E-Commerce Management

E-Commerce Metrics to Live By

2008-04-21T08:56:00.000-07:00

No, this is not another article about how to create new sales.

We are all privy to the constant bombardment of material promising the next "best idea" for generating e-commerce sales. Although the pace of exciting new developments in the industry is staggering, something is missing. There is a lack of accessible content related to the best practices for effectively managing the sales these "best ideas" create.

As we clamor for the best of breed e-commerce marketing, conversion, and analytics techniques, we need to temper our excitement with a single thought:

Where is the profit in the ineffective management of a customer’s online order?

With this question in mind, our latest article discusses several easy-to-implement metrics to help ensure you are effectively supporting your e-commerce sales initiatives.

Topics Include:

Monitoring daily cash flow
Increasing operational efficiency
Controlling costs

Click to view this article regarding E-Commerce Metrics to Live by.

I hope your 2008 sales are off to a great start thus far!

Sincerely,

Dana Madlem
Rush Order, Inc
Email. dana.madlem@rushorder.com
Tel. (800) 522-5939 or (408) 848-3525
www.rushorder.com

Looking Back... A Recap of the Data that Shaped Online Holiday Sales in 2007

2008-03-28T17:53:00.001-07:00

What does the 2007 data hold for the future?

Is my e-commerce revenue growth keeping pace or falling behind the industry trend?

How do Rush Order clients stay ahead of the pace?

Is "Cyber Monday" fact or fiction?

An Article Courtesy of Rush Order, Inc.

Trends and Forecasts

While national news headlines were plagued with sluggish economic data during and after the holidays, the news was equally frustrating for the online retail industry. This article discusses the recent trends in online holiday shopping and hints at the methods Rush Order is using to “recession-proof” its clients.

In forecasting several of the negative trends reported, Rush Order proactively tested a number of new order capture and sales channel tools this past holiday season.

Of the few clients we tested these tools with, we achieved significant results that helped us achieve the opposite of the negative trends in the headlines. In fact, we will expand and implement these tools across our entire client roster in the near future. Stay tuned for additional details in articles later this year as the 2008 holiday season approaches.

First, here is the good news regarding the 2007 holidays that made headlines… Total revenue collected by online retailers during the months of November and December in 2007 hit an all time high of $29.2 billion. This figure represents an increase of nearly19% over the 2006 holiday season.

So, what is the bad news? Simply put, growth in online sales is slowing. While 19% growth this year may look impressive at face value, it is part of an ongoing and perhaps worrisome slowdown in the industry’s holiday sales.

Year over year holiday season online sales:

Year	2003	2004	2005	2006	2007
Sales (in billions) (Nov. 1st – Dec. 31st)	$12.3	$15.8	$19.6	$24.6	$29.2
Increase over previous year		28.5%	24.1%	25.5%	18.7%

There are plenty of macroeconomic pressures behind this trend that would be an excellent topic for a college thesis, as opposed to this short email. In a few words, we know 20% to 30% annual growth in industry wide holiday sales was simply not sustainable forever.

This infers that the online retail industry, both for manufacturers and resellers, will become increasingly competitive in the future, especially during the holiday season. Many merchants will fight for a smaller amount of total industry growth.

In looking at the data in this ominous light, it is easy to imagine a future where the online retail landscape is dominated by a few major players, much like what has happened to brick and mortar retail over the last couple decades. Of course, we have all heard the story of the corner grocery store displaced by the new Super Wal-Mart.

However, online retail is inherently different than this brick and mortar model for a number of reasons. Most notably, the web provides lower barriers to entry and increasing opportunities for upward mobility.

Long term growth is certainly achievable for those merchants capable of delivering a superior customer proposition in terms of product leadership, customer service, and operational efficiency. The two latter propositions are a source of constant focus and development in the tools Rush Order provides for its clients. As such, we are working diligently to ensure that our clients do not fall victim to this flattening industry growth.

By running the right promotions and building the right order capture tools, it is certainly possible to continue our aggressive growth in online sales, despite sluggish national trends. For hints and ideas regarding how Rush Order is accomplishing this, please do not hesitate to contact us. And, as mentioned, stay tuned for future articles.

2007 Holiday Order Volume Data

Cyber Monday – Fact or Fiction?
Week by Week Volume Comparison

For years, we have wondered whether or not "Cyber Monday" is a real phenomenon. Is it actually the equivalent of the infamous "Black Friday"? We finally set out to find hard answers on this topic and discovered some interesting data compiled by comScore, Inc.

The following table lists the top 10 online spending days of the 2007 holiday season. This data excludes auction and travel related websites.

Source: comScore, Inc.
Rank	Day	Total Revenue ($ Millions)
1	Monday, December 10 ("Green Monday")	$881
2	Tuesday, December 11	$819
3	Thursday, December 6	$803
4	Wednesday, December 5	$798
5	Tuesday, December 4	$776
6	Wednesday, December 12	$754
7	Monday, December 3	$753
8	Friday, December 7	$734
9	Monday, November 26 ("Cyber Monday")	$733
10	Thursday, November 29	$733

Yes, "Cyber Monday" is ranked 9th on the list. Although this is not a bad showing, it is nearly $150 million off the top ranked day... "Green Monday".

What is Green Monday? eBay is credited with bestowing this name on the second Monday in December on which it claims the heaviest volume of online holiday purchases are made. This holiday season, Green Monday certainly earned its designation.

So, to set the record straight, Green Monday is the online equivalent (or at least the younger sibling) of Black Friday. Contrary to popular belief, "Cyber Monday" is more accurately described as the first newsworthy spike in online holiday sales.

This data is echoed by Rush Order's experience. As you can see in the graph below, our clients' sales (in terms of dollars transacted) closely matched the general movement in the industry. This graph maps weekly sales with data points plotted in terms of the date the week ended. Both lines peak during the week that included Green Monday, December 10th. In fact, Green Monday was at the top of our list, just as it was for the national figures.

Does this data infer that you should be running "Green Monday" promotions later this year? Perhaps... But you may have to wait for our future article on the topic.

In the meantime, the Rush Order team wishes you a happy and successful 2008. Please feel free to contact us anytime with questions, feedback, and anything that comes to mind.

In addition, please remember to visit the remainder of our website and browse additional order management articles.

Eliminating Annual Physical Inventory Counts

2008-03-28T17:46:00.000-07:00

An Article Courtesy of Rush Order, Inc.

In most cases, the answer is "yes". Cycle counts are often a better way to effectively and accurately manage inventory.

Cycle counting is not a new phenomenon. However, there are many common misconceptions regarding how such a process is managed and what benefits may and may not result. Not only can cycle counting provide greater inventory control, larger systemic issues that resulted in discrepancies can be addressed immediately.

Traditionally, full wall to wall physical counts have been the inventory control of choice. Understandably, shutting down operations at the end of each year and counting inventory can be a great way to start the new year with a clean slate.

