S9.P1 - TOPIC 8 DIRECT MARKETING
LEARNING OUTCOMES y the end of this topic, you should be able to:
1. Define direct marketing and how it can move forward through advertising;
2. Discuss the features of direct marketing, its advantages and disadvantages;
3. Analyse the format of direct marketing; and
4. Identify the methods in evaluating the effectiveness of direct marketing.
INTRODUCTION Peter Drucker said, "The first task of any business is to decide what business it is in". The question for direct marketers is, „what business are you in, direct mail, direct response, direct advertising? No! As direct marketers you are in the business of developing customers for clients the acquisition, development, and retention of profitable and satisfied customers. Hemming (n.d.) Direct marketing is a marketing system based on individual customer records held in database and this database records become the basis for marketing research and analysis, planning, implementation or programmes and control of all the activities. Today, direct marketing is an integral part of business and advertising agency. The most powerful tool in direct marketing today is the database. Great advances in technology have enable marketers to gather vital customer information electronically and to selectively target their customer communications. This makes it possible for businesses to keep track of customers, their purchases, preferences, what, when, why and how they buy. Armed with this vital information, marketers can operate more efficiently and do a more effective job of developing mutually beneficial customer relationships (Hemming, n.d.).
ACTIVITY 8.1 One of the best ways to predict how someone will behave in the future is to look at what they have done in the past. By tracking a consumerÊs past purchasing behaviour, marketers can design highly targeted advertisements based on the specific preferences and tastes of individual customers. Examine your own buying behaviour for the past one week by answering the following questions: (a) What did you buy? (b) What are their reasons for buying? (c) How often do you buy? (d) Are you buying for others? (e) Where do you like to buy? (f) Where do you get your information? Summarise your buying behaviour and explain what you can conclude from your profile as a customer.
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8.1 DIRECT MARKETING BACKGROUND
There are two main types of marketing that companies can take part in. These are referred to as direct and indirect marketing methods. Indirect marketing or general marketing is any form of marketing that does not promote and sell something directly to consumers, but rather allows companies to build relationships with them through the media or other forms of communication. Direct marketing, on the other hand, involves sending marketing messages to particular people or organisations.
8.1.1 Definition of Direct Marketing The Direct Marketing Association of USA formally defines direct marketing as follows: „... an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location". Similarly, the Australian Direct Marketing Association also defines direct marketing as: „/ an interactive system of marketing that uses one or more advertising media to effect a measurable response and/or transaction at any location, with this activity stored on database". The Institute of Direct and Digital Marketing, UK defines the term as follows: "The planned recording, analysis and tracking of customer behaviour to develop a relational marketing strategies". Section 11(3) of the Data Protection Act of the UK defines „direct marketing" as: "the communication (by whatever means) of any advertising or marketing material which is directed to particular individuals".
Ogilvy (1989) defines direct marketing as „any advertising activity which creates and exploits a direct relationship between you and your prospect or customer as an individual‰. There is actually no general agreement on the definition, but by contrasting the different definitions, the general opinions point to four basic features of direct marketing: (a) A combination of advertising and selling into a single function: (b) A prominent service concept that will affect repetitive buying; (c) A strong trend toward specificity; and (d) An existence of built-in feedback mechanisms. Today, direct marketing is a marketing system based on individual customer records held in the database and this database records become the basis for marketing research and analysis, planning, implementation or programmes and control of all the activities (Pickton & Broderick, 2005).
8.1.2 Databases in Direct Marketing As direct marketing concerns the understanding of one's individual customer than to build up product brand, there is a natural alignment between direct marketing with relationship marketing. Direct marketing encourages us to think in terms of customer relationships with the company by building new prospects or loyal customers. Therefore, it is important that direct marketing captures individual customer details at the first sale so that a marketer can begin a relationship with the customer. The customer is then treated in a special way over time in order to generate repeat business. The recording of individual data in a database and direct contact to allow a communication are key elements in operationalising a relationship marketing strategy. A database is an essential component of direct marketing. It facilitates the development of a medium to long-term commitment or relationship with both existing and potential customers. A shift from the product or service-focused marketing to customer and market segment-focused marketing has meant that customer databases have started to replace the traditional product-based database.
