Direct marketing is a system through which companies try to evoke responses from prospects without use of intermediary channels.
The interface between the marketer and the customer totally eliminates presence of channel members such as distributors, wholesalers, retailers etc.
Direct marketing is a collection of techniques that enable organizations to market products directly to customers (Business to customer or B2C). It is a proactive approach to marketing that takes the products to customers without the use of intermediaries. It is a form of “non-shop” shopping referred to as one to one marketing. Direct marketing tends to target specific individuals or households.
Learn about:- 1. Meaning of Direct Marketing 2. Attributes of Direct Marketing 3. Channels 4. Products Sold 5. Direct Marketing (DM) in India 6. Database 7. Copywriting 8. Enclosures 9. Production Aspects
10. Catalogues 11. Costs 12. Consumer Guided Marketing (CGM) 13. Direct Marketing Guild of India 14. Advantages 15. Disadvantages.
Direct Marketing: Meaning, Channels, Enclosures, Advantages, Disadvantages and Production Aspects
- Meaning of Direct Marketing
- Attributes of Direct Marketing
- Channels of Direct Marketing
- Products Sold by Direct Marketing
- Direct Marketing (DM) in India
- Database for Direct Marketing
- Copywriting for Direct Marketing
- Enclosures of Direct Marketing
- Production Aspects of Direct Marketing
- Catalogues for Direct Marketing
- Direct Marketing (DM) Costs
- Consumer Guided Marketing (CGM)
- Direct Marketing Guild of India
- Advantages of Direct Marketing
- Disadvantages of Direct Marketing
Direct Marketing – Meaning
The term direct marketing is believed to be first used in 1967 in a speech by Lester Wunderman, who pioneered direct marketing with brands such as – American Express and Columbia Records. The term junk mail is used to describe unsolicited mail. The term Spam meaning unsolicited commercial e-mail can be traced back to 1973.The practice of mail order selling began in the US in 1867.
Increasing marketing costs, channels distancing the customer from the marketer, increasing competition, marketing of new concepts are some of the reasons for the growth of direct marketing in India. Direct marketing tools are more frequently used by companies to promote products as diverse as cosmetics to aircraft.
In the dictionary of marketing terms, direct marketing is defined as the sum total of all activities by which the marketer in effecting the exchange of products, uses one or more media to a target audience for the purpose of creating a response by phone, mail, Internet or personal visit from a sales person. The marketer may use personal selling, mail, phone, TV etc., for this purpose.
Direct marketing is a system through which companies try to evoke responses from prospects without use of intermediary channels. The interface between the marketer and the customer totally eliminates presence of channel members such as distributors, wholesalers, retailers etc.
Direct marketing can be done in combination with other components of promotion mix.
Direct marketing is a collection of techniques that enable organisations to market products directly to customers (Business to customer or B2C). It is a proactive approach to marketing that takes the products to customers without the use of intermediaries. It is a form of “non-shop” shopping referred to as one to one marketing.
Direct marketing tends to target specific individuals or households. The firm is eliminating the use of intermediaries and selling directly to customers. This has implication for both channel and logistical decision.
There are two main features of direct marketing. Firstly, it attempts to send messages directly to customers (direct mail, e-mail, telephone) usually unsolicited. Secondly, it tries to evoke a direct response from the customers (it attempts to make the customer act).
Direct Marketing – Attributes
Direct marketing has following distinct advantages over other methods of promotion:
i. Focus – A well – segmented group of prospects is targeted to direct the message.
ii. Personalisation – The message is directed towards an individual.
iii. Immediacy – It tries to evoke response immediately.
iv. Measurability – It is possible to measure responses for each communication.
There are four attributes which make DM distinct from any other communication:
1. Focus – It targets a message to a well-defined target audience, selected on the basis of segmentation or otherwise.
2. Measurability – It counts the number of responses as a result of each communication exercise.
3. Personalisation – It communicates with a person directly, addressing him/her by name.
4. Immediacy – It makes an offer in such a way that it generates an immediate response.
Right from books to computers! Almost anything that can appeal to a large audience. Anything that is exclusive. Of course, then we must be able to access the prospects efficiently. Any product for which strong copy and artwork can be produced.
Profit margin must be sufficient to cover costs, especially the cost of accessing. Mail order offers must have ‘product plus something’ advantage. What is plus product, gives the offer a competitive advantage.
There is a fear whether direct marketing mail will be opened. It will be opened if there is persistence. We may have to approach the customer repeatedly to convert his hostility to apathy. If we have identified our prospects correctly, half the battle is won. The motivation to open the mail must be incorporated into the design of the envelope and copy on it.
