Fulfillment is a vexed issue for most publishers. Here’s the basics. Essentially, you spend lots of time and money getting customers. Then you give your customers over to someone else. Then you pay that someone. Then you let them handle your customers for you, without really knowing what really happens. Then you pay them again. Then you ask them to tell you what’s going on with your customers, and they tell you that you have to pay them to find out. Then you pay them. Then you don’t really find out what’s going on. Then you pay them again.
I may of course be exaggerating, but hey, I’m just trying to get your attention.
There are problems with the current subscription fulfilment model. What we as publishers lack is a sense of direct, hands on control, and what we feel is that every time we go beyond the absolute basics, we pick up extra costs.
And yes, we all sign contracts with our fulfilment houses after a period of negotiation, so we get what we ask (and pay) for. We only have ourselves to blame.
There is an alternative of course. You can “do it yourself”. There are a selection of systems available which you can licence, then operate using your own staff. This gives you total control, obviously. However, control comes at a price – literally. You need a dedicated staff of handlers, processors, managers and IT systems people. Most large publishers worked out long ago that it is more efficient to outsource.
Fulfilment has its dull moments. We all need large numbers of envelopes opening, and renewal series sent out, and labels printed, and so on. And yes, of course, we don’t want to do these dull things ourselves. Our expensive and highly skilled(!) staff can be better deployed generating revenue. But, remember this, fulfilment is the contract at the centre of our business. Without out subscribers we have no business at all.
These two alternatives – use an agency, or do it yourself, are rather extreme. Could there be a middle way?
What we, as publishers, want, is to farm out the dull, and control the interesting. So what’s dull, and what’s interesting? Opening envelopes, dull, certainly. Banking cheques, dull. Sending out renewal notices, sometimes interesting. Handling incoming calls, occasionally dull. Doing label runs and separations, mainly interesting. Running renewal reports, that’s the highlight of the day (honest).
The truth is, there is a scale operating here from dull to interesting, and the positions of the tasks involved in fulfilment on that scale change from month to month. I would very much like to have more control, right now, of the experience that my customers have when they phone me up. Tomorrow that may be different. Today, I want to be in control of my data manipulation, tomorrow I may not.
Either way, I want it to be cheaper, more in my control, and more flexible. Most fulfilment agencies struggle understandably with all three. Cheaper – well that’s their revenue I’m talking about; in my control – that takes investment, or effort, or both; and flexible – they have large staff, they can’t just outsource them all, and sometimes we just want more than their teams have capacity for, staffing up takes time.
IT’s a problem
There are three main problems in the way of getting the service that I want – systems, people and expertise.
First there’s the IT systems side. Being a fulfilment agency has traditionally involved the setting up of bespoke, complex IT systems.
This means that there’s a huge barrier to entry, and a barrier to service development – it’s just plain expensive to build and maintain a large, bespoke IT system. How can we change this? It may help to consider a parallel in the development of websites.
When we first started out building websites for our magazines, events and so on, we’d choose a developer, sometimes employ them directly, and write the code line by line. And boy did it cost us some money.
Now, in the main, we buy off the shelf systems. Mostly we take building blocks – a database/registration management tool, a content management system, an advertisement handling system – and plug them together ourselves, like flatpack furniture. But there are companies (particularly in events – ASP Events for example – but also people like SIFT who work more generally in media) who provide a customisable system ‘ready assembled’, hosted and maintained on a third party server, but controlled ‘through the browser’ by the media/event owner directly.
Could there be a serious through-the-browser user-customised fulfilment management system? There exist all the basic building blocks of such a service, at it’s simplest, fulfilment is a CRM database, and there are loads of them about.
Indeed, any one of the fulfilment system providers could provide such a thing – for example Gordon & Gotch, BPI, and Oak. They provide, in general, server hosted applications on a traditional licence model. It’s only a short step from that to a service hosted and maintained on a third party server – application service providers.
What about the IT people you might need to operate and maintain them? Can there be ‘off-the-shelf’ expertise you could rent to manage the system on your behalf? Why not?
It’s the way we do it
A second problem is the large numbers of people required to answer phones, and open envelopes. These large staffs are a big legacy problem for most agencies as they need to charge enough for their services to continue paying them. Most are of course based in the UK. At the moment, we mostly feel that we need UK residents answering the phone, but as time goes by, there will be less and less contact by mail and phone, and more by e-mail and web. This can be automated, or dealt with anywhere in the world.
So increasingly we’ll want these tasks done, more cheaply, outside the UK. Will there be time for existing agencies to run down staff through natural wastage and move gradually to outsourced call centres? Possibly not. And anyway, will they want to outsource? History suggests they’ll want to employ direct – agencies could easily have outsourced to UK based call centres already, but they haven’t.
Talking of call centres, a brief examination of their history suggests that outsourced services start small and focused, then become large and highly systems driven as those systems increase in sophistication – concentrating the activity in a few centres.
If we follow this through for the various ‘dull’ tasks that are involved in fulfilment – opening letters, answering the phone, banking cheques, inputting data and so on – we can see that there are (or could be) specialised operations which can deliver such services, either offshore or domestic, at a lower cost, and with greater flexibility than a dedicated focussed group can.
For example, if I want to run an outbound telemarketing campaign through an agents in house call centre, I have to let it run over a longer period than if I pass it to an outsourced call centre with a more flexible resource base, which is able to put a larger number of callers on to the campaign at a time.
So the solution then is a series of arms-length agencies focussed on the specialised, but dull, areas of fulfilment? Well, maybe, but once again, to expect publishers’ staff to manage those directly is unrealistic. We’d need to take people on to do that.
It’s the knowledge
There are things that I want to buy from fulfilment agencies that I struggle to now, these are based around expertise. I need my agency to help me reduce costs, and improve performance; to make a better subscriber experience, and save me money. At the moment, it’s not in the interest of any agency to reduce its own income, and while it is in their interest to help provide a better subscriber experience (and they do try to do this), they remain trapped by the legacy of their software and systems development.
This expertise – the knowledge and experience of experts in fulfilment – is what I really value. And this could be high margin business for those who can provide it.
So the successful fulfilment business of the future could be a very different beast to the ones we see today. Here’s one way that it might work better, for me at least.
I buy a service for a fee, from a consultancy – let’s call them a Fulfilment Agent – who, on my behalf, licences software probably maintained on a third party server, and manages a series of outsourced agencies for inbound/outbound telemarketing, letter handling, cheque/credit card processing and so on. They put me in control of my own data – so I can do my own label runs (or not, depending on my preference), affect the renewal series’ in real time (with their constant advice and help of course) and generally stay in total control of my own business.
The value that fulfilment bureaux really add – the knowledge and expertise – is what I really want, and am perfectly prepared to pay for. I think, in the future, that those businesses in the fulfilment area that survive and prosper will be those who make money from where they add value, rather than from where they perform dull and time-consuming tasks, those who trade on their expertise rather than their capacity.
Will this happen? The current service providers may be working towards something like this, but it will be a hard thing for them to change so much. Expecting large, profitable organisations to totally change their business model, reduce their staff to a fraction of present day levels through outsourcing, and restate all their customer contracts is a big ask. So it’ll take a substantial time, or a new entrant or two. So it won’t happen anytime soon, unless someone else has already had the same thoughts as me….