Fresh Ideas, Not Tech, Drive Innovation

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The world was different in 1986. We dialed rotary phones, used keys to unlock our car doors and bought Michael Jackson's latest album on a two-sided record. Today, technology lets us upgrade to wireless phones, automatic car keys and compact discs. During the past 20 years technology has changed the mail-order industry as well.

Desktop publishing was almost non-existent in 1986. Creative teams were still cutting copy, waxing on large boards and adding tissue overlays for color breaks - a painstaking process. It wasn't until the late 1980s that the personal computer and software like PageMaker let catalogers simplify the process and cut processing times in half.

Our list sources and processing capabilities have changed, too. Preparing for a catalog mailing 20 years ago was simpler. When it came to renting lists, catalogers had far fewer sources and selects to choose from, virtually no enhancements and no cooperative databases. The simpler process did not make it faster, however. In the days before the fax machine and e-mail, catalogers mailed their list order to their brokers and waited at least a week for the lists - on magnetic tapes - to be mailed back to them. The process was much less targeted as well.

Likewise, list processing (or merge/purge) has evolved from punch card-like comparisons on count-based business rules to sophisticated hygiene processes, algorithmic matching logic and faster turnarounds - at 200 to 400 percent less cost.

We've also witnessed change in our offer and order channels. In 1986, roughly 80 percent of catalog orders came through the mail with a check, and the rest came via the call center. Few consumers used credit cards, and 800 numbers were just becoming the norm.

An average 38 percent of orders comes through the Web today, according to the Abacus Annual Trend Report, and 85 percent of Web sales are driven by catalogs and direct mail. The call center remains the most popular purchase channel with 42 percent of sales, and, depending on the demographics, some pure mail-order buyers are still out there.

Also reflected in the Trend Report, marketers are increasingly comfortable with the agility of our business and the multichannel landscape that has developed over the past 20 years. Technological advancements have been a major catalyst for improving our processes and abilities as direct marketers.

But where do we go from here? Though we have made tremendous strides as an industry, DMers face incredibly sophisticated consumers and complex offer and order channels. How can we optimize the technologies we've adopted over two decades in order to improve efficiencies and understand the customer?

The answer lies in a fresh way of thinking based on looking at the data we use on a much broader level rather than on a list-by-list level. This way of thinking emphasizes process innovation and improved analytics, yet maintains the level of overall performance needed to achieve campaign profitability. It's this way of thinking that lets service providers help eliminate much of the time and expense associated with circulation planning, list procurement and merge/purge processing.

DMers should look for data solutions that remove the inherent complexities associated with traditional multi-source mailings. The most effective solutions will combine superior list development with innovative analytical elements. The right solution will:

* Reduce the time it takes to get an offer into the hands of the best customers.

* Capitalize on the most up-to-date information on customer buying behavior to develop more effective, compelling offers.

* Lower merge/list costs and decrease the costs of integrating lists from multiple sources.

* Allow for less time, effort and money spent on acquiring and preparing lists and more time on value-generating activities.

We also need to redefine our thinking as it relates to relevance. The demographic mix in the United States, access to information and customer preferences will change drastically in the next 20 years, which, much like the technological changes of the past, will push us to evolve as an industry. By looking back at the past 20 years, it's possible to see that change is constant and that the future of direct marketing will depend less on emerging technology and more on thoughtful, innovative ways of reaching the right consumers.

In part two, Chris McDonald will detail how the U.S. consumer universe will shift in the years to come and how direct marketers can keep up with those shifts.

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