Company President Kris Calef talks about variety, value, and growth.
For the rest of the December 2004 issue of CRM magazine please click here
We have six product lines, starting with the Beer-of-the-Month Club, but we allow customers to mix and match--we can ship you beer one month and then cigars the next, or any kind of configuration.
We need to be sure we have good addresses. Five of our six products are perishable or require an adult signature. So it's important that someone is there to receive the shipment. If it's cheese, for example, and we've got a bad address, by the time it comes back to our fulfillment center, it's toast. It's not going to be reshipped. We've lost the product completely. What other problems were you facing?
For [every package] where UPS has to make a change because the address wasn't in [its] system exactly as it was on our shipping label, we get charged five dollars. With between 15,000 and 25,000 boxes going out every month, we were racking up some substantial charges--between $1,000 and $1,500 a month. That's what really justified using the QAS [address-verification] product. How did you select a vendor?
Actually, QAS found us. We didn't know this solution was out there. We didn't even seek competitive services. The key was that they let us demo the software for three months before we officially bought the product. So we had three months of data that showed us we were actually reducing our costs.
It came down to the numbers. For a relatively small organization--we're a $7 million company with fewer than 20 employees--the licensing fees are upwards of $8,000 to $10,000 a year. I like to make sure those reoccurring, annuity types of costs are justified. What obstacles did you encounter?
Mail Order Manager is our primary CRM system. QAS integrates with MOM, but what it hasn't integrated with naturally--although they tell me that it will--is our shopping cart. When I raised the issue with the folks who host our Web sites, they had an issue with how large the QAS database is. They didn't want to put that massive database on our server with our shopping carts for fear of degradation.
Also, when we take orders off our Web sites, we don't actually run the credit cards; we batch-import them into MOM daily. We wanted to run the orders through QAS as well, [but] we were already writing custom code for the import program; we had to have those programmers interact with QAS. It took two or three weeks to work out.
What benefits have you seen?
We've been able to reduce the UPS bad-address charges dramatically, but where we see the real added value--where you don't necessarily have a "hard-dollar" [benefit]--is the improved customer service. There are a lot of nonrecoverable costs when you're shipping perishable products. When flowers get returned to us, we have to ship another bouquet--you've already sunk the shipping costs. But if we're getting it to the right address on the first delivery, there's a huge benefit from our customer's standpoint, because he's getting it when he wants to get it.
We're also reducing the amount of customer service we have to do on the back end, trading phone calls or emails with the customer. We have about 10 customer service reps--having QAS hasn't carved out a profound amount of time in their day, but we're growing at 30 percent a year, and haven't had to take on more bodies in the process. What are your next steps?
We'll be looking at implementing the Web version of QAS, to catch [address errors] that much sooner. That will let our customers correct their addresses as they're entering their orders, as opposed to when we're entering the information into our order-management system.
Lessons Learned ROI doesn't always begin with an RFP. Cold-calling vendors occasionally have products that can actually help your business.Listen for the sound of opportunity knocking.If the proof is in the pudding, taste test it. Make a successful beta test--not just a demo--a prerequisite for purchase.Benefits come in many flavors. Cost justifications are critical, but look deep enough to see the indirect impact
of any project--it's hard to hang a price tag on happier customers.Don't break what's working to fix what isn't. Take care to prevent conflicts with and to not overload your existing systems--be sure they can handle the additional stress.