Getting closer to your customers

Innovations in direct marketing technology are revolutionizing the way marketers are reaching their customers.

Ink-jet imaging sends a personalized sales message to each customer and prime prospect in a company’s database; two-way automated telephone link-ups via a 1-800 number allow instant communication between consumers and marketers – this is the leading edge of direct marketing technology and it is likely to become commonplace in marketing departments everywhere before the decade is out.

Direct marketing technology represents a viable alternative to companies that can no longer afford the luxury of pitching their products to customers over the store counter, face to face.

Today, Interactive Voice Response (ivr) technology, for example, using 1-800 telephone numbers and computers, allows consumers anywhere to tell companies what they want or need to buy, and when.

As Adrian Harvey, account executive with Toronto-based Phonetix, a supplier of voice processing systems, software and services and the Canadian distributor for InterVoice RobotOperator systems, says:

‘Customers are telling us what they want now on a daily basis, instead of us occasionally telling them what we think they want, usually when they’re not the least bit interested.’

A case in point: Two years ago, Sterling Howe, vice-president and general manager at Sunbeam, was commanded by his company chairman to ‘get us closer to our customers.’

Meeting that pledge was no easy business.

The home appliance maker serves customers across Canada. And Howe knew frustrated customers often rang the Toronto head office with complaints after hours, or were sent to all corners of the company by inexperienced telephone receptionists.

‘Customers ended up telling our people, `You’re the fifth person I’ve spoken to, I want some service,’ ‘ Howe says.

The solution Sunbeam chose was an automated ivr system, designed by Harvey, using computer and telephone software.

The process allows customers calling 1-800-55-Sunbeam to hear product information, cut through to customer service, or register their warranty.

And the system provides marketers with daily, and even hourly, information on how effective their advertisements are.

Technically, the ivr telephone gateway runs on a stand-alone ivr-dedicated pc, and comprises directories and pathways, or ‘nodes,’ that offer product and service information.

Howe says the ivr system, now in operation for slightly more than a year, is an invaluable marketing tool.

Customers use the toll-free line to register their warranty. Doing so, they enter postal code information, their name and telephone number directly into Sunbeam’s database via their touch-tone keypad.

‘From that, we’re developing a mailing list for possible future promotional use,’ Howe says.

Harvey says a key benefit of the ivr system is that marketers do not have to develop a psychographic profile of their prime customers and then create an advertising campaign to reach a group audience.

Instead, the 1-800 number delivers individuals and, more specifically, the names and telephone numbers of people seemingly intent on a purchase. What is more, many give their permission to be included in future mail or telephone promotions.

Harvey predicts the result will be more response-driven advertising for the future.

‘Eventually, all advertisements will include phone numbers,’ he says.

Marketers, in turn, will use responses to 1-800 numbers to identify their prime customers and their buying patterns. Such information will then be used as part of follow-up promotions.

This scenario will greatly affect creative directors, Harvey says.

‘Advertisements will not just involve big color graphics, or dramatic photos and a catchy slogan, all to set a mood for a product,’ he says. ‘Consumers today want information, and 1-800 numbers at the bottom of advertisements will point the way to more of it.’

How would an ivr campaign work in practice?

Last year, Sunbeam developed a Barbecue Hotline as part of its 1-800 gateway service.

Howe says the company makes about 100,000 barbecues annually for the North American market. Often, customers would buy one on the weekend and assemble the appliance the same day, only to occasionally find a part missing.

‘Traditionally, the customer would return to the retailer, who would go into the backroom and take a part from another unit to give to the customer,’ Howe says.

The retailer would then either order another part from Sunbeam, or return the barbecue set at the end of the summer.

Come September, Sunbeam might have as many as 5,000 barbecue sets with parts scavenged from them, greatly adding to labor and inventory costs.

Parts

Today, the 1-800 Barbecue Hotline allows customers to order parts from Sunbeam and receive them by courier the next day. And retailers, who might still hand out parts from their stores, can easily reorder them.

For Sunbeam, the result is happier customers, and a vastly reduced number of barbecue sets returned this summer.

And, owners of Sunbeam barbecues might in the future be sent promotional material or be asked for an opinion on company products they use.

Howe anticipates installing a dealer locator service, as yet another telephone gateway guiding customers to the nearest retail outlets.

ivr technology is also allowing Canadian banks to offer home banking to their most fast-paced customers.

At the Canadian Imperial Bank of Commerce, customers can do routine banking – transferring money between accounts, checking account balances, applying for loans or mortgages – using a touch-tone phone.

The cibc’s LinkUp service, introduced last March, operates across Canada, day and night, via 1-800-465-CIBC number.

The system’s InterVoice RobotOperator technology, supplied by Phonetix, consists of an ibm network computer system; a database system; a voice response unit that verifies banking customers’ access privileges; a data response unit that acts as an interface between LinkUp and Bell Canada’s Alex videotex service; and a network monitor to ensure smooth sailing for the system and alert support personnel to problems.

Once plugged into LinkUp, banking clients use personal access codes to move through an automated enquiry or transaction via a series of questions or ‘prompts.’ Alternatively, they can press ‘0’ and a customer service operator will come on the line for assistance.

Jill Sallas, marketing manager for home banking at cibc, admits LinkUp calls for massive investment by the bank for a project that, like the automated teller machine, may never be self-supporting and cost-effective.

