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Direct
Marketing... What it is... What it isn't... What it Should Be.
by John L.
Cimino,
Cimino Direct, Inc.
prepared for the
Advertising Communications & Marketing Expo
October 9, 1997
Secret Number One:
There aren’t any secrets! Shared knowledge is available and accessible
from many places and sources, and best of all… It’s usually
FREE!
I have a problem with the word “secret”, and while I don’t
want to start off on a tangent or dwell on the semantics of the word,
what bothers me is this: a secret literally means hidden knowledge. And
I’ve always been a tad suspicious about the fact that the very same
people who have been hiding this secret knowledge from the rest of us
. . . are constantly trying to sell it back to us in the form of books,
magazines, periodicals, workshops, seminars and newsletters promising
to reveal them. I ask myself, perhaps naively, why have they been hiding
these secrets from us in the first place? In the parlance of today’s
youth I ask—What’s up with that?
You buy a book or magazine promising to reveal the secrets of something—direct
marketing, let’s say, or selling real estate, or fundraising, and
what you really get are the results of someone else’s experience.
But in today’s highly personalized, highly individualized, niche
market world, no two marketing situations are exactly alike. And most
often, there’s no real secret solution that will bring your particular
direct marketing problem to a quick, successful, conclusion.
But there’s evidently some magical power in the word “secret”
because it continues to work. I submit, as an example, the fact that there
are so many people in this room. And the reason it works is simply because
there’s the hidden, unstated promise of instant gratification. If
I get to know the secrets of successful direct marketing, then it’s
going to be easier for me to succeed than you. That’s the underlying
premise. And, quite frankly, that’s a lot of bull! What it really
is . . . is good marketing . . . creating a perceived need when there
may not be a real one!
While Secrets of Successful Direct Response is the topic assigned to this
informational session this afternoon, it wouldn’t have been the
title I would have selected. Maybe because I began my career in direct
marketing as a copywriter, I tend to place too much emphasis on the exact
meaning of a word, as well as what it may connote to a reader. But you
have to . . . if you want to ensure that the meaning of your message is
clear and understandable.
OK, enough already with the secrets. Let’s get back to the real
task at hand by taking a look at what I believe is one of the best definitions
of direct marketing that I’ve ever come across.
Direct Marketing—What
it is
“the heart of direct marketing is its ability to deliver, in all
of its forms, highly relevant communications based on the known behavior
of individuals.”
The words in quotes are Jerry Reitman’s from the Introduction to
his book entitled, Beyond 2000—The Future of Direct Marketing. I
got the book for FREE, by the way, so you can’t say I’m being
hypocritical about paying for “secret” information!
You’ll note with interest that there’s no mention of eliminating
the middleman in this definition of what direct marketing is. There’s
also no mention of the word measurable or calculable, perhaps an intentional
oversight because the book was aimed at individuals who already knew the
basics of direct marketing. But no discussion of direct marketing, whether
general or specific, can be entered into without the measurable aspect
of direct marketing taking center stage. That’s what sets it apart
from general advertising, sales promotion and public relations.
You’ll also note that this definition sounds suspiciously more like
the definition of Integrated Marketing than Direct Marketing. Not such
a surprising thing when you consider that Jerry was Executive Vice President
at Leo Burnett Co. where integrated marketing and brand marketing reign
supreme, and where accounts like Kelloggs, McDonald’s, Kraft General
Foods and Hallmark have been parking their multi-million dollar advertising
budgets for years.
Depending on who you talk to, integrated marketing is either a form of
marketing that is superior to mere direct marketing or merely a fancy
name that general advertising agencies invented to attract traditional
direct marketing clients and accounts.
By all accounts, one thing is certain—direct marketing, in definition
and practice, is being inextricably drawn into the larger theatre of marketing,
general advertising, sales promotion and public relations. In just the
past ten years, we have seen the advent of database marketing, integrated
marketing, relationship marketing and one-to-one marketing.
Where does that leave direct marketing? In my estimation, when you can
execute direct marketing strategies with fully integrated communications
among all the media employed in the campaign, and the message remains
clear, constant and understandable—that leaves direct marketing
on the cutting edge—maybe not in terms of percentage of the total
budget—but in terms of being a measurable, calculable form of advertising
that not only sells, but provides invaluable feed-back data for ongoing
product development and service enhancement.