However, there are several problems with a full annual physical count approach:

Completely shutting down and subsequently restarting operations is costly.
Counting inventory during the holiday season is no fun. This may seem trivial but employee morale is a worthy consideration.
Discrepancies in perpetual versus physical numbers can be very difficult to reconcile. Reviewing and reconciling transactions that occurred during the current quarter is easier than reviewing transactions that occurred over the course of an entire year.

Discrepancies between perpetual and physical inventory numbers are usually the symptom of a single mistake, or worse, a broken procedure or process. If a system "breaks" in any way after an annual count, it may continue to create unnoticed problems in your inventory all year. It may not be until next year's count that you discover the issue. Not only is this problem costly in terms of misrepresentation of inventory figures, it may be a symptom of a larger issue.

Example: As in most operations, your accounting system decrements inventory upon exporting a corresponding shipment directive to the warehouse. However, if your warehouse never receives the shipment directive, you now have an inventory discrepancy (perpetual inventory in the accounting system was decremented while physical inventory on the shelf was not). In such an event, you will be forced to react once customers begin complaining about their missing shipments.

Such events may ruin customer satisfaction levels and increases customer service and accounts receivable costs. Had the problem been uncovered earlier, fewer customers would have been affected.

To mitigate the shortcomings of annual counts, cycle counts can be performed at the beginning or end of each day on a regular basis as part of normal operations. No shut down in operation is required. Each day (or other regularly prescribed basis), a small number of part numbers in the system are counted on the shelf. When a discrepancy is found, the key is to research the root cause and discover the underlying problem that led to the discrepancy.

Note: Simply adjusting the perpetual value in the accounting or warehouse management system without performing in depth research is a lost opportunity to improve the efficiency of your business.

When performed correctly, the primary benefits of cycle counting are realized in two key functions:

Perpetual inventory is consistently matched to physical inventory on an ongoing basis. As a result, your accounting records are accurate and your marketing team and sales force can confidently deliver on the promises they made to customers.
With cycle counts, the odds of proactively uncovering and fixing a problem are much higher. In the example given above, you will likely discover the problem in your system or process before it affects a large number of customers.

As a result of these factors, cycle counts typically add substantial benefit to the bottom line.

There are three common approaches to cycle counting:

Pareto method – Derived from the Pareto Principle (or 80/20 rule), the goal of this method is to set cycle count priorities based on percentages of inventory value. In short, expensive items are counted most frequently and inexpensive items are counted least frequently.

Example: Using the Pareto method, a merchant selling flat panel LCD televisions may count the televisions twice each quarter while only counting wall mounts once each quarter.

The Pareto method generally appeals to accountants because it minimizes variances in inventory value. Lower write downs result in higher net income and a healthier balance sheet.

However, the Pareto method can be inefficient in terms of effectively managing the supply chain. Shortages of inexpensive items can bring the assembly line and/or fulfillment operation to a standstill. In the LCD television example, a shortage of power cords could be catastrophic. Although inexpensive, and thus rarely counted when the Pareto method is used, power cords are an essential component.

Usage method – The usage method requires that items shipped (or accessed) more frequently should be counted more often, regardless of the item's value. This method purports that the risk of variance is higher every time an employee adds or removes an item from the shelf.

Although this method is logical in most instances, there may still be reason not to count some high velocity items on a frequent basis. For example, regardless of how often marketing brochures are shipped out, they are probably not worth counting down to the individual unit on a frequent basis.
Hybrid method – In an attempt to combine the benefits of both the Pareto and usage methods, most companies "score" each inventoried item based on value and frequency of use. The goal is to derive a count schedule based on the relative "importance" of each item. As such, items that are deemed both high value and high frequency are counted more often while items deemed low value and low frequency are counted less often.

A systematic analysis can be used to score each item, although subjective input from management is often useful as well.

A scorecard method can actually be useful regardless of which of these three methods is implemented. Categorizing each product / item in inventory according to an "ABC" method is often useful. In such an approach, "A" items are counted most often while "C" items are counted least often.

Keep in mind that the most frequent reason for a discrepancy between counts and perpetual values is usually a simple counting error. If you are not scanning each box with inventory scanners, you may be interested in a form Rush Order produced to aid in the counting process. You are welcome to download our count sheet template at your convenience.

Regardless of the method(s) used, cycle counting can be a terrific asset to your business. If you have questions or would like additional assistance setting up a cycle count process for your operation, please feel free to contact us.

Please remember to visit the remainder of our website and browse additional order management articles.

Can direct sales and channel sales peacefully (and profitably) coexist?

2007-10-09T10:35:00.000-07:00

An Article Courtesy of Rush Order, Inc.

The obvious rise in popularity of e-commerce has prompted many manufacturers to take a second look at the merits of direct sales, despite potential pushback from reseller partners.

When discussing the role of direct sales in their multi-channel strategies, many proponents cite large profit margins, clear customer feedback, the ability to experiment with various product features, partial protection from shocks to resellers' businesses, and the ability to spot market trends as invaluable benefits.

However, as both a supplier and direct competitor to their own reseller partners, manufacturers must account for the resulting consequences channel conflict has on their distribution strategies.

In Rush Order's experience, several key initiatives have helped our clients minimize the negative consequences of this conflict. As a manufacturer selling direct, here are several points of reference you may wish to utilize in your own efforts to minimize conflict.

Price Point
Perhaps the single best way to reduce channel conflict is to avoid direct price competition with your resellers and other channel partners. This can be accomplished if you, the manufacturer, charge full price (MSRP) while your reseller partners discount the price by several points.

Some percentage of customers are willing to pay a premium in exchange for the quality support and customer service usually found when purchasing direct from the manufacturer. As a result, you reap the benefits of higher profit margins at full MSRP without risking direct price competition with your reseller partners. In this scenario, you help reduce channel conflict in two ways:

You provide a competitive edge to resellers by allowing them to charge a lower price for your product.

With a higher price, you are essentially marketing to a different consumer than that of the reseller. Consumers who pay a premium when shopping direct are part of an inherently different market segment than those who look for a price break from resellers. These customers expect a level of service that only a manufacturer can provide.

Shipping and Handling
Similar to providing a higher price point, charging shipping and handling for direct orders solidifies your stance. This approach effectively demonstrates a clear intention to only service a small subset of customers willing to pay a premium in exchange for additional benefits that only a manufacturer can provide. The additional cost of shipping and handling should further solidify your standing with your reseller partners.

Refurbished Stock
As a manufacturer selling direct, your ability to differentiate your product offerings from those of your reseller partners will go a long way to reducing conflict. Most resellers, with few exceptions, are not very interested in selling refurbished merchandise. As a result, you enjoy the following benefits:

Adding “factory refurbished" stock to your online store is a great way to reduce inventory of returned merchandise on your shelves while simultaneously salvaging some margin.

You reduce channel conflict by offering different products than those offered by resellers. Although the product is actually the same, the fact that it is refurbished creates a distinct difference amongst the product offerings presented by you and your reseller partners.

Bundles
Along the same lines as the refurbished stock argument, creating product bundles is another way to differentiate your offerings from those of your reseller partners.

For example, if resellers offer several different colors of the same product sold separately, you may wish to bundle all of the colors together as a single offering and name it the “family bundle". Another way to accomplish this is by bundling an accessory with the product.

