Special Focus: Ops & Fulfillment

Upselling, the Multichannel Way
It’s Time to Master the Phone/Online Upsell
By Liz Kislik

Since the 1980s, when the majority of catalog orders began shifting from mail orders to the telephone, it’s become standard practice to not just take phone orders efficiently, but also to incorporate the upsell as a regular part of call center operations.

But it’s 2007, and the typical catalog order isn’t necessarily over the phone anymore. Consider this scenario:

Your customer calls to place an order and everything in the process goes smoothly. Your order taker follows standard practice and offers one or more upsells. In the classic equation, you’ve created additional potential value for the customer — more satisfaction with your fabulous products, more sense of loyalty because of your extraordinary care, increased order value for little or no increased cost, and a greater share of wallet, among others.

Here’s the modern-day twist: Your customer is online shopping the site during the phone call. How can you take advantage of this multichannel experience to add value in a new way? Naturally, this is going to happen more and more frequently, so it makes sense to approach the process strategically.

Feel Them Out

The first thing you want to find out is if calling customers are online. Certainly you can find this out if they announce it, but even that knowledge will need to be filtered by a rep who is listening and making appropriate decisions. At some point, try asking customers if they’re online so you can guide them from there.

If they’re online, figure out whether it’s worth addressing the situation. Do you want them online while you’re on the phone? The cost advantage of self-service on the Web no longer applies; the full expense of any inbound phone call has been triggered anyway.

But now you have some new opportunities, including the chance to teach customers how to deal with any online order problems, so the self-service option gains relevance again. Spending that kind of teaching time on the phone can show how much you want to support the relationship and participate together, and it’s well worth the labor and telephone cost if you end up with a successfully completed transaction instead of an abandoned online shopping cart.

Do-it-all Shopping

Adding on real value helps cement customers’ sense of loyalty because it demonstrates both helpfulness and the ease of one-stop, do-it-all shopping. This is true whether you’re offering additional services (e.g., gift wrap, cards, personalization, club or community memberships, newsletters) or products (e.g., upsells, cross-sells, discounted specials).

The biggest advantage of the phone/Web order-taking combo is that customers can see exactly what you’re discussing. Plus, you get the double-whammy of interactivity; as the rep and the customer shop together, you get to learn more about customer preferences and needs — both pay off in better decision making in the long run.

There could be some potential problems, too. Customers can be distracted by what they’re seeing and not pay enough attention to what they’re hearing. They may want to read your wonderfully written Web copy, which is going to be a little different from a live person’s dialogue. So calls may take longer.

And you may cannibalize some of your Web promotions if the Web has different specials and deeper discounts. So you’ll need to honor any discounts online to avoid a sense of bait and switch (although you may be able to convince customers to take an extra item or two).

You’re still investing in relationship-building, though. So if you decide that the pros outweigh the cons, consider the possible reasons why customers might call when they’re already online — or vice versa.

• Difficulty ordering.
• Word choice, i.e., your search function doesn’t recognize the name a customer used to find a particular item in your mix.
• Confusion regarding the shipping and handling method or expense.
• Service concerns the Web site doesn’t answer.
• Optimization, e.g., your site was created for Internet Explorer and they’re using other browsers, so nothing works/displays quite right.

Consider the Possibilities

In sum, they might be calling about any possible usability, product or service issue. Conversely, they might have no problem at all. They may have started out by calling you to order, and while they were waiting in queue, they heard your on-hold message about visiting your Web site and thought they’d go check it out. Or they might be at the office and multitasking — calling you while looking something up on the corporate intranet.

Your reps should be sensitive to all these possibilities so they can shift gears for greater speed, confidence-building, or outright salesmanship, as the circumstance requires.

Some set-up work is necessary to maximize these opportunities. You’ll certainly need support from your Web designers for this audio-visual approach to be as successful as possible. Consider some potential infrastructure problems. The probability of error is very high if your rep dictates as your customer types, so minimize the likelihood of this situation, whether via “pushing” pages to the customer or having buttons or other clickthrough devices on the relevant pages.

Some other ponderables: Will customers be able to toggle smoothly from cart to selling page if they want to see their order subtotal and you don’t run it on the screen they’re currently on? Should you have a “compare” option so customers can consider several alternatives they hadn’t noticed before? If you can’t build in such a function, make sure your reps know the browsers your customers use and can explain how to open multiple tabs or windows, and switch back and forth.

In the same way your marketers think about the landing page, have them think about the termination page, which may remain open on the browser once the call is done. This either could be on the order confirmation screen if the transaction itself occurred online or on some other page the rep led customers to if the rep places the order during the call. Do you want more product pictures? A big thank-you message? Information about upcoming promotions?

Offer Options

In addition to requiring training, reps will have to possess sound judgment to choose the best timing for an upsell offer. If the offer is geared specifically to a product the customer is choosing or to a specific circumstance the customer has noted, the offer should occur as close to the purchase or discussion as possible. If the call is plain vanilla, though, with the customer requesting item after item, then your rep can offer a generic upsell at the end of the call.

