although wide-scale defections from full-service options to self-service Websites is not an eminent threat, it is one, nonetheless. Businesses are therefore advised to pursue a two-prong strategy. The short-term – and continuously ongoing – initiative should be to look for ways to differentiate oneself from the competition. Make your company and services stand out; do what others don’t – or can’t; position yourself to be indispensable.

Long-term, be aware that commerce, in general, and customer service, specifically, will migrate to the Web. What can your business do to capitalize on this? The answer may have little to do with the business you currently run, but it will have everything to do with your long-term viability. Fortunately, there is time to consider, study, and plan for these eventualities, but preparation is requisite because this is a threat that won’t go away; ignoring it will be to your peril.

Peter DeHaan is a magazine publisher by day and a writer by night. Visit www.peterdehaan.com to receive his newsletter, read his blog, or connect on social media.

Anything for a Sale

Peter DeHaan: Author, Blogger, Publisher, EditorBy Peter DeHaan

Last year, my family’s two favorite TV shows were on the WB and UPN television networks. These two networks merged this fall to become the CW Television Network. Since our provider offered both networks, I was confident that would be no problem receiving the new network. I was wrong.

Repeated contacts to our provider via email resulted in no response whatsoever. My wife was aghast; I was not. My expectations were nil and they were squarely met, but that is a different story for a different time. Subsequent calls to our provider resulted in no satisfying results or tangible communication.

In the midst of this, a direct mail piece arrived from a competing provider. It offered a seemingly attractive price, free installation, and new equipment, including a DVR (Digital Video Recorder). This was an attractive enticement since our receiver and remote (free promotional incentives from our existing provider) were wearing out; the DVR would be a great bonus.

Upon calling the prospective provider, I talked to a helpful and confident agent, Karl. My first query was if they carried the CW network. Karl knew all about the merger (whereas most prior contacts did not) and assured us that they did in fact carry the new network. Additional probing revealed that my hope of slashing our bill was not to be realized, but still it was a worthy change as we would get the new network and new equipment, including a DVR.

My first clue that Karl’s veracity was questionable should have occurred when he insisted that no additional wiring would be needed to connect the second TV to the single receiver. I knew that this was technologically feasible via an RF signal as Karl explained, but I was dubious that such technology would be included in our free equipment. At this point, however, we had established a rapport and I trusted him to be both honest and ethical.

I confirmed my understanding of what Karl said and placed my order. A few days, the installer arrived and set up the system. He quickly gave an overview of its operation while the programming was downloading. I asked what number the CW network was. “That’s the new one, right?” he said. “I don’t know offhand, but it’s there someplace. If you can’t find, it call this number” and he handed me an information sheet.

Thirty minutes later and frustrated, I dialed that number. “I’m sorry,” the agent said. “I can only help you with installation issues and this isn’t an installation question. You’ll need to call the provider.” (We had apparently bought from an authorized agent.) The provider’s call center told me it would be an extra $5 a month to get the CW network. Mad at this unexpected news, I called my buddy Karl. Unfortunately, he was no longer my buddy. “I only deal with sales questions,” he stated curtly. “I can’t help you,” and he hung up.

My wife, who is tenacious in righting wrongs and fixing the unresolvable, took over our quest for the CW network. Over the next few days she called Karl, the service department, the installation line, and the billing department, as well as all the other numbers she was given. Several days and countless hours later, she resigned herself to accept that we had been had. During the course of our dealings, we have been told:

  • The CW Network is included in your service package.
  • The CW Network is available for only a dollar more a month.
  • The CW Network is available for five dollars a month.
  • The CW Network is not part of your local channels (even though it is a local channel, albeit an HDTV subcarrier).
  • The CW Network is available everywhere, but in your area.