As long as the combined bundle creates a noticeably higher price point than the standalone product, this may be an effective method for reducing channel conflict.

Replacement Parts
If your product requires additional updates or replacements as part of future fixes or maintenance, offering these updates and/or parts in the online store accomplishes two things:

It supports those products sold by your channel partners. You are essentially adding value to the products sold by your reseller partners.

Like bundles, you also differentiate your product offerings from those of your reseller partners.

You can choose to give away or charge for these fixes and replacement parts. What you charge will likely depend on a variety of variables. Just to name a few, these variables may include your cost of delivering the part to the customer, the depth of positive impact you would like these offerings to have on your reseller partnerships, your desire to affect public perception of your customer service standards, and customers' willingness to pay for the parts.

On a side note, selling replacement parts is a great way to retrieve customer contact information (including those who purchased from resellers), thus building a terrific in-house customer list for future marketing initiatives.

Free Advertising and Website Layout
Likely as important as the price point you offer, your efforts to help your channel partners sell product is crucial to avoiding channel conflict. Providing equal real estate for resellers on your website is one way of accomplishing this. Instead of touting your online store as the central place to purchase your products, you may wish to embed your online store link within a variety of options of “where to buy".

By giving customers a clear choice of paying less at a reseller website or brick and mortar store, or paying more in your online store, you accomplish the following:

You provide a distinct signal to your reseller partners that you are only interested in the percentage of customers who are willing to pay a premium to buy direct.

You help increase your reseller partners' sales.

If you display the reseller's name or company logo, you increase their overall market exposure. In our experience, most resellers tend to appreciate their logo displayed, as opposed to plain text.

Try linking to your reseller partners' websites using the following techniques:

Link directly to the reseller's home page.

Link directly to the listing of your product on the reseller's website.

Link directly to the reseller's “find a store near you" page if the reseller offers brick and mortar store locations. Make sure you update these links frequently, just in case the reseller changes the location of their “find a store" page on their website. Also, several third party applications are available to help you manage store finders internally on your own website. Here are two examples: www.spatialpoint.com and www.zenoweb.com.

Above all else, open a dialogue with each reseller to gauge what method they prefer.

Promotions

When running direct response promotions such as discounts, free shipping, buy one get one free, etc., try to limit your offering to your in-house customer list. Buying lists of potential customers in the general public may cannibalize reseller partners' sales.

By using your in-house list, you reduce the risk of compromising your position as the supplier to a unique market segment that would not otherwise purchase from a reseller.

On a side note, please review our past article discussing quick and easy promotion reminders.

Merge Customer Service
When selling direct online and/or via the telephone, make sure your customer service agents are well versed in the questions, comments, and issues that arise when servicing customers who purchased your product from a reseller.

As part of your direct sales efforts, customer service agents can play a vital role in the support reseller sales. Provide your agents with the normal product expertise your customers would expect, but also provide them with the ability to help customers with questions such as:

What retail stores carry this product and where can I locate such a store?

I am standing in line at the store. Before I buy this product, can you tell me…?

I bought this product at my local retail store. How do I return it? What if the store does not accept my return?

Providing this level of customer support to customers who purchased your product from a reseller, clearly demonstrates that you are motivated to help your resellers.

Reseller Partner Dialogue
When in doubt, talk to your reseller partners. Open a dialogue early and often to avoid brewing problems in the future. While it is probably impossible to avoid channel conflict altogether, and while some competitive conflict may actually be beneficial, opening a dialogue with your channel partners will help you avoid situations that harm your business objectives.

Be clear in your intentions and ask for feedback from your reseller partners when warranted. Giving your partners the opportunity to provide input now will save a great deal of headaches, wasted effort, and lost sales later.

Please feel free to contact Rush Order anytime regarding our methods for managing direct sales and reducing the level of channel conflict our clients experience. We provide consultations at no charge. Our only hope is that you will keep Rush Order in mind as a resource and potential order processing and fulfillment solution for future needs.

Please remember to browse additional order management articles.

Minimize Online Payment Fraud

2007-07-30T15:45:00.001-07:00

Why Should you be Concerned with
Online Credit Card Fraud?

Your Business Depends on it

Your business should be concerned, or at least aware of the risks, if you are involved in e-commerce, mail, and/or phone order transactions. These transactions are exposed to a relatively high level of risk due to the fact that neither your customers nor their credit cards are physically present at the point of sale.

Criminals are often very intelligent. Educate yourself and utilize the items below to prevent them from stealing your products. Remember, complacency is a criminal's greatest ally.

The items listed below will provide insight into how you can reduce the potential for fraud, disputes, chargebacks, and the costly effects each of these have on your business. Rush Order monitors, manages, and prevents these costly problems on behalf of our clients on a daily basis. In fact, we are proven experts in the field. If you have questions or need assistance with any of these items, give us a call today at 800-522-5939. We are here to help.

Minimize your risk of incurring costly fraud, disputes, and chargebacks by using these helpful tips:

Pay attention to the card type, number, and expiration date. Visa card numbers begin with a "4" and contain 13 or 16 digits. MasterCard card numbers begin with a "5" and contain 16 digits. American Express card numbers begin with a "3" and contain 15 digits. Discover card numbers begin with a "6" and contain 16 digits.
To safegaurd data, always use a secure connection and/or encryption where applicable. Never send credit card information via email.
Charge your sales as close to the ship date as possible. Never charge a credit card on an order that you know will not ship immediately. Customer complaints are directly correlated with the amount of time before or after the ship date you take to charge the card. When backorders begin building up for a lengthy period of time, you may want to send your customers an update on the status of their order.
Use address verification systems (AVS) for domestic orders.
These criminals typically know that a credit card is often audited with an Address Verification System. To circumvent this, these criminals are often capable of acquiring their victims bill-to addresses. Therefore, large distances between a customer's bill-to and ship-to addresses (usually belonging to the criminal) should raise a flag for concern. Require a bill-to and ship-to address. You may want to create an automated program based on zip codes that determines if the distance seems reasonable.
Require a phone number. This can be used to notify customers of back order situations, call customers when their credit card is declined, and match area code and zip code proximity. A bill to phone number and address in different areas may be a flag for fraud.
Require an email address upon order entry. This can be used to send order and shipment confirmations, notify customers of back order situations, and notify customers when their credit card is declined. Invalid email addresses are also a way to flag potential fraud.
To reduce chargebacks, make sure the customer will recognize the name of your company or product on their bill. If your company operates under multiple names, make sure your customer will recognize the charge. Gear your website, customer service, and marketing materials such that they do not confuse customers as to whom they are purchasing from.
For international orders, verify the IP address.
Sticker your shipments with "do not re-route without shipper's authorization" text. Criminals frequently re-route shipments in transit to their desired locations in and outside of the United States. When the carrier receives a request to re-route, they should then contact the shipper for permission.
Maintain vigilance and learn to spot and control the warning signs listed below. Create automated and manual processes for reviewing your orders.