Although many reps feel more comfortable with a generic offer on the assumption that it’s less threatening, it’s also less engaging to the customer. Particularly if the customer has explained the reason for being in two channels simultaneously — it should be relatively easy for the rep to segue into an offer:

“While we’re on the phone and you have the Web site up, could I just ask you to click the link under the photo so you can see the discontinued colors you might want to stock up on?” Try to emphasize products the reps like; it’s amazingly easy for them to avoid making offers they don’t believe will be successful for them.

Above all else, reps need to know when enough is enough. Customer tolerance for the combination of phone time and clicking around will come to an end quickly. So unless an individual customer is an avid buyer, it’s best not to ask to change pages more than once or twice.

Check out most research reports these days and you’ll see that more than half of most catalogers’ orders are coming in online. Back when phone orders became commonplace, the opportunity to upsell caught on fast. Now comes another new opportunity worth jumping on.

Liz Kislik is president of Liz Kislik Associates LLC, a consultancy that focuses on customer satisfaction and employee success as the building blocks of a resilient, effective enterprise. You can reach her at (516) 568-2932 or lizk@lizkislik.com.

The New Back End
E-commerce has changed the rules in operations
By Nicholas C. Isasi

Before 2000, every aspect of back-end support operations for the direct marketing industry was tailored to meet the needs of typical catalogers and their customers. In the 1970s and ’80s, direct marketing was limited to the mailbox. The costs and requirements for information systems, fulfillment operations, inventory management and transportation functions were limited by technology and developed exclusively to meet the expectations of catalog customers.

Consumer catalog orders were generated over a 12-week selling season. Inventory planning was based on historic patterns of sales and procurement, with sufficient lead time to forecast needs, buy products, transport them to the fulfillment center and fill customer orders. Back orders, delayed shipping and high customer service call-to-order ratios were fairly typical.

In the 2000s, merchandising on the Internet has changed the rules. E-commerce support operations learned some hard lessons in 2000, and they were challenged to predict and accommodate the new demands placed on all aspects of operations. The direct marketing operations providers who developed their services to support catalog and DRTV businesses now are rethinking the process from order acquisition to package delivery.

New Customer Expectations

Some e-commerce marketers are creating new customer expectations by advising customers of the exact day that an order will arrive at their home, and consistently doing it! Internet marketers have the advantage of quickly changing product offerings to ensure rapid fulfillment of in-stock items. Online access to shipment status information increases customer interaction and confidence. Delivering what you say you will, when you promise, has become the most critical success factor in developing repeat customers.

Rethink Fulfillment Process

Mature fulfillment operations with large-scale investments in automated storage, multi-item picking, packing and sortation systems are finding that “state of the art” for the catalog business isn’t as effective in meeting e-commerce customer demands. Traditional catalog fulfillment facilities are designed to accommodate an average order of 2.5 items from an inventory of up to 1,200 average SKUs per catalog. Products are purchased in bulk without packaging. Order picking and packaging systems are designed to combine multiple items in one shipment.

Inflexible systems, limited dock doors, staging space, unloading-reloading capacity and material handling resources all are constraints to high volume processing of prepackaged, single-item orders. Fulfillment centers must create the flexibility to accommodate the extreme highs and lows of these customer orders.

The challenge is to change from a multi-item, pick-pack, warehousing operation to more of a cross-dock operation. Increased dock doors, unload and reload capacity, staging areas, and high volume material handling, labeling and shipping are essential.

New Systems Development

Heavy investments in programming to keep up with the changing demands for processing and communications may not pay off if you’re not creating a flexible, low-cost system able to take advantage of new programming technology and high-speed hardware. So take a hard look at mature mainframe systems before investing in new development.

Disposable Applications

Look at new systems development with the belief that most of your accomplishments will be obsolete in a very short time. New programming technology and inexpensive, high-speed hardware are making it easier to invest in “throw away” applications designed to meet an immediate need followed by change.

The challenge is to create an information management environment that allows for rapid, low-cost development of new applications with easy access for all.

Traditional methods of demand forecasting and inventory planning aren’t yet effective for Internet sales. New customer demographics, geographics and the lack of sales history are preventing accurate forecasting. True demand is difficult to determine based on Internet activity. This includes lost orders when items are out of stock or when items are removed from the offering.

Shorter Cycle Demand

Increased demands are being placed on product suppliers and carriers to perform in a much shorter procurement cycle. Online vendor inbound shipments tracking and advanced receipt processing will become a requirement.

Jacksonville, Fla.-based sports merchandise multichannel merchant Football Fanatics carries more than 50,000 unique team and league-licensed products from NFL, college, MLB, NBA, NASCAR and NHL teams. An integral part of maintaining the utmost level of customer satisfaction involves the selection of a transportation professional as a partner to ensure the highest levels of service and efficiency.

Football Fanatics previously used several carriers to directly handle all of its inbound freight shipments from vendors and had limited visibility to incoming orders.