There is much to be learned from this saga. One seemingly small miscommunication had widespread and far-reaching ramifications. One person’s words, either out of intentionality or ignorance, resulted in more that a dozen follow-up phone calls and a new customer who is angry and feels maligned. It will take great effort to overcome such a bad start. As such, several recommendations are in order:

  • Training: If the miscommunication was out of ignorance, then better training could have averted the whole ordeal. Unfortunately, the payback from training is not directly quantifiable, whereas sales numbers are. This is a dichotomous situation that managers must acknowledge and grapple with.
  • Call Monitoring: If the miscommunication was intentional, then some policing is in order. Active monitoring might have caught the error, could have eliminated the rouge employee, and certainly would have minimized all employees’ propensity towards untrue statements.
  • Incentives and Measurements: What gets measured gets done and what gets paid for gets done better. Again, if the miscommunication was intentional, then it was likely a calculated lie aimed at making a sale. Unfortunately, sales deaprtments measurement and reward systems often unwittingly serve for promote and foster activity and performance that is detrimental to an organization’s overall best interests. The big picture must be continually considered.
  • Third Parties Accountability: Whenever customer contact is relegated to a third party, control over transactions need to be retained and carefully tracked by the issuing party. Their organization is at risk and they need to be able to verify that they are being properly and ideally represented at all times. This involves more that just tracking monthly sales totals or costs per call.
  • Consistency: All staff need to have the same information, supported by the same technology, and reinforced by the same training so that they will tell customers the same thing. Furthermore, this needs to be synchronized with their websites and coordinated with marketing pieces: one message, many employees, multiple channels.
  • Quickly Salvage Mistakes: There is a ripple effect when a mistake is made. This occurs both within the organization has more and more people are pulled into the problem, as well as outside the organization as more and more people are told about the problem. Both take their toll. Front-line employees need to be empowered to act and to solve pressing issues, not encouraged to end the call just so they can take the next one.
  • Problem Resolution: After many calls, finally an agent apologized. But no one ever said, “What would you like done to resolve this?” No one ever suggested a course of action and recommended a solution.

At this time, we still do not have the CW Network, but Karl, who apparently will say anything to close the deal, did chalk up a sale.

Peter DeHaan is a magazine publisher by day and a writer by night. Visit www.peterdehaan.com to receive his newsletter, read his blog, or connect on social media.

Customer Since 1978

Peter DeHaan: Author, Blogger, Publisher, EditorBy Peter DeHaan

It was an emotional moment for me. After proudly carrying and using a Shell gasoline credit card for more than 20 years, I had just canceled it and was in the process of cutting it up. Not that I was angry or upset with Shell, but it no longer made sense to carry their card. You see, Shell, in conjunction with Chase Manhattan, had launched the Shell Master Card. If I used it for my Shell gasoline purchases, I would receive five percent off my fuel expenditures on my next statement. For all non-gas purchases, I would earn a one percent rebate on future gasoline. Therefore, I could use the card for more than just gas and get discounts, too. In comparison, my old trusty Shell gas card was an absolute antique. The only practical thing to do was to cancel it.

How did this long-term relationship with Shell start? It was 1978. I was attending electronics school and found myself changing jobs often and moving just about as frequently. During one such transition of both employment and abode, I found myself on the other side of town, far away from the gas stations whose credit card I carried. However, there was a Shell station around the corner from my ramshackle apartment, one down the street from the TV station where I worked, and another next door to the school I was attending. Add to this a gas shortage, skyrocketing prices, and Shell’s tendency to not only have gas, but to be one of the less expensive options. This led to an easy decision to get a Shell credit card. It all began due to practicality, convenience, and frugality.

Of course, it wasn’t long before I finished school, got a “real” job, and moved again. To my delight, there were Shell gas stations both near the office and close to my new home. Soon thereafter, I married and it was a simple matter to order a second card for my wife. In the years that followed, through job changes and relocations, there always seemed to be a Shell gas station nearby. A habit was formed. By then, even at times when Shell didn’t have the lowest prices, little thought was given to going somewhere else. (This is a lesson for anyone selling a commodity product or service: availability, convenience, and consistency produce long-term customers.)

Fast-forward to a couple of years ago when the Shell Master Card was introduced. At first, I viewed their offer with skepticism, but there didn’t seem to be a downside. I could continue my Shell gasoline habit, reduce my overall gas costs, and have a more versatile card. We applied for the card and begin using it immediately. Even so, I anxiously awaited the first statement, worried about a hidden snag or unanticipated caveat. None appeared, just my rebate to be applied to next month’s gas charges. Still the cynic, I cautiously anticipated my second statement. Was there some fine print to let them wiggle away from the result I expected? No. The rebate occurred exactly as indicated and for the amount promised.

Even so, my old Shell card remained in my wallet – just in case. Finally, after a year of non-use, I realized the time had come to throw aside any emotional connection to my long-term companion. It was time to cancel the card. I glanced one last time at the words I had grown to delight in – “customer since 1978” – and cut the card into pieces.