A database is not only a list of names and addresses but should also be distinguished by the quality and quantity of relevant marketing information on customers. There are primarily two types of information retained on a marketing database: (a) Historical data This is transactional data that indicates a customer's past orders, that is the frequency of purchases, responses to offers and size of the orders. This data also contains personal data such as name, address and gender. Historical data and customer attributes are scored to predict their future buying behaviour. (b) Predictive data This data is processed data which is derived through statistical methodology. Predictive data usually identifies those who are more likely to respond to a certain offer. Based on what was mentioned, it is clear that database marketing relies heavily on computer technology. It involves the collection, selection and analysis of customer records. Direct marketing is a subset of marketing and is a marketing method which creates a direct contact, response and relationship between a supplier and its potential customers or encourages business activities between them through targeting and certain media. There are two important elements in this definition; one is targeting which is facilitated by a customer database, the other is the use of media in communication.
8.1.3 Direct Marketing Issues Direct marketing is a customer-oriented method of marketing which uses customers details commonly held in databases to perform three main activities, namely, to analyse customers data, to formulate a marketing strategy and to implement it to obtain direct responses from customers. The use of databases to analyse customers purchasing behaviour is a fundamental building block of direct marketing. What information does a database currently hold? Many databases have a list of customer contacts but more specific information about their needs and interests are increasing recorded to make marketing more effective. This data might include:
(a) Personal profile of individual consumers age, gender and details of their lifestyle or socioeconomic status.
(b) Ordering behaviour dates, frequency and timing of orders.
(c) Types of order type and quantity of goods or services ordered and their value. (d) Total annual sales the margin on these sales and their payment history. (e) Details of distribution details postcode, type of area. One of the most important aspects of the legal environment pertaining to database marketing is customer privacy. The use of personal information by businesses is an issue of local and national concern. It is generally indicated that most consumers are concerned about, and opposed to, the unexpected or unintended use of personal information. Consumers and businesses sometimes have conflicting agendas. On the one hand, businesses want to maximise opportunities to utilise personal information for commercial reasons, including offering goods and services to consumers. On the other hand, consumers generally want to limit the ways their personal information is utilised and want control over that information. In Malaysia, and many other countries, there is no comprehensive privacy law that addresses the collection or use of personal information. For the most part, businesses have employed self-regulatory mechanisms to deal with privacy and data protection concerns through the use of disclosures or privacy policies by businesses. By disclosing data collection practices to consumers, companies are providing valuable information. However, disclosures can only be effective if useful information is provided and consumers are educated and informed about it. Another issue in direct marketing is the conflict on channel of distribution. The rapid development of commerce on the Internet has made it easier for many manufacturers who traditionally distribute their products through retailers to engage in direct sales. Top suppliers in a variety of industries have begun to sell directly to consumers over the Internet. These suppliers include global companies such as IBM, Nike, Pioneer Electronics, Cisco System and Estee Lauder. While more and more manufacturers are engaging in direct sales, their retailer partners voice the concern that orders should have been placed through them, and not through a manufacturerÊs direct channel. To avoid this conflict, some manufacturers have halted direct sales, while others have tried to convince retailers that their direct channel taps customer segments.
8.2 FEATURES OF DIRECT MARKETING
Several features distinguish direct marketing from general advertising and other types of marketing, as shown in Figure 8.1: Figure 8.1: Some features of direct marketing that are different than general advertising Let us now discuss the features one by one.
