In the arena of business marketing, however, direct marketing techniques had not been fully explored until the 1980s. In this domain, telemarketing methods were often put to more careful use, supplementing rather than replacing expensive face-to-face sales calls. Hunter defined direct marketing as “an interactive marketing system that employs integrated, organized contacts to effect a measurable customer response.” The effectiveness of integrating mail, telephone, and field contacts, he believed, would always be greater than that resulting from using each medium independently (Exhibit 1).
Central to the HBG approach was the use of an economic model - a customer contact matrix - developed by Hunter. The foundation for the model (Electronic Exhibit 1, Exhibit 4) rested upon the research of the service management group at the Harvard Business School.2 This group developed groundbreaking methods to measure customer loyalty and adjust customer contact frequency based on current and future revenues. Therefore, even in a dying industry like typewriters where sales had gone down 20% in one year, there would be stability and sustainability as long as selling expenses declined more rapidly than revenues.
HBG began by establishing an entirely new company to address the Star business. It was named TeamTBA. The company operated out of HBG’s Milwaukee headquarters under the leadership of Julie Kowalski, a member of HBG’s management team. The initial agreement between the firms stated that HBG would license the Star brand, and independently manage a direct marketing operation that would include marketing, sales, manufacturing, and product design. Star would receive no compensation on sales below $20 million per year, but was entitled to 2% of TeamTBA revenues exceeding that. Additionally, Star would retain control over the product—HBG would need to obtain Star’s approval before making changes to current TBA products. This included dropping existing products, changing...
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