Creating Virtual Ladies With Stubby Pencils
That Bookspan—the amalgam of the old Book-of-the-Month and Literary Guild—was cited and fined for treating customers badly is a shame.
It’s true that the negative option book club is—without question—the most complex of direct marketing business models. It operates under a crushing schedule of 15 mailing cycles a year. Ten to 15 different kinds of communications between the member and the club could be in the mail at any given time: packages of books, returned books, announcements of new books, rejection (do-not-ship) slips, bills, statements, dunning efforts, payments, bonus book orders and bonus books shipped.
All of these transactions are date sensitive. If a rejection slip didn’t reach the club on time, an unwanted book is shipped that’s later returned for credit. If a payment is slightly late and not posted before the next statement went out, the member would be upset at being double billed.
The logistics are horrendous.
At one of many long, liquid lunches that I had with my boss, mentor and great friend at the Better Homes & Gardens Book Clubs, Lester Doniger, I put this question to him:
How in the world could book clubs with hundreds of thousands of members keep these myriad transactions straight before computers?
Lester took a sip of his white one and smiled. “Ladies with stubby pencils,” he said.
The Oh-So-Personal Touch
The majority of executives at work today have no idea what business was like before computers.
At book clubs prior to the computer, all transactions were posted by hand. In a large room were tubs of files overseen by “ladies with stubby pencils.” The files were arranged alphabetically by the customer’s name. For example, Aa to Ag was handled by Alice. Annie was in charge of Af to Al, while Am to Ar was Audrey’s territory.
When Mrs. Allen called in to find the status of an account, Annie got the call. Annie chatted up Mrs. Allen—whom she may well have known from previous phone conversations. When she found Mrs. Allen’s account card in the tub, she would be reassuring that the returned book had indeed been received and that it would be reflected on the next statement. Mrs. Allen had reached the friendly voice of someone who knew her and cared. Mrs. Allen was a happy customer.
Switching to the Computer
The computer makes it possible to save millions of dollars a year by getting rid of roomfuls of “ladies with stubby pencils.” At the same time, it’s imperative that the new system be so smooth and seamless that customers believe they’re personally being taken care of by a real lady with a stubby pencil, even though she’s virtual.
In the words of the late, great freelance copywriter, Bill Jayme, “In the marketplace as in theater, there is indeed a factor at work called ‘the willing suspension of disbelief.’“
One of my early jobs was running the School Administrator’s Book Club and the Lawyer’s Literary Club for Macmillan’s Professional and Technical Publishing Inc., division (P.T.P.I., known familiarly as Pee-tee-pi), consisting of 14 different clubs. It was presided over by William H. (Bill) Houghton, whom I remember three things about: (1) He smoked eight packs of cigarettes a day in his office; (2) he was the most cautious, risk-averse executive I ever worked for; and (3) he was a brilliant conceptual thinker with one of the most meticulous, detail-oriented minds I have ever run across.
When Houghton took over the organization, he walked into a catastrophe. The clubs could send bills with the books it shipped, but was incapable of sending statements and had a one-year backlog of correspondence. Letters were being answered by hand in chronological order; this meant that members were hearing back from the club a year after they had written.
The first order of business was to trash everything that was more than 48 hours old. Houghton then computerized the operation. Under his vision, he fooled the computer into thinking that it was running one giant club when, in fact, it was really servicing 14 different clubs. Once the new system was programmed, Houghton ran it parallel with the old hand system for nearly a year to make sure all the glitches were worked out. Finally the switch was made and a seat-of-the-pants operation became a business.
How Could an 80-Year-Old Company Be Cited and Fined for Shabby Customer Service?
Harry Scherman, Robert K. Haas and one of the all-time great direct mail copywriters, Maxwell Sackheim, founded Book-of-the-Month Club in 1926. At a time when bookstores were very few and far between, they came up with a marketing scheme that brought the very best books to the entire country.
This trio of marketing geniuses—together with a wild Doubleday salesman named Charlie Marshall, who founded Literary Guild a few years later—made America literate.
The business model was based on flattery (“As one that loves books, you are invited to….”) and the inertia of the negative option (“If you want this extraordinary new novel by Ernest Hemingway, do nothing and it will be shipped to you automatically.”)
The system was created from scratch, and these men knew every facet of the business. They designed the tubs with the account records and hired the “ladies with stubby pencils.” They fielded phone calls from members, wrote promotions, negotiated with publishers for the rights to books and made damn sure everybody was happy—members, publishers, authors and the hard-working internal people who made it all happen.