But consumer research by cibc before and after LinkUp’s March launch indicates time-starved customers want home banking.

‘We know our customers are looking for easier ways to do their banking from their home or their office, any time day or night,’ Sallas says. So, offering LinkUp represents the cost of doing business for the bank.

The cibc has competitors. The Toronto-Dominion Bank is operating a Bankline home service in Ontario.

Sallas expects before long that the td bank and rival banks will operate their own national service, eclipsing the cibc’s pioneering advantage.

Speech recognition

And unlike LinkUp, the Bankline service includes speech recognition technology that allows customers to talk their way through a transaction if they are using a rotary dial phone, and not a touch-tone model.

On a five-year horizon, u.s. telephone giant at&t has developed a Smart Phone, complete with a built-in computer, modem and a display screen for dialing, much like those found on automated bank machines.

Harvey says companies could, in the future, send a promotional pitch or information via the Smart Phone, store it in a memory base, and consumers could hear that information at will.

Because that customer had already given permission to be contacted by the participating company, Harvey says they might respond favorably to an announcement of a new product launch, or a request for views on a new line.

Mail use

Direct marketing technology is also transforming the use of the mail to reach existing and potential customers in a personalized, targetted manner.

For example, Radio Shack, the electronics retailing chain, personalizes its flyers and the order forms sent out monthly using ink-jet imaging, rather than address labels.

Duncan McClelland, print supervisor at Radio Shack, says the company has a database of six million customers, of which one million get a personalized flyer each month.

The ink-jet printing system, developed by Montreal-based Quebecor, saves time: it once took one week to apply one million chesire, or pressure-sensitive labels. Ink-jet imaging does the job in a day and a half, saving on overhead.

Direct targetting

McClelland anticipates that, with its database indicating past buying patterns of customers, Radio Shack can within one year use ink-jet imaging to target special offers, products or promotions directly via a printed name and address.

‘Customers currently receive a shotgun,’ he says. ‘We’re saying, `Here’s what we think you might buy.’ But next year, the message should be, `We know you bought a computer, but not a printer. Turn to page 32, and you might see a printer you like.’ ‘

Other companies are following Radio Shack’s lead in selectively binding their mailouts, inserting information or products for target groups.

Tim Boissinot, sales manager at Quebecor, points to one Canadian gardening company that varies the seeds it includes in its cross-country mail promotions depending on which varieties grow best in particular regions.

Boissinot says the implication is that the company treats its prospective customers as individuals, rather than addressing them as an entire group.

California-based Viking Catalogue, another Quebecor client, goes further.

The office product direct mailing company has a customer database indicating the time between individual purchases and repurchases.

Personalized message

So, Viking can ink-jet a message on a personalized catalogue, saying, ‘We know you are using this product, and may be running low. Turn to page 12 and we have a special offer on that product.’

Other messages read: ‘Special pricing on the computer paper you bought in June. Buy two packages at 25% off. See page 24 for details.’

At present, most ink-jet messages are up to four lines in length, with 53 characters on each line.

Viking also puts a map of a prospective customer’s neighborhood on the catalogue’s cover and, using ink-jet imaging, highlights three businesses in the three city blocks encompassing the prospect’s address.

The message underneath says that these neighboring businesses use Viking products and asks the consumer to use them as references, and ‘call us.’

Says Boissinot: ‘You can imagine the extent of the database Viking would need, and has, to convey that type of information to a potential customer.’

He expects that in two or three years, when Canadian companies now putting together similar databases complete the task, they will catch up with pioneer users such as Viking.

As with cibc’s LinkUp home banking service, direct mailing technology calls for heavy start-up costs.

But Boissinot says that once companies spend money to establish a database, the cost of using ink-jet imaging for personalized sales messages alongside names and addresses is comparable to the cost of cheshire labels.

Already General Motors of Canada stands at the leading edge of direct mail printing technology in this country.

Last spring, the car maker introduced a direct mail campaign to convince gm car or truck owners whose warranties had expired to continue servicing their vehicles at local gm dealerships. Many were going to Canadian Tire or Goodyear outlets.

‘Direct Value,’ as the mail campaign was called, comprised a personalized 12-page brochure customized for every single gm dealer across Canada.

Direct Value program

Spring and fall Direct Value program are to be executed this year, and two more mailouts are planned for 1993.

The brochures offer coupon deals on 10 routine maintenance services generally performed each year – from air-conditioning checks to lube and tune-up jobs.

Gord Collins, retail marketing manager at gm’s Oshawa, Ont. headquarters, says the use of ink-jet imaging allows dealers to be price-flexible.

One dealer may charge $24.99 for a service advertised in its customized brochure, while a non-competing gm dealer elsewhere might charge only $19.99.

‘Dealers know their local markets and they can vary their prices to remain cost-competitive,’ Collins says.

gm dealers see by the number of coupons redeemed which services are in demand. And a Customer’s Choice Survey in the brochure allows car owners to offer vital personal data and opinions on the products and maintenance services received.

But for all its potential, direct marketing technology has yet to make the breakthrough into marketing departments across the country that its proponents see as inevitable.

More proof

As with all technological advances, companies want to see more proof that consumers are prepared to respond to direct marketing advances – to, for example, consider 1-800 numbers an easy and convenient way to make purchases to complete transactions – before they commit precious funds to projects of their own.

All of which suggests that maketing databases and the technology to put them to use will remain a popular pathway in the future.