Soon the Shell Master Card was used for all our household purchases and the ensuing rebates grew. Things went well for quite some time. Then a surprise came on our statement, a $29 late fee. My wife, Candy, called Chase Manhattan to inquire. Since our payment history was stellar and Candy can be most persuasive, it was a trivial matter to get the charge removed. We were admonished to mail the payment earlier in order to avoid future late fees.

The next month, Candy mailed our payment five days before the due date. Again, another $29 late fee appeared. This time she called to complain. “We don’t care when you mailed your payment nor do we consider the postmark,” came the arrogant reply. “We only look at the date we post your payment.” Apparently, this was a change in their policy. Plus it seemed a bit despotic, especially considering that our payment was applied eight days after it was mailed. “But we have no control over when you process our check,” Candy countered. The agent’s response was quick and terse, “We always post payments on the day they are received.” No amount of pleading or cajoling could get the late fee removed a second time. The complaint was escalated and soon the only remaining recourse was to submit our concern in writing.

Our letter of complaint was submitted as instructed and a series of automated written responses from Chase Manhattan followed. The last one promised the company would “notify (us) of our findings as soon as they become available.” That was nine months ago. There have been no further communications from them about this matter.

Since the late fees were exceeding our rebates, we stopped using the Shell Master Card and begin buying our gasoline using an existing Visa card. This afforded us a new level of flexibility since there was no longer any need to continue our routine of looking for a Shell sign. We could also shop for the lowest-priced gas. (When we used the Shell Master Card, the rebate would more than offset any higher price we paid for their gas.) It soon got to the point that we were seldom going to Shell.

Over the past 24 years, I estimate that we have spent about $20,000 on Shell gas. Assuming that our future gas consumption will remain constant and projecting that prices will increase, we could likely spend another $30,000 on gasoline in our lifetimes. In line with this projection, a $50,000 lifetime customer and $30,000 in future business was lost due to a $29 late fee and the policies supporting it.

What are the conclusions we can draw from this experience?

The first is to be careful in pursuing strategic alliances. Yes, this is a business trend and, when properly done, it is a great way to retain clients and obtain new ones. I am sure that Shell saw these benefits, which is why they formed a relationship with Chase. The failure in their strategy is that they relinquished interaction with their patrons to Chase. Chase did not view me as a $20,000 customer or foresee a $50,000 lifetime value; they likely saw me only as an unprofitable credit card holder (since we always pay the entire balance each month and, until the end of our relationship, continually paid on time). Hence, when forming any kind of marketing, cross-promotion, or reciprocal business relationship, make sure you retain control over your clients; don’t leave such a critical element to someone else.

The second lesson is about policies. Certainly Chase’s policy to track late fees and interest charges by the date posted is practical and easy to follow (as well as being self-serving), but is it fair? Care must always be given to ensure that policies and procedures balance the needs of the company with the best interests of the client.

Lastly, consider your staff. The agents Candy talked to did not have the latitude to credit a late fee more than one time. Apparently, their supervisors didn’t either, nor did the managers. Yes, there is a place for rules and policies, but to make them absolute and intractable, unfairly handicaps agents and can ruin client relationships. The last words that a frustrated client or caller wants to hear are, “It’s our policy,” or “I can’t do that.”

Because of these problems, caused by a partner company, Shell, through no direct fault of its own, has lost me as an exclusive customer and has encouraged me to spend money with its competitors.

[Postscript: We since received a notice from Chase stating in part, “Shell will no longer be participating with Chase in a credit card program.” Do you think that perhaps Shell has realized what I’ve just pointed out?]

Peter DeHaan is a magazine publisher by day and a writer by night. Visit www.peterdehaan.com to receive his newsletter, read his blog, or connect on social media.

It’s All Virtual

Peter DeHaan: Author, Blogger, Publisher, EditorBy Peter DeHaan

As I contemplated my publishing business, I was struck with the realization that I had structured it as a virtual company. This wasn’t intentional; it just worked out that way. Not only am I the only one working in the “corporate office,” there are no local vendors either. Indeed everyone who takes part in the production of our magazine is from out of state – different states!