Credit Card Fraud Warning Signs:

The customer's information contains misspellings.
The order is shipping to a PO Box. This may indicate a lack of permanent physical presence.
Large dollar amounts shipping via an untraceable method such as first class mail.
Large dollar amounts shipping via expedited shipping methods such as overnight delivery.
Large dollar orders are something to be carefully inspected regardless of any other information in the order.
Multiple orders by the same customer in a short time span.
Orders containing free internet email addresses that seem to have no relevance to the person's actual name.
Most automated fraud tools cannot validate foreign addresses. Review international orders and verify information via email (or phone) when the legitimacy of an order is in question.

Secure E-Commerce

2007-07-18T10:25:00.000-07:00

What is a SSL Certificate? Why do I need a SSL Certificate? How do I get a SSL Certificate?

What is a SSL Certificate?

Secure Sockets Layer (SSL) technology secures your Web site by encrypting information and providing authentication.

A SSL Certificate consists of a public key and a private key. The public key is used to encrypt information and the private key is used to decipher it. When a browser points to a secured domain, a secure sockets layer handshake authenticates the server and the client. It also establishes an encryption method and a unique session key, thus beginning a secure session that guarantees message privacy and message integrity.

Why do I need a SSL Certificate?

Without SSL encryption, packets of information travel across networks in full view. Imagine sending mail through the postal system in a clear envelope. Anyone with access to the network can see the data. If it looks valuable, they might take it or change it.

Without third-party verification, how do you know a Web site is an authentic representative of a business you trust? Every SSL Certificate is created for a particular server in a specific domain for a verified business entity. Like a passport or a driver’s license, an SSL Certificate is issued by a trusted authority. When the SSL handshake occurs, the browser requires authentication from the server. If the information does not match or the certificate has expired, the browser displays an error message.

How do I get a SSL Certificate?

VeriSign and GeoTrust are the two primary vendors Rush Order obtains SSL Certificates from. Although there are many other viable vendors, Rush Order sticks with these two for several reasons.

VeriSign is the leading secure sockets layer (SSL) Certificate Authority enabling secure e-commerce and communications for Web sites, intranets, and extranets. Being the leader, they are also the most visible and trusted source for certificates on the internet. However, many users are content with just knowing that the site is secured. GeoTrust is the world's second largest digital certificate provider, and a leader in a wide variety of Identity and Trust services. Both provide 128 bit SSL Certificates compatible with nearly all browsers on the market.

While both Verisign and GeoTrust provide high level of encryption, there are some other factors to consider. Primarily, you should consider your target user and/or customer.

If your target user is the average end user, GeoTrust is the most cost effective and quickest way to obtain a SSL Certificate. If your target user is another Business or the Government, Verisign is highly regarded as the best provider of SSL Certificates. However, Verisign SSL Certificates take longer to obtain and may require cooperation amongst several departments within your organization in order to complete the SSL Certificate request. Some of these items may include phone records, a notarized copy of your business license, setup of a new email inbox, etc.

Ideally, your e-commerce solution should be hosted on multiple servers. Rush Order’s e-commerce systems support up to 6 servers for load-balancing and redundancy. This means that a certificate must be purchased for each server used. We ask our clients to purchase a minimum of two servers. In the event of a server failure, or if site maintenance is being performed, your site will still be available.

For additional information or assistance regarding SSL certificates, please contact us at 1-800-522-5939, or 408-848-3525, or info@rushorder.com.

What Should Your Online Store Charge for Shipping and handling?

2007-07-17T15:05:00.000-07:00

Is your shipping and handling fee driving sales or driving customers away?

This post explores methods for maximizing the effectiveness of shipping and handling charges in your online store and/or catalog.

To begin, there are many possible methods for charging shipping and handling, some of which include:

Product weight
Customer location
Product Price
Actual carrier charges, plus a margin
Flat rate
Free Shipping (where S&H is built into your product's profit margin)

Regardless of which metric for shipping and handling you use, there is a fine balance between charging enough to cover your own fulfillment costs and charging too much, thereby losing sales. In either case, be honest with your customers and charge a fair price, especially in light of recent lawsuits that have put online shipping and handling charges under heightened scrutiny.

Over the last 16 years, Rush Order has processed and managed millions of online orders and related customer service contacts. This experience not only includes daily service but also involvement in multiple projects such as surveys, customer comment cards, focus groups, and industry average analyses. Based on this extensive experience, here are a few of the most important factors a customer consciously and subconsciously evaluates when he or she views the shipping and handling (S&H) charges associated with their potential purchase.

Perceived Value
Have you ever willingly paid $10 in shipping and handling for a $2 product? Probably not. What about $10 in shipping and handling for a $100 product? As a customer, this seems much more reasonable, even if the $2 item and the $100 item have the same weight and size. Both surveys and empirical data show that the retail price of your product will likely be the most influential factor behind customer perceptions of your shipping and handling fees. Feel free to contact Rush Order for ideas on heightening the customers' perceptions.
Speed of Service
How long is your lead time prior to shipment? What will the time in transit be? A simple stock message in your shopping cart is a great way to convey this information. For example, you may want customers to know that "Most orders ship within 24 hours". Also, can the customer expect the shipment to arrive via mail, UPS, Fed Ex, DHL, or other carrier? Shipping via UPS, Fed Ex, and DHL will likely drive a higher perception of the value behind the S&H fee. Offer a variety of shipping methods for your customers to increase their control over the speed of service.
Known Proximity
Do you run a regional marketing campaign? Is your brand supported by the location of your business? For example, if I am selling a product branded with a particular city like “New York Gadgets”, my customers in New York may not expect to pay S&H for a cross country shipment. In this case, it may be wise to charge S&H based on customer location.
Packaging
The size of the box, the quality of the packaging, and the overall design of your packaging can drastically influence customer perception. As such, relay this sense of quality packaging in your online store. One option is to put up an image of a packaged product on your main website, online store, or shopping cart.
Fragility
Customers ordering fragile items online are more likely to expect a higher S&H fee. Good examples of fragile items may include artwork, giftware, consumer electronics, computer hardware, and computer software. Conveying a message about your careful packing will go hand in hand with this point. Setting this expectation with your customers may help your effort to squeeze a bit more out of your S&H charges.
Disclosure
Are you clearly communicating your charges to potential customers? Give them the exact dollar amount they will be charged for shipping and handling. Customers are more likely to buy when they believe they have all the facts in hand. One way to evaluate this communication is to analyze the pure drop off rates within your shopping cart. By moving the shipping and handling charges to the early steps of the ordering process, you can evaluate the affect of this change along with long term data on your drop off rates, free of the shipping and handling variable.

For additional assistance on determining the exact dollar amount you should charge for shipping and handling, please contact us at 1-800-522-5939 or 408-848-3525 or dana.madlem@rushorder.com.

Cost Effective Initiatives for Improved Customer Service

2007-07-13T16:45:00.001-07:00

Streamline your Online and Offline Customer Service for Better Results

Missing the obvious benefits of cost effective customer service can hurt your business. Despite all of your efforts, customers will still look for help.