(a) Interactivity This is an interpersonal communication between the marketer and the prospect or customer. Marketing messages are addressed directly to the customer and/or customers. Direct marketing relies on being able to address the members of a target market. The two-way communication between the message sender and the receiver includes complaints, guarantees, terms of refund and returned goods, etc. Interactivity is identified as an important element of direct marketing now because of the rise of consumerism and the increasing number of self-approaching consumers who initiate contact with the direct marketing organisation.
(b) Measurability Direct marketers can measure the response to any offer. Measurability allows direct marketers to test a variety of lists, offers, media or any aspect of a campaign in order to allocate marketing resources to the most effective combination of elements. Direct marketing emphasises tractable, measurable responses from customers regardless of medium.
(c) Transaction at Any Location In direct marketing, the transaction may take place at any location and is not limited to retail stores or fixed places of business. The transaction may take place in the consumer's home or office via mail, over the phone, or through interactive television.
(d) Addressability This comes in a variety of forms including e-mail addresses, mobile phone numbers, web browser cookies, fax numbers and postal addresses. (e) Call for Action Direct marketing seeks to drive a specific "call to action". For example, an advertisement may ask the prospect to respond to a mail order or to call a free phone number or to click on a link to a website. (f) Selectivity of Target Audience Direct marketing allows a marketer to screen and target consumers who are most likely to be the potential customers. The advantage will result in improved cost effectiveness. (g) Concentration on Focused Group Direct marketing focuses on certain groups of consumers according to their preferences. This way, the marketer can formulate highly concentrated marketing strategies to achieve objectives and get a higher response rate than other marketing methods. (h) Comprehension of Communication Material As direct marketing deals with targeted and focused groups, comprehensive information and knowledge can be conveyed to the identifiable customers. Direct marketing can also overcome some cultural and linguistic barriers in marketing.
(i) Sales Promotion Effective and measurable sales promotion can be facilitated in direct marketing activities. (j) Continuity of Customer Contact A customer database is an important part of direct marketing which enables the direct marketing firm to have a long-term relationship and contact with its customers and enables the cultivation of brand loyalty. (k) Public Relations Based Upon the Relationship with the Individual Public opinion on a direct marketing company primarily depends on whether the firm can secure a favourable image with the customer. This is to say that customers will judge the company based on their experiences with the firm. This, along with continuity of customer contact, generates a sense of brand importance and accountability as well as consumer's trust in the brand.
8.3 ADVANTAGE AND DISADVANTAGE OF DIRECT MARKETING
The advantages and disadvantages of direct marketing should be noted before the marketing campaign begins, especially since those potential disadvantages may be eliminated if they are identified in advance. Listed next are some of the main advantages of direct marketing.
8.3.1 Advantages of Direct Marketing Direct marketing is facilitated by technology. It also broadens the marketing function with distribution channels offering delivery from the supplier to the customer directly. This sometimes results in a high efficiency, focused management effort, and higher margins which previously were given to distributors or retailers. Considering the role of direct marketing in marketing strategy, the following advantages may be identified: (a) Concentrated group: Consumers are targeted in concentrated groups that are effective for niche marketing; (b) Direct marketing is particularly cost effective when customers repeat their purchase; (c) As the direct marketing response is measurable, it is easier to control and evaluate the impact and effectiveness of marketing activity in the market;
(d) Direct marketing always offers a way for consumers to respond to their message and encourages them to respond immediately. Direct marketing also treats each consumer as an individual; therefore, it usually allows a higher flexibility in comparison with other marketing techniques. Tele-marketing, in particular, is very flexible for constructing message content and can receive immediate responses; (e) It is possible to simulate „test marketing‰ among a pre-defined consumer group. Before the marketing campaign actually starts, its effect on the market can be estimated based on the results of the test run. Marketers start to see direct marketing as an alternative route for a company to go international at an early stage. In this way, the company does not need overseas salespersons or other overseas market entry arrangements like contracting; (f) Companies will have the opportunity to build up a database and retain customers and establish long-term customer relationships; (g) Messages can be tailored to specific target groups; and (h) Direct marketing can carry out multi-functional marketing purposes, such as promotional messages, customer care and information.