Dave, our layout genius and designer extraordinaire is in Pennsylvania. His work gets sent over the Internet to our printer in Ohio. There they work up the proofs and put them on an FTP site for Dave and me to review and then approve. The mailing list is maintained by myself in Michigan. For each issue, I output the file and email it to our list processor. They massage the data and sort the list, in turn forwarding it to our printer. The printer merges the mailing list with the magazines and delivers them to the post office. An army of postal carriers deliver the finished package to your home or office.

The newest member of the team is Valerie, our media rep., in New York; she handles the display advertising sales. As editor, I plan, solicit, collect, and edit the articles and press releases. Finally, our websites are hosted by a in Arizona, but I update the content remotely from Michigan.

I have never met any of these fine people in person. We conduct business via telephone and make frequent use of email. Each issue is produced without any face-to-face interaction. For our first issue, this was somewhat disarming and disconcerting, but I am convinced that the result is better than if we all worked together in the same office. True, we miss out on some synergy, incidental communication, and camaraderie, but we are also each free to do what he or she does best and to do so with minimal outside distraction and interruption. As Bill Murray said in the movie “Stripes,” “We’re a lean, mean, fighting machine!”

I theorize that most organizations could similarly be configured as a virtual operation. Over the years I have run into more and more situations where aspects of a business are outsourced, including billing, accounts payable, and general ledger. They hire a computer support firm to maintain equipment, an ad agency to do marketing, and an independent sales agent (in the spirit of a “manufacturers” rep) to generate sales. Not that any single company outsources all of these functions, but many companies outsource some.

It is important to note that “outsource” does not necessarily imply another country. Indeed, despite media attention to the contrary, the majority of outsourcing occurs to business within the same country.

Conventional wisdom says that you don’t outsource your “core competencies.” However, there are those who advocate that you can indeed, farm out your core competencies as well. What if someone else can do it even better – or cheaper? What if your labor market has near zero percent unemployment or if you’re just plain tired of the HR aspect of the business? All of these are prime reasons to consider outsourcing your operations. In fact, I am aware of several companies which have done or are doing so. Outsourcing the operations aspect for a start-up can solve many problems and conserve cash flow while a base of clients is being amassed; then it is all moved in-house. Others have opted to form permanent outsourcing arrangements either out of necessity or preference. The end result is that there are no staff working in their office!

There are essentially six areas of focus and effort for most organizations: operations, customer service, sales and marketing, technical, accounting, and management. I have yet to see one company do all six with aplomb and excellence, yet any viable concern excels in at least one area. Even the strong players master only two or three. In fact, some of the most profitable companies are, at best, average at five of the six, but because of a strong, visionary, and capable management, they consistently generate outstanding profits.

Since no one can master everything, it is pragmatic and even wise to consider outsourcing the weak areas of your company. Then you can focus on what you do best and your company will be better as a result. After that you can consider taking it to the next level and outsource the rest. Ultimately, you too, could become a virtual company; a company of one!

As you begin looking for outsourcing partners, you must be careful in your selection. A bad choice can be costly or even crippling, but it can also be quickly corrected by merely finding a new firm to handle that aspect of your business. (Those who have outsourced their operations did not put “all of their eggs in one basket,” but have divided the work between multiple vendors. No more than 50% of your business should go to any one place; this gives you greater flexibility and minimizes risk.)

You should scrutinize an outsourcing partner just like you would any other vendor. “Look before you leap.” Referrals are valuable; check references. When outsourcing operations, unless they come highly recommended, visit them in person. What does their facility look like? Are they big enough to handle your work? Are they small enough to care about your account? Do you have a good rapport with and respect for the key people in their company? Is there the potential for a long-term business relationship? Lastly, find out who will be your primary contact on a day-to-day basis. How well do you mesh with that individual? What is their anticipated future tenure with the company? Should this contact leave, will your satisfaction with the outsourcer’s service disappear as well, or will someone else be capable and able to take over without impacting your organization?

Certainly, no outsourcing agreement should be entered into lightly or without due diligence, but when it is properly executed and for the right reasons, the results can be both liberating and profitable.

This is not to advocate that everyone needs to look into outsourcing, but it does offer some intriguing opportunities and is certainly another option to consider as you look to the future and consider how to make your company better – and more profitable.

Peter DeHaan is a magazine publisher by day and a writer by night. Visit www.peterdehaan.com to receive his newsletter, read his blog, or connect on social media.

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