Preparing a Direct Marketing Campaign

No. Direct marketing is any marketing activity that can generate a direct and measurable response. Conventional advertising can be "direct," as can telephone, fax, e-mail and, of course, the Internet. Direct mail is direct marketing communication sent by regular mail. Direct mail is sometimes thought of as "junk" mail because of the amount of unsolicited mail that people regularly receive.

In many situations, yes. You may not have a sales force or a retail network, so customers can only buy directly from you. If you want to sell to niche markets, or if your customers are widespread geographically (or perhaps globally), direct marketing may be the only cost-effective way of reaching them. If you decide to sell direct, the products themselves must be suitable for selling through direct marketing—that is, they do not have to be demonstrated to or inspected by the customer.

Direct marketing builds customer relationships, and the stronger your relationships with your customers, the more opportunities you have to influence the direction and success of your business. If your company depends on a few key customers for most of its business, you can use direct marketing to continually communicate with them and build their loyalty. If one of your customers is paring down the vendor list, you can use direct marketing to help ensure that you remain on the list.

Although there are numerous examples of successful large-scale mailings, the key to direct marketing success is reaching the right people in a cost-effective way. Large-scale efforts based on poor research or imprecise customer targeting may yield results, but only with a high level of waste. The more precise your marketing, the more likely you are to succeed.

Direct marketing goals include:

• encouraging prospects to buy directly in response to a campaign
• generating leads for the sales force or retail network
• supporting sales force activity
• improving the effectiveness of other forms of customer communication
• raising awareness of a company, product, or service among clearly identified customers and prospects
• maintaining effective contact and building relationships with customers and prospects.

These general goals should be translated into precise, measurable objectives like these examples:

• raising awareness of your product range among 35% of technical directors in the mechanical engineering sector
• ensuring that purchasing managers of your ten top corporate customers are contacted at least once every two weeks
• increasing direct sales of supplies by 15%.

Do you want to reach all customers and prospects? Or are you targeting specific groups? Direct marketing is a precise medium, so your campaign could be aimed at just a few key decision makers or thousands of potential users. Ask yourself:

• Who buys your type of product?
• Who influences the purchasing decision?
• How many prospects do you want to reach with the campaign?
• How many prospects can you normally convert to customers, and how long does it take?
• How do customers and prospects currently get information about your products?
• Is direct marketing the best (or only) way of reaching the target audience?

You'll be able to make your campaign more precise if you gather as much information about your target audience as possible. In an ideal world, direct marketing would allow you to communicate one to one with every prospect, but it's much more likely that you will be communicating with groups of people who share certain characteristics. For example, you could reasonably expect that "all fleet managers in northern Virginia managing more than 30 vehicles" would have similar on-the-job needs.

There are a number of factors that will affect campaign timing: lead times for producing mailing material, seasonal purchasing patterns, product availability, and others. Ask yourself:

• When is my customer likely to be making the buying decision?
• How long is the selling or buying process? How many stages are involved?
• Does my direct marketing campaign have to tie in with the timing of any other marketing activity, such as an exhibition, advertising campaign, or sales force visit?
• If we are launching a new product, when will the product be available?
• How long will it take to produce the material that is to be mailed?
• When will we be able to follow up the campaign?
• What will we do if we get fewer responses than needed—or more than we can handle?

A single mailing, telephone call, or direct response advertisement may produce results, but there are several benefits to a series of properly handled contacts:

• raising levels of awareness with each contact
• educating potential clients in greater detail about your product or service
• moving individual respondents further along the decision-making process
• maintaining contact during extended decision-making processes
• following up those who have not responded.

How often you contact those on your mailing list will depend very much on your business, your customers, and your targets: there is no hard-and-fast rule. For example, a company trying to get a prospect to make a decision may make contact several times a week, while a company aiming to maintain long-term customer loyalty may need to contact customers only monthly or quarterly.