Front cover graphics must encourage receivers to open it up. Once the mail is opened, we have to convert the indifference into enthusiasm. It depends upon the quality of message or its readership value.
Direct mail is growing by leaps and bounds. Technology has contributed a great deal to its growth though it happens to be costliest medium in terms of cost per person reached. Its beauty lies in reaching just the right person. Direct marketing is not mass marketing. It is class marketing. It reaches efficiently only those people who will buy what we have to sell.
Direct Marketing – 7 Channels
1. Direct Mails:
This is the most common form of direct mail. Advertisers send conventional paper mail to customers through post by using a list of mailing address. The word junk mail is used to describe such unsolicited mail.
Mail includes advertising circulars, catalogues, free trial CDs, credit card applications, request for contributions, trial samples delivered to customers. Bulk mailing is a popular method of promotion for financial services, travel and tourism industries, electronic home entertainment products etc.
In many developed countries bulk mailing forms significant amount of total volume of mail. Bulk mail rates are much lower than normal individual mail rate.
Direct mail uses database marketing. Advertisers refine their data base by selecting target segment thus improving the focus of marketing efforts. For example, a person who has shown interest in photography may receive mailers for products related to photography.
The second most popular form of direct marketing is telemarketing. In this method marketers contact prospects through telephone. The unpopularity of unsolicited calls has resulted in legislation by government to protect privacy of telephone users.
3. E-mail Marketing:
This is the third type of direct marketing which is gaining popularity with increased use of Internet in India. Unsolicited mail called ‘spam’ is of a major concern, e-mail service providers offer e-mail filters to eliminates spasm.
4. Door to through Leaflets:
Door marketing through Leaflet distribution services are widely used by fast food outlets, supermarkets, and other service providers like beauty salons, libraries, to capture the neighbourhood markets. This method is used to target areas, and very inexpensive as compared to direct mail. No mailing cost is involved in this method.
5. Television Marketing:
Direct marketing on TV has two forms. Long form using half to one hour explaining in detail the product. Short form of 30 seconds to 60 seconds asking customers for immediate response. Many health products use the first format.
6. Direct Selling:
Direct selling is done through personal selling when a sales person calls on a prospect to sell a product. Tupperware, Amway use parties for selling.
Marketers use a mix of channels of direct marketing campaign. It is not unusual for a large campaign to combine direct mail, telemarketing, radio and TV as well as new channels like e-mail, social networking etc.
Direct Marketing – Products Sold by Direct Marketing
The following products elicit a response through direct marketing:
(i) Ready-to-wear garments, e.g., Otto Burlington
(ii) Credit Cards, e.g., silver classic card of Citi, SCB cards, American Express (AmEx) cards, etc.
(iii) Shoes, slippers and other footwear
(iv) Cosmetics, beauty aids and health products
(v) Kitchen equipment’s and household products
(vi) Books and periodicals
(vii) Music products, film products
(viii) Travel plans, package tours, holiday resorts, time-share plans
(ix) Banking and financial products including insurance
(x) Collector’s items, hobby items, garden supplies
(xi) Stationery, sporting goods
Direct marketing is an iceberg. Only a small part is visible and a large part is underneath. It is for marketers to explore it.
Direct Marketing – Direct Marketing in India
Service marketers are the main users of DM. Besides, it is used by business-to-business marketers, consumer durable and consumer goods marketers and industrial sector marketers. In future, DM is likely to be used by competitive sectors like insurance, automobiles, IT, telecom and financial services. In India, the below-the-line marketing business accounts for Rs. 300 crore.
Suddenly, banks, insurance companies, hotels, airlines, retail outlets and even FMCG majors such as Lever and P&G have hopped on to the direct marketing bandwagon. Jewellery companies resort to direct marketing to get a select band of affluent and jewellery-inclined to visit their outlets and take a look at the latest collection on display.
Direct marketing is targeted towards specific buyer groups. It is a matter to study who our buyers are and what are the motivating factors for them. Each mailing has its own lessons. Direct marketing is like oil deposits, deep into the bowels of the earth and requires drilling.
Direct Marketing – Database for Direct Marketing
The simplest thing we expect the database to possess is the element of correctness. The names and addresses need constant revision. The organisation has to scrutinise or clean the lists while working with them.
In direct marketing, we have to go beyond the superior copy. Copy quality might double our response, but the quality of our data base increases our response ten-fold.
