Real-time Retailing
Getting Marketing to Synchronize its Watch
Deliver the right goods at the right price to the right people at the right time. Retailers recite this mantra with the seriousness and conviction of a monk. But who is really doing it? You are? All of it? Or just part of it?
Most retailers would confess they're not delivering the entire mantra on a repeatable basis. Adding to the frustration is the sense that it should be easier to achieve in today's world of real-time and just-in-time technologies. The question then is, "Where's the hang-up?" The answer, many times, is Marketing.
While other critical operations such as Merchandising and Distribution have found ways to shorten lead times, make inventory adjustments in mid-air, sort and distribute merchandise based on geographic and demographic preferences, lower warehousing costs and basically re-engineer their approach to key functions, Marketing is stuck in time. Production still takes as long as it always has. Despite spending tens of thousands of dollars on computers and software, work progresses at the same pace. The question is, "Why hasn't Marketing come up to speed?" The short answer is, lack of integration: both strategic and technological.
How often have you heard the phrase, "Marketing is just overhead?" A key insight is that retailers historically viewed Marketing as a program executor and not a contributor to the bottom line. In other words, Marketing has always been a necessary but downstream function that delivers little or no ROI and in most cases just eats away at margin dollars. As a result, critical functions such as Merchandising and Distribution got all the technology attention. Retailers continue to spend frequently on upgrading and integrating their systems while Marketing is still a technology orphan.
In the old days (10 years ago), this perspective was tolerated. Now it isn't. As the lone retail-time holdout, Marketing's lack of system integration hamstrings those departments that are operating at warp speed. For example, where there is a deal, Merchandising will follow; ready to respond at a moment's notice to any product opportunity. But they can't if Marketing says there isn't enough time to do a new promotion, or it's too late to adjust creative on a campaign that's already in the works. Merchandising takes a pass on the product deal. No additional ringing of the cash register.
Smart retailers determined to bring Marketing into the world of real-time retailing start by reinforcing Marketing's value in the right product, right person, right price, right time strategy. Sharing direct responsibility for business goals – increasing competitive advantage, cost efficiency and ultimately, bolstering the bottom line – automatically requires closer collaboration between all critical departments and will therefore lift Marketing out of its internal vendor status. Then the question becomes, how do you enable what amounts to a significant change management initiative that may begin with Marketing but must include all departments?
The corner stone to this new alignment is a DAM system. DAM stands for Digital Asset Management. In its most basic form, a DAM is a shared asset repository that houses all graphics, design, and imagery as well as templates and production specifications. It enables an entirely paperless development process across all media: broadcast, print, web and collateral. Art directors, writers, traffic and production, even pre-press and printing vendors have instant access to photos and copy, templates and logos, location listings and tags.
While it's easy to understand how a DAM can speed up the traditional process of developing and distributing promotions that's typically just a start-up goal. Putting a hot new engine into an old car is not the best use of the new engine. What a successfully implemented DAM really does is turn a methodical, one-step-in-front-of-the-other production process that does not respond well to change into a dynamic, non-linear process that not only welcomes change but leverages it into a powerful, competitive weapon. Simply put, the longer merchandising can wait to establish product and price, the more strategic and competitive the decisions it can make. By shortening its own lead times, Marketing can buy time for Merchandising.
On the flipside of changing on the fly is a more mundane but equally important outcome of a strong DAM system. Cost-efficiency - both within the Marketing department and across other departments. A well-organized DAM identifies the status of every image in the photo library. That way when a web designer pulls a shot he or she knows if the royalty negotiation includes web usage. Otherwise, the retailer may end up paying twice. A DAM eliminates pricing misprints and inconsistent merchandise descriptions.
Multi-channel integration, consistent promotional execution across multiple channels of communication, is an area where organizing retail time processes and people around a DAM can immediately improve lead times and enhance profitability. For example, an offline-to-online promotion migration can be done concurrently during the development cycle because all the program assets are also at the web team's fingertips. No waiting for an offline art director to dig the right photo out of his or her desktop, no misfires on key messaging or wondering if there's copy for a particular product shot. The program launches sooner with greater cost efficiency and no mistakes that can drag on margins.
Sounds good. But don't forget wholesale adoption and implementation of a DAM system depends first and foremost on establishing Marketing's upstream value as an integral strategic partner. Then give them the technology they need to make it happen. Once that happens, getting the right product to the right people at the right price at the right time will no longer be just a marketing mantra.