Obliterating Obsolescence

Posted on November 19, 2011 by admin

Marketing’s Next Operational Opportunity

The shelf life of marketing consumables and promotional materials has never been shorter or more challenging to manage. Marketers are spending billions of dollars producing, warehousing, and shipping marketing literature, as well as packaging, documentation, point-of-sale displays, premiums, giveaways, signage, and handouts for all channels of market contact and engagement. How well is this portion of marketing operations being managed and controlled? What level of visibility and control is needed to materially impact go-to-market effectiveness and competitive advantage?

According to a new CMO Council study, “Mapping + Tracking the Optimized Marketing Supply Chain,” even though investment in traditional marketing channels has been decreasing during the past few years, marketing consumables still make up a significant portion of the marketing mix. Yet 33 percent of respondents claim to not have any form of forecasting or inventory management of materials, relying on “instinct,” loose records of past orders, or guessing to order when materials are needed.

This “business as usual” approach to marketing supply-chain operations has led to an epidemic of obsolescence. As marketers seek to provide the most timely, fresh, and of-the-moment content to customers, old, overordered, rush-ordered, or unutilized materials tend to be stored, destroyed, or ignored, left to sit and occupy costly space in offices and warehouses. Leading practice enterprises will typically have an obsolescence rate no more than 8 percent-yet, when asked, respondents to the CMO Council’s survey estimated their obsolescence rate to be in excess of 10 percent with a large portion of companies facing over 20 percent obsolescence.

There are two key aspects to investigate while discussing impact of obsolescence: the impact on budget and the impact on experience. One of the greatest risks to the marketer’s agenda is that obsolescence has a direct impact on go-to-market effectiveness. Forty-two percent of respondents agree that the delivery of fresh content is absolutely critical to their strategies, with content hitting customers’ or prospects’ hands being the most up-to-date product and company information.
Even as marketers admit to the criticality of content, 51 percent also admit to having sent out old materials containing out of date content. Why? For a small few, warehousing error (2 percent) can be blamed. An additional 61 percent point to their printer/agency/creative for not having the materials ready in time for launch. But it is the 23 percent of marketers who simply did not know that the old material was sent that is the concern. Are these marketers not interested in this point of the experience and engagement? More than likely, regardless of their desire to have this level of visibility, it is simply not available.

The second point of impact for an inefficient marketing supply chain is the customer experience-or specifically a marketer’s ability to effectively present a unified customer experience that promotes loyalty and activates advocacy. Disconnection and customer defection can be instigated from a single negative customer experience. Imagine the reaction to receiving out-of-date or incorrect materials, receiving materials with incorrect pricing, conflicting brand messaging, or obsolete product information. To be sure, defection and disconnection are worst-case scenarios; however, marketers agree that the delivery of an optimized customer experience is a critical competitive differentiator in today’s tough marketplace.

Obsolescence is the very real manifestation of budget dollars that should have been deployed in other programs. Rather than investing in materials that eventually fail to land in the hands of the intended audience-be it customer, prospect, investor, or company employee-these lost dollars can be redeployed into rich demand-generation or retention strategies that move the business needle.

The opportunity lies with marketers to transform the marketing supply-chain operation. During these critical times, in which customer engagement is top of mind, budgets are restricting how far and wide programs can potentially reach. That’s why reducing obsolescence is more important than ever, enabling marketers to redeploy budget wasted on out-of-date materials. It’s a challenge, indeed, but a streamlined marketing supply chain is possible.

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