When lists are merged, there should be an effort to eliminate duplication, e.g., there is some duplication involved when we get the lists from Standard Chartered of their credit card members and from American Express of their AmEx cardholders. Some names need discarding. For merging and purging, the lists are taken on tape.
When some duplication is unavoidable, our letter should carry the note that though this may be a duplicate mailing, on account of your being on preferred lists, the present mailing should be passed on to a friend most likely to derive benefit from the said offer. Even then, no data base is 100% accurate. A certain percentage of mailers do get returned.
While using the list, we have to match the database in terms of demographic and psychographic characteristics to the offer made. However, the list may be used by the competitor and he is also doing the same matching. Instead, we can match the offer to the database.
A list can be segmented, e.g., high income buyers and low income buyers. It can be called further to know who the hotline buyers are – those who have bought in the last three months. Such selective approach towards the list increases the cost per address.
One of the basic principles of direct marketing is not to sell to everybody and to focus energies on worthwhile prospects. While using the list, we can be speculative – may be the cellular buyers are Diners’ Club members. Here the list is used speculatively as there is no apparent match between the offer and database.
Sometimes, there is wrong targeting, e.g., literature of sanitary napkins going to menopausal women.
Direct marketers often find it worthwhile their effort to pay a little more for a good database that has been well- researched and segregated. The validity of database is very important. Some databases have only 30 per cent validity.
Direct Marketing – Copywriting
Like any ad copy, direct marketing copy has to attract the attention of the customers, create an interest in the product, followed by a keen desire to possess the production for which purpose they have to take action – order the product or enquire about it. It is called AIDA formula of copywriting, though it does not mean that a consumer passes through the same progression of effect every time.
DM is objective and factual, though emotional appeals are also used. As there is no face-to-face contact, we have to write so convincingly that the reader feels tempted to take the offer. Direct marketing copy works better if we make use of the experience of the target audience. Besides this, we should bear in mind that DM copy is like a well-dressed woman.
If the woman has substance, we remember her identity as Ms. so and so, while recollecting about her. We do not expect her to be called a woman in Victorian dress or Jeans, or the latest in salwar kameez. Here, our attention is primarily directed to the outfit, rather than the woman.
Similarly, DM copy should invite our attention to the product, rather than to the skillful copy itself. It does not, however, mean that the copy should be mediocre. It only means that only cleverness for its stake in the copy is not desirable. This cleverness should enhance the image of the product. We also have to write a focused copy. No one expects to read ‘101 Reasons You Should Buy This’.
Instead, we have to identify the primary theme of the copy, and add a few subsidiary selling points in the body copy later. Focused copy is also easy to test. DM copy has to induce action like generating an enquiry, response through a coupon, or order itself.
The copy should use specifics rather than non-specifics. There could be conditions attached to an offer. The positive aspects are emphasised. Active voice is preferred. The copy should be short of the unnecessary flab like redundant expression, tautological expressions, repetitions, etc.
We should avoid pomposity. Cliche-ridden language also is to be avoided. Write using titles and subtitles. Organize the matter in suitable paragraphs. All this adds to the comfortable reading.
DM copy is based on self-interest and lists the benefits that may accrue to the receiver. It also highlights the USP.
A covering letter that accompanies the brochure should not repeat what has been said in the brochure. A sales letter is a challenging task by itself. It has got to be motivating. There can be an over-line the salutation to improve the readership.
It can lend a personal touch to the letter. The salutation that is most commonly used is Dear Friend. Or else it spells out the relationship the receiver has got with the organisation, e.g., Dear Card Member.
These are the days of computer letters. We can create personalized computer letters by putting relevant matter in fill-in areas. But computer letters still lack that personal touch.
In the body of the letter, the speculative approach is not adopted. We cannot make the receiver guess what offer we are offering to him. Some openings appeal to our sense of fear and insecurity. Some openings are based on exclusivity. Some openings are based on self-interest. ‘Tomorrow may be too late’, type opening is guilt based.
The letter may carry some marginal notes in cursive lettering, e.g., “Here is your FREE gift!” These marginal notes are mostly put succinctly against the matter in the accompanying passage.
Variety makes our letter effective. We should write modern prose in neat concise paras. A main paragraph is double indented. The whole letter is in single space. There is double space between the paras.
It is better to put some action phrases such as, ‘Mail before such and such date’. We avoid expressions like, ‘Your order must be received before such and such date’ which puts us at the mercy of the post office. Sometimes, a period is mentioned- ‘post within a month.’
In the layout of the letter, there should not be unduly long paragraphs. A key paragraph can be empanelled or hand- circled.
