too many companies are jumping into the Internet without considering some direct marketing basics. For one thing, they have thrown the customer overboard in their pursuit of the e-rush.

Lash yourselves to the mast and consider the following research findings:

– A 1999 study by Net Effect of best-in-class Web sites shows that 67% of online purchases are never completed due to inadequate real-time customer support.

– According to Datamonitor, 237 million online transactions were attempted in 1998, but only 22% were completed. Datamonitor estimates that $1.6 billion in sales could have been saved by implementing some form of customer service – a figure that escalates to $3.2 billion in lost sales for the 1999 Christmas season alone.

– Analysis by Forrester Research, as published in The Marketing Report, states that 76% of Web sites fail to meet basic requirements for a good customer experience. In addition, only 17% of sites had customer service woven in; keyword searches were precise and comprehensive on only 7% of sites; and 3.87% didn’t provide essential information at each user decision point.

– Per a Meta Group/MT study, “In spite of marketplace perceptions of the Web (e-channel) as a dominant customer contact point, traditional selling channels such as face-to-face selling, business partners, and telechannels continue to account for more than 95% of revenues.”

Or consider these little nuggets. The CEO of an international company decided that the Web presented such a strong economic benefit to the company that all other forms of ordering should be discontinued. What happened? Terrified managers conducted research and determined that only 10% to 15% of customers preferred the Web. And Julie Schoenfield, president of Net Effect Systems, says that “only 2% of those who visit a site actually make a purchase.”

Many corporations are lured to the Web because of the promise of substantial cost savings. The pulse of the bottom line throbs with notions of eliminating vast departments of sales people, order processors, etc. However, we need to keep our eye on the customer and realize that Web marketing does have a costthat hangs in the balance – the customer relationship.

The more effectively we can nurture that relationship, the more we can increase lifetime value. Rather than a complex formula, the best way to consider LTV is as the total business a customer may do with your company. As time goes on, your acquisition cost goes away, so every dollar transacted becomes more profitable.

Yes, we must be constantly vigilant about the quality of our goods and services. And yes, we must become zealots for our customers, rabid in our pursuit of customer satisfaction: communicating value to our customers (as our customers define value) through the media and sales channels that they choose.

Here are four tools for creating customer-focused (versus media-focused) strategies:

1. Voice of customer media and message preference research – Without being overly simplistic, the best way to identify what customers want is to ask them. The VOC process helps develop qualitative marketing data through one-to-one interviews with customers and prospects. The detailed, personal nature of the research yields results that are free from the pollution of group dynamics.

2. Reallocating budget to spend the most on your best customers – Marketing investments should be driven by potential return. Potential return is driven by the concept of “propensity to buy.”

Who has the highest propensity to buy? Likely the 20% of your customers who generate 80% of your revenue. But instead of allocating our marketing dollars to these folks, the prevailing wisdom says, “They already bought – we need new sales.” And so we concentrate on prospecting.

Important perspective comes from an AT&T study that (in 1918) concluded: It is five times more expensive to sell a prospect than to sell an existing customer.

3. The consensual database opt-in process – The true role of a database is to drive the allocation of resources. However, the database can only be as effective as the customer information it draws upon.

The consensual database opt-in process provides a quantum leap in the clarity and accountability of the customer information, because the information comes directly from customers – not third-party sources.

There has been a consistent theme rising from over 500 hours of VOC research: Customers and prospects find most marketing communications to be superficial and irrelevant – not providing them with the information they require to make an informed decision.

The answer to this marketing conundrum also came from VOC research – in the words of the CIO of a multinational corporation, “You think that because I’m the highest-level person in the department, you have to send all the materials to me. But that’s not how we make decisions here. I’m tired of being your executive mailperson, reading each correspondence and then forwarding it on to who really needs the information. I would rather sit down with you and tell you who needs what information, when they need it and via what medium. And I will refresh that information once a quarter.”

In subsequent interviews, nine out of 10 decision makers endorsed the concept and said that they would participate as the executive sponsor for their company.

How does this work in practice? IBM created a consensual database opt-in process and achieved the following results:

– 841% increase in qualified response.

– 82% conversion from responses to qualified leads.

– 80% increase in sales over the control group.

– 75% decrease in marketing waste.

– 6 point increase in customer satisfaction.

– 17% of the market in pre-sales activity versus 8% previously.

Want to hear it from the horse’s mouth? Here are the considered opinions of three “best-in-class” marketers, two business-to-business, one consumer. Each is an example of customer-centric, carefully integrated, multimedia, multichannel strategies to surround the customer with value-added communication options.

Andy Grim, VP of sales and marketing, Golden Rule Insurance

Golden Rule’s target market is small-business owners, self-employed individuals and others who not covered by group health insurance.

The prevalent idea is that the Web is only for transactions – and that the cost savings are very attractive. However, we found that our customers don’t buy health insurance that way.