The purpose of direct marketing is to get the prospect to take action. You must make it easy for them to do so. First, decide if you want prospects to place an order, request a sales visit, ask for further information, or take some other action. Then decide which response mechanism is the most appropriate and the easiest for the prospect: mail, telephone, fax, e-mail, or Web site address. Finally, make sure the prospect has the means to respond easily—provide a return envelope, for example, or a toll-free telephone number.

Before the campaign begins, you must have in place systems to capture all the data. At the very least, you should track:

• what was sent (the offer, the package or letter, and so on) and to whom (the lists used and reason for selection)
• the anticipated response (for example, percentage initial response and percentage purchase)
• the actual response
• the costs compared to the return—in other words, did your campaign make a profit?

One benefit of direct marketing is that you can test your approach before committing resources to the full campaign. You can test:

• the target audience—the most important element
• the offer—what exactly you are offering for sale (including any incentive)
• the creative approach—the look and feel of the communications
• the response mechanism—how easy it is to respond, for example, using a toll-free number or business reply mail
• frequency and timing—including the way you follow up inquiries.

The test campaign can be conducted in a number of ways:

• on a sample portion of the target market
• in a defined sales or geographic territory
• in a particular sector of the target market.

Your goal in testing is to identify the most effective type of campaign and then continue to use and refine that approach. Successful direct marketers test continually to drive down their costs and drive up response rates. Every campaign should be considered a "test" to improve on previous campaigns. Each best-performing campaign then becomes the "control" against which others can be evaluated.

Testing your campaign may reveal that different approaches work more effectively in different market sectors. If your budget allows, you can develop a series of campaigns that vary the offer, the creative approach, frequency, timing, or other factors—but keep track of these variables so that you can use the best-performing campaign format next time.

In the long term, a campaign may increase awareness, improve customer relations, or cut the cost of sales. However, the simplest and most immediate measure of a direct marketing campaign is the response level it generates. In setting your target response levels, you should aim for a realistic figure given the type of campaign that you are able to implement. Note that response rates:

• as low as 1% or 2% are regarded as the industry norm for large companies sending mail to "cold" lists
• around 5% are regarded as high
• between 10% and 20% have been reported by companies that have integrated other forms of marketing communications into direct marketing campaigns
• can be increased by specialized companies communicating vital information to a very committed list of supporters.

The results of a direct marketing campaign can be measured precisely by the number of responses, making it a particularly accountable medium. Failing to take advantage of this feature of direct marketing, some companies neglect to set measurable targets and lose an opportunity to inform their decision making. If your target is to generate leads from 2% of the target audience, this will determine how many people you contact, the type of offer you make, and the response mechanism you provide. It will also tell you very quickly if your budget balances: How many of those leads need to convert into customers to cover your costs?

Sometimes a company will use direct mail when customers are accustomed to a personal visit and face-to-face negotiations. Customers may be put off if they feel relegated to a direct mail list.

With direct marketing, you can communicate with a single prospect or with 50,000. However, there may be ways that are more cost-effective than direct marketing to communicate with 50,000 prospects. Direct marketing works most effectively when it is aimed at a precise audience that cannot be easily reached by any other medium, and, crucially, when you want a response.

Direct marketing can reinforce advertising, sales promotion, and press and public relations, and vice versa. If you place advertisements in publications that reach a general audience, for example, you can reinforce the ads with personalized communications to selected prospects. You can tailor your product and corporate literature to the information needs of different market sectors by including direct marketing material.

Meisner, Chet. The Complete Guide to Direct Marketing. Kaplan Business, 2006.

Spiller, Lisa S., and Martin Baier. Contemporary Direct Marketing. Prentice Hall, 2004.

Tapp, Alan. Principles of Direct and Database Marketing. 3rd ed. Financial Times/Prentice Hall, 2005.

The Direct Marketing Association: www.the-dma.org

Direct: www.directmag.com

DM News: www.dmnews.com