The Advantages of Direct Over Retail

Not more than 10 years ago, retail was the sovereign channel for the selling and distributing of consumer and business computer software.

But with the rise of e-tailing in recent years, bricks-and-mortar retailers have witnessed an erosion of their hegemony as the channel of choice for software distribution. The decline of traditional retailers, in turn, has forced the keepers of computer software marketing to investigate additional modes of marketing and distribution to supplement their retailing efforts.

Through its SPC subsidiary, Vizacom Inc. publishes the well-known Harvard Graphics presentation software program. Since its inception in the mid-’80s, Harvard Graphics, like most corporate software products, has been sold exclusively through retail and corporate channels.

However, the company recently developed a new, simplified product based on the corporate product’s most significant features, in order to expand into the small-business market. Although one aggressively priced version has already been introduced to retail and reseller partners, a second, free version consisting of only a product CD is the subject of a direct mail test that dropped in mid-February out of the company’s New Hampshire facility.

Direct-marketing a free version of a product that in its corporate form costs several hundreds of dollars is nothing short of radical. Yet the model we intend to use is one that has worked well in the past to sell our other software products, as well as several third-party technology products that Vizacom direct markets as an outsourcing solution. A mail campaign will promote a free product CD, called Harvard Graphics Quick Presentations, to telephone respondents. Once on the line with an inbound agent, these users will be cross- and up-sold an array of ancillary products, including a product manual, clip art and supporting applications in stand-alone or bundle form. The primary objective is to lure purchasers of business software with the Harvard Graphics brand name and a strong benefit statement to effect cross- and up-selling opportunities that generate revenue.

The art of up-selling and cross-selling through telemarketing – offering the respondent of a product offer additional products with synergistic or superior benefits – is nothing new to direct marketers. When executed properly, it can maximize economies of scale, enhance customer loyalty programs, and generate significant revenue. What is less widely known is that telemarketing-based cross-selling and up-selling models make particular sense when applied to technology products. This is because most consumers approach technology products with some trepidation.

The furious pace at which computer software publishers release consecutive product generations also serves to alienate rather than lure most consumers. A well-trained telemarketing agent can often provide a vital, human link that simplifies product features and mollifies consumer angst, helping to complete the transaction process. Traditional retailers, whose store personnel are neither trained nor motivated to attempt cross-selling and up-selling tactics, could never reap the rewards implicit in an effective telemarketing campaign.

We expect to see the advantages of telemarketing and its faculty for supporting up-selling and cross-selling of technology products put to work in our test of Harvard Graphics Quick Presentations. Because presentation software generally involves specialized technologies, it can quickly intimidate and confuse potential consumers. And as is the case with so many software products, it is designed to work in conjunction with supporting applications, such as clip art to embellish slides.

Telemarketing may allow us to convincingly explain Harvard Graphics

Quick Presentations’ many feature benefits, as well as promote a broad range of ancillary, revenue-generating products.

Direct marketing holds several other advantages over retail in regards to the marketing and distribution of computer software products. The reality of meeting operational efficiencies forces retailers to pack a diverse range of products serving numerous markets onto their shelves.

Additionally, the cost inefficiencies of producing several packaging concepts for different or changing markets, as well as the lack of real estate inherent to boxed product, circumscribe effective presentation of feature benefits. The invariable result is that the ostensible software purchaser soliciting a retail outlet is greeted by an onslaught of nondescript messages that dilute the impact of any one marketing concept.

Direct marketing, on the other hand, by its very nature facilitates both target marketing and flexible marketing communications. In the case of Vizacom’s direct mail test of Harvard Graphics Quick Presentations, we have segmented the small-business market into several categories, including small-office, home-office, which we believe includes business entrepreneurs who want an easy solution to their occasional presentation needs.

The mail piece – a four-color, 6-inch-by-10-inch postcard – may be modified to address the responsiveness of different segments far more cost-effectively than boxed product. Retail marketers could only dream of the opportunity to test markets and fine-tune communications available to this direct approach.

Although the jury is out on whether direct is better than retail at promoting a Harvard Graphics presentation software product to the small-business markets, we predict that a model featuring market segmentation, flexible marketing communications, and tele-based cross-sell and up-sell tactics may ensure that the initial free product offer promoted through direct mail is not a dead stop, but rather a key that unlocks the door to a room of possibilities for generating meaningful revenues.

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