Direct Marketing Explained
Direct marketing is unique to other forms of marketing in that it communicates directly to consumers through a one-to-one relationship and seeks to create an immediate action on the part of the audience.
By marketing directly to the end user, direct marketing doesn’t typically utilize distributors and wholesalers as traditional or general marketing might.
Rather, direct marketing utilizes one or more media in seeking a response and/or transaction.
Direct marketing, also known as database marketing or direct response, uses direct mail, fax, telephone, website, e-mail and even face-to-face sales in order to persuade customers to order.
Direct marketing has been steadily increasing in popularity since the 1970s. While instances of direct marketing go back as far as the late 1700s, its use among businesses has increased exponentially since the advent of the database.
The database – or target audience list – is what makes direct marketing unique. No other form of marketing relies as heavily on the database for churning business leads or mailing lists. Whether it is for creating customized call lists, improving catalog response rates, sending profitable e-mail blasts or large direct mailings, the database is key.
In addition, another distinctive aspect of direct marketing is its intricate blend of disciplines. By combining information technology, copywriting, design, analytics and sales, direct marketing is truly a hybrid.
Direct marketers, by nature, are well-balanced individuals who appreciate the strengths and weaknesses of each discipline represented on the project team.
Direct marketers seek a “give-and-take” from each individual contribution in order to reach the optimum mix of creative, database and sales offer. It’s the combination that makes it a success.
What are the top two components of a Direct Marketing campaign?
For starters, you need to identify the main product (or service) for marketing. While this may seem basic, it is remarkable how often this crucial first step is overlooked. Some products respond better to direct marketing than others.
A general rule of the thumb to follow is this: The easier the product is to find in a store, the harder it will be to sell through direct marketing. For example, staple items – such as sugar, milk, bread and eggs, or easily available items like pens, paper, – are not direct marketing items. Items that cannot be purchased through a store, or are specialty in nature, however, typically do respond well to direct marketing efforts.
Secondly, have a plan. Always determine and write out S.M.A.R.T. marketing objectives. First, ensure that the objective is Specific in nature and Measurable. In other words, quantify the goal. For example, you might set an objective to “increase unit sales of X by 4,000” or “increase net sales by $450,000.”
Next, be sure the objective is Attainable. Those that are set too high or too far out of reach quickly fizzle out. Your objective should stretch you slightly so it feels within reach but still require a strong commitment for success.
Next, ask yourself if your objective is Realistic. In other words, is it achievable? The skills and resources necessary for reaching the objective should be readily available. If they are not, then the objective is unrealistic and must be modified or dismissed in lieu of another, more attainable objective.
Lastly, ensure your objective is Time-specific with a clear timeframe and deadline for completion.
Without this, the commitment from team members is often too vague. Procrastination almost always sets in and a lack of urgency only further contributes to the doomed project. The irony of the time-specific aspect of the objective is that it too must be specific, attainable and realistic.
What are the three most critical elements of a Direct Marketing plan?
If you think of the direct marketing plan as a pie chart, you’ll find three critical elements for success. The first of the two largest areas is database, commonly referred to as “list” (the audience you’re targeting).
On the pie chart, database represents 40%. This means that database, or list, is a major factor in determining the likelihood of success. To whom are you marketing? Who is most likely to buy the product?
These types of questions, as well as questions concerning customer demographics (sex, location, age, race, buying habits), are key components in direct marketing.
The second piece of the pie chart is the offer or “hook” that motivates consumers to purchase. Like the database, the offer equals 40% of the equation and is critical to the success of the plan.
Direct marketing plans have free offers, reduced offers, discount offers or any number of combinations thereof. The offer is critically essential and can have a tremendous effect on response rates. Companies like affordableblinds.com often test their offers on their website first to see which pulls the highest response rates before creating bigger campaigns.
The third and smallest area of the pie chart is creative. Creative entails everything from the concept, design, paper and photography, to layout, packaging, etc.
While creative only represents 20% of the equation, it is imperative that it receives 100% of its due attention. Solid creative acts as the glue that binds database and offer together. This tri-fecta combination is the difference which often makes a direct marketing campaign lethal to the competition.
Once database and offer have been established, creative goes to work generating and honing ideas that will capture the minds and hearts of the target audience.
What is common Direct Marketing formats?
Direct mail: Often referred to as snail mail, direct mail is still the primary form of business advertising and communication. Direct mail is excellent for generating sales leads as well as selling products directly to consumers and businesses alike.
E-mail: While still relatively new, e-mail is proving to be a successful means of communication with existing customers. Its use as a prospecting tool, however, is increasingly criticized.
Many states have anti-spamming laws (or anti-e-mail prospecting laws) on the books. The US Congress has passed legislation specifically outlining the rights of consumers who do not wish to receive such promotions. For this reason, many companies are steering clear of this potential minefield and have limited e-mail marketing to existing customers only.
Telephone: Also heavily legislated, telephone sales or telemarketing ranks near the top of customer frustrations. Viewed as a violation of privacy by many consumers, state laws now assign extraordinary fines to companies that fail to consult the state do-not-call list before prospecting.
Consumer activism and backlash have slowed investment in this multi-billion dollar industry. Yet things like vanity telephone numbers and free peer to peer calling apps and software have pushed this industry into more of the technical side of things. As technology finds more ways to stay connected through cheaper and less evasive voice options, we could see this part of the industry grow again.
Fax: Like the telephone, use of the fax as a business prospecting tool has been heavily legislated with many of the same restrictions and is most definitely a dying part of the equation. While companies still use this form of marketing, the advent of electronic communication and commerce has seen the importance of the fax machine steadily decline.
Catalogs: Paper catalogs have experienced a re-birth of sorts since the dot.com bust. Marketing managers across the country have opted for a more brick-and-mortar approach after e-mail response rates failed to materialize as they had hoped.
Alternative Media: This consists of card decks, package inserts, bind-in cards, blow-in cards, specialty advertising, etc. This area of direct marketing is still heavily utilized and continues to focus on providing qualified leads as well as generating sales.
Why are companies switching to Direct Marketing?
To begin with, companies are seeking a bigger ROI on their marketing dollars. Over the past several years, marketing budgets and personnel have dwindled as a consequence of two things: the dot.com bust and Wall Street’s stricter corporate governance laws, which require fuller financial disclosure.
The pressure from both corporate management and Wall Street analysts now require top performance from all company executives…marketing included.
Secondly, there has been a shift away from mass-marketing towards targeted, smaller campaigns. One of the most efficient ways of improving marketing ROI is redirecting the focus to smaller, more highly-targeted direct marketing.
Direct marketing thrives upon tracking and analysis of campaigns, ads, etc. It is this tracking, analysis, and proof of return (or lack there of) that companies and analysts find extremely attractive. With newer legislation such as Sarbanes-Oxley, the importance of tracking and analysis will only grow…providing plenty of fuel for those seeking to take a direct marketing approach.