A multimedia approach seems to work best for higher-ticket sales. Restated, the importance of the product to the client – i.e., commodity versus important/ complex – will determine whether a strategy that focuses on Web purchases or integrates the Internet into the media mix works best.

For us, it was the difference between being focused on the medium, or focused on the client.

We also found that Web advertising is ineffective. Advertising generates too many unqualified browsers.

What we found to be effective is investing our lead generation dollars in building mutually beneficial partnerships with other Web sites where we pay for qualified leads – not clicks.

Once we receive a lead, we then:

– Use e-mail to acknowledge the inquiry.

– Use direct mail to send them complete information, and an application.

– Follow that up with an outbound call from a licensed rep.

We have maintained our closing ratio of 25% to 30% while massively increasing our lead and sales volume by transitioning clients from impersonal generic Web sites to value-added, personalized e-mail and phone interactions.

The Web is a good lead generator for us – but not the only one. We allow clients to find us through multiple media: The client chooses. Once they declare their interest, increasingly personalized and timely follow-up is critical. Each customer “touch” must be value-added. Once we get to the outbound phone call, instead of saying, “Why are you calling me?” the client must say, “I’m glad you called.”

Nick Roelofs, director, electronic business initiatives, PE Biosystems:

The rate of change in life science combined with the vast amount of data available on the Web makes the Internet a mandatory tool for research.

This affords PE Biosystems the opportunity to competitively differentiate ourselves within the life science community. The problem is data overload. The Web will increase the amount of data – good and bad – that the customer can access. How does the customer find the specific piece of information in this infinite sea of data?

Our goal is to direct customers to the pieces of information we want them to see, and they feel they need. Through the integration of print, mail, phone, e-mail and personalized Web site access, it will be possible to engage in the value-added exchange of information and thus provide the exact information, in the right way, at the right time.

In the “new” world of electronic business, whoever has the right information/ message at the right time, wins. It is no longer just being “top of mind” – it is now “first to respond.” This requires integrated messages, timing and personal profile information.

Personalization of the customer experience is key not only to delivering the information they want in the form they prefer but providing a relationship experience that is meaningful to the customer. The more you know about your customers, the more tailored and unique their experience can be.

Remember, the customer is looking for a path out of information overload. The value of the site is personalized information. If it is done correctly, customers will increasingly “opt-in” with increasing levels of personal information to improve their experience.

Real-time customer service and support is mandatory. Even if you lose an order, if you are always there to respond with a quality answer, you will be given de facto “first right of refusal” in the world of information clutter. Real-time response will become the price of admission.

E-commerce, however, is new to many in life science. Although many scientists use the Internet at home for personal purchases, the adoption of e-commerce for laboratory purchases is just beginning. The main barrier is internal purchasing systems with approval processes that inhibit instant purchase via the Internet.

Some aspects of the sales process will always rely on the face-to-face-interaction of a field person – major product configuration/selection, prod uct customization and final relationship management. If the Internet can deal with the research aspect of the customer interaction, then the sales force can focus on the value-added aspects of the interaction.

Dennis Thomas, VP of sales and marketing for LaserTech:

LaserTech – a direct marketer of stamps, signs and other office products – is integrating personalized Web sites into its media mix. We have two competitive differentiators going for us:

1. We produce a superior product.

2. We will go the extra mile for our customers – and that also drives our media-mix strategies.

To prove our commitment, we are in the process of developing a specific Web site for each of our large customers. The Web site will feature all the products that are contractually approved by that individual company, so their employees can order easily as the need arises.

Now this sounds great when we’re presenting to the customer, but what if nobody comes to the Web site? Then nobody wins.

It will take the integration of traditional media – primarily direct mail, catalogs, inbound and outbound telemarketing – to stimulate demand from our customer’s employees.

First we plan to sit with each customer and create a consensual database. Together, we identify the end users and those who have purchasing authority. We record their reach information – phone, fax, e-mail – and their media preference for different types of messages, for example: catalogs versus product updates.

Outbound will be the workhorse. Our challenge will be to keep the contact value-added. Let’s say we mail a catalog. Outbound follows up the catalog with a two-fold message:

The first part will provide immediate value to the customer:

– By our records, you use the X and Y products.

– Here is what’s new, here are some tips on how to use the product better.

– Let’s both get on the Web and review some related products you can benefit from.

The second part will provide ongoing value to the customer, and to LaserTech: What has changed in the office? Who is new? How are our products working? What are new needs that we respond to?

Thus, the integration of media will be critical to satisfying our customers, and generating increased revenue.

Starting with the wrong assumptions on the telephone is like rolling a boulder uphill. While it can be done, you’ve got a much better shot at success if you begin your journey on level ground. That requires some forethought and preparation.

One of the best ways to think through a telephone program is to start with the target audience, not what you have to sell them. While this may sound like Direct Marketing 101, you’d be surprised to find how many campaigns and scripts focus on the product, its features and benefits, the company, why we’re better than the competition, what’s on special and a host of other things that are of absolutely no interest whatsoever to a potential buyer.

