The changing economics of business has influenced both direct marketers and suppliers to seek new ways to succeed.
Reflecting on where to allocate resources, it seems that “cutting costs” is still out pacing “investing in innovation.” Cutting to the muscle by doing things that only yield a lower unit cost will both smother customers’ growth strategies and will kill suppliers who only compete on price.
There is a better approach. At IWCO Direct, we work with many customers with many different business styles. One customer we work closely with has a very simple and effective policy regarding their direct mail practices:
1. Set pricing for all elements of a direct mail package at market competitive rates with best in class partners. The key is to require competitive pricing, not just the lowest.
2. Focus the majority of their team’s time to engage deeply with partners to identify ways to reduce speed, increase response and lower overall touches to their program. They specifically try to outpace their competitors in their vertical.
Their outcomes are consistent and impressive. They continue to lead their vertical in response and overall program cost management.
When you step back, it is easy to understand why they succeed…they choose to spend their resources on developing ways to improve their program at broader levels rather than spending resources to cut the last cent out of an envelope.
From IWCO Direct’s perspective, we are happy to go through multiple rounds of pricing exercises to yield competitive pricing for a program. But we provide far greater value when we can apply our resources to moving customers programs forward in more profound and effective ways.
Throughout this recent economy that’s the one lesson that has really stood out…You can’t cut your way to prosperity in direct marketing. Buying smart is the entry fee, but engaging innovation in all aspects of your program is what makes your program a true winner.
- Tom Wicka