In today’s online marketplace, many e-tailers and direct marketers correctly focus on the presentation and ease of use of their online store and checkout process. The goal, of course, is to increase sales and reduce customers’ dependence on the inhouse and / or outsourced customer service staff.

Although focus on user friendly interfaces and quickly navigated checkout processes are very important pieces to the puzzle, many e-tailers seem to forget or ignore the fact that some customers will still inevitably call or email in an attempt to find further assistance.

For those customers who insist on obtaining additional help, how can they be serviced quickly and effectively in such a way that still preserves the profit margin within each individual order?

Automated Customer Service

There are a number of automated functions you can provide that will help reduce your customers' dependence your support staff and/or contact center. By proactively providing your customers with the information they commonly seek, you will reduce the cost of servicing each order received and shipped.

Live pricing, shipping and handling, and sales tax calculation – Reduce questions and increase customer confidence with live sales tax calculation in your online store and CRM solution. This has become a common element of most e-commerce solutions. Do not leave your potential customers guessing. They will not enter their credit card until they understand exactly what will be charged.
Live inventory ping – Let your customers know in the initial stage of the shopping experience whether or not the desired item is currently in stock. If it is not in stock, try to incorporate a system that displays the expected availability date.
Online real-time order status – In the hours and days following the order capture, provide your customers with a link and corresponding web page to view the exact status of their order. Be as specific as possible. This will eliminate the need for some customers to pick up the phone.
Order confirmation email – This is another low cost method of avoiding customer service issues that is commonly implemented in most e commerce solutions. Acknowledgement of a properly captured order will always reduce your customers’ dependence on your support staff.
Shipment confirmation email with tracking number – While this requires a well integrated fulfillment solution, it is a common expectation amongst the growing volumes of online customers.

Contact Center Hours of Operation

A quickly and efficiently serviced customer will likely cost you less than a customer who is not serviced at all. Many would assume that offering limited customer service hours is a great way to reduce costs. However, limited hours such as 8:00am to 5:00pm are much more likely to produce a variety of negative results.

Most notably, product returns can be minimized by offering extended hours of customer service. Aside from corporate customers, the average end user is likely going to open their purchase and attempt to operate it for the first time during an evening or weekend. This is the exact moment when a customer is most likely to call or email for help. Therefore, it is also the time when great customer support is most likely to create a positive return on investment.

The same is true for order status questions and even order placement phone calls. Providing truly accessible customer service is a terrific way to limit returns and increase overall sales. So, what hours of operation are best? The answer is typically “the more the better”. If you are looking to outsource your customer service operation, you will likely find that most vendors offer phone, email, and live web chat services 24 hours a day, 7 days a week.

Contact Center Training

Company background – Make sure your reps are able to answer simple questions surrounding your company’s background. How long have you been in business? How many employees do you have? What is your mission? What is your brand and how does it distinguish you from your competition? If your rep sounds like a valued employee who takes an active interest in the company’s success, you are much more likely to build credibility within each individual customer interaction.
Products – Does the rep have an intimate understanding of the products he / she is providing customer service for? While this may seem like an obvious point, you may be surprised to find just how many companies do not put the actual product in the hands of the reps. A rep who uses the product in his / her own daily life is much more likely to explain the products' benefits through well communicated enthusiasm.
The basics of e commerce – Many customers will call with questions surrounding the operation of the shopping cart and the back end processes involved. Do your reps understand what happens when a customer clicks the “submit my order” button multiple times? Do your reps know how credit card processing actually works? Do your reps understand where and why you charge sales tax? Comprehensive knowledge of these topics will help build credibility with the customer as well as reduce the average length of a customer service phone call or web chat.
Ease and accessibility of information – Providing reps with easily accessible information is paramount to reducing customer service costs. This topic is usually technology based and is often dependant on the limitations of your customer relationship management (CRM) software or service. In order to effectively handle customer service calls, web chats, and emails, your reps should be able to quickly access the needed information once the problem or issue is identified. This is true for both product and company data.
Utilize “call-backs” – There are a variety of service methods that will likely result in a reduced average length of call. One of the easiest to implement is the “call back”. If a customer has a particularly unique problem that requires some additional research by the rep, it may make sense to offer the customer a call back later in the day at a convenient time. Customers often appreciate the acknowledgement that their current issue and resulting phone call is not the only priority in their busy day. As opposed to keeping the customer on hold while the rep investigates the problem, giving the customer the option to receive a follow up phone call later at a convenient time is cost effective and provides great customer service. Just make sure you have a systematic way of scheduling any necessary call backs.
Tools for “tele-stress” – For one reason or another, every rep will have an occasional bad day. Perhaps there are personal issues at home or the rep has answered a series of calls from upset customers. Disgruntled reps will not efficiently service your customers, nor will their negative attitude support a contact center atmosphere in which other reps can efficiently service your customers. Stress management trainings are a great start to reduce the negative effects of a rep that has simply had a rough day. Providing ergonomic work stations, scheduled breaks, and easy access to simple necessities such as food and water are also key to reducing the negative effects of “tele-stress” on your bottom line.
Frequent review and monitoring – Although this is an obvious point, the number of companies that neglect to review and monitor the performance of their reps is staggering. Record your service calls and emails and review both great and “less-than-great” examples of customer service with reps. Use both individual and group settings for review. Upon review, use praise and constructive criticism. Monitoring customer support will also help you quantify the frequent issues customers are experiencing.
Fast email replies – Despite numerous claims by many small to medium size businesses as being exceptional in their own customer service management, CRM Magazine reported in the Fall of 2005 that “51 percent failed to respond to emails at all and 70 percent did not respond within 24 hours”. It appears that the industry standard is seriously lagging. For purposes of comparison, Rush Order’s average turnaround for a customized email reply is less than six hours. Email response times should be taken very seriously to preserve the customer relationship.

Pre-emptive Outbound Customer Service

If an order is placed with incorrect address or credit card data, it will likely benefit you to proactively contact the customer in an effort to retrieve the sale. This is especially true if the order in question contains a high monetary value.

Automating this process with systematic queuing of outbound phone calls, emails, and / or written notices can be an extremely cost effective method for maximizing customer service and capturing what otherwise may be lost sales.

A Unified Solution

The efficient coordination of all the resources and processes listed above may appear to be a daunting task to some. As such, many will find that a single unified solution stationed under one roof is the best answer to maximizing the cost effectiveness of customer service. Whether conducted in-house or via an outsourced vendor, a seamlessly integrated order management and customer service solution is likely to provide the highest level of customer service continuity at the lowest cost.

By providing customers with a single point of contact, you can avoid multiple transfers that end up frustrating both your customers and your reps. You will also be able to provide a single order process view for your reps. As such, they will be able to quickly address any issue a customer may have at any point along the order process flow. If your processes must be housed under multiple roofs, make sure that your order management system provides a great deal of transparency throughout the order flow process.

SAS 70 is Frequently Required of Order Fulfillment Vendors

2007-07-12T11:17:00.000-07:00

What is SAS 70?
Statement on Auditing Standard No.70 (SAS 70) is an internationally recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA) in 1992. It is used to report on the "processing of transactions by service organizations". For example, Rush Order's SAS 70 certification confirms our "reporting on controls placed in operation".

