Direct Marketing - Module 3: Integration PDF

DIRECT MARKETING MODULE 3 : INTEGRATION I. INFORMATION AND MEASUREMENT The database is the center of marketing communications planning. Marketing communications have four main purposes :...

DIRECT MARKETING MODULE 3 : INTEGRATION I. INFORMATION AND MEASUREMENT The database is the center of marketing communications planning. Marketing communications have four main purposes : To initiate a relationship ( prospecting ) To develop the relationship into a sales transaction ( conversion ) To maintain the relationship ( loyalty building ) To resurrect a lapsed relationship ( reactivation) The marketing database is essential for efficient management of these tasks. It enables us to identify the right names for a particular communication, according to their potential value and their propensity to be interested in this offer. It tells us the right time to send it; even the right form of words to use based on our knowledge of the interests of the individual. Example : A publisher discovered that when writing to prospects with a subscription offer, copy tended to work better if it was written in the style of a publication currently read by the prospect. He found, for example, that an Economist reader would react better to more erudite ‘educated’ copy, whilst someone whose main reading was a sports magazine would respond better to a simpler approach The database helps us record and analyze our responses by segment and gives us the information we need to prioritize and target future communications. Obviously, if we are to rely on our database, the information it contains must be accurate and up to date. Unless this is so, it can sometimes be worse than having no information at all. We use the data to make management decisions. So, if the data is bad: it simply helps us make bad decisions more quickly it reduces the accuracy of our targeting it clouds our judgement when analyzing the outcome of our actions. Not all traditional marketers are comfortable with the ‘benefits’ of accur- ate data. Although, undoubtedly, it helps us to keep improving our skills and our results, it also puts our decision-making skills on the line for others to see. However, such concerns are far outweighed by the benefits – having close control of our activities enables us to identify weaknesses much more quickly and to correct them before we spend all our budget. Thus, the database leads to more effective and more profitable campaigns. 1  DIRECT MARKETING Ask any experienced direct marketer whether they would like to go back to the days before the user- friendly database – not 1 in 1000 would say ‘Yes’. The database helps us continually to improve, bringing greater job satisfaction in the process. The database enables precise testing of alternative ideas before we commit large amounts of money. A word of warning here – not all tests will work nor find a new ‘winner’. There is a cost penalty in buying information. The investment is usually worth it, however, because the chances are that sooner or later you will find a result which produces enough incremental profit to pay for all your previous tests. Note that you should not wait until you are in trouble to start testing. You may be perfectly happy with your results, but could you do better? It is certainly tempting to avoid the effort of setting up test programs if you are not under pressure, yet this is precisely the time you should be testing. Successful direct marketing companies test not to solve problems but to preempt them. Example: “All this talk about testing is very interesting, but it’s not the real world, is it? In my company we don’t test but simply use our intelligence to select the right list segments and offers. And we make plenty of money.” The only answer to this sort of naive comment is to point out that without testing you really do not know whether you are getting as much response, or making as much money as you might. Case 1: Direct marketing consultant Roger Millington tells the story of a publisher client, who for several years had been using the same incentive offer to attract new subscribers. Roger tried for 3 years to persuade him to test a new idea, but the publisher steadfastly refused, saying, ‘My ads and mail- ings are profitable, so why should I risk money trying to do better?’ Roger eventually persuaded him to test the new offer against his current one and the new offer produced twice as many recruits. The publisher rapidly switched all his advertisements to the new offer, but consider what might have happened had he run the test 3 years earlier. His advertising budget would have bought twice as much business and, given the economics of publishing, his profit from this program would have more than doubled. II. THE POWER OF INTEGRATION We all want to increase the responses we achieve from customers and prospects, but what is the secret? There are not too many golden rules in marketing, but one that does generally apply is that careful integration of your marketing activities will produce a disproportionately beneficial effect. 2  DIRECT MARKETING When all the components of a communications campaign come together at precisely the right time, their effect can be considerably greater than the sum of their parts. There are several examples of this throughout this book but here is a taster: Example : An insurance broker tested the integration of telephone with a cross-sell mailing he had sent to existing policyholders. The purpose of the mailing was to persuade existing motor policyholders to consider insuring their homes with him; and existing ‘home’ customers to insure their cars with him. Within 3 days of mailing he had a response of 5% – which some might think is quite good, but he felt was poor! He asked two of his office staff to follow up the non-respondents by telephone during the evenings of the following week. After the telephone campaign, he analyzed the results. Almost 50% of the people mailed and telephoned had agreed to his offer Although this result seems remarkable, in fact it is not unusual when using this technique of mailing followed up by a telephone call. Many other companies have experienced similar uplifts in response. However, in common with all ‘new’ techniques, the more it is used, the less effective it may become. You may be wondering how we can be sure that the uplift was caused by the telephone call. The answer is ‘controlled testing’. To measure the precise effects of such variations, we need to set up control samples. If we have enough names on our data base, we might set up a three-way test: 1 Sample 1 receives neither the mailing nor the telephone call (this is our control sample). 2 Sample 2 receives the mailing but not the telephone call – comparing this with Sample 1 tells us how successful the mailing is on its own. 3 Sample 3 receives the mailing and the telephone call. This simple matrix will help us to evaluate all parts of the test. III. MAKING MARKETING COST-EFFICIENT To make marketing work cost-efficiently, we have to say the right things to the right people at the right time. What do we mean by this? Saying the Right Things People react well to information that is interesting and relevant to their current needs. We need to provide relevant information, but we must also deliver it in a suitable way. 3  DIRECT MARKETING Reaching the Right People UK direct insurance company historically recruited new customers for its motor policies by using ‘cold’ direct mail. Cold mailings are those sent to external lists with whom you have neither a relationship nor any natural affinity. Such mailings sent to simple lists of motorists without any additional data on which to make selections produced a very low response – well under 1%. At the Right Time The same advertiser found he could rent names of motorists from a lifestyle database company, but this time with a powerful additional factor – the month they renew their car insurance. He now mails only those motorists whose insurance is due for renewal within the following two months and his average response has increased to more than 5%. IV. THE VALUE OF INDIVIDUAL DATA As we can see, when we have access to real data about individual customers and prospects, we can be much more selective. The fact that I am a freelance marketing consultant working from home tells you a lot more about me than the fact that I live in a detached house. Knowing my occupation, you could reasonably assume that I have a modern PC with a good printer and expensive software. I am also likely to have a fax, a telephone answering machine, a laptop computer and so on (probably several thousand pounds worth of business equipment). This is useful to know if you sell home security systems for instance. Having individual information, enables us to be selective about: whom we communicate with when we speak to them what we say to them – tone, offer, style and so on how we ask them to respond/react. In other words, we can segment our customers and prospects into clusters with similar needs, problems and characteristics, and develop messages that address individual issues, with relevant information at the time when it will be most useful. 4