That’s a brief, cursory glance at what direct marketing is. Let’s
continue our examination of the subject by taking a glimpse at what it
is not!
Direct Marketing—What
it isn’t
“direct marketing is not simply a means by which you sell subscriptions,
records, books, vitamins or food products.”
If direct marketing was merely a distribution vehicle for certain types
of products or services, I wouldn’t be here talking about it and
you wouldn’t be here listening. For many companies, marketing means
“selling stuff and collecting money.” That is, however, an
antiquated way of looking at marketing. Given today’s hi-tech ability
to scan, record, analyze and eventually personalize individual behavioral
data into the actual text of your advertising messages, the field of direct
marketing has become highly complex. There are an increasing number of
specialists required to carry out a multi-media direct marketing campaign,
and to successfully orchestrate a full-blown direct response marketing
strategy requires management by generalists who also possess hands-on
knowledge of several advertising, marketing, data processing, printing,
paper and lettershop functions so as to be able to get all these disparate
functions to work smoothly and harmoniously. It’s a daunting task.
But when a direct response campaign using TV, print, mail, phone, inserts,
FSIs and electronic media is running on all cylinders, the response can
be overwhelming.
Despite its scope and complexity—experts argue whether direct marketing
is a $30 billion industry or a $300 billion industry—the public
perception of direct marketing is still largely a negative one based on
the assumption that all of us in the business work for ADVO. The average
consumer doesn’t see the scientific, mathematical or artistic side
of the industry. All they see are the unwanted flyers, coupons, telephone
calls and e-mail that flood their
mailboxes, phones, fax machines and electronic mailboxes. Many of us in
the direct marketing industry can be rightfully accused of living in somewhat
of an ivory tower when it comes to the industry’s image.
To Generation Xers, we’re a bunch of low-life, greedy junk mailers
intent on invading their pristine privacy and looting their under-developed
bank accounts. To baby boomers, we’re those TV pitchmen and women
who are constantly trying to stuff cheap cubic zirconium jewelry down
their throats. And to mature folks, we’re those mail order scoundrels
who are constantly trying to separate them from their retirement money
for swampland in Florida.
So now we’ve had a brief glimpse at what direct marketing is, as
well as what it isn’t.Let’s take a look now at what it should
be.
Direct Marketing—What
it should be
“it should be a useful tool to build and sustain relationships for
almost
any product or service in any category, particularly via direct mail.”
Relationship marketing bas been one of the mainstay buzzwords of the 90s.
I write a column in the Philadelphia Direct Marketing Association’s
newsletter, PDMA News, a monthly publication which my company edits and
produces. This particular column was a tongue-in-cheek rendition on the
term relationship marketing and pointed out the fact that relationships,
for the most part, require tremendous energy and that most normal people
already have more relationships than they can handle and really don’t
want any more.
Of course I was only having a little bit of fun with the nuance of language
again, but like most good jokes, there’s more than a sliver of truth
in the realization that relationships aren’t built and nurtured
easily—they require limitless energy and an undying commitment.
It’s axiomatic in marketing today that great care and attention
be paid to our
relationships with clients and customers. The major reason for that, of
course, is competition. Buyers of products and services have more choices
than ever. Customer loyalty is as outmoded as chivalry in today’s
business climate. Quality, price, and service are expected today (as opposed
to the old days when customers were told to pick which two out of the
three they’d like). That’s why it’s so important to
focus on the nature of the exchanges, communications, and transactions
which take place between you and your customers all day long, day after
day. Are these encounters pleasant, simple, and satisfying? Or are they
annoying, complicated, and frustrating? Your company’s success or
failure may rest with the answer!
Relationship marketing strategies don’t come in a box or on a CD.
You have to design them yourself. To devise a truly customized relationship
marketing strategy that will improve your business and meet your objectives,
you need more than the terminology. You need an in-depth, reliable, objective,
insightful knowledge of your customers. Who are they? How do they feel
about your products or services? You may come to the conclusion that there
are pockets or segments or groups of customers you really don’t
want to have a relationship with at all!