We can appeal to the sense of importance of the receiver. The receiver’s background may be admired.
Our letter becomes bright and sunny when it does not jump to describe the product directly without prefacing the product benefit. Another pitfall is to appeal to wrong motives and quote wrong references.
We should not write pompous and bombastic letters. We tailor our communication to the receiver’s level. The receiver’s background, his realm of experience and his thinking pattern is taken into account.
While closing the letter, all the selling points are put in a recap form in a quick manner. Later, a simple closing sentence like, ‘we care for you’ appears followed by signature. After the letter is complete, a PS or post-script is put emphasizing action or gift or premium.
We should use correct, simple and direct words. Our writing should not have unnecessary flab. Words should be complementary and supplementary to each other, rather than contradictory. We should be clear about the offer. Cliches are better avoided. Humour is to be used with caution.
Good creative is essential it is to remain in the mind of the prospective customer. But remember, no matter how brilliant the creative, the database is always far more important. If you have a bad creative, but a good database, a direct marketing exercise will work.
Direct Marketing – Enclosures
There are two types of enclosures:
(i) Samples, tiny gift items, greeting cards, small calendars, etc.
(ii) Printed enclosures.
Small items which go well with the product offering are sent as enclosures, e.g., Standard Chartered sent greeting cards with matching envelopes. Lever sent Surf Excelmatic sachets, pencils and coffee and a plastic sheet through which a hazy picture is seen to give an idea of a cataract, etc.
However, it is not always necessary to enclose the above and creatively produce and printed literature which will achieve the purpose just as effectively as any of the above will do. Besides, printed literature costs much less.
One of the most common enclosures is the endorsement type enclosure where some customer, opinion leader or celebrity speaks about the use of the product. Such endorsements validate a product and are individualized by adopting a different size and colour. The endorser should complement to the image of the product, e.g., a sportsman recommends a malt based drink.
This introduces the element of credibility in the communication; Even our routine letters from customers can be used as endorsements by taking their consent. Such endorsements are to be used in moderation. We also have to do a certain amount of follow-up. Celebrities endorse a product at a price.
A separate small sheet may carry a single point and become a validator, e.g., as our preferred customer, you are being given a special discount. Other validators could be an article reprint from a magazine or a question-answer format that anticipates most of the misgivings about a product. Question-answer format makes the whole thing appear objective.
Brochures are also very common enclosures. There are third party endorsements where someone not related with the company is approving a product, e.g., Vimal approving Ariel Microshine. There are special discount enclosures, guarantees and warranties, suitably bordered and membership cards to give a sense of belonging.
All enclosures do their assigned task if they are well made, well drafted, exciting, and truthful and provide flavour and urgency to the mailing.
Direct Marketing – Production Aspects: Envelopes, Order Cards and Coupons
It is necessary to master the basics of print production. Paper selected for printing must be thick enough to take multiple impressions of colour processing. Paper cost should be carefully examined. The paper used should be opaque as it is easy to read. Colour psychology guides us in the selection of colours. Colour contrast is profitably used to distinguish the enclosures.
We must be conversant with typography. Print jobs must be executed with professional finesse. These days there are organisations that do the mailing for us. They put the insertions inside the envelope and actually mail them.
The direct marketing envelope is not just to carry the offer but it is used to motivate the receiver to open it. The inside stuffing is not visible and the only visible component of mailing is the envelope. If it is not motivating enough, the whole offer finds its way to the waste paper basket. The envelope is, thus, crucial in making our DM either a success or failure.
The envelope carries a copy that makes the receiver less hostile to the inside contents. It improves the reception to the offer. Most of the envelopes carry a promise and the inside contents must live up to this promise, e.g., free gift promise must be kept. A personal envelope has inside it a letter with a personal touch.
Though novel methods do attract initially, they are soon copied and the feeling that such a style has been seen already does not create the necessary impact of the repeated novelty. The copy on the envelope should not in any way intrude on the privacy of the individual and must not embarrass him in any way.
Envelopes carry action-oriented phrases but these should not sound like rude commands, and should be backed up by some benefit. Sometimes, we keep the recipient guessing about its contents, whereas sometimes, the offer is printed on the envelope itself. If there are free samples, the offer can be announced on the envelope itself. The offer should be announced always with the accompanying benefit.
Envelopes do appeal to our sense of vanity and exclusivity. They flatter us by making us a preferred customer. In response to an enquiry, the envelope says, ‘Here’s the Information You Asked for’. The offer should be relevant to the receiver and not just relevant to us.
