Lead Generation

Strategies for direct marketing

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


Are you getting the most from your direct marketing? Make sure your direct marketing campaigns are target, measurable, and ethical.

About Direct Marketing

As we discussed in Direct Marketing Fudamentals, direct marketing includes various approaches in which the producer of goods or services directly contacts the end-user. Direct marketing encompasses face-to-face selling, direct mail, catalogs, kiosks, telemarketing, and more. Regardless of the form you choose, there are some critical considerations.

Targeted Campaigns

The criteria for direct marketing begins with a reliable customer database. Other factors include offering greater customer value through a more customized and personalized approach for product and service offerings, distribution processes tailored to meet the needs of customers, and the opportunity to build customer loyalty.

One of the first criteria for direct marketing is to have a consistent customer profile available which describes the dominant target markets. This information must have sufficient detail to support a customer database.

A customer database quantitatively captures the key characteristics of prospects and customers who are most ready, willing, and able to purchase your product or service. It may offer demographic information about their age, income, education, gender, and previous mail order purchases. In concert with this information, this customer database identifies customers who possess these characteristics:

  • Have purchased most frequently
  • Purchased recently
  • Spend the most at each transaction

This database is used to accomplish the following.

  • Identify prospects
  • Decide when a customer needs a specific offer.
  • Enhance customer loyalty
  • Stimulate repeat purchases

Access to a customer database is the first step. The next set of criteria includes enhancing customer value through one or more of the following factors:

  • Customized product and service solutions
  • Personalized interaction before or during the actual transaction
  • The development of expertise within an industry or based on specific issues
  • Individualized distribution processes accompanied by customized marketing offerings

When these criteria are met, the organization may be able to leverage areas of expertise, economies of scale, and have the potential to build customer loyalty. An organization may be able to achieve greater target market precision through direct marketing than it can experience through a mass marketing or channel marketing approach.

Before You Begin, Decide How to Measure

Successful direct marketing campaigns plan their efforts, determine their objectives, target their markets, determine the offers’ key elements, test those elements, and establish measurements to assess the campaign’s success. Measuring your success is key.

Begin by gathering information about your fixed costs relating to overhead expenses and the variable costs relating to how many pieces are going to be sent. Then prepare to track revenues generated. Each of these areas offers valuable information to assess the results of the direct marketing campaign.

Conducting a simple break-even analysis can be a valuable tool in this process. For example:

Dental Data Co. is an organization that offers specialized patient management software to dentists. They would like to determine what their break-even point would be if they mailed CD-ROM demos with printed materials to 2,000 selected dentists. Their estimated expenses for the direct mail campaign follow.

This information will help determine what Dental Data’s response rate needs to be to break even on the campaign. The 43 units to break-even equates to a 2.15% response rate. This response rate is determined by dividing the 43 units at break-even by 2,000, the total number mailed.

Therefore, if Dental Data does not have a response rate higher than 2.15% over the time period they have determined, they will not realize profit from this direct marketing effort.

You can test the anticipated response rate, based on establishing a break-even sales point, to better understand the possible combinations of potential results. Information regarding general direct mail response rates, industry standards, or your past direct marketing experiences may be used to predict reasonable response rates.

Analyzing your direct marketing campaign can allow you to steadily improve direct marketing performance. If multiple direct mail pieces are used, analyze the response rates from each.

This measurement may consider the results that occur after the conclusion of the campaign. Some direct marketing campaigns produce results months or years after the campaign has been assessed. Initial “failure” may change into a successful campaign if results are tracked and measured over time.

Ethical Considerations and Responsibilities

Not all marketing is good marketing. It is important to recognize that some direct marketing techniques contain negative attributes that impact the targeted group. This may include invasion of privacy, deception, or fraud.

Invasion of privacy issues are often associated with telemarketing. How many long distance provider calls have you received in the middle of dinner? “Spam” email messages sent to numerous computer mail addresses clutter inboxes. How many are you receiving each day? These activities can create negative impact on a potential customer, and cost money that could be more effectively spent elsewhere.

Direct marketing can also involve using communication vehicles that exaggerate information and mislead buyers through deceptive claims about a product size, performance, or price. Products that fail to meet the claim, and nonprofit organizations that use funds for other purposes, are guilty of inaccurate or misleading direct mail promotion tactics. In addition to creating a negative image, this kind of marketing can be legally risky.

Consider the potential ramifications a direct marketing campaign may have on your product, service, and organization when selecting, designing, and implementing the campaign.

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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