What makes direct mail such a good fit for your relationship marketing
efforts is the very essence of its non-intrusive nature, compared to advertising
on the telephone, television, radio or fax. Naturally, the junk mail crowd
would argue that junk mail is just as intrusive as those other media,
but it’s not! The kind of direct mail that works is personalized
and targeted. It goes out to people who are interested in reading what
it has to offer. People can either read the direct mail you send them
. . . or toss it. Savvy direct marketers use the medium of direct mail
to acquire new customers who have already shown an interest in the products
or services they offer, and to maintain the relationship once they become
customers.
If it’s
not measurable . . . it’s not direct marketing
Why has direct marketing grown so fast in the past 10 to 20 years? Because
once an advertiser or manufacturer discovers how calculable and controllable
their costs are, direct
marketing becomes a permanent part of the overall marketing campaign.
Let’s face it, if you were spending your money on an advertising
campaign instead of your clients’, you’d want to know where
every penny went. In direct marketing, everything is measured. Cost per
lead. Cost per acquistion. Cost per thousand. Gross response. Net response.
Even the lifetime value of a customer.
Especially with direct mail, you can test creative approaches, offers,
lists and price points in very small quantities—as low as 5,000—and
still get an accurate read on what a rollout of the same package and offer
would do if you mailed a million!
Direct marketing isn’t rocket science, either. While it may be somewhat
of an
oversimplification, all you have to do is add an 800# (if you can get
one) or an 888# to your magazine space ad and presto—you’ve
got a direct response ad. Add a coupon or a bind-in inquiry card, and
you’ve got an even stronger direct response ad.
Testing brings timeless knowledge!
OK, you’ve heard my views about secrets early on in this talk when
I proclaimed that there aren’t any, but rather a body of shared
knowledge that direct marketers have gained over the years as a result
of testing. Successful direct marketers test everything—from offers
and package sizes to methods of postage.
Here are some principles I’ve compiled from various sources which
form a nucleus of
information about direct marketing. Some of them may seem obvious, but
all of them are
truisms based on actual test results of marketing campaigns.
The 80/20 rule of list/database marketing.
Give or take a few percentage points, 80% of repeat business for products
or services will come from 20% of your customer base.
The second order is the charmer!
The most important order you ever get from a customer is the second order.
Because someone who has purchased twice is at least twice as likely to
purchase your product or service again.
List-Offer-Timing-Creative
The critical factors, in order of importance, for maximizing direct mail
success are the lists you use, the offers you make, the timing of your
mailing, and the copy and graphics. Some experts like to add these percentages
of importance to those factors: lists - 50%; offer-20%; timing-20%; creative-10%.
When I first made the switch from general advertising to direct response,
I used to cringe when I heard direct marketers talk about this formula
for success. After awhile, I started to understand its significance and
take advantage of it. That’s when my packages started to work.
Hotline names work best.
Most lists have “hotline” names—names of recent buyers
or subscribers or members etc. If, on any given list, these hotlines names
don’t work, you can figure that none of the other
segments of this particular list will either.
Multiple list names outpull single list names.
When direct marketers run merge/purge operations for the lists they’re
planning to mail, those names which appear on two or more lists will outperform
any single list from which these names have been extracted.
Lists containing names of direct response buyers always outperform lists
of names which were compiled.
The source of the names on the lists you mail are crucial to your chances
for success. A friend of mine in the list business used to like to say
that you could make the best offer in the world for your dog food, but
if I didn’t have a dog, there’s no way I’d buy it!
The more you target . . . the more you succeed.
Direct response lists are usually available with enhancements or overlays.
These can can include lifestyle characteristics, income, sex, education,
age, marital status or propensity to respond by mail or phone. Using these
enhancements will always improve response. Unfortunately, they will also
always increase costs.
30-Day follow ups pull 40-50%
A follow-up mailing to the same list within 30 days will respond at a
rate of 40-50% of the original mailing. Wait longer than 30 days, and
it’s anybody’s guess.
Asking for
a “No” results in more orders.
Go figure it. “Yes/No” offers routinely generate more orders
than offers that don’t request “no” responses. That’s
why you see these offers so frequently in magazine subscription direct
mail as well as others.
Negative option offers always win.
Here’s a no-brainer. The conversion rate for negative-option offers
will always outpull positive-option offers at least two to one. If my
cable company sends me a direct mail package saying they’re going
to add a premium channel to my cable package—unless I tell them
not to—that offer is bound to work better than if it were the other
way around. It’s also bound to tick me off and make me think about
buying a dish.