8.3.2 Disadvantages of Direct Marketing
The disadvantages of direct marketing are described as follows: The biggest disadvantage of direct marketing is the „image problem‰. This problem results from those direct marketers who lack the discipline of targeting appropriate market segments that generates negative feedback from consumers. For example, direct mail is associated with „junk mail‰ although fewer complaints about direct mail have been received. In particular, people resent being telephoned too often or late or if a pushy door-to-door salesperson knocks on their door after they have had a long day at the office. Direct marketers ought to be very conscious about the customerÊs privacy especially at the initial contact (for example during the first mailing or first telephone call). Most consumers want to know from where their name and address have been obtained. Although research has asserted that some people prefer to receive direct mail, there are number of people who consider it to be intrusion or invasion of their privacy.
The initial customer acquisition costs are high while subsequent transactions are much lower. Direct marketing has a high cost per thousand people contacted compared with other advertising. Moreover, sometimes the response rate can be as low as two per cent when the direct marketer fails to target effectively, resulting in a financial loss. In addition, to develop a comprehensive database may require a large investment cost. That is to say, if direct marketing is used in short-term promotions it will cost a substantial amount to the organisation. In contrast, if it is run in long-term promotions, it will be a more cost effective option for management. When direct marketing involves product distribution from the supplier to the customer, the channel usually is not under the direct influence of the supplier. Products are either sent by general post service or a contracted carrier. Therefore, in some cases, unpredictable problems might occur.
ACTIVITY 8.2
Direct marketing suffers from poor image factors. Direct mail is often treated as junk mail while direct response advertisements on television are often low-budget ads for low-priced products. This contributes to the image that something less than the best products are marketed although home shopping channels do promote some expensive products. Telemarketing and spam are irritating to many consumers thus lowering the image of the direct marketing industry. Discuss.
8.4 FORMS OF DIRECT MARKETING Direct marketing is a collective term involving all kinds of direct marketing activities, techniques and media. It is essential for marketers to choose the most suitable form of medium or media in order to reach their customers and market their products effectively. There are many terms used to refer to direct marketing. Some of the most widely used ones are as follows; one-to-one marketing, targeting marketing, profiling, loyalty marketing, interactive marketing, personalisation, customisation, database marketing and segmentation. Direct marketers have a range of media choice to communicate their marketing messages. Television shopping channels, for example, broadcast and demonstrate various merchandises for those who wish to shop in their own home. Also, in many countries, teletext performs a satisfactory function in delivering messages and marketing activities. With improved technology and the increasing role of social change, the opportunities for media development are greater. Listed as follows are the various forms of direct marketing:
(a) Direct Selling Direct selling is one of several available channels of distribution where the manufacturer or supplier deals directly with the consumer. The World Federation of Direct Selling Associations (WFDSA) defines direct selling as: "On non-fixed retailing places and through the use of face-to-face way, the product and service are sold directly to the consumers". Other definition states that direct selling is a distribution method for consumptive product or service through personal contact and at different commercial locations, mainly at home. Some of the common direct selling methods include the following (refer to Table 8.1):
Table 8.1: Some of the Direct Selling Methods
Direct Selling
Method
Description
Person-to-person
Sales person makes individual appointments with customers sales to do presentations or to demonstrate new products.
Door-to-door sales
Sales person approaches homes and businesses by appointment or unannounced to leave catalogues and offer products or to do product demonstrations.
In-home
Sales person arranges parties and at-home gatherings to presentations present or to demonstrate products.
Online shopping
The use of websites and e-mail lists to build customer networks and to offer online ordering facilities.
Venue sales
The setting up of booths or kiosks at events to generate new leads and to promote and sell products. Network
The recruiting of other sellers into a network to "duplicate" marketing the product sales role, earning a percentage of their sales revenue and expanding the product reach.
