Are Direct Marketers failing to ‘measure up’ to direct marketing?

One of Direct Marketing (DM) key benefits is its measurability. Marketers know whether the campaign has been a success or failure very quickly – almost instantly for some online campaigns – by measuring the ROI. In most cases the key measurability of DM is sales - did the revenue generate a profit after costs.

However there is a growing acceptance that as markets become more cluttered and consumers more targeted other metrics need to be considered when determining campaign success or failure.

The challenge for marketers is to broaden their view beyond measuring just the ROI on each and every DM campaign.

A number of scenarios may exist which drive marketing decisions to only focus on ROI:

• Marketers are focused on the virtue of their products and the reasons why they believe the product will benefit prospects
• Marketers are pressured in today’s market to strive for short-term goals ie sales
• Marketers may view the fact that product has been previously purchased suggests ‘it will again’ and it is as simple as finding more of the same ‘best customers’

So what can happen when direct marketing fails to ‘measure up’ to marketer’s expectations? And how can this be improved?

Generally there are two scenarios faced by marketers who may become disillusioned with DM:

1. Tried DM but didn’t get the ROI required
2. Initially enjoyed positive ROI but it didn’t last

To gain consistent ROI over a longer term marketers must make it a rule to establish other objectives during their initial planning to better maximise the measurability capabilities that a direct marketing channel has to offer.

Setting these objectives should ideally be part of the initial direct marketing plan and could include a strategy to determine:

• What kind of market intelligence is required (to assist better proposition the product to prospects)
• How to obtain this market intelligence (online/offline surveys, loyalty programs, competitions etc)
• How can this market intelligence be captured so it is accessible for analysis (CRM)
• How will the market intelligence be used to increase sales

Is the extra effort and cost worthwhile? Pioneers of the DM industry, publishers Readers Digest, utilised customer questionnaire and customer (transactional) response so accurately that they knew exactly how many orders of a new product to expect before the product was even produced. They knew this because their customers would tell them exactly what they wanted and how much they would pay.

The following are a couple of suggestions to help marketers better ‘measure up’ when applying DM to their businesses:

1. Ask what your customer wants and give it to them
2. Commit to best practice

Ask what your customer wants and give it to them
'Not now, maybe later' theory – as the bulk of your list may not convert to a sale give them a reason to respond anyway. Run a competition (to win your product) with three insightful questions to be answered prior entry submission; Develop a stand-alone ‘survey/questionnaire’ with an online/offline response device (with an incentive); If Telemarketing is used to convert leads ask 3 questions on the conclusion of TM call. Make sure to use a robust sample size of current and non-current customers (previous non-responders) from list; Keep survey simple; Three or four questions answered is better than 20 questions getting no reply.

Note: A short-term option if cost or other reasons are a deterrent then conduct an in-house workshop to identify assumed Customer Insight (see MindSearch® as a guide).

Commit to best practice
DM has always been a blend of Art and Science.

Marketers who choose to ignore one or other of DM techniques are not really following best practice. Simply stated a great idea well executed sent to the wrong list OR a mathematically sound ‘break-even’ equation without a cut-through creative message are always going to perform below their potential best.

Testing is another such key element and every customer contact should be viewed as a test with clear objectives that will lead to future improvement.

Remember ‘not now may be later’! Determine the ‘life time value’ of a customer, it may pay to have the first few contacts as loss generating because when you do capture the customer they will make up for the loss quickly.