Too Few, Too Little, Too Much: Why Direct Marketers Fail . . . And Ten Ways To Make Sure You Don't

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3. Too few new employees

Direct marketers tend to wait too long to adequately staff their organizations. People are hired only when the phones are not being answered, not before. The learning curve is too often ahead of rather than behind consumer and business to business marketers. The learning curve is, as a result, constantly being compensated for instead of being used to advantage.

Too few middle managers are being developed and too few senior managers are being prepared for succession. This is partly as a result of mobility in the industry, but mostly as a result of politics and territoriality. As an industry, direct marketers tend to be conservative and cautious, traits that have worked well up to now. The years ahead, however, are likely to be explosive, daring and risky, traits that we have not traditionally managed well. The ability to attract people who think differently and who have a different frame of vision is likely one of the most beneficial personnel strategies that can be adopted today. You will need fresh eyes and fresh minds increasingly as you begin to navigate the interactive opportunities of the future. Staff today to be where you want to be over the next two years. Pull your businesses ahead instead of pushing them from behind as we have always done.

A business plan to grow the company cannot be considered complete without a business plan to grow the employees, both in quality and quantity. Knowing when you move to a senior vice president instead of a vice president is essential for success. There are very real "knotholes" in business to business direct marketing that are related to sales and staffing. The first knothole is around $10 million; the second at $20 million; the third at $40 million; the fifth at $60 million; the sixth at $100 million and at each successive $50 million increase thereafter. At each of these knotholes, the company has to be virtually totally redefined and reorganized. This requires people and policy as well as corporate vision. This is the reality of corporate culture and results in either its growing success or its agonizing demise.

SOLUTIONS:

1. Begin discussions with talented individuals one or two years before you need them.
2. Staff at the next level of response and effectiveness.
3. Develop a strong core management team and outsource additional talent.
4. Import knowledge. It is no longer feasible to grow all talent internally.
5. Be willing to change your corporate culture.

4. Too little variation of selling offers

Just keep cranking out the same old stuff. Rest on the laurels of controls and profitable offers without any consideration for the necessity for change. Keep looking just like you looked last year, five years ago, even longer. Don't run the risk of having your customers think you are new and exciting. Above all, don't -- whatever you do -- don't come up with a new and unique selling proposition.

The world walks right by "familiar" without seeing or hearing it; the world stops to investigate and evaluate "newness" and is receptive to fresh sounds and visions. In example after example, we see the same selling offers repeated year after year with pretty much the same results: adequate but eroding response and margin. At what point are you out of business without knowing that you are dead?

Want to do magic? Then you have to adhere to the Primary Rules of Magicians: 1) Never, ever repeat a trick; 2) Never, ever reveal how the trick is done. Magic is never seeing the same offer twice. Magic is never seeing the same advertising material twice. Magic is always expecting the next trick to be better and more exciting than the last one. That is marketing!

It is said that some 250 types of offers exist; there may be easily twice that number. For the direct marketer, these are your repertoire. If you are not using all 250 offers to stimulate your customers -- past and future -- you are not harvesting the sales that are possible.

Too little promotion exists anymore. We are promotion wimps. Why are we afraid to promote and to merchandise? Merchandising is becoming a lost art in business to business direct marketing. We just plug along, selling another 200 plastic bags, another 500 invoices, another dozen cotton gloves. What happened to the P.T. Barnum soul that exists in every selling situation: "This way to the egress!"

SOLUTIONS:

1. Study the art of offers. Learn from the successes of others. Read and listen to direct response marketing and merchandising as if it were great music. Concentrate on the unique selling proposition.
2. Ask your colleagues to create ten new offers this year that have not been tested and test them.
3. Ask those same colleagues to create ten new promotion concepts that you have never done and test them.
4. Ask your colleagues to describe and create ten merchandising ideas that have never been attempted by your company and test them.

5. Too little economy of scale

The business has grown, but the economy of scale of the suppliers hasn't. Too many direct marketers are losing valuable cost, time and efficiency advantages because they have stayed with smaller suppliers too long.

There is a normal progression of economies of scale. The printer you started with ten years ago may no longer be the best printer for your business today. If you are still buying ink on paper, you may be seriously behind in the competitiveness that comes with adequate utilization of economies of scale. Your printer must be a design house, a digital pre-press expert, a photographer, a list processing house, a mailer, and a trucking and shipping mail consolidation operation. Then, after all of those economies are met, your printer should also print.

Fulfillment is also an economy of scale advantage. Outsourcing and decentralization may be necessary to meet your customers' time demands. The old centralized, one location warehousing operation may be woefully inadequate. The economies of scale from a decentralized shipping operation have to be considered.

No direct marketer can long remain at the same scale of business. To do so is suicidal. But, no direct marketer with $20 million in sales can afford to use the same economies of operations that worked when the company was $4 million in sales; yet, all too often this is exactly what is happening.

The concept of partnership rather than the traditional customer/supplier relationship is essential. You must work with suppliers that have an adequate scale of operations to bring you an advantage and cost efficiencies. Your suppliers must be able to pull you forward rather than try to play catch up to your requests.

SOLUTIONS:

1. Establish a goal of reducing your costs by a specific amount, say 15%. Calculate each area of cost to determine what you must do to reach this goal. For instance, examine printing, telephone costs, fulfillment services, collection fees, credit card processing costs, and all other outside service costs.
2. Sit down with existing suppliers and give them the opportunity to respond to your cost reduction program as a long term partner. If they choose not to respond, identify a second supplier of one scale larger than your existing supplier and determine if they are interested in helping you grow.
3. Establish target cost reduction benchmarks for each partner and each level of growth. Share that information with your supplier-partners and solicit their innovation for meeting and exceeding the targets.

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