Why is SAS 70 certification important to me?
The SAS 70 audit has become the "de facto due diligence document" throughout the United States and the world with regard to an organization's internal controls that potentially impact financial reporting.

The importance of the SAS 70 primarily stems from a growing surge of legislation, most notably, the Sarbanes-Oxley Act of 2002, otherwise known as "SOX". The SOX rulings advocate protection of privacy, corporate accountability, and establishment of internal controls throughout an organization.

Thus, a need was created in many industries for a due diligence process that can aggregate many of the principles found within this act. It also provides companies with a high level of assurance and confidence when using service organizations such as Rush Order for outsourcing critical business functions. The SAS 70 was created as an audit process to ensure data integrity and all related transactions amongst service organizations.

In a post 9/11, SOX world, there is a large movement in the global business culture that places enormous merit on quality data, as well as safe and secure IT transactions. Because such a heavy reliance is placed on computer systems, organizations are compelled to ensure that data and all related processes and procedures are safe and secure. It also ensures that IT controls are operating as designed in an effective manner.

For a publicly held company, requiring SAS 70 audits of its service providers is becoming increasingly mandatory. In the past, the impact of many business functions and service providers on financial reporting could potentially be deemed immaterial, provided that such a service accounted for a small fraction of the company's financials. With the inception of Sarbanes-Oxley, the global consensus is that all data is material, regardless of the size and scope of the service provider's impact on financials. In-depth due diligence on the infrastructure and internal controls of service organizations, such as those measured by a SAS 70 audit, is now essential.

For privately held companies, the need for cost effective due diligence is often just as important. From the very beginning of a partnership with a SAS 70 certified service provider, the private organization can make promises to its stakeholders and its customers that many of its competitors cannot. It also assures the private company that they have partnered with a firm that is fully capable of meeting the rigorous standards required by public filings. In other words, private firms can leverage the safe, secure, and efficient systems that are certified to exist by a SAS 70 report.

Ultimately, user organizations (both public and private) are able to gain a greater understanding and assurance of the internal controls in place at a service organization such as Rush Order. SAS 70 certification is a formal confirmation of Rush Order's proactive steps in developing and implementing numerous controls used to process transactions on behalf of our clients. Furthermore, SAS 70 reports assist external auditors for user organizations by cutting the time and costs of launching inquiries into the controls at service organizations such as Rush Order.

For more information on SAS 70, or to obtain a copy of Rush Order's actual SAS 70 report, simply email Rush Order or call me at 800-522-5939.

Customer Geographic Distribution Patterns

2007-07-12T10:55:00.000-07:00

In a recent survey, we discovered a startling trend in which many online merchants cannot name the most common states their orders are shipped to.

From initial marketing to the time your product arrives at the customer’s door, the location of your customer can determine a lot about the resulting interaction during the sales process.

Aside from your initial marketing or public relations messaging, customer location can also dictate perception of your shipping rates and shipping methods. Location can also play a vital role in setting delivery expectations. Every step along the way is an opportunity to gain or lose sales. Recognizing the location(s) of your customer base will always give you an advantage.

So, where are your customers located? If you cannot name the top five most common states your customers reside in, you are not alone. Most managers and executives cannot answer this question with much confidence.

In truth, most online merchants see very similar trends in terms of customer location, regardless of the type of product they sell. Here are three different mapped examples of customer locations based on actual Rush Order client data. Each dark blue dot on the map represents the destination of an order shipped during a recent time period.

Notice that the vast majority of orders are clustered on the East and West Coasts. While several orders are sprinkled throughout the Midwest, the overall distribution is heavily weighted to the coastal population centers.

If you are interested in generating a map of your order destinations like those displayed below, simply email Rush Order and attach a spreadsheet that includes the destination zip code of each order you shipped. Or, call me at (800) 522-5939. I will also include a report of cumulative order quantity by state.

Results from a Book Publisher:

Primary customer locations include Seattle, the San Francisco Bay Area, greater Los Angeles area, Chicago, New England, New York, Washington DC, and coastal areas of the Florida peninsula.

Results from a Software Manufacturer:

Primary customer locations include Seattle, the San Francisco Bay Area, greater Los Angeles area, Chicago, New England, New York, and Washington DC.

Results from a Consumer Electronics Manufacturer:

Primary customer locations include Seattle, the San Francisco Bay Area, greater Los Angeles area, Chicago, New England, New York, and Washington DC.

When mapping customer locations, the pattern is remarkable. It is even more remarkable that our 20+ years of observations of direct sales patterns across many product categories have remained surprisingly constant.

The only instable part of this story is the general supply chain flow. Traditionally, a much larger percentage of products were manufactured in the Midwest. As such, locating order fulfillment in the Midwest made perfect sense. Product flowed into the fulfillment center (red arrows) from nearby manufacturing sites. Product then flowed out to customers near the coasts (black arrows).

Today, most products arrive from overseas manufacturers. The intuitive and cost saving approach is for product to flow into the fulfillment center (red arrows) from overseas manufacturing sites. Product then flows out to customers near the coasts (black arrows).

The ability to store inventory and fulfill orders within a close proximity to the East and West Coasts holds the following advantages:

Cheaper shipping from the manufacturing site to your door (specifically from the port of entry to your door)
Shorter time in transit from the manufacturing site to your door
Cheaper shipping from your door to the customer’s door
Faster delivery to your customer’s door, thereby cutting customer service costs and increasing overall customer satisfaction.

The result is a dramatic time and cost savings throughout the supply chain.

Even if your product is not manufactured overseas, a coastal fulfillment operation may still make terrific sense. Not only do you still leverage the cheaper rates and shorter lead times when shipping to your customers, you are already setup for future growth that would allow you to source manufacturing overseas.

Great Products and Poor Sales can go Hand in Hand

2007-07-12T10:48:00.000-07:00

Most well designed and promoted products fail. Why? Doesn’t this defy the logic in everything we learn as product developers and product managers? Not really...

Leverage the following real life examples and practical advice to increase your chances of producing a successful product launch or repositioning.

As a back end fulfillment, customer service, and returns management solution that has processed millions of orders, Rush Order is a primary data collection point for an enormous variety of product launches. In light of recent successful combined efforts as partners, this article blends Rush Order's experience with the 280 Group's expertise as the premier product marketing and product management consultancy firm in Silicon Valley.

Unfortunately, creating new customers while simultaneously minimizing the drop off rate of current customers is easier to imagine than it is to achieve. For example, depending on particular industry standards and a company's product management methodology, return rates can range from around 3 percent to as high as 50 percent of total merchandise sold. Obviously, a similarly shocking disparity is evident when comparing sales figures amongst various organizations.

Successful product management is the result of much more than developing and marketing a great product. Yes, of course, a truly successful product must reach consumer demand en mass with the winning combination of price, style, and function consumers value. While product managers focus on this winning combination, as they should, delivery of the overarching "customer experience" is often marginalized.

