What Keeps CEOs Awake at Night
A review of the past several years' worth of thoughtful articles in DM News about the business-to-business world of multichannel direct marketing reveals several top concerns for owners, CEOs and senior managers. In that time, I have heard firsthand during consultations with many of these executives about these top concerns. If you find yourself pondering your priorities, here are brief synopses of four priorities being thought about by your peers:
Talent and people. Nothing concerns BTB managers more than finding people with the skills and talent to guide the company through the "Next Big Thing," whatever that thing may be. As of June, the demand for leadership in search engine marketing, affiliate marketing, e-commerce and online catalog integration - all under the position description "multichannel e-commerce director" - was at an all-time high.
We saw a similar talent concern and demand in the mid-1980s with the advent of desktop publishing and the first electronically produced catalog creative processes. Later, in the early 1990s, the talent concern and demand shifted to database marketers and leadership in database construction, analytics, data mining and warehousing. In the mid-1990s, a mini-gold rush was experienced after the importance of logistics and operations was so skillfully exposed by Chuck Tannen and the first National Catalog Operations Forum. Suddenly, warehouse and back-end talent was the lynchpin of direct marketing.
Talent and people are not a novelty. Neither were database marketing, operations and logistics, or digital publishing. These are all progressive talent upgrades within an industry that must improve productivity to survive. Had you not been concerned by any of these talent revolutions, or by the current demand for productivity improvements through online and search engine marketing advances, you would not be in business today - and will not be in business tomorrow.
Marketing dollar mix. Nearly every CEO I work with struggles to uncover the correct dollar allocation mix of marketing expense. What percentage of the marketing budget should be in catalogs versus online search versus telemarketing versus inserts versus affiliate marketing versus pay per click, ad nauseum? The channel explosion and hyper-fragmentation of sub-channel marketing tactics have occurred so rapidly that there are no tested or proven models of what precise allocation works.
CEOs who come from a background of catalog mailing into the BTB world with a simple 60:40 ratio of customer to prospect mailings four times a year are totally at sea trying to factor in the 15 new places to spend money across five channels in 52 campaigns a year.
At every turn, CEOs are bombarded by search engine marketing firms, usability improvement firms, affiliate marketing firms, co-op database firms, aggregators, bloviators and alligators ... and they don't know where to spend money first or fastest, if at all. For those CEOs whose companies are public or owned by private equity firms, this is not a roll of the dice; this is life or death. The accurate and highest return on investment allocation of marketing dollars has become a fiduciary responsibility with awesome consequences.
Inventory processes. Many multichannel BTB marketers are up against the wall on unnecessary costs associated with the logistical process of inventory management. CEOs in the advertising specialty, imprinting and product personalization arenas are asking the question: "Why do we truck this stuff to our warehouse only to have to truck it somewhere else in a week?"
Here's what's brewing. Consider ad specialty coffee cups as an example. The end consumer in Florida has to order at least 72 to get a price advantage. Those cups are brought in from China by the container-load. The cataloger in Rochester, NY, has 50 styles of cups, maybe totaling three containers, mixed. They are shipped from China or India or Bangladesh at a cost, placed on the racks in the Rochester warehouse, and then 72 are picked and shipped again to a decorator who puts on the logos in, say, Dallas. The decorator, in turn, boxes them and ships them a third time to the buyer in Florida. Why do we do that?
The new logistical pattern is to show the manufacturer of the coffee cups in China how to decorate 24 cups and send them directly from the factory in China to the customer in Florida. All the initial, interim and external shipping is eliminated. Given the price of oil, this makes sense.
The concerns that U.S. BTB marketers have are control, quality, customer relations and - ultimately - loss of their market when China figures out how to sell direct into the United States. This is the earliest period of China's and India's and Bangladesh's entry into direct marketing, particularly through the Internet channel. Today's CEO is deathly afraid of awakening a slumbering giant competitor by giving away the formula for the Secret Sauce. But the U.S. CEOs realize there is no alternative. And that is a concern.
Eroding quality of life. Most senior managers I talk with are starting to spend way too much time working. As the industry's complexity grows (multiple convergences, multiple channels, multiple tactical approaches, multiple strategies, multiple positions, multiple markets, etc.), the demand for productivity and improved ROI dictates that "more be done by the same people." Fifty-hour weeks become 60; 60-hour weeks become 70. Satisfaction of life diminishes because the business is just business, it is not life.
Concern is growing among thoughtful, well-rounded managers (and among young, less aggressive, more "life-living" employees) that we are entering an era of meta-life, a time when living is subverted to working; in effect, an atavistic return to the distant past where primitive life was essentially an all-consuming survival existence. It's bad enough when you don't stop to smell the roses, but it's even worse when there are no roses.
Conclusion. What I hear and what I observe tell me that pressures and reformations of the landscape are occurring in the multichannel BTB world. The concerns being expressed are a healthy mix of technology, logistics, humanity and personal choices. Perhaps that reflects the great strength of the catalog and direct marketing milieu - indeed, of the well-grounded nature of the BTB universe: perspective and stability.
Nonetheless, all of these concerns demand change, and change is always the most difficult of all concerns.