Apr 1, 2005 12:00 PM, Lorin Cipolla

Technology combined with a drive for customer service pushed fulfillment revenues up 14% in 2004, to $4.7 billion from $4.1 billion in 2003. Not only are marketers capturing customer information quicker via Internet-based fulfillment, they are also trying to establish trust and build relationships with jaded consumers both online and offline.

Often working behind-the-scenes, fulfillment companies play an important role in fulfilling prizes for many promotions and several are turning to the Internet to speed up the process.

“One of the advantages of making fulfillment easier and easier is doing it online,” says Mark Yokoyama, director of marketing for epromos.com, Inc. of New York. “Original requests can be sent through to the warehouse electronically and that brings down cost and increases accuracy. It makes it more cost effective to do fulfillment.”

Though cost effectiveness may bring a smile to a marketer's face, consumers can often spot a cheap trick when they see one. As marketing consultant and author Scott Hornstein points out, “The concept of fulfillment is answering the customer's question: What's in it for me? Traditionally the concept of fulfillment was underrated and ignored by marketers because it is not a sale. Now there is a gap between marketers and customers — in 2004 alone, 64% of consumers were concerned about the practices and motives of marketers.”

Running promotions exclusively online, Farmington Hills, MI-based ePrize witnessed its 2004 revenue more than double last year to $18.6 million from $9 million in 2003.

“In our business, digital fulfillment grew significantly faster last year. In fact, it is one of our fastest-growing disciplines,” says ePrize founder and CEO Josh Linkner.

EPrize has conducted a three-year member promotion for Pa1mOne, makers of hand-held computers, where the most loyal customers refer their friends to the company and receive Pa1mOne bucks. Those bucks can then be spent as cash either at Pa1mOne or other digital stores including Amazon.com and Staples.com.

“Essentially a lot of the old-school fulfillment tasks — data entry, mailing, cost and risk — are avoided with digital fulfillment,” Linkner says. “When a customer fills out a rebate online there are no data entry errors on the other end. In my opinion, sweepstakes entries and participation are all heading online.”

The fulfillment segment has also grown in 2004 for Bloomington, IN-based International Outsourcing Service (IOS) serving retailers, manufacturers, government agencies, educational institutions, banks and financial firms. Over the past year, IOS has conducted fulfillment for Fuji, Circuit City, Best Buy and hundreds of other retailers.

“Our clients are increasing their rebate offers by providing multiple offers within one rebate,” says Frank Clausen, executive VP of data services for IOS. “There are no longer just rebates on the aisles, they are now at cash registers and rebates can be used in conjunction with other rebates.”

Manufacturers are increasingly providing rebates at retail to provide value for consumers and encourage trial.

“If the industry has undergone 14% growth it should undergo even more growth by providing customer satisfaction, retention and lifetime value,” Hornstein points out. “Marketers need to pay more attention to the individual customer.”

SNAPSHOT 2004

U.S. brands spent 14% more on fulfillment in 2004 than in prior year

Online technology keeping down costs

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