The range of possible scenarios is simply staggering:

Half of all so-called 'malfunctioning' products returned to stores by consumers are in full working order, but customers can't figure out how to operate the devices. - Reuters

In a recent survey of online merchants, 50.7% of survey respondents indicated that less than 2% of the products they sell online are returned, compared to 29.8% with a return rate of 3-5% and 9.2% with a merchandise return rate between 6-10%. - Internet Retailer

40% of online shoppers reported a lack of satisfaction with the item return process. While 51.1% indicated they had never returned an item purchased online, 16.7% noted they had returned an item once, 15.3% twice, 5.5% three times, 3.5% four times and 7.9% five or more times. - Business Wire

Regardless of the expert research, high technology, and high style rolled into a product, these three essential practices can spell doom or boom for your product launch.

Customers will encounter hurdles. Anticipate the majority of these hurdles and build solutions before you lose sales.

There are plenty of circumstances that seem to arise for nearly every company launching a product. Running a beta test internally or with a predetermined set of potential early adopters can help you sort out which circumstances are going to present the biggest headaches. Develop your products and setup your systems such that you can confidently ensure the following:

* Your supply chain can handle spikes in volume. Back order situations are costly in terms of lost or canceled sales and increased customer service touch points.
* Your product contains easy to follow setup instructions, preferably annotated with large color images.
* Your customer service team can quickly address customer issues within minutes. Any wait for service longer than "same day" is becoming increasingly insufficient in today's markets.
* Your customer service team is available during extended hours, preferably 24 hours a day, 7 days a week. The resulting increase in sales and reduction in your returns rate will likely offset the cost of operating during such hours.
* Retailers' sales reps can adequately address customer questions. Provide in store demos and training materials to sales reps. Take responsibility for sales numbers at the store level. Do not rely on the retailer to adequately communicate the benefits of your product without prior training. The same is true for online resellers as well.

Example:

Customers will call on you or the retailer they purchased your product from to answer questions and address issues that are going to alter their perception of the product's value in one way or another. Have you provided accessible tools for your customers to "self-correct" the problem? Have you provided your retailers' sales reps with the tools and information needed to adequately dissuade returns?

In short, provide the needed support to save the customer's day, save the sale, and save yourself from a potential customer relations failure.

Despite your best planning in anticipation of the majority of hurdles customers will encounter, you cannot anticipate every possible issue. Be agile and adjust accordingly when you discover the hurdles you did not anticipate.

Unforeseen problems in manufacturing such as faulty assembly and production delays are the most common examples of this scenario that our clients encounter. In general, turning bad news into an opportunity for positive touch points with your customers is a great way to manage these situations.

Example:

A customer calls with a request to fix a previously unknown issue he/she is experiencing. Give your customer service reps the resources and latitude they need to quickly adjust and fix the problem before it results in a return. Also make sure that the rep has a way to escalate the issue to your technical staff for further evaluation. If the problem can be replicated and identified, you may have a chance of improving future production runs to avoid seeing the same problem again.

Example:

Your manufacturer has promised delivery by the end of September. What happens when the date is delayed? Have you told customers to expect their orders to ship by the end of September or have you promised shipment "this fall"? Give yourself a margin of safety so that you can comfortably beat expectations. As the date shifts forward or backward, keep your customers informed with periodic email blasts as information becomes available. This is a great way to set and beat expectations. This is also a great opportunity to retain visibility in front of your customer base.

Example:

UPS has lost your shipment intended for use in tomorrow's airing of a major television show's product review segment. Can you quickly send another unit out the door in time? Do you have the ability to ship overnight if you receive the request at 5:00pm? Do you have the ability to ship via same day courier if you recieve the request at 9:00am on the day of the show?

Do what you promise to do. Set customer expectations and deliver accordingly.

Meet and exceed customer expectations 100% of the time. Live up to your promises in terms of delivery times, warranty and return policies, customer service, and technical support. Does your fulfillment center promise same day shipping? Set the expectation with your customers of a lead time of 24 to 48 hours. You never know when a rare oddity in an order may cause a delay.

Example:

A customer enters an order requesting shipment via UPS Ground to a post office box, will you still be able to meet the customer's expectation for delivery, even though the customer made an error? The ability to make a quick adjustment by either contacting the customer or automatically switching to a USPS shipment method will still allow you to meet and exceed the expectations you have set regarding order delivery speed.

Example:

Your manufacturer has fumbled the printing of sequential serial numbers on the product packaging. The customer support team is dependant on tracking these numbers in order to service your customers. What now? Make sure you have the resources in place ahead of time that will give you the agility needed to quickly analyze alternative solutions.

Example:

If your hard work pays off, customers will quickly begin to rely on the utility and enjoyment of using your product. Through your great work as a product designer, developer, and marketer you have set an expectation of quality and performance in the customer's mind. In the event that a product is not functioning correctly, can you effectively fix the issue remotely with your customer service team and/or replace the defective product in the customer's hands with minimal interruption to the customer's use of the product?

Let's take a real life example from a recent article published by Brian Lawley, President of the 280 Group, where he discusses his reasons for returning his Palm Treo:
I've been a Palm user for over ten years, including owning several Palm Pilots and Treos. The Treo has met my needs for years, but I haven't been entirely happy. Once when the Treo stopped working it took them 10 business days to get me a replacement (since I run my business on my cell phone this was ridiculous - particularly since the Treo is a premium-priced product). Read the entire article here.

Despite his credible claim that he was a loyal Palm customer, as well as his stated opinion that his Treo was a terrifically designed and built product, Mr. Lawley eventually returned his Treo and switched to the Cingular 8525 Smartphone as a result of this poor customer experience. In this case, Palm's failure to retain this otherwise loyal customer was the result of several fatal errors.

First, in the customer's mind, Palm did not live up to its previous track record of providing products that are essential to any business professional's success in today's mobile business climate. If a product is an essential tool, a business professional should not be asked to live and work 10 days without it.

Palm simply failed to acknowledge that its well established success carries a great deal of responsibility in the minds of its customers. In this case, a breakdown in communication meant that operations did not meet the expectations set by marketing's successful branding.

While Palm created a method for replacing the phone within 10 days, the only way to help the customer successfully jump the hurdle in front of him would have been to build an exceptional advanced warranty replacement solution capable of an overnight turnaround. Had Palm anticipated this situation or adapted quickly enough through the use of such a solution, Mr. Lawley, and potentially thousands of others in his shoes, would still be active Palm customers.

Successful product management is dependant on the whole product solution, both in terms of function and customer interaction. The 280 Group and Rush Order provide first-rate outsourced capabilities in these areas, ensuring that your customers enjoy using your products and interacting with your organization.

A blend of exceptional product development, successful marketing, reduced overhead, increased sales, and happier customers are a recipe for success that our respective companies fully understand and execute every day.

If you are interested in obtaining additional information about the operational aspects of this topic or interested in a joint end to end solution by leveraging both companies' services, please contact me at dana.madlem@rushorder.com or by calling (800) 522-5939.

If you are interested in obtaining more information on the 280 Group and its product management and product marketing expertise, please contact Brian Lawley at contact@280group.com or by calling (408) 834-7518.