Houghton dove into the nitty-gritty of his 14 book clubs and became facilitator, ringmaster, cheerleader and toughest critic. It irked me to no end when Houghton would criticize my promotional copy, but he was always right.
The downfall of Bookspan, no doubt, was caused by specialization.
“Whoever knows only one direct marketing skill,” wrote Martin Gross, “whether it’s art direction, copywriting or list management, does not even know that properly.”
In direct marketing—and most other businesses—what happens in one area directly affects other areas. And when people are hired for a specific job in a specific department, that job and department are the only frame of reference this newbie has. Without seeing the big picture—and not having the mentality of a marketer—the result can be customer abuse rather than customer delight.
Apple and Bookspan—Textbook Mediocrity
Three weeks ago I ordered a new battery for my laptop from Apple online. I gave them my credit card and a few days later the product arrived and is working fine. Here is part of a long e-mail sent to me by Apple:
Dear Apple Customer,
Thank you for shopping at the Apple Store!
If you already have paid for your purchase, please retain this invoice receipt for your records.
If you need to send payment to Apple, please reference Apple’s Invoice Number on your remittance. After remitting payment, please retain this invoice receipt for your records.
This is absolute gibberish. Apple is saying, “We don’t know if you paid or not.” My confidence in Apple—one of the most sophisticated high-tech companies in the world—plummeted.
Who approved this communication—some IT nerd? Who wrote it—a programmer? What is Apple thinking?
Clearly the people in charge of Apple fulfillment emphatically aren’t “ladies with stubby pencils” who’ve talked to customers and who intimately know how their system works.
The folks at Bookspan are far worse. The Pennsylvania attorney general’s rap sheet is truly embarrassing—as is the fact that the venerable old Book-of-the-Month’s back-end misfeasance ended up on the Florida State’s “Fraud Update” Web site:
* Failed to provide ordered merchandise.
* Failed to provide ordered merchandise in a timely manner.
* Shipped merchandise that was not ordered.
* Billed consumers shipping and handling charges for incorrect merchandise.
* Issued consumers notices that threatened to refer their accounts to a collection agency if the bills for incorrect merchandise were not paid.
* Disputed consumers’ claims that incorrect items were in fact returned.
* Failed to refund consumers for merchandise that was either never received or returned.
* Advertised merchandise that was not available.
With Amazon.com’s magical service and discounted prices and a Barnes & Noble in every mall and city, the negative option book club is becoming vestigial—in the same company with buggy whips and 45-rpms.
That the back-end people at Bookspan were practicing the same customer abuse so rampant at AOL may not be surprising. Bookspan is partly owned by Time Warner, which also owns AOL. Maybe nastiness is part of the corporate culture.
About the Chart Illustration at the End of This Article
Two of the most scrupulous practitioners of back-end excellence are Prescott Kelly, proprietor of the Stamp Collectors Society of America, and his creative director, the great copywriter, Malcolm Decker. Their product: postage stamps from around the world sent on a continuity basis.
At the end of this article is the flow chart/decision tree of correspondence requirements for one of the early Stamp Collectors Society of America promotions. Each line represents a letter that must be written in response to the customer’s action.
Kelly and Decker believe that every letter (or e-mail) that goes out represents a unique opportunity to pre-sell, re-sell, up-sell or—at the very least—to further enhance and solidify the relationship with the customer. Conversely, a carelessly written letter could lose a customer. As a result, all letters are either written—or at least edited and polished—by Decker himself. In Decker’s words:
We put as much effort into Transmittal Letter Number 7, 17, 27, 37, load-up and bounce-backs—word-for-word, page-for-page—as we put into the four-, five- or six-page letters in our full-dress packages that brought these same subscribers into the program.
Incidentally, Decker’s letters are not necessarily “personalized”—that is, with the name of the recipient included in the copy. But they’re perceived as personal—one writer talking to one reader in a personal, conversational way.
Does this attention to back-end detail payoff? Completion rate for an average Stamp Collectors Society of America series over a three-year period was around 50 percent, and many of their customers bought more than one series.
To get a fix on average completion rates on a long continuity series, we called Grolier Enterprises, who sell a ton of the things, and asked what percentage of starters—on average—complete any given series. There was a long pause on the phone. Back came the reply. “According to an informal office consensus, 16 percent.” Consultants Paul Goldberg and Andrew Svenson agreed, estimating from 16 percent to 25 percent
In continuity marketing, the profitability of 50 percent completers versus 25 percent completers is exponential.
Decker and Kelly achieved what every business should aspire to. They made the customers believe that they were being lovingly taken care of—not by an impersonal computer—but by individual “ladies with stubby pencils.”
Click on chart to enlarge.