Lead Generation

Direct marketing fundamentals

written by Tim Berry of Palo Alto Software http://www.paloalto.com

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Direct marketing occurs when the “producer” connects with the end user. The end user may be a consumer or a business.

Direct marketing applies to product and service-oriented businesses, and to nonprofit organizations. In all situations, there is no intermediary involved. Direct marketing describes this interactive communication with the end user.

Direct marketing is not synonymous with mass marketing. The most effective direct marketing takes place when there is a clear connection to reach the target market.

Organizations may use several ways to leverage direct marketing as they communicate with and deliver products to their customers. This may include using a direct sales force, catalogs, websites, email, direct mail, telemarketing, seminars, trade shows, and other “one-to-one” techniques to communicate and sell to their customers and clients.

Some of these direct marketing methods have grown dramatically, especially with the growth of marketing over the Internet. There is evidence that other direct marketing approaches have diminished, such as reports that the response to direct mail is often below one percent compared to the five percent+ response rate numbers more commonly experienced in the past.

Companies may choose to leverage direct marketing exclusively:

Many local nonprofit organizations also use direct marketing exclusively.

Other businesses use direct marketing in concert with other marketing channels:

Types of Direct Marketing

The most common forms of direct marketing are:

  • Internet marketing
  • Face-to-face selling
  • Direct mail
  • Catalogs
  • Telemarketing
  • Direct-response advertising
  • Kiosk marketing

Let’s look at these in more detail.

Internet Marketing

The Internet has revolutionized direct marketing for promoting the sale of products and services to targeted audiences. Access to the Internet provides users with services in four basic areas:

  • Information
  • Entertainment
  • Shopping
  • Individual and group communication

Online channels can eliminate geographic considerations. With this capability people around the world have the same access as the person across the street. Many businesses that can sell their products and services through downloading, or who can economically ship those products, have discovered an entirely new way to market.

The Internet makes direct marketing easier, more targeted, more flexible, more responsive, more affordable, and potentially more profitable than ever. Virtually every business should seriously consider the Internet as a part of their marketing mix and determine if it is a viable fit for their direct marketing efforts.

Face-to-Face Selling

The most traditional direct marketing involves the in-house sales force personally contacting potential and established consumers. Examples of organizations that use face-to-face selling include:

Direct Mail

Direct mail is described as sending information about a special offer, product or sale announcement, service reminder, or some other type of communication to a person at a particular street or electronic address. Historically direct mail has existed in the form of printed materials, but CDs, audio tapes, video tapes, fax mail, email, and voice mail are also used in direct mail campaigns. For example, America Online experienced a highly successful campaign through mailing out CD-ROMs to prospective customers. Direct mail permits high target-market selectivity; it can be personalized, it is flexible, and it allows early testing and response measurement to take place. A highly selective and accurate mailing list often determines the success of direct mail efforts to enhance response rates and control costs.

Catalogs

Product catalogs are another version of direct mail where the catalogs are the communication tool. The most common use of this approach involves featuring a variety of products that target the needs of a specific audience who have shown a propensity to order from catalogs. An increasing number of business-to-business marketers are sending catalogs on CD-ROM to prospects and customers. The average U.S. household receives more than 50 catalogs each year, ranging from general merchandise to specialty goods.

Examples of general merchandise catalogs are:

Examples of specialty goods catalogs are:

Telemarketing

The process of contacting people on a qualified list to sell services over the phone has grown in popularity to the point that the average household receives 19 telemarketing calls each year. Successful telemarketing campaigns depend on a good calling list, an effective script and contact structure, and well-trained people that are compensated and rewarded for making calls that result in sales.

The telecommunications industry, for example, has used telemarketing extensively to attempt to increase their market share.

This includes:

Direct-Response Advertising

Direct-response advertising is communicating with potential buyers through television, radio, magazines, and newspapers. The prospective consumer watches, hears, or reads about the product or service and initiates a call to a toll-free number to place their order. Television, for example, offers a wide range of exposure, from a 30-second commercial to a 60-minute infomercial.

Kiosk Marketing

Customer order machines, versus vending machines that actually provide products, are another form of direct marketing. Examples are:

Your bank’s automatic teller machines (ATMs) placed in convenient and high traffic areas are another example of kiosk marketing. A combination of these direct marketing techniques may offer the optimal revenue generating solution.

Tim Berry

about the author

Tim Berry

Founder and President of Palo Alto Software and a renowned planning expert. He is listed in the index of "Fire in the Valley", by Swaine and Freiberger, the history of the personal computer industry. Tim contributes regularly to the bplans blog, the Huffingtonpost.com as well as his own blog, Planning, Startups, Stories. His full biography is available at www.timberry.com. Follow Tim onGoogle +

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