Leverage Daily Operations as a Marketing Tool

2007-07-12T10:37:00.000-07:00

What do operations people know about marketing? Well, to begin, they are probably the only group that sees the actual unembellished order volumes resulting from the marketing gurus' best ideas.

No, marketing professionals need not worry about their long term job security. However, they should pay attention to the empirical data streaming in from daily operations.

Marketing and advertising professionals go to great lengths, as they well should, in trying to quantify who and what generate new revenue.

However, what does the resulting customer interaction after the sale say about the relative success of a marketing campaign? Here are a few quick tips for building useful data streams in your back end operations that can assist current and future marketing efforts.

Direct Sales

In addition to any ongoing channel sales through distributors and retailers, selling your product direct online may not only boost your profits, but may also tell you a great deal about whom your customers are and what they are interested in buying. As you would expect, the ability to test multiple messages and view the resulting orders can help focus your efforts in successfully selling products through a variety of other channels.

An actual Rush Order client recently recognized, when it began selling direct, that response rates were higher when advertisement content that included a basic product image and features was replaced with the same image alongside detailed technical specifications. Customers were likely not responsive to the feature centric messaging because the product category was still in an early phase in the adoption curve.

As a result, the client removed its in-store displays that show off basic features in favor of displays that elaborate on the product's technical specifications. As you would likely guess, the client saw a steady climb in the product's sell-through in retail outlets.

Direct Sales Returns Analyses

While no one appreciates the prospect of receiving and managing returns, ignoring the corresponding data is a mistake. The opportunity for data capture when processing direct sales returns is immense. Use this data to properly adjust your marketing efforts.

First, a returns processing system should be able to generate a return merchandise authorization (RMA) or similar reference number. This will not only help your fulfillment operation track the returned package as it is processed, but will also help in recording valuable marketing data.

Make sure that, when a customer service representative issues an RMA, they are required to select one of many detailed reason for return descriptions. Tracking the reasons why customers are returning your product is an indispensable data stream for any successful marketing department.

When you setup or append your system with new reason for return descriptions, only choose descriptions that will provide useful feedback later. When creating a new return description, ask yourself whether or not frequent reporting of this particular description by customers will provide you with enough information to remedy the root cause and avoid future returns. Return reason reports should be the basis for an action item, not just anecdotal pieces of information.

Specificity is the best approach when setting up return descriptions. Instead of using "Does not work" as a return description, use "Product will not connect to the network". If such reasons are recorded frequently, the former tells you nothing about what needs to be remedied while the latter gives you an action item that you can now research and hopefully solve in order to reduce the volume of returns.

In addition, do not let your customer service reps slouch in their effort to pick the best possible reason for each and every return. This is generally a training issue that can be addressed via periodic training sessions and performance reviews.

Assuming you have the necessary reporting mechanisms in place, data points will stream in and trends will develop. You should be able to spot common specific reasons why customers are returning the product.

For example, you may discover that while factory defects are another potential issue worth planning for, it may be that customers are opening and trying to use the product, only to find that it is not exactly what they thought they were purchasing.

In this case, your marketing message may not be a perfect fit for the product. Use this data to help evaluate potential new messages that would retain or increase sales while simultaneously reducing returns.

Or, in some instances, you may find it is easier to develop a new product given that you now know what customers are actually expecting when they open the box for the first time. Why not give them what they were hoping for? Plenty of monumentally successful products have been stumbled upon in this way.

Customer Feedback

The same principles of specificity are applicable for sales and customer service teams as well. As customers increasingly reach for email and live webchat customer support in place of traditional telephone support, the ability to capture and quantify the gestalt of your customers' feedback is now more feasible than ever.

While countless methodologies for capturing and reporting this data exist, using specific call tracking methods can help you identify why customers are calling. While this obviously facilities increased operational efficiencies, the resulting feedback is essential for ongoing product development and marketing as well.

Example:

In handling inbound customer service responsibilities for a particular consumer electronics product manufacturer, Rush Order provided a series of reports to the manufacturer detailing actual customer inquiries received via email.

The data strongly suggested that potential customers' apprehension, when considering whether or not to purchase, was directly tied to the product's required ongoing connection to the company's online service. Essentially, we discovered that customers were nervous about making a long term commitment.

Given that the product was not a standalone item, it was overwhelmingly evident that customers were concerned with the company's reputation and prospects for longevity. Time and time again, we could see that customers were asking questions like:

"Can I still use the product if you go out of business?"
"If your company fails, will I still be able to connect my product to someone else's service?"

For obvious reasons, these are legitimate concerns that any consumer should have when purchasing a product that requires an ongoing relationship with the manufacturer.

As a direct result of this feedback, the company was able to adjust its marketing efforts by including messaging about the "bulletproof" network they offered. The company also began featuring testimonials from highly regarded industry experts about the product's ongoing success. As a result, sales skyrocketed.

In addition to changes in messaging, examination of specific inquiry data for inside sales calls revealed that comparison shoppers almost never seemed to worry about our client's longevity. As a result, sales rose dramatically when the client ran several advertisements directly adjacent to those of its largest competitor. Running the ads next to the competitor actually solidified the validity of this emerging product category in the minds of potential customers. When the ads ran side by side, we found that customers were more inclined to buy in to a long term commitment.

Additional Examples

This list of examples does not exhaust all of the possibilities in which back end operations can assist your marketing efforts. As a result, I will be adding to a corresponding Daily Operations as a Marketing Tool webpage from time to time. In fact, the next set of examples will discuss retail sales forecasting methods and price testing.

In addition, please feel free to contact me directly if you would like additional assistance in building these types of data streams into your operation. We provide consultations at no charge. Our only hope is that you will keep Rush Order in mind as a resource and potential order processing and fulfillment solution for future needs.

E-Commerce Management

E-Commerce Metrics to Live By

No, this is not another article about how to create new sales.

Looking Back... A Recap of the Data that Shaped Online Holiday Sales in 2007

What does the 2007 data hold for the future?

Is my e-commerce revenue growth keeping pace or falling behind the industry trend?

How do Rush Order clients stay ahead of the pace?

Is "Cyber Monday" fact or fiction?

An Article Courtesy of Rush Order, Inc.

Eliminating Annual Physical Inventory Counts

An Article Courtesy of Rush Order, Inc.

Can direct sales and channel sales peacefully (and profitably) coexist?

An Article Courtesy of Rush Order, Inc.

Minimize Online Payment Fraud

Why Should you be Concerned withOnline Credit Card Fraud?

Secure E-Commerce

What is a SSL Certificate? Why do I need a SSL Certificate? How do I get a SSL Certificate?

What Should Your Online Store Charge for Shipping and handling?

Is your shipping and handling fee driving sales or driving customers away?

Cost Effective Initiatives for Improved Customer Service

SAS 70 is Frequently Required of Order Fulfillment Vendors

Customer Geographic Distribution Patterns

Great Products and Poor Sales can go Hand in Hand

Leverage Daily Operations as a Marketing Tool

Why Should you be Concerned with
Online Credit Card Fraud?