6 direct marketing

8/9/2019 6 Direct Marketing

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MSc Marketing

Principles of Marketing

Communications

Direct Marketing


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Overview

s

What is direct marketings A different way of thinking

s Database

s Media choice

s Creativity and direct marketing?

s Customer loyalty

s Measuring effectiveness


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Evolution

s 60s type of distribution, mail order

s 70s marketing communications tool with

emphasis on feedback and response

optimisation

s 90s long term relationship/ customer loyalty

building (Relationship Marketing Ladder, Payne

et al)

s 00s focus, cost efficiency, measured

response

OR obsolete, environmentally-unfriendly SPAM?


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Todays definition

Contacting customers and prospects in a

direct way with the intention ofgenerating an immediate and measurable

response or reaction (Tapp 2004)

Direct media such as mailings, brochures,telephone ie not via intermediaries

Immediate response eg coupon

redemption, phone, organise personal visit

Database/ customer records required

Focus on customers not products


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Some basic facts

s

Most UK businesses still use some type ofDM

s B2Business as big as B2C

s Annual UK expenditure 8 billion +

s 75% of press ads & 30% of TV ads are

direct responses Top European retailers spend well over

1 billion annually on loyalty initiatives


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A different way of thinking

s Understand customers personalisation/ individual

dialogue

s Customer relationship categorisation new, light/heavy, loyal or repertoire, behaviour usage andcharacteristics

s Can replace retail outlet, salesforce, marketresearch, traditional media (eg First Direct Bank,Laithwaites)

s Different strategies & tactics for customeracquisition/ retention


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Key differences

s General marketing

build a brand and promote it

distribute via retail outlets

customer initiates buying

s Direct marketingget to know customer better by recording

transactions with themmay distribute direct

company initiates contact


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But DMs essential difference

s The database:

who our customers are

what they buy

what they want from us

how much theyre worth to uslifetime value concept

Create relationships over time

Update and maintain!


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Two main data groups

s Transaction data - what people buy

s Customer characteristics data - what

people are like

These data groups are key toeffective segmentation


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Channels and tools

(De Pelsmacker et al, 2008)


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s Unaddressable

DR national/ local press/ TV/ Radio

Classified adsInserts

Door to door

s Addressable

Direct mailTelephone including care lines

Internet/ e-mail

Statement stuffers

Loyalty schemes/ clubs

Catalogues


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Factors affecting media choice

s Audience does it reach the desired TA?

s Impact does it have impact to break through theclutter?

s Message does it communicate well?

s Response does it make responding easy?s Internal management does it allow efficient

management?

s The End result costs/ revenues/ achievement ofobjectives?


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Advantages and limitations of direct mail

s Selectivitys Personalise messagess

Flexibility in use ofcreative ideass Communicate fasts Tailor specific groups

s Customise messages andoffers

s Good for detail

s High clutters

Junk mail images Receivers are very

selective in opening mailss Low response ratess Expensives Need list!

Advantages Limitations


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Response to mailings in the UK

(RSGB Mailmonitor 2005)


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Message

s Direct mail - unlimited message length butno sound or movement

s Telephone - short messages only, powerful

impacts TV - most dramatic/ comprehensive

s Inserts - carry more information than press

ads

s Radio KISS!


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Internal management issues

s

How long from brief to customer?s What about pre-testing?

s How to handle responses?

s Expertise in house to handle suppliers?

s Trial different/ new media approach?

s Will chosen media deliver targetallowable marketing spend/ cost percustomer?


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Essentials of a creative approach

s

Left brainthink logically

step by step approach to purchase

s Right brain

evoke feelings, emotions

reach out and emotionally touch people


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Creative approach implications

s

Left brain appeal: what are the benefits? USPs keep the message clear

make it easy to respond

symbols of beliefs and visions

dramatise dreams, desires aim for an emotional response pictures more important than words

s Right brain appeal:


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Using the AIDA approach

s Attention

Headline or picture: stop the reader frommoving on

Headline: news, curiosity, greed

Picture/ symbols

s Interest Lead into body copy easily

Use question and answer approach

Benefits & features

Anticipate & overcome objections, one at a time


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s DesireConvince re value for money

Link to big emotional hook:

think how youll feel whenOvercome fear of making wrong decision

Immediate refund if not totally satisfieds ActionThe key to direct response

Delay kills response act now to save money/avoid missing out

Make it easy - pre fill coupon;telephone /contactdetails/ personal details


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Benefits of customer retention

s High costs of recruiting new customers

s Life time customer value

s Knowledge of existing customers customise/ personalise

s Opportunity to cross-sell

s Build up of trust

s Development of customer loyaltys Categorisation (s.t/ l.t est profitability)


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Customer retention - profit impact

0 1 2 3 4 5 6 7

Retention in years

Acquisition

costs

Basicprofit

Costreduction

W.o.M

Price premium

Sales growth

(Reichheld, 2001)


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Contact lifecycle for loyal customers

Sa

les

Time

Welcome

Up-sell

Cross-sell

Renew

Reactivate

(Picton & Broderick, 2005)


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Measuring effectiveness of DM

s Quantifiable - % response rate, cost per response

s Model-able (recency, frequency, value/ spend)

But also:

+ Recall, Reading, Attitude, Response

+ Test market campaigns

+ Track by medium (code)

+ Compare promotional/ incentive approaches


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The future of DM?

s Recession likely impact on media spend

s Quantification enables clear comparisons Direct response should be beneficiary

s Direct mail in long-term decline but growth intraditional DR by driving traffic on-line

s Search is new DR channel

s using microsites in conjunction with direct mailworks well with specific customer groups

Michael Doyle, Honda UK, 21/10/08Testing Honda Accord mail pack containinginteractive DVD that provides link to website andrequest for test drive


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e-mail marketing

s Direct marketing via the Internet

s Speed, flexibility, customisation/ personalisations More effective on response rates (up to 32%)

s 65% cheaper than postal campaign

s Automatic tracking & measurements Opportunity for receivers to pass on/ forward

s Opt in/ opt out (permission marketing) build up

databases Intrusion/ irritation/ fatigue


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Comms approach to e-mail marketing

Personalise messages; subject lines key

Customise on interests, preferences,demographics make sure its relevant

Invest in e-mail database & use all opportunities toobtain addresses; segment

Test for best period to send

Short, clear, compelling copy with offer in firstcouple of lines

Create and communicate privacy policy and respectit!


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Review

s DM a different way of thinking

s Database management keys Media choice

s Creativity

s Customer retention/ loyalty & lifetimevalue

s Measurement

s Intrusion - permission

6 direct marketing

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