The company was fielding numerous calls from vendors on how to best route its shipments. Carrier costs were rising, and Football Fanatics wanted to enhance service to its customers. It sought a transportation solution to ensure top customer service, manage routing requests and come at cost-effective rates.

Cost Reduction in Freight

With the help of a transportation provider that focuses on the direct marketing industry, Football Fanatics identified and selected high-service, cost-effective national and regional carriers.

Leveraging the volume generated by a consortium of participating companies, the provider obtained aggressive LTL (less than truckload) rates for it, resulting in a significant freight cost reduction.

Nicholas C. Isasi is the director of business development for DM Transportation Management, an inbound freight management firm. You can reach him at (407) 517-4673 or nicholasi@dmtrans.com.

React When It’s Sent Back
Best ways to streamline the returns process
By Carolyn Heinze

When it comes to processing returns, it’s all a matter of approach. Certainly, nobody wants a lot of returns and processing. But if you approach returns processing as more of an opportunity than a burden, you may be surprised at the results.

“The biggest mistake I see with the returns process is that returns are treated as an operational procedure. But it’s an excellent marketing opportunity,” says Debra Ellis, president of Barnardsville, N.C.-based Wilson & Ellis Consulting. “It’s personalized contact with the customer that you don’t get when a customer orders online or through the mail.”

The bottom line is that customers who’ve had positive experiences returning items tend to be more loyal to those companies. “The best customers you’ll ever have are those that have had problems that were satisfactorily resolved,” she says. “Once they have had a problem, if you resolve the problem quickly and easily, you have increased their sense of trust and loyalty.”

Incorporating a personal touch throughout the returns process — such as sending e-mails confirming receipt of the returned item and alerting customers when the replacement product has been shipped — is a great way to make customers feel like they’re more than just another file number. “These are valuable customers,” Ellis says, “and if things are satisfactorily resolved, they have higher lifetime values than customers that just place orders and have no issues.”

Ellis emphasizes that solid communication all the way down the line ensures that returns are dealt with effectively. “If you start with good communication up front, you’ll minimize your returns on the back end,” Ellis says. “When the returns do come in, those customers will more than likely be resellable, unless the returned products were damaged in the process.”

Provide All Information

Give customers easy access to information on how to return items in the catalog, on the Web site and in the actual shipment itself. Be sure to answer the following questions:
• Does the product have to be returned in its original
packaging?
• Should the tags be left on?

Even though the answers to these questions are obvious, customers should know them ahead of time.

Ellis advises issuing call tags as long as you don’t make customers jump through hoops to put the returns together. They come in handy, particularly if the cataloger is at fault or the product is damaged when it arrives, she says. For high-ticket items, call tags make the most sense. But the process should be flexible enough to take less than cost-efficient scenarios into account. Where refunds are necessary, payments should be credited as quickly as possible.

With less expensive products, they’re not cost-efficient. For instance, she points to a personal incident in which she ordered a set of six plastic storage bins — a low-ticket purchase. When one bin arrived damaged, Ellis contacted the shipper, who immediately issued a call tag so the item could be returned and exchanged.

“But it cost the cataloger more for the call tag than it would have cost if they’d just sent a new bin,” she points out. Although there was an issue of whether the bin was broken, the item was very inexpensive. “Have some fail-safes in there to monitor whether or not to issue a call tag and the product should automatically be returned,” she advises.

Cost Savings

Catalogers with integrated software systems are able to save time and money on processing returns, points out Curt Barry, president of Richmond, Va.-based fulfillment consultancy F. Curtis Barry & Co. “If you have to go into multiple systems, where part is done in inventory, another in accounting and another in the customer service system, the transaction takes longer,” he says.

Some companies, particularly those that project high return rates, might opt to outsource the entire returns management process to third-party providers such as Newgistics, or major carriers, such as United Parcel Service and Federal Express. “This takes the job completely away from the cataloger,” Ellis says, “and expedites the process for both the cataloger and the customer.”

Another returns-related cost to consider is when you need to determine whether a returned product can be re-sold. Like other catalogers, meeting planner and stationery marketer Day-Timers examines all of its returned goods to see whether it’s worth the company’s effort to re-enter products in inventory.

“It’s pretty much a cost strategy determining how much work it’s going to take to refurbish something,” says marketing communications manager Maria Woytek. “Because our returns policy is so liberal, we want to make sure everything that goes out is 100 percent in terms of the quality that the customers are expecting, and that it looks and feels like a high-value product. Nothing goes back into the product area that isn’t perfect.”

But Day-Timers views returns in a way that a solid defense makes for a great offense. “We manage returns on the front end by trying to prevent them,” Woytek points out.

The company invests a lot of money into researching and selecting products it believes clients will be interested in purchasing. Careful attention also is paid to how the product is displayed in the catalog and on the Web.

“We’ve learned that accurately depicting products, both through photos and copy on the Web, as well as in the catalog,” Woytek points out, “is really important enough to keeping our return rate down.”

Carolyn Heinze is a freelance writer/editor based in Vancouver, British Columbia, Canada. You can reach her through her Web site, www.carolynheinze.blogspot.com.