Direct marketing

From Wikipedia, the free encyclopedia

Direct marketing is a discipline within marketing that involves contacting individual customers' (business-to-business or consumer) directly and obtaining their responses and transactions for the purpose of developing and prolonging mutually profitable customer relationships. The term was coined in the 1970s by Lester Wunderman, who pioneered direct marketing techniques with brands such as American Express and Columbia Records, and by Herb Ahrend who introduced mass direct mail advertising techniques as early as the 1940s (employing hundreds of typists in New York City to mass produce offerings, the likes of which are now done by computer and laser printer).

Direct marketing is a form of marketing that attempts to send its messages directly to consumers, using "addressable" media such as mail and email. Therefore, direct marketing differs from regular advertising in that it does not place its messages on a third party medium, or in the public market, such as a billboard or a radio commercial would. Instead, the marketing of the service or commodity is addressed directly to the target customer.

DM uses non-addressable media as well as addressable ones. The important thing is that it seeks a response and it is this which the recipient, usually a marketer, bases their future actions, or contact strategy, on. In fact all DM is done through media, it's just that many, e.g. email, telemarketing, SMS, are "addressable". It usually is not taken to include face-to-face contact. Direct marketing is attractive to many marketers, because in many cases its effectiveness can be measured directly. For example, if a marketer sends out one million solicitations by mail, and ten thousand customers can be tracked as having responded to the promotion, the marketer can say with some confidence that the campaign led directly to the responses. By contrast, measurement of other media must often be indirect, since there is no direct response from a consumer. Measurement of results, a fundamental element in successful direct marketing, is explored in greater detail elsewhere in this article.

While many marketers like this form of marketing, it is sometimes criticized for generating unwanted solicitations, which are sometimes referred to as junk mail and e-mail spam.

Direct marketing channels

Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Direct marketers often refer to such media as "addressable" to distinguish them from "mass" media, such as television, radio, and print.

Direct mail Probably the most commonly used medium for direct marketing is direct mail, in which marketing communications are sent to customers using the postal service. In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways - which reduces the handling (and therefore costs) required by the postal service.

Direct mail permits the marketer to design marketing pieces in many different formats. Indeed, there is an entire subsector of the industry that produces specialized papers, printing, envelopes, and other materials for direct mail marketing. Some of the common formats, include:

• Catalogs: Multi-page, bound promotions, usually featuring a selection of products for sale.
• Self-mailers: Pieces usually created from a single sheet that has been printed and folded. For instance, a common practice is to print a page-length advertisement or promotion on one side of a sheet of paper. This is then folded in half or in thirds, with the promotional message to the inside. The two outside surfaces are then used for the address of the recipient and some "teaser" message designed to persuade the customer to open the piece.
• Poly packages: Large (often 9x12 or bigger) full-color packages sealed in a clear plastic outer wrap. The contents show through the poly, giving the potential for maximum initial impact. Poly packages are extremely effective, but also quite expensive.
• Postcards: Simple, two-sided pieces, with a promotional message on one side and the customer's address on the other.
• Envelope mailers: Mailings in which the marketing material is placed inside an envelope. This permits the marketer to include more than one insert. When more than one advertiser is included, this is often called "marriage mail". Valpak is one of the largest examples of a marriage mail service.
• Snap Mailers: Mailers that fold and seal with pressure. The sides detach and the mailer is opened to reveal the message.
• Dimensional Mailers: Mailers that have some dimension to them, like a small box.
• Intelligent Documents: Programmable mail pieces built dynamically from database information, and printed digitally for faster production.

Advantages and Disadvantages of Direct Mail

Advantages include the following:

• Targeting - Historically, the most important aspect of direct mail was its ability to precisely target previous customers. If a suitable list was available, it also did a good job of targeting prospects.

• Personalization - Direct mail can address the customer personally and be tailored to their needs based on previous transactions and gathered data.

• Optimization - Because of its direct accountability, direct mail can be tested to find the best list; the best offer; the best timing (and many other factors). Then the winning tests can be rolled out to a wider audience for optimal results.

• Accumulation - Responses (and non-responses) can be added to the database, allowing future mailings to be better targeted.

Disadvantages include:

• Cost - The cost per thousand will be higher than almost any other form of mass promotion (although the wastage rate may be much lower).

• Waste - Large quantities of paper are thrown away (see below).

• Alienation - Some recipients resent direct marketing being "forced" upon them, and boycott companies that do so. Moreover, they may obtain Prohibitory Orders against companies whose direct marketing mail they find offensive.

