Even as founders Bill Guthy and Greg Renker have started to transition out of day-to-day operations, however, the eponymous company has kept its dual leadership structure intact. Co-CEOs Ben Van de Bunt and Kevin Knee steered the company for several years, and in 2013, two new leaders ascended, charged with one of the biggest challenges the company has ever undertaken: to transition from a traditional direct response television company into an omnichannel marketing powerhouse.
Seth Radwell, co-president and chief revenue officer, joined the company in 2010 as chief marketing officer. In previous positions, he helped direct-to-consumer book club marketers such as Scholastic, Inc., and Bookspan/Bertelsmann transition into digital sales, and also helped the early Internet provider Prodigy establish its e-commerce business—almost before anyone could say what e-commerce was.
Georg Richter, co-president and chief operating officer, also signed on with Guthy-Renker in 2010. He began his career in Europe at Bertelsmann, and has since served in leadership roles at the direct marketing divisions of Bantam, Doubleday, Dell Publishing, BMG Music Clubs, and Sandvik Publishing.
With Radwell overseeing marketing and Richter handling operations, the leadership team is now remaking Guthy-Renker into an omnichannel marketer. The company has expanded the presence of successful consumer brands such as Proactiv, Wen, and Meaningful Beauty in the digital space, and beefed up operations to handle the changing paradigm—one that puts the customer in charge of the sale.
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<strong>Making the Shift</strong>
Radwell describes direct response as having three phases: first, the now-classic era of the ’80s and ’90s, when Guthy-Renker and other companies simply logged telephone orders after airing television ads. “The business was more straightforward then,” he says. “It was about storytelling and the full presentation of a concept—often in long-form, which combined elements of inspiration, education, and information to drive consumer action. We measured it through the phone response.”
During these years, Guthy-Renker moved from motivational successes such as the Think and Grow Rich audiocassette series into consumer products, building Perfect Abs, Proactiv, and other products into familiar brands.
With the advent of e-commerce, online order capture defined the second wave of DR, starting in the late 1990s and continuing through about 2010. “That was where you built a website to take orders,” Radwell says. “Instead of thinking about response coming through the phone, we did the same types of infomercials and moved into short-form, and drove people to call the phone number or go to the Web to get the product.”
But with rapid expansion in mobile and social media, e-commerce would soon mean more than ordering from your desktop. The “Great Recession” slowed progress somewhat, but with people no longer hardwired to the Web, advertisers needed to find new methods to push messages to new devices and media. “Not only was the country not doing so well, but the media world changed from very traditional media to more Internet-driven,” says Georg Richter. “The media changed, and Guthy-Renker had to change.”
The new leaders are now bringing Guthy-Renker into phase three—what Radwell calls “digital-centric omnichannel.” As with any large consumer products company, it can no longer rely solely on a TV commercial to do its selling. It must be fluent in digital, social, mobile, and more to survive and thrive.
“That’s a huge transformation for the company, and a huge task,” Radwell says. “Digital is our No. 1 channel for order capture, but it is an equally big part of prospecting for new customers. The digital platform is a huge CRM tool, too. It’s all of those things now—and it has required us to fundamentally revamp the entire company.”
<strong>Breaking With Tradition</strong>
On the marketing side, Radwell is recalibrating Guthy-Renker’s creative infrastructure to target buyers wherever they live, surf, and socialize. The company has expanded rapidly into short-form on television and the Web to accommodate viewers’ shrinking attention spans. “We’re targeting customers differently, and measuring response differently,” Radwell says. “Just getting our storytelling into a compressed format has been a huge challenge, but the added challenges of attribution to the multi-touch customer journey is aything but straightforward.
“When I came onboard, there was a nascent digital team. They were doing some great stuff, but it was clear that the business had to wrap itself around digital competencies. That included everything from the e-commerce side to how we prospect online. It was all of the softer skills. It has been a big evolution.”
On the operations side, Richter is building a technological platform that delivers a state-of-the-art customer experience from initial contact to call routing to fast, transparent fulfillment. “If it’s revenue, [Seth] does it, and I do all of the interesting things like costs and technology,” Richter says. “You can argue about who has it easier.”
Together, the two have made a substantial investment in staffing and technology, adding more than 200 employees to teams handling digital marketing initiatives and customer service. “Technology is the enabler,” Radwell says. “Whether it is technology that allows us to prospect for customers in digital channels, or technology that allows us to better route and deliver packages, it is all technology-based.”
Guthy-Renker also brought more tasks in-house to exercise stricter control over the supply chain and better accommodate omnichannel shoppers. “I had to change the model from outsourced to controlled outsourcing—really being on top of the customer experience,” Richter says.
Old-line companies tend to have outdated and inefficient systems in place, he adds—systems that might have been appropriate when the company experienced its initial growth spurt, but became dated over time. “I am still in the process of rebuilding systems from a very old, traditional, slow world to a very fast world,” Richter says. “In today’s world, it’s about speed. One of my mottos is ‘Faster, Better, Cheaper.’”
<strong>New and Improved</strong>
Five years ago, Guthy-Renker had product websites, but didn’t have much of a presence in the emerging digital channels. “Today, if a customer sees a Proactiv spot on TV, the least likely thing they are going to do is call the phone number or go directly to the website and convert immediately,” Radwell says. “Many will search ‘proactive,’ go to Facebook, or go to Proactiv.com and look at our reviews. Some might go to Twitter. Some will see what bloggers say. There are many touchpoints before they convert. What that requires is a real understanding and embrace of the digisphere.”