(b) Direct Mail
Direct mail is considered the most common form of direct marketing communication. By using personally addressed mail, direct mail is the process of sending out sales letters or other materials that advertises a business and its products and services to potential customers or clients. There are several different types of direct mail such as catalogues, postcards, envelope mailers, fliers and leaflets.
(c) Direct Response Advertising
There are three criteria in defining a direct response advertisement: (i) It should make a definite offer; (ii) It has to provide enough information necessary to make a decision; and (iii) It has to provide specific directions for response, such as a toll-free number or a response coupon. These direct response advertisements can be delivered through any kind of media, such as newspapers, television, radio, inserts, fax, magazine, fliers and catalogues. (d) Mail-Order Catalogue A mail-order catalogue retailer is a retailer offering merchandise and/or services through catalogues posted directly to customers. Currently, there are two types of catalogues. (i) Channel of Distribution Involves selling where the consumer can purchase merchandises through mail-order. By producing catalogues or lists of goods and services, products are marketed directly to named consumers or are provided for customers. This form of direct marketing is used as the „channel of distribution‰. (ii) Promotional Catalogue This catalogue is distributed to consumers but do not necessarily involve purchase. If consumers are interested in buying the products, they will have to go back to a retail outlet. A wide range of products are sold through newspapers, magazines, inserts, and most significantly, catalogues. It focuses on selling a product through offers or sales promotions instead of sending messages or information. It urges consumers to purchase products or services. The influence of modern technology means that mail is no longer the only medium involved in mail-order catalogue sales. Very often, customers place their orders by telephone or even fax.
(e) Door-to-Door
Door-to-door direct marketing is primarily conducted through a salesperson recruited by a particular organisation which either sells some technical merchandise requiring detailed explanation or some fast moving consumer good requiring „word-of-mouth‰ to promote the merchandise. The former usually is a more knowledgeable salesperson on a certain technology, on machine operation, or insurance; the latter usually is only used with people who are loyal to or confident with the product and are commissioned to recommend the products to friends, relatives or neighbours. Companies selling products through house parties are also part of the door-to-door selling business.
(f) Telemarketing
Telemarketing involves contacting potential customers over the phone to sell products or services. It can generate new customer prospects in large volumes and is also a useful tool for following up on direct marketing campaigns. Telemarketing is gradually becoming one of the common forms of direct marketing. With technological developments and improvements in living standards, most households own a telephone which provides an immediate response towards a message delivery or sales promotion or even immediate purchase of the product. It has also become a medium for the consumer to place an order instead of responding by mail. The definition of telemarketing has been broadened to include Internet communication, due to the growing penetration of all kinds of telecommunication methods. It also includes automated calls and business-to business calls. There are four factors which influence effective telephone marketing: (i) Desirable product or service; (ii) Persuasive script; (iii) Skills to manage interaction, customer, and objectives; and (iv) Positively perceived telemarketer voice.
(g) Text Messaging and E-mails Text messaging allows businesses to reach individual customers and send messages to large groups of people at a low cost. Marketers may use the short message service (SMS) to send customers messages as follows: (i) Sales alerts on specials and product offers. (ii) Links to website updates. (iii) Appointment reminders or delivery or pick-up arrangement reminders. (iv) Personalised messaging such as birthday greetings, holiday greetings or remembrances.
(h) Vendor Machine
Vendor machine selling points are widely available. They provide convenience for both companies (which do not have to hire staff) and consumers (who can purchase the product without going to a shop). Usually, the products sold in a vendor machine are basic consumer goods for which the consumer has an immediate need, such as, drinks, chocolate bars, sanitary towels, tissues, etc.
(i) Social Media Marketing
Social media can be used effectively as a marketing tool for business. It gives the opportunity to interact directly with customers and regularly share relevant product or service information. Social media platforms also make it very easy for customers to share content with their entire network, increasing reach exponentially. Social media is able to develop a profile for a business that allows marketers to promote products and services while also encouraging customers to provide feedback by leaving comments.
