Archives for posts with tag: Back_end

Once the order is placed through the IVR or Web, the second portion of the back-end is the fulfillment.  This is an area that is not focused on enough, as it is often outsourced.  You have spent tremendous efforts to lower you CPO (Cost Per Order) and increase your RPO.  But are you maximizing the efficiencies of your fulfillment?

The piecemeal billing of fulfillment companies is relatively straightforward, but marketers often leave costs out of their forecasted economics.  Are you truly counting all of your fulfillment expenses in your economics?  Do you know what your true shipping costs are for each customer shipment combination, including split package charges, gas surcharges, etc.  I realize how simple this sounds, but speaking from previous experience, accurate data is often difficult to obtain.

Companies are often using antiquated computer systems that were created when the company was much smaller.   Over time, they have continuously built additional modules that were not thought of when the computer systems were originally designed.  This can lead to portions of the computer system not correctly interpreting information from other portions, thereby producing bad data.  There is nothing worse than making a ‘correct decision’ off of incorrect data.  Does your internal system communicate efficiently with your front-end (orders coming in from IVR, web and affiliates) as well as with your fulfillment house?  Are you able to produce the proper reports to accurately analyze all aspects of your programs?  Accurate data is the lifeline of direct response marketing; you should never feel like you are flying blind.

Another issue to look at is inventory.  Are you shipping product as soon as orders are received?  Any delay causes increased credit card decline rates that can have a detrimental effect on the bottom line (even though the front-end CPOs looked fantastic).  Do you have inventory of all of your upsells in stock, or are you unnecessarily splitting shipments to customers?

The front-end of DRTV is what most marketers view as the fun part, but it’s the ‘boring’ back-end that can have the biggest impact to profitability, as back-end improvements drop directly to the bottom line.

Most companies focus on customer acquisition, because it determines the viability of a campaign, but it’s the back-end of a successful campaign that truly determines your bottom line.  Optimizing the back-end can be the single most important aspect to increase a company’s profitability.  The back-end is broken into two parts.  The first consists of the upsells (to the TV product) offered during the IVR/web order.  The customer is calling because he/she is excited about the TV offer, therefore, sell her more of what she wants.  Deluxe versions typically work best and offer additionals at a discount with free shipping.  Other upsells should be tightly connected to the TV offer.

The target RPO (Revenue Per Order) from a $10 TV offer should be about $60, much higher than that will likely cause significant problems with credit card charge back and returns.  Each upsell takes away from the response of future upsell offers as the customer’s attention span wanes; too many upsells causes the IVR length to lengthen unacceptably.  I have listened to IVRs that can run 18 minutes.  This causes significant frustrations for the customer and can easily lead to customer input errors that again lead to increased charge backs and returns.  It is important to A/B test upsell position order as well as price points to optimize your upsell stream.

The second portion of back-end optimization concerns fulfillment which I will address in a future post.

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