BtoB Roundtable: Discussing the state of direct

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For the second year in a row, BtoB convened a roundtable of leading b-to-b direct marketers at the DMA’s annual B-to-B Conference, held in September in Tucson, Ariz. These experts delved into topics including the decline in direct mail volume, the impact of spam and spam legislation, and the merits of sophisticated data analysis.

Participating were: Char Hart Cuomo, director, customer development, Viking at Office Depot; Michael Faulkner, senior VP-segments and affiliates at the Direct Marketing Association; Mark Shaffer, manager-business development at GE Access; Todd G. Ritter, database marketing manager at Konica Minolta; Ann Wallace, marketing communications strategy manager at DuPont; and Julia Weidman, marketing communications manager, Health Imaging Group at Eastman Kodak. BtoB Editor Ellis Booker and Senior Reporter Carol Krol moderated the discussion.

BtoB: How has your direct marketing changed in the past six months?

Cuomo: How we are spending our money is really shifting lately because we have been looking at acquisition costs [online] that are much lower than we’ve experienced in some different media. That’s a big difference for the Viking model, for sure, and it’s spilling over into how Office Depot’s looking at going into the market. Prospecting with catalogs is going down, and there’s a lot more attention on the online side.

Faulkner: We have a group at the [Direct Marketing] Association called ISEC, Information Services Executive Council. It’s the eight largest information providers, including Trans Union, Equifax, D&B. They come together and talk about the key issues. Every single one of them [says] that between 10% to 15% of their business is now business-to-consumer.

Wallace: We’re an old-line chemical manufacturing company that is changing its stripes. We have to become marketers in today’s environment, and we are going to be b-to-b and b-to-c. Even though we’re not selling directly to that consumer, we’re helping our business partners sell. So, we have to learn more about that end-user customer.

BtoB: Direct mail volume has been down. Is that still the case?

Ritter: Ours is down substantially. We did a large mailing this year for a new product of ours, the Color Force 8050, which is the new digital print engine. I’m in a position now where I can begin to market to end users using this engine. [My costs] are going to slide off the table because I don’t have to rely on external sources to do my printing, to do my personalization. And I’ve recently struck a relationship with Dun & Bradstreet whereby I have full access to the entire D&B database. So I’m profiling, segmenting and analyzing my market for our direct group, as well as our branch and dealer group—really teaching them about who their customer is and providing them with prospects.

Weidman: We need to look at technology as one of the reasons that direct mail has declined. And I’m thinking not only of the kind of one-to-one marketing you’re describing, but even basic technology like the Web and online interaction and what that’s done to supplant direct mail.

BtoB: Are you doing less direct mail?

Weidman: No. We’ve been doing probably about the same amount of direct mail that we’ve been doing—but smarter. So, it’s really been a matter of doing more targeting.

BtoB: Have response rates gone up or gone down?

Ritter: Ours are actually going up, just by the way in which we’re addressing the market. And that’s Web, e-mail, direct mail, telemarketing. We’ll call folks and just engage them in a conversation. "Gee, I’m in the market for some digital office equipment. I’m in the market for this, I’m in the market for that." The arrangement we have with the telemarketing firms we use is the minute they hear that, I need to know about it. We distribute those opportunities out to the field immediately, in addition to some scoring and some profiling.

BtoB: What’s everyone feeling about the advertising and marketing industry? Are we recovering? Are you still tentative about spending?

Ritter: People are finally realizing that if we’re going to get ourselves out of this, we need to make the first move. Individuals and companies have been waiting to see what’s around the corner. The waiting, I think, is over.

Faulkner: Productivity numbers are increasing, but everybody’s being very cautious. Legislative and regulatory issues can still put a headlock on our recovery. The b-to-b world has been pretty much immune to it, but it’s going to affect you folks. Federal and state regulators are looking at the b-to-b marketers, and they’re licking their chops because they’ve already drawn blood on the b-to-c marketers. These are all bills that are going to have an impact on b-to-b marketers, and it’s around the corner.

BtoB: For more than a year, direct marketers have set their sights on existing customers, maximizing existing relationships. Are you going to go back to prospecting?

Weidman: You can’t live forever on an existing base. That base changes, and you’ve got to go out and think about new ways to bring your product or your service to market, and look for new ways to grow that business. You can do that by having them all out to breakfast, or you can do it, if it’s a bigger group, by sending direct mail or by using the Web.

I think the days of buckshot and sending direct mail out to the world are probably gone. I don’t think anybody can afford to do that. But you can’t afford not to be wooing customers.

Ritter: I think a lot of it has to do with hunkering down to where the economy is; it’s more you’ve been defensive of retaining your customer base. Once we get into a growth mode again, [marketers will be] more aggressive.

BtoB: How are you going to do prospecting? Is it going to be acquiring lists or some other technique?