Mobile Advertising Using SMS Mobile advertising is one of the newest trends, with which advertisers reach potential customers. Mobile advertising refers to the use of SMS or short message service as an advertising media. In Malaysia, SMS is a rapidly growing advertising media, providing brands, agencies and marketers the opportunity to connect with consumers beyond traditional and digital media directly on their mobile phones. Mobile advertising through the use of SMS can be a stand-alone medium for advertising, but mostly it is used together with other media, traditional media such as television, radio, newspapers or direct mail. SMS is usually sent by mobile phones, but can also be computer-generated. Recipients can generally store a limited number of messages; unlike e-mail, messages usually do not have a subject line that can be read without opening the message. SMS allows users of mobile phones to send and receive a text message of up to 160 characters and across virtually any operator network, which is a disadvantage of SMS for advertisers. According to MMA there are two primary types of advertising inventory: (a) Application-to-Person, A2P: This type of inventory includes SMS and MMS messages sent by a business or other organisation or entity via an automatic application to a consumerÊs mobile phone. In many cases, the consumer may interact with the application through messaging and this kind of advertising is the focus of this research. (b) Person-to-Person, P2P: The original purpose of messaging was to enable users to communicate amongst themselves. Almost 90 per cent of current SMS volume is still person-to-person message, but advertisers see big potential in SMS advertising. SMS advertising is strictly a form of telemarketing, but it shares features with e-mail marketing and mcommerce. Mcommerce (mobile electronic commerce) is defined as „the use of mobile, wireless (handheld) Internet-enabled devices to communicate and conduct transactions through public and private networks. One of biggest problems of mobile marketing is privacy, which Chaffey (2003) defines as „the right of an individual to control the information held about them by third parties‰. Target customers need to permit receiving SMS ads. It is believed that three variables could influence consumersÊ acceptance of mobile advertising and they are: user permission, wireless service provider (WSP) control and brand trust. User permission was believed to be the most important variable, as consumers were seen to be fearful of SMS mobile advertising and high levels of spam, as with e-mail marketing. WSP control is found to increase the probability of user acceptance to mobile advertising. Brand trust means that consumers may be more likely to permit advertising from „known names‰ that they trust and align their values and beliefs with. According to research from the Nielsen Company, usage of mobile Internet climbs every year and becomes a very important part of companyÊs advertising tools. Also, according to them, the biggest responses come from young people, which is the target group of mobile advertising.
Source: Adapted from Gregurec and Brodar (n.d.)
Direct Mail and Telemarketing
Types of Direct Mail
The most common types of direct mail include:
(a) Catalogues: bound, multi-page promotions of products.
(b) Self-mailers: created from a single-printed sheet that has been folded.
(c) Envelope mailers: with inserts inside the envelope. (d) Postcards: with your promotional message on one side and the customer's address on the other.
(e) Fliers: small handbill or handout.
(f) Leaflets: printed sheet of paper.
(g) Snap mailers: folds and seals with pressure. (h) Dimensional mailers: for example, a small box. (i) Intelligent documents: printed with personalised information from a database.
Types of Telemarketing
Types of telemarketing include: (a) Cold-calling: calling someone for the first time and without their permission to generate a new lead. (b) Warm-calling: a cold call that uses „warm‰ communication techniques designed to create a rapport, or a call made to follow-up on an initially positive response. (c) Follow-ups: calls designed to turn a lead into a prospect, renew contact with a lapsed customer, thank a customer for their support or check customer satisfaction. (d) Fundraising calls: contact made for the sole purpose of seeking charitable donations. (e) Market research: calls to individuals made according to customer or demographic segments to gather information for research surveys. (f) Database clean up: calls made to update customer records or establish a customerÊs level of ongoing interest in your products or services. Source: Adapted from Business and Industry Portal (n.d.)
