Background: A well-established specialty retailer has a multi-channel distribution network, which includes a number of partnerships with department stores, oil companies, credit cards, airlines, hotels and other marketers. We were asked to evaluate this company’s partner marketing strategy, direct marketing tactics, internal procedures, staff effectiveness and other key factors, and make recommendations about the future direction of partner marketing efforts.
Key challenges: This client was attempting to make the most of their relationships with a diverse group of marketing partners. They faced a highly competitive marketplace, and an internal environment that had grown, over a sixty-year period, to support an order processing system rather than a marketing-oriented company. Legacy systems made effective marketing initiatives difficult, in the absence of customer data most marketers take for granted. In addition, each partnership agreement seemed to have been an ad hoc effort, making it challenging to get a clear picture of partner profitability and customer value. Finally, the client sought guidance regarding how much of their marketing efforts should be directed through partner channels, and how much through their own branded direct marketing efforts.
Our methodology, solutions and recommendations: MSA studied and analyzed partner legal agreements, direct marketing materials, sales reports, financial statements and other materials. We conducted numerous interviews with marketing, sales, technology, finance and operations staff. We reviewed competitors’ partner marketing efforts. We evaluated the effectiveness of support systems, information infrastructure, reporting, fulfillment operations and other vital support functions. We witnessed internal meetings and took part in interdepartmental conferences.
Our report, delivered in writing and in a personal, interactive meeting with senior executives including the CEO, CFO, CMO and Director of Partner and Direct Marketing, stressed the urgent need to implement an effective marketing database. We pointed out that legacy systems and the company environment resulted in an under-emphasis on marketing, while correctly stressing impeccable order processing and customer service. We recommended creating a much more information-rich environment in which marketing and finance managers could better understand partner profitability and customer value. And we stressed the need to implement uniform guidelines for evaluating potential partnerships, and a flexible but consistent template for partnership agreements. We also pointed out a number of potential marketing opportunities to field targeted marketing efforts and drive incremental revenue for the retailer and its partners. In addition, we noted the limitations inherent in the partner channel, and suggested a greater reliance on institutional direct marketing efforts, supported by the enhanced database capabilities we recommended.
Actions and results: Top management strongly supported a new emphasis on direct marketing through both partner and proprietary channels. The company is currently implementing a cross-departmental re-orientation of the company to correct the imbalance that had existed between operations and marketing. Senior management was restructured to support this new direction. MSA is currently developing database marketing solutions for this company, and we look forward to helping design and implement new partner and branded marketing initiatives to generate incremental sales and profits.
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