Ritter: We’re profiling our markets, scoring the different vertical industries, determining where all of our business is coming from—from key accounts, core accounts, moderately revenue-producing accounts. And we’re going back out to those verticals to look for businesses that look like these businesses. The trick is to identify the Home Depots before they’re the Home Depots. When they make it to that top decile, in terms of purchasing and total loyalty to you, they’re so embedded with you that they can’t say no. But the flip side is, there’s also a time to let go, because there are accounts that go the other way. They grow into the large accounts, and then they begin to dwindle. A lot of folks will actually focus on that and throw additional money in. You’re better off going after a few hundred prospects to supplement that business than to try to save that relationship.

BtoB: Do you have a problem finding good lists? We keep hearing the list universe is shrinking.

Shaffer: It’s always hard to find good lists. We’ve lost 3.5 million jobs, or whatever, in the last three years. When the unemployment numbers come out every week and there are fewer people, how long does it take for those list services to catch up?

Weidman: Another thing to think about is what you can do in terms of co-marketing and partnering with other related companies within your industry. [These] can help bring you to new prospects through their channels. Also it’s really [important] to get at some of the budgeting issues that people will face.

We have OEM relationships and foreign distributor relationships we’ve had for years. We’re finding that it can make sense to work with someone who is in the same market but has a piece of equipment or solution that works with ours. In the end, it can be a better solution for the customer as well, because it is really a lot less work they have to do on their side.

BtoB: Everyone agrees e-mail marketing is a powerful and efficient marketing tactic. But spam is becoming a huge problem. Are people scaling back their e-mail programs because of all of the legislation and because of all the resulting noise and clutter that come with the proliferation of spam?

Shaffer: [E-mail] doesn’t work in my areas. I don’t use it as my introductory method. We’re a distributor of many high-end computer products. I qualify leads as a value-add to our retailers and our customers. I don’t use e-mail marketing as my lead. I’m focusing on telemarketing from a lead perspective. A lot of it has to do with speed to market, being able to extract the amount of information out of [prospects] to shorten that sales cycle.

Ritter: You’re kind of placing your blackjack bet on "this message is going to be applicable to this entire market." To Mark Shaffer’s point, we do the same thing where we go out and ask them a variety of questions, and it can go a variety of different ways. You know, "Contact me in a month." You don’t hear that when you do e-mail. It gets deleted or it doesn’t turn into anything, and that is money down the drain.

BtoB: As marketers who are using e-mail—and I take it all of you are—what kind of approaches are you using to get around some of these very thorny problems?

Weidman: Right off the bat, having someone ask to receive
e-mail significantly decreases the problem. We have different forms where people can come, and they can opt to receive information. I know that they’re highly qualified because of the processes they went through [online]. I’ve found something than can sort things out for me and bring me back a group of people who are willing to hear what I have to say.

Wallace: We’re looking at building portals where people are going to come to us, and we’re not going to e-mail them.

BtoB: How are they going to find you?

Wallace: Search engine. I mean, if they put an inquiry into [a search engine], we’re going to come up.

BtoB: Some companies have collected so much data that they don’t seem to know how to use it or what to do with it. Are you making better use of the data you already possess?

Weidman: We’re getting smarter about the data that we possess. There’s some data that we’re realizing that, just from a marketing perspective, maybe we don’t need to collect. Maybe we’ve been asking some questions that we don’t need. I think the issue is really having the finances and the people to actually interpret the data. It could be a head count issue. I’ve got this great stuff that I’m collecting, but I need somebody to look at it and massage it and work with me on it.

Ritter: We’re profiling our markets, taking a look at our data, actually linking some databases together for the first time. I began with Konica in the spring and was amazed at some of the applications that we used internally. We’re actually in the process of validating some models and taking some multidimensional looks at customer spending, customer movement and customer pathing in terms of the products and services that they’re buying.

Salespeople can’t digest the information. They’re out there to sell, not to analyze information. It’s a huge undertaking to try and understand customer behavior.

Wallace: We are hearing from our customers, from the marketplace, "How come I have to see six DuPont salespeople when I just want to see one?"

That’s been an ongoing problem for multibusiness corporations, and we’re taking it very seriously. We’re really paying attention to the market space, and we’re analyzing how many products across 22 businesses really are going into that same market space.

Ritter: How many times are you making the customers repeat themselves over and over? From a customer’s perspective, especially in the b-to-b environment, that’s what frustrates customers and causes them to go other places.

Cuomo: We have a great data warehouse that has been in place and operational for a long time. Because of it, we’re very sophisticated in our personalized and customized offers. But, interestingly, we’ve also just started saying: "Do we really need this? Are we actually going to act on this?"

We certainly find a lot of value is in customer pathing and looking at transactional history and things like that. But from the perspective of where we focused our 2003 campaign, we really honed it down. We went from quite a few questions on our qualified phone calls down to about three.

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