ACTIVITY 8.3 Explain the following forms of direct mail and identify their strengths and weaknesses.
Direct mail letters
Postcards
Self mailers
Catalogues
Brochures
Direct mail coupon mailers
Personalised direct mail
8.5 CREATIVE APPROACH TO DIRECT MARKETING
Marketing strategies are very important to any marketing campaign because companies want to market effectively and efficiently. Marketers must think about the target demographic for the products they are advertising, and develop marketing techniques which will reach this demographic. Imagine every day we get hit with hundreds of marketing messages and for the most part we discard or ignore these messages. So how can your messages stand out from the rest? Direct marketing creativity has traditionally been dominated by an approach called USP or Unique Selling Proposition which focuses on selling by leading the prospect through a series of logical arguments (Pickton & Broderick, 2005). This contrasts with advertisersÊ need to create atmosphere and produce entertainment as part of their mission to create emotional liking for the product.
Standing Out From the Crowd
When it comes to looking for the best direct marketing techniques, there are a few key components that will improve your chances for success. Personalised Messages If the information is not relevant to the recipient, your message is sure to be overlooked. This is why the first component is to make sure the message is tailored to the individual. Using customer insights and variable data, you can create personalised marketing messages to fit your prospectÊs interests and needs. Timing Is Everything A large component of successful direct marketing is the timing. You want to reach out to your buyers when they are ready and in need of what you offer, not when it is convenient for you. How do you know when they are ready? Unfortunately this is not something that can be universal, but instead depends on your product, your clients and the data available. However, as you plan your direct marketing efforts these are the questions you should be asking and finding answers to.
Once Is Not Enough, Use Multi Touch Points Sending out one communication to your audience is not enough. People are getting hit with hundreds of messages per day and may ignore your offer the first time. Others may receive your message and have the intent to act, but then life happens and they never get around to it. Because of this, it is important that you have multiple touch points to improve your odds of getting through and having your prospects act. Utilise Multiple Communication Channels As you create your direct marketing campaign with multiple touch points, one thing to keep in mind is that people have different preferences on how they want to be reached. Some prospects may check their e-mail regularly, however you may have a „junk e-mail‰ address or the prospect may receive hundreds of e-mails per day and would prefer a printed piece. Other prospects may still prefer a phone call. The point is that you have better odds reaching the prospects when you utilise different types of communication channels. Technology Bringing It All Together While you create your timely integrated multichannel direct marketing campaign, technology can help you implement this strategy and manage the process. You are able to send out personalised direct marketing pieces and track the results. From here you can then send out additional direct marketing pieces and change the messaging based on their activity or non-activity. Source: Adapted from Best Direct Marketing Techniques, Winbrook (n.d.)
SELF-CHECK
8.1 Explain how each the following elements relate to effective direct marketing: (a) Identify your target audience. (b) Implement a compelling message. (c) Get your audienceÊs attention. (d) State or clarify your market position. (e) Educate and inform your audience. (f) Prove your claims with testimonials. (g) Provide your sales force with knowledge and with effective selling tools. (h) Gain the confidence of your prospects. (i) Convert prospects to clients.
8.6 DIRECT MARKETING MEASUREMENT
It is essential to measure the results of direct marketing activities. This is to make sure advertisers are getting the most out of their budget. Generally speaking, direct marketing measurement is about two things: finding out how well the current campaign is performing and gaining insights to apply to future campaigns. Next are some of the methods in the measurement („What is Effective Direct Marketing‰, n.d.): (a) Direct Order A direct order campaign is designed with the sole intent of generating a purchase. Its success is measured through the number of purchases it generates. (b) Lead or Traffic Generation A lead or traffic generation campaign is designed to generate product interest. Its success is measured by the number of qualified leads captured.
(c) Lead Follow-Up A lead follow-up campaign pursues qualified leads in an effort to nurture them toward a sale. Its success is measured by the number of leads who become customers. (d) Loyalty A loyalty campaign is designed to strengthen client bonds. Its success is measured by the number of clients retained, and through referrals from existing clients.
