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Ask most executives their opinion of direct marketing and a colorful response is likely to follow. Faced with response rates that average less than 1 percent, money-men consider most direct marketing strategies little more than throwing dollars down a hole. What if direct marketing could, instead, be cash in the bank? It can be. However, the direct marketing strategies companies are using today must change dramatically. The results can be astounding, coming in 20 times higher than traditional methods—even in these budget-conscious times.
Mass Communication
The concept of direct marketing is simple. It includes any communication designed to generate a response, such as a direct order, a sales lead, or traffic to a store. In fact, all good marketing should generate a response. More than any other type of marketing, direct marketing is highly measurable.
Most companies take a mixed approach, balancing mass and direct communications strategies. While companies may not like the response rates for most direct marketing campaigns, there are a number of factors pushing them to adopt even more and broader strategies than ever before.
First, the number of communication methods used by consumers is blossoming rapidly. Direct marketing of the past was achieved only by mail. Today, companies can also leverage e-mail, text messaging, voice mail, and more. Since target customers may actually enjoy and prefer to receive marketing messages via one of these methods, the opportunity for improved returns increases.
Despite the growing number of channels through which to send marketing messages, the number of professionals available to manage these programs is shrinking. Companies are downsizing internal departments and outsourcing marketing functions.
At the same time, marketers are being asked by corporate management to provide measurements for every marketing program they undertake. Rather than create general return-on-investment metrics for the entire year, marketing pros are expected to measure ROI for each and every program, from direct mail, to Web sites, to mass media. As a result, they need programs with built-in metrics to gauge success.
In addition, the funding methods for marketing departments have changed. In the past, a set percentage of sales was handed over to fund marketing activities. Today, these departments are expected to generate a specific number of leads, which in turn deliver a particular level of sales. Budgets are allocated accordingly.
Finally, technology and data mining allow for more personalization and better targeting of offers. In fact, consumers now practically expect laser-printed direct-mail pieces, as well as offers that match their particular preferences.
Making Direct Marketing Relevant
The world of marketing is equal parts art and science. With each campaign, a company is experimenting in the marketplace. Will prospective customers like the creative? Will they be persuaded? More importantly, will they be spurred to action?
The answer is simple. The target will take action if the materials presented are relevant to them. Relevant direct marketing is the art of understanding the audience so well that they receive information in a particular way and tone that precisely meets their needs every time.
Consider credit card companies, which send millions of applications by mail each day. Over time, these companies have learned to expect a return of 0.25 percent. In other words, only one-fourth of 1 percent of credit card application recipients will fill out the application or call the company that sent it.
Instead of sending out millions of generic credit card applications to everyone in the marketplace, why aren't there more specific offers that speak to particular segments? Consumers with certain credit scores might be more attracted to a distinct offer. Here are five elements of good direct marketing:
Target the Right Customer
Does a small business owner need to buy million-dollar industrial equipment? Does a retiree need to build a college savings account? Should an individual who has filed for bankruptcy receive a gold card application? Poor targeting leads directly to poor response rates.
Provide a Strong Call To Action
Mass media builds branding. Direct marketing drives sales. That is why every direct marketing piece needs a relevant offer and a method to easily take it.
Build in Measurements
Most marketers try to measure results when it is already too late. Instead, measurements should be built into every direct marketing program. This might be through establishing specific URLs and toll-free numbers, counting e-mail responses, or asking customers to bring a card into a store.
Good Controls and Tests
What drove the customers into the store? Was it the eye-catching creative? The offer? The way they were contacted? It is easy to find out. Simply establish a system of controls and tests where a portion of the target group receives varied creative or a different offer. This quickly helps the marketing department establish best practices and continually improve results.
Link Departments
Do you want to really get bang for your direct marketing buck? Stop segregating the sales department. Too often, marketing decisions are made in the bubble of the home office, without input or consideration from the sales force. If, instead, direct marketing efforts were coordinated with sales, the sales force would have much more powerful tools to help them meet or beat their goals.
Get Real Results—Now
The beauty of direct marketing that encompasses the five elements above is this: it becomes a self-renewing learning system that produces great results, fast.
The concept is simple. Did a campaign work? Great, do more of it. Did another campaign fail? Avoid using that strategy again.
Unfortunately, in the real marketing world, results do not always drive actions. That is why direct marketing must become a strategic and systematic learning system. It takes discipline and tracking to ensure marketing managers are acting on reliable information every time.
The payoff is well worth it. By following the five simple steps above, direct marketing campaigns can transform dismal 1 percent response rates into power-packed 20 percent response rates. That is ROI that would make even the most skeptical executive proud.
Jeff Bradford and Mike Tobias are the president and chief executive officer of Cross Media (www.crossmediamgmt.com). Cross Media handles the back-end execution of marketing campaigns on an automated marketing platform, helping customers measure results to improve their ROI on marketing initiatives.
author: By Mike Tobias and Jeff Bradford