The only thing that does interest John Q. Prospect (especially within the relatively short duration of a telephone contact) is his needs, his pain, his problems and how you can solve them. What you have is only meaningful within this context.

So how do you zero in on the hot buttons of your prospective market? The first step is an acknowledgment on your part that many – if not most – of the people you will talk with will not be good candidates for your product or service at this time.

While this may seem like a negative way to plan a campaign, the reality is that – even with a good list – nine out of 10 people won’t need or want what you have to sell or won’t be ready to buy it. By focusing on eliminating the folks who truly are not a good match, you will be better prepared to understand the needs of your true target market so you can craft an approach they will find compelling and convincing. At the same time, acknowledging that what you have is not for everyone (which implies you’re not going to try to shove it down everyone’s throat), you’ll reduce the natural fear and resistance most people experience when someone is trying to sell them something by phone.

This general concept has been called consultative selling, solutions-oriented selling and a host of other terms. The best thing about it is that it makes the folks on both sides of the line feel more relaxed and requires each to focus on the other in trying to determine if there’s a good fit.

It’s the antithesis of what most people think of as “telemarketing” – which is why it’s so effective. And like most good things, it’s easier said than done and requires some soul searching and pre-planning to design effectively.

The first step is in determining which of your customers are most profitable to you. It seems basic enough: If you know which customers provide the most value over their buying lifetime with you, you’ll know how much to spend to acquire them. You’ll also be prepared to find out their “stats” so you can pursue an appropriate internal or external list search. For business-to-business calling, this might include company size, number of employees, vertical market and level of decision maker. For consumer calling, the most pertinent demographics might include gender, age, annual income or number of children.

If you’re feeling a little embarrassed that you’ve never analyzed which customers are most profitable or which prospects never seem to buy from you, don’t be. Very few companies do this type of analysis up front, especially in planning a telephone campaign. The good news is that there’s no time like now to start gathering and scrutinizing this data.

Beyond list selection, you’ll need to understand a lot more than your market’s basic statistics in crafting the overall campaign. What are their hot buttons? Which of their needs are not being met in the marketplace. How can what you have to offer meet those needs better than their current supplier(s)?

Who influences and makes the buying decision? When are these individuals accessible and most receptive by phone? Can a decision likely be expected in a si ngle telephone contact? If not, what is the next step in the selling process? What information or materials will likely sell the prospect on taking the next step?

Be prepared to talk with a host of people as you try to get to “the true core” in qualifying the issues that lead to a sale: satisfied long-term customers, people who no longer buy from you, people who almost bought but didn’t, people who are still in the pipeline, etc. Once you have distilled your learnings down, document specifics about “ideal” prospective customers. If these folks were standing in front of you right now, what would they look like and sound like? And what will you need to explore on the phone to determine if they’re a likely prospect or not?

Here’s a real-life example from a company that was selling a technical fix for a legacy computer system within the financial services market. The following describes the best scenario for selling their service:

– They reach the decision maker or the decision maker’s right-hand technician.

– The prospective company has budget approval to purchase a fix externally.

– The prospective company runs a “mission critical” operation that could grind to a halt without the fix.

– The prospective company is a current customer and tends to be loyal to you.

– External resources are not available (the company has no local technical consultant or value-added vendor who can help with the problem).

– The company’s internal technicians do not have either the skill set or the time to perform the fix.

– The company’s internal technicians are not afraid of losing their jobs if they request external help (no “high fear factor”).

– There’s currently no automated technology or process in place to deal with the problem.

– The company has no immediate plans to upgrade their systems (which would render the fix obsolete and not cost-effective).

Unfortunately, much of this information often comes from pitching such a service to the wrong people: By getting turned down you can learn a lot about why someone would be pre-disposed not to buy from you. This is how the most successful telephone representatives learn by trial and error and adapt their presentations and qualifying questions accordingly. Few companies, however, have processes in place to accurately capture this information and adapt their basic approach so that more representatives can benefit from it. And unfortunately, very few companies ever alter the front-end marketing materials to leverage what’s learned at the telephone point of contact.

By building focused research and some pre-rollout tests into your direct marketing plan you’ll avoid the crash-and- burn first scenario that sinks so many telephone programs before they even get started. Careful preparation within an adequate timeline is always cost-effective because it avoids money wasted on mis-targeted marketing and advertising, wasted leads and turnover within the call center resulting from the high rejection rate associated with an ill-prepared script or failing list.

Working through the research and logistics for your next telephone program – before you start firing away at it – will help to keep you on target.

To avoid tele-crashing and burning: Determine which of your customers are most profitable to you.

– What are their hot buttons?

– Which of their needs are not being met in the marketplace.

– How can what you have to offer meet those needs better than their current supplier(s)?

– Can a decision likely be expected in a single telephone contact?

– What information or materials will likely sell the prospect on taking the next step?