Book clubs and record clubs are fond of negative-option offers, but I
think you’ve got to take a long, hard look at the impact on your
relationship with those customers.
Credit card orders always win.
Another no-brainer. Credit card orders outpull cash with order offers
by at least two to one.
Credit card orders increase the size of the order.
Yet another no-brainer. In catalog marketing, credit card privileges will
increase the size of the order by 20% or more.
Using deadlines always works!
Offers with a time limit that give a specific date outpull offers with
no time limit practically every time. This is one of those human nature
principles that people act quicker when you put them under a little stress.
The hard part is giving them a reason to respond by such and such a date
that’s credible!
FREE gift offers beat discounts!
It’s one of those magical words—FREE! And free gift offers,
especially where the gift appeals to self-interest, consistently outpull
offers which only offer a discount.
Sweepstakes increase order volume.
Across a wide variety of offers, particularly when used in conjunction
with impulse purchases, sweepstakes will increase order volume 35% or
more. Sweepstakes are great, but watch out. Reader’s Digest marketers
probably wish they never started using them, because they haven’t
been able to produce a winning direct mail package that doesn’t
include a
sweepstakes offer for years. Over the years, sweepstakes can bump up your
costs and sometimes decrease your conversion.
In fundraising, asking for a specific amount works better than
not.
Not only will you collect far more money in a fund-raising effort if you
ask for a specific amount, but you’ll also collect more money if
the appeal is tied to a specific project.
People buy benefits, not features.
Every copywriter is familiar with this old axiom. But there are exceptions.
In fact there are several exceptions to this rule: one is selling to experts,
another is selling to enthusiasts, engineers and scientists.
Keep ’em reading!
Here’s another axiom which direct marketing copywriters know all
too well. The longer you can keep someone reading your copy, the better
your chances of success. The same axiom holds true for long-form TV or
infomercials—the longer they watch, the better the odds they’ll
order.
Self-mailers cost less and produce less response.
It’s always tempting for inexperienced marketers, especially those
on a tight budget, to choose self-mailers over traditional envelope-enclosed
mailings. But in most instances, they rarely outpull a traditional direct
mail package.
Timing is everything!
Sending a pre-print of an upcoming ad, accompanied by a letter and an
order form, outpulls a post-print mailing package by 50% or more.Increasing
dollar amount is easier than increasing percentage of response.
For a variety of reasons, one seemingly that a body at rest tends to stay
at rest, it’s easier to increase the average dollar amount of an
order than it is to increase percentage of response.
Put your winners up front!
In catalog marketing, you’ll increase your orders substantially
by putting your proven winners in the front pages of your catalog.
Longer is more productive!
In catalog marketing, you will always get a higher response rate from
a 32-page catalog than from a 24-page catalog.
Customers are the best source of response.
Back to the no-brainers. A new catalog to a customer base will outpull
cold lists by a whopping 400-800%.
Bind-in cards are winners!
A print ad with a bind-in card will outpull the same ad without a bind-in
up to 600%. The marketing question is: how much will the bind-in increase
costs?
120 seconds beats 60 seconds.
In direct response television (DRTV), a direct sale TV commercial of 120
seconds will outpull a 60-second direct response commercial better than
two to one.
TV support bumps up newspaper insert response.
Using television support commercials for FSIs increases response by up
to 50%. Once again, the marketing question is how much does it bump up
overall costs, and is the increase in costs justified?
Qualified leads are easier to close.
Here we go again with the no-brainers. The closing rate from qualified
leads can be from two to four times as effective as cold calls.
Telephone leads close better than mail.
Telephone-generated leads are likely to close four to six times greater
than
mail-generated leads.
Remember, If it’s not measurable . . . it’s not direct
marketing!
Successful direct marketing campaigns usually produce very few surprises.
Other than which lists/offers/formats or creative approaches work best—the
numbers are always worked out in advance. The marketers know—sometimes
in less than a month—whether the campaign was a financial success
or failure. That’s the part of the business which makes it different
than running a series of space ads and waiting a year to see if market
share is up or down—and if it is up or down, is it the space ads
that are working or is it some other media that is being used?
© 1997, Cimino Direct, Inc. |