ACTIVITY 8.4
Consider the extended use of e-mail nowadays, for all sorts of communications. Do you think it is easy to measure direct mail responses when the ads are sent online? There are three possible ways listed next. Explain to what extent they are useful in gauging the success of your direct mail campaign. (a) The bounce rate of an e-mail which measures the percentage of the e-mail that is undeliverable. (b) The open rate, the percentage of e-mail that arrives at the
destination e-mail and is opened. (c) Along with HTML e-mails, a click-thru option within the e-mail to be used to allow direct mail recipients direct access to your website. Direct Marketing Analytics Now, with the introduction of digital tools and channels, direct marketing analytics has become easier, more accurate and more affordable than ever to measure the effectiveness of direct marketing campaigns. E-mail Marketing Analytics The best way to track the results of an e-mail marketing campaign is to use an e-mail marketing software solution like pbSmart™Connections, which comes with built-in analytic tools. Every time you send an e-mail marketing message to your contacts you can log in and see the campaign results in real time, and find out exactly who has opened your message and who has clicked on the various links. This helps you spot which messages and content are generating interest and driving results.
Direct Mail Marketing Analytics In the past, direct mail measurement was limited to a few options such as dedicated phone numbers or special discount codes. Many businesses are now using QR codes and dedicated URLs to make it easier to track campaign responses. With a QR code generator like pbSmart™Codes, you can add a QR code to any direct mail piece and track how many customers scanned your code in real time. Direct mail solutions like pbSmartMarketer™ will add a dedicated website URL to your direct mail pieces, so you can see exactly how many customers visited the website in your direct mail call to action. Bill Advertising Analytics With bill advertising, there are a few additional options for direct marketing measurement. For example, mail solutions like pbSmartPostage™ and pbWebConnect™ allow you to print QR codes and marketing messages directly onto your envelopes. This allows you to instantly track responses as your campaign goes live. Source: Adapted from Pitneybowers (n.d.) Direct marketing is a marketing system based on individual customer records held in a database. These database records become the basis for marketing research and analysis, planning, implementation or programming and control of all the activities. Direct marketing encourages us to think in terms of customer relationships with the company by building new prospects or loyal customers. Direct marketing is a collective term involving all kinds of direct marketing activities, techniques and media. It is essential for marketers to choose the most suitable form of medium or media in order to reach their customers and market their products effectively. Several features distinguish direct marketing from general advertising and other types of marketing such as interactivity, measurability and addressability. It broadens the marketing function with distribution channels offering delivery from the supplier to the customer directly. This sometimes results in a high efficiency, focused management effort and higher margins which previously were given to distributors or retailers.
One of the biggest disadvantages of direct marketing is the "image problem" which results from those direct marketers who lack the discipline of targeting appropriate market segments that generates negative feedback from consumers. Direct marketing creativity has traditionally been dominated by an approach called USP which focuses on selling by leading the prospect through a series of logical arguments. This contrasts with advertisers' need to create atmosphere and produce entertainment as part of their mission to create emotional liking for the product. As with all forms of marketing, it is essential to measure the results of direct marketing activities to make sure advertisers are getting the most out of their budget. Generally speaking, direct marketing measurement is about finding out how well the current campaign is performing and gaining insights to apply to future campaigns.
Database
Direct response advertising
Direct mail
Direct selling
Direct marketing
Mail-order catalogue
Direct order
Telemarketing
Best Direct Marketing Techniques,
Winbrook. (n.d.).
Retrieved from http://www.winbrook.com/ Business and Industry Portal, Queensland Government. (n.d.). Retrieved from www.business.qld.gov.au Chaffey, D. (2003). E-business and e-commerce management. London: Prentice Hall. Fresh Color Press. (n.d). What is effective direct marketing . Retrieved from www.freshcolorpress.com
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