Business-to-Business Mailings (B2B)

Business products and services have long used direct mail to promote themselves. Traditionally, this worked in one of two ways. As a direct sale, therefore precluding the use of a salesperson or a retail store, or as a method of generating leads for a salesforce. The former method was ideally used by products that were easy to sell, were familiar to the prospect and needed no demonstration. The latter method was used for large ticket items or for those that needed demonstration for example.

Direct mail

Although bulk mail, junk mail, and admail are, strictly speaking, not synonyms, the terms are used in common parlance to refer to advertising circulars, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. The term "junk" is usually used when someone receives an item of mail that is untargeted or not relevant to them. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.

Advertisers often call it "targeted mailing", as mail is usually sent out following database analysis. For example a person who likes golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. The USPS prefers to call it "advertising mail" (admail for short), noting that some people might find offers of interest to them in it. [1]

Some people respond positively to direct mail advertising and find useful goods and services on offer. Traditionally, this was more true in rural areas where people had to travel many miles to do their shopping and direct mail and mail order shopping was a major convenience. However, many people dislike it, in the same way as with telemarketers' calls and e-mail spam, and some jurisdictions like the US have laws requiring junk mailers to withhold their offerings from residents who opt out.

Many consumers, as well as environmental protection groups, are concerned about the environmental impact generated by junk mail. According to 50 Simple Things You Can Do To Save The Earth^[1]:

• Each year, 100 million trees are used to produce junk mail.
• 250,000 homes could be heated with one day's supply of junk mail.
• Americans receive almost 4 million tons of junk mail every year. [2]
• The yearly production and disposal of junk mail consumes more energy than 2.8 million cars.

An organization called the Mailing Preference Service allows people in the United Kingdom to register with them for free and they will ensure those people's addresses are removed from 95% of mailing lists. A similar service is provided by Junkbusters for removal from the USA's Direct Marketing Association members' and other mailing lists.

Unaddressed mail

Delivery of unaddressed items through letterboxes ("direct mail without the stamp") takes place in large numbers throughout Canada, the USA and EU. Deliveries are either made via the postal service, independent delivery companies or local newspaper publishers.

It is a lower-cost alternative to direct mail and therefore can produce a lower cost per response for the advertiser. It can be used as part of a mixed media campaign, e.g. with TV or Radio.

Direct response

Main article: Direct response marketing

A related form of marketing is direct response marketing. In direct marketing, the marketer contacts the potential customer directly, but in direct response marketing the customer responds to the marketer directly. Its most common form today is infomercials. They try to achieve a direct response via television presentations. Viewers respond via telephone or internet, credit card in hand. Other media, such as magazines, newspapers, radio, and e-mail can be used to elicit the response, but they tend to achieve lower response rates than television.

Order forms or coupons in magazines and newspapers are another type of direct response marketing. Mail order is a term, seldom used today, that describes a form of direct response in which customers respond by mailing a completed order form to the marketer. Mail order is slow and response rates are low. It has been eclipsed by toll-free telephone numbers and the internet.

Legislation

In the United States, the United States Postal Service maintains that direct marketers pay the majority of the costs of mail. Bulk mail thereby subsidizes low cost stamps for letter, magazine, and book mailing. No such compensatory relationship exists with e-mail or faxes, which require the receiver to pay for bandwidth, storage space, or paper and toner, and some of the solutions to e-mail spam in the United States have involved instituting a freight cost on mass e-mail to make it productive. Such solutions have not been universally lauded, as they leave the recipients of unsolicited e-mail with the problem of storage and bandwidth consumption and would increase costs to companies that send only solicited mass mailings.

The United States telemarketing industry was affected by a national do-not-call list, which went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themself on the list. People can register for the list on the web at donotcall.gov. After the list had operated for one year, over 62 million people had signed up [3]. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.

See also

• Predictive analytics
• Johnson Box
• National Do Not Call Registry
• Telephone Preference Service

References

1. ^ The Earthworks Group [December 1989]. 50 Simple Things You Can Do to Save the Earth. Bathroom Readers Pr. ISBN 0-929634-06-3.

External links

• The Direct Marketing Association's Consumer page, with links for consumers to remove their contact information from telephone, email, and postal mail lists of its members. The DMA does not itself maintain any marketing lists of consumers. Its members are obligated to cease mailing, telephoning or e-mailing consumers for marketing purposes after they have registered their wish to no longer be contacted.
• The UK's Mailing Preference Service, for UK residents to remove their postal mail address from marketing lists
• The UK Direct Marketing Association
• Junkbuster's How you can gain control of your mailbox (Encyclopedic information and effective advice for consumers)
• Form to block sexually explicit junkmail (United States) (PDF file)
• Go to Privacy Rights Clearinghouse for information on how to reduce junk mail.