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For many software
publishers, direct mail marketing represents a new channel
for the sale of their products. For these firms that have
been utilizing only the retail channel, thoughts of ‘channel
conflict’ come racing to mind prior to their very first mailing.
Working with numerous firms who have gone through this phase
allows me to offer some thoughts that may help you attain
‘channel unity’, showing you that the two channels can work
together in concert instead of conflict.
Individuals, whether making business purchases or consumer
purchases, will buy some products via direct mail and other
products via retail. It is a very personal buying preference,
typically based on the type of product. For example, one might
prefer to make clothing purchases through retail stores yet
make audio CD purchases via direct mail catalogs.
This concept is supported by an event that happens when
a software publisher entrenched in the retail channel performs
a mailing which offers the direct sale of their product. A
short while after the mailing hits its target, they track
a spike in product demand from the retail channel, a flurry
of registration card returns, and a higher volume of calls
into their technical support group.
Can you visualize what is happening? You can almost see
the customers in the retail store with the direct mail piece
in hand. There is no doubt that certain individuals prefer
making software purchases through the retail channel. They
can purchase heavily discounted products which they can physically
touch, and even get the personal attention of a salesman.
There is no doubt that the direct mail campaign is helping
to lubricate the distribution channel, causing heightened
product awareness and demand at the retail level. Knowing
that this situation does indeed happen, how can a software
publisher further capitalize on the event?
One method is to structure the direct mail offer so that
if a potential customer wants to make their purchase via a
retail store, a voucher can be validated by the retailer which
will yield the customer a rebate or premium. It is a simple
solution that can be also leveraged in the software publisher’s
battle to obtain retail shelf space. A direct mail campaign
designed to increase store traffic shows an extremely high
level of channel support, which is certainly a negotiation
chip in your favor.
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This ‘dual-channel’ offer also yields an additional benefit
to the software publisher, which is the enhanced capture of
end-user names. The return of the validated voucher, which
is needed to obtain the rebate or premium from the publisher,
is going to force the registration of that customer. My previous
article on upgrades (which can be made available to you) discussed
the lifetime value of a customer. An increased capture rate
of end-users translates into more customers to upgrade for
the years to come, a highly profitable activity and critical
component to installed-base marketing efforts.
Here’s another scenario showing unity between the two distribution
channels. Take, for example, the small software publisher,
who cannot secure retail shelf space, that is entirely selling
product via direct mail. I have seen situations where these
small software publishers, once reaching a critical mass in
the direct mail channel, were actually sought out by the retailers
to carry their product. This was typically caused by customers
going to their local retail stores requesting the product.
Either that, or by a smart distributor who recognized a hot
product that could also be sold at the retail level. Another
example of the two channels working together in harmony.
There’s even a new channel that is rapidly developing -
the Internet. Internet shopping will also have its own place
in the buying habits of individuals, coexisting with the direct
mail and retail channels. World Wide Web sites can be carefully
designed to generate a call to a firm’s 800 number for the
placement of an order or obtain product literature and the
location of the nearest dealer. Or when encryption develops
to a level where its safe to place an order over the Internet
(its practically here with the dual-key encryption system),
perhaps the direct mail piece could point the potential customer
to the Web site where they can get in-depth product information,
download a demo version, or even place a direct order.
The early adopters and technophiles enjoy using this new
medium for transacting business -- why not give them the opportunity
to use it.
I have seen many software publishers create a productive
harmony between the retail and direct channels. There is no
doubt that they can work together to maximize overall order
activity and to even strengthen relationships between the
software publishers and the retailers. In a future article,
we will discuss several strategies on actually measuring the
impact of direct mail with the retail channel.
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