And the digisphere is everywhere. Brands must be optimized to appear in search and suggest themselves on YouTube, Facebook, Twitter, and Instagram; review sites are often just as important. “We have to be in display, in paid search, in organic search, and in nonbranded search,” Radwell says. “We have to be in email marketing, we have to be in video, and we have to be in mobile. My goal was to fundamentally embrace digital, so that digital is at the heart and soul of demand creation—to make digital a storytelling and marketing device, as well as a customer-engagement platform to capture and service customers.”
In addition to short-form video, affiliate email and display ads are proving to be strong performers in the digital space. For example, Guthy-Renker can pitch Proactiv using an informational email that clicks through to a landing page; the landing page further showcases the product’s unique selling proposition (USP) and closes the sale. Search has also been productive, and Proactiv ads pop up any time there’s a search with the keywords “acne” or “acne treatment.”
Mobile display is a new growth area for Guthy-Renker, along with video pre-roll and mobile search. X Out runs :30 TV ads that go directly to a mobile presentation, for example, skipping dumbphones altogether. “If you are a 35-year-old woman shopping at the grocery store, you used to look at the tabloids,” Radwell says. “Now, you’re looking at your phone. Display infrastructure has evolved and has given us a huge opportunity. In 2010, we might have acquired maybe 1,000 customers a week; now—through display alone—we can acquire maybe 6,000 a week.”
Guthy-Renker isolates likely customers through behavioral profiles, demographics, and sequential targeting that follows consumers across multiple platforms. “Let’s say we target a mom with kids,” Radwell says. “The first ad she sees might say, ‘Is your teen suffering from acne? You should learn about Proactiv.’ Then, we can target them a week later: ‘Special today! Free shipping and handling. Try it for no risk!’”
Paid digital channels such as display and preroll are more difficult to measure than phone calls, he adds, but more challenging still are social channels such as YouTube, Facebook, and Twitter, where Guthy-Renker engages customers but can rarely measure a CPO. “We feel like it’s important that we are there, because our customers are there and our prospects are there,” he says. “You can’t not have a robust presence on Facebook or Twitter.”
Guthy-Renker remains committed to long-form television, however, and recently launched three new products supported by 28:30 infomercials. “TV is still a huge part of our business,” Radwell says. “It is where we grew up, and while there is definitely an increase in digital consumption, TV is not going away any time soon.”
<strong>Meeting the Market</strong>
On the demand-satisfaction side, Richter has built out the infrastructure to follow prospects and customers throughout their purchase path. Using a cloud-based system that monitors every interaction and distribution in the company’s worldwide network, Guthy-Renker tracks social media comments, distribution challenges such as weather and traffic, and more. “We have everything live in front of our eyes,” Richter says.
Guthy-Renker still takes phone calls—18 million of them per year, using 5,500 agents in 26 call centers worldwide. The cloud-based system sends each call to the best agent available at that moment, knowing the customer’s status based on a phone number. “When you run an infomercial, you can all of a sudden get 5,000 phone calls,” Richter says. “You have to be able to catch these waves.”
The new, more centralized system creates accountability. “If, for example, we are falling behind on how long it takes to pick up a phone call, a light goes red, and I have people who are doing something about that,” he says. “It used to be that you would make a mistake and weeks would go by; that can’t happen anymore. There is not much to be said if something goes sideways and you can see it.”
Richter has also accelerated fulfillment and expanded customer service to meet consumers’ outsized expectations. “Amazon set the expectations in the market, and we have no choice but to conform,” he says. “That’s why we constantly upgrade systems; that’s why we move to new distribution networks.” Guthy-Renker now ships orders the same day until 7:00 p.m., seven days a week.
“I’m in all the contact points with the customer,” Richter adds. “There are so many platforms, and you have to be available anywhere at any time, 24/7. The customer is in charge—that is no secret. You have no other choice but to please the customer.”
<strong>An Ongoing Challenge</strong>
Nothing stays state-of-the-art for long, of course, and it’s a continuous challenge for Guthy-Renker to keep up. As an established company, the two leaders are happy to let “bleeding-edge” companies develop new digital strategies first, see what works, and adapt them to keep Guthy-Renker market-equipped.
“It always feels like you’re playing catch-up,” Radwell says. “The environment is changing so rapidly that you never feel like you’re ahead of it. This is what’s so fun about the digital space—learning from fast-moving, agile, entrepreneurial, digital players, and applying it to a bigger business like Guthy-Renker.”
Data is at the heart of keeping the digital strategy on track, the two leaders concur. “We spend a lot of energy on attribution, but like everybody else, we struggle to get perfect information,” Richter says. “Today, all of our customers hit several channels at the same time. There are multiple touchpoints before people make the decision to purchase.”
“You’re always swimming in a sea of ambiguity,” Radwell notes. “You are never quite sure what’s going to work. It takes a lot of left-brain and right-brain skills—a lot of measurement and also a lot of gut. Attribution is never perfect.
“You need live data to know what’s going on with your customers,” he adds. “[Consumer products companies] think that their customer is Walgreens. To us, a customer is a person with an age and an income and specific usage patterns, and the better we understand these patterns, the better we can fulfill their needs. When customers order, they demand a great experience, and we have to deliver that.”
And even if the customer of the future expects his or her next shipment to be dropped by drone, Guthy-Renker will be ready. “Whatever it is, we will be there,” Richter says. “I’m working on staying in touch with the future, always being respectful of what the customer might want. All you can do is focus on getting things right, and hopefully, the customers will come.”