Case Study: Vantage Deluxe World Travel and MarketFirst
You can make money online in this day and age; it just takes guts, smarts, and great customer relationship management.
Vantage Deluxe World Travel is a little different from other travel agencies. In business almost 20 years, Vantage caters exclusively to the mature traveler, those 60 years and older. For these customers, Vantage develops its own fully escorted travel programs, over 100 different programs, including escorted motor coach tours, European river cruises on its own riverboats, ocean cruises, and train adventures. This niche approach allows Vantage to spend more time understanding its customers and developing a more comprehensive and compelling offer.
Vantage needed a way to better leverage its assets and enhance dialogue with customers. With nearly 110 employees, $125 million in revenue, and years of experience in dealing with customers, Vantage understands the value of providing excellent customer service and reaching customers effectively. Vantage decided it was ready to utilize its detailed knowledge of more than 300,000 customers to increase revenue and profits, while providing service its customers want.
Problem: The lifeblood of Vantage Travel is effective direct marketing. Traditional techniques, using printed pieces, were becoming inefficient means of filling tours within short timeframes. Due to the cost, labor-intensive nature, and time needed for scheduling, direct mail was becoming a less effective method to drum up business.
Vantage was starting to move toward marketing by electronic means. As Tracy Emerick, senior vice president of marketing, put it, "Email marketing was part of our new direct marketing direction. The question was just a discussion of economics: How to make it profitable?" Due to Vantage's mature customer base, traditional mail will persist as a major factor, so the challenge became even greater to squeeze profits out of an email marketing program.
Vantage had been testing email marketing for a time, using an external service. The economics were unfavorable - with a variable cost, Vantage couldn't use high volumes to its advantage - but the decision was clear for moving into the email marketing space. Vantage needed a fixed cost solution, so it wanted software, rather than a service. After this the decision became "Build or Buy?" It decided to scan the market for vendors and see what was available.
Vantage made some decisions early on about what it was looking for. It decided not to go with a vendor that required a proprietary database. "We wanted a open database, so we had more flexibility," says Emerick. Vantage wanted an application solution, and one with a fixed cost structure, so it could use volume and customer understanding to its advantage.
Quickly, two potential vendors rose to the top of the list. After MarketFirst delivered their presentation, the decision was all but made. MarketFirst brought the solution, cost structure, and flexibility Vantage needed, along with experience and expertise.
MarketFirst was founded in 1996. A private company, MarketFirst does not release revenue numbers, but has worked with a number of high-profile clients, including Standard & Poor's, Exodus Communications, Autodesk, and Sharp. MarketFirst provides "enterprise marketing solutions" to streamline planning, operations, and effectiveness for marketing. Several companies have used MarketFirst's solutions to enhance their targeting of marketing messages and strengthen customer relationships.
MarketFirst recently released the latest version of their premier software package, MarketFirst 3.0. With prices starting at $195,000, up to $495,000, based on maintenance and professional services options, this application provides powerful marketing automation for clients. The program offers enhanced customization and tracking to help businesses understand and serve customers better.
Almost nine months ago, Vantage made the decision to go with MarketFirst. Within only one month, Vantage had its first marketing program out and live. Mr. Emerick described the implementation process as having "some hiccups," but was smooth, quick, and easy.
Vantage decided to train the entire marketing team on the MarketFirst system to ensure complete backup capability and to bring the team's focus together. "You have to have commitment and focus on the team; then it's easy. Until you get that, it's painful," says Emerick. As a testament to that focus, the key to Vantage's quick start was that Emerick's team developed and tested the marketing program on MarketFirst's servers, so that the second their implementation was up, they were able to get going.
Small glitches popped up, as Vantage had to learn the hard way about running its own marketing programs. When dealing with high volumes of email, maintenance issues become more serious. One email sent to a half-million customers crashed the mail server when undeliverable emails bounced back. Every time Vantage learned from their experiences, the process got faster and easier.
Along with the inevitable adjustments needed when moving a marketing program from an outside service to an in-house team, Vantage wanted to ensure that the MarketFirst program would move forward without being hampered by the past. To cement that break with tradition, Vantage hired an outsider to run the system. This seemed to minimize the effects of forcing employee change and conflicts with previous systems.
Of course, these kinds of changes within a marketing department affect more than that one department. Marketing automation in such a customer-centric business can speed up everything in the organization. "Having something like this internally does affect an organization," says Emerick, "Email marketing changes the cycle time to 'rapid.' Not six weeks like before, but daily. It's a whole different ball game as far as the ability of the organization to handle the speed." Other departments needed to adjust to the stepped-up pace. Booking could happen faster, so tours had to be created and published faster. The pressure increased as the schedule went from weekly or biweekly to daily or twice daily, but Vantage is seeing the benefits.
Vantage's Emerick seems quite satisfied with the MarketFirst purchase. "We exceeded our initial goals for MarketFirst and broke even a long time ago - it has paid for itself many times over," he says.
When Vantage was using the outside email service, it paid up to $0.04 per email. Now that the MarketFirst solution outlay has been recouped, Vantage is sending email virtually for free, reaping a profit every time it communicates with its customers. With less than six months in the program, Vantage has calculated that the program is responsible for at least $1 million in profit. The program also generates over $1 million in bookings every month. As if the added revenue and profit weren't enough, Vantage estimates its savings in direct mail expenditures to measure in the millions.
MarketFirst is helping Vantage pull results out of customers even in the toughest times. Due to the increased customer understanding and the enhanced capability for offer testing, Vantage is getting consistently high response rates, which generate between $100,000 and $280,000 in bookings every week.
Aside from the financial results, Vantage is using its email marketing capability to re-qualify existing customers, generate new leads, and expand its customer knowledge. Through email surveys and yield loss tracking, Vantage is able to pinpoint customer interests and optimal messages. Happy but not satisfied, Vantage sees great opportunity in the future, especially as research and customer insight continues to be a strong focus.
Vantage's strategy for managing organizational change is an interesting one. Many companies instituting new CRM programs have trouble with employee resistance to change. This resistance is natural, but it adds to the total cost of implementation. Vantage decided to circumvent much of that obstacle by bringing in an outside 'pilot' for the program thereby avoiding the tendency to revert to tradition that can happen when people are forced to take on new systems. It could be, however, that this approach may exacerbate political friction when new meets old. The approach seems to be working well for now and may be a viable option for other organizations making similar changes in the future.
Vantage's experience also goes to show that customer relationship management and smart marketing can drive powerful revenue streams and profits. The techniques of direct marketing are tried and true, and only the technology is truly modern. However, these new tools allow organizations to transcend many of the limitations of traditional direct marketing and drive results in today's complex and fast-paced world.