Envelope colours should go well with the product and the company. A heavily produced envelope reinforces the premiumness of the offers. Envelopes can be tailored to individual needs economically if the print run is high. In small quantities, tailoring envelopes costs as much as the production of brochure. Tailor the envelope so as to add to the impact.
If the type, colour and tint to be used on the envelope are the same, tinting is economical – much more economical than using the colour paper. Two coloured envelopes can take advantages of a variety of under-colours, colour bars and tint blocks.
The business reply envelopes (BREs) are produced as economically as possible, because they are used for reply function only. Its size should be just sufficient to accommodate the order form.
Colour bars are used to attract attention. They could be vertical or horizontal. The company logo can be put inside the colour bar. The bars can carry copy like, ‘for members only’. We can set the copy running parallel to the horizontal colour bars. The vertical bars are somewhat from the edges.
The horizontal bar could go through the window envelope. Colour bars can be used at other angles. These two bars can intersect. However, they should cross in the middle of the envelope.
Some envelopes have die-cuts. Such cuts should show the contents underneath by using gel or cellophane. Sometimes, envelopes carry photo snaps. Instead of paper envelopes, some companies use poly-bags to flash their message in bright colours. In heavy promotion, both sides of the envelope can be used.
Instead of envelopes, self-mailers can be used. These self-contained messages have built-in order forms, which serve as an envelope and so do not require an outer extra envelope. The typical example of a self-mailer is the catalogue. Another example of a self-mailer is the broad-side where a single sheet of paper is folded without stitching and can be opened (e.g., 17″ x 22″ or 17″ x 25″).
Standard Chartered recently changed the design of its Gold Cards to give them an international look. It sent the cardholders a broad-side enlisting the benefits of its Gold Cards.
In spite of all possible care that we take to make up the mind of the prospective client, our efforts will go in vain if the accompanying order card is not suitably drafted. In a direct response ad, the place of the order card is taken by the coupon. The order card or coupon must enhance the desire to buy, and so it may carry suitable headings like ‘rush your order today’ or ‘no entrance fee if you apply for the credit card before March end’. The benefit and promise made in the mailing must be repeated on the order from.
The order form avoids legalese. It invariably mentions what is being offered free along with the order, or the monetary benefit that might accrue to the order giver. It should not confuse the receiver and should be clear enough. We recommend it to be complete in all respects – it should span out the buying options or the offers being made, and the prices at which these are made.
It should incorporate payment details; say by cheque or DD or credit card. It should have space for name of the sender with options of gender suffixes like Mr., Mrs., Ms., space for address and phone number.
he order form or coupon can start with acceptance words like “Yes” Please rush me…’ or “Yes”, I take this opportunity to have your no-risk muscle-toner…” Coupons do indicate a sense of urgency. It is necessary to print the name and address of the company in the coupon and outside it, so that even if the coupon gets detached, the buyer does not feel handicapped for want of an address.
A buyer-keep portion can be included with the necessary details so that the buyer can keep a record of the order made.
Direct Marketing – Catalogues
Product catalogues are very common in industrial marketing. These are speciality catalogues like catalogue of a postal stamp vendor, or a computer book publisher or distributor. Catalogues must be produced efficiently, and must reflect sound marketing philosophy.
Vertical product mix catalogues feature all related products — catalogue of Otto Burlington in India featuring garments and outfits for the family. Such catalogues carry a form for recommending other customers and some incentive is offered to existing customers for doing so. Horizontal catalogues feature general products.
A catalogue producer has to think in terms of what he has to offer — whether his products are exclusive, his service is impeccable, his prices are competitive, his elegance is praiseworthy. He may be chosen as one who offers the best bargains. A catalogue has to be friendly. It should provide privacy, convenience and confidence to the buyers.
The catalogue copy should describe the product creatively and completely.
It is necessary to use a long copy for high value items. Perhaps, some item requires a long copy because it is expected to be a ‘leader item’. The benefits are emphasized. We have to devise a right name for the product to make it distinguished. The catalogue should indicate the delivery time.
Pictures make the bull of the catalogue. They show the product in use, or a shot of the product, or a product with background. Bras and panties are best shown on a model wearing it; whereas socks and gloves are shown alone, unless they are high-fashion products. Sometimes, photographs are supplemented by line drawings for showing certain functional aspects of the product.
Some catalogue makers may use art drawings instead of photographs; of course the costs of doing so are high. Benefits are also illustrated by drawings. A product that is not visually attractive is also shown in drawing.
Though four colours printing of catalogue is now in vogue, it is economical to use two colours or one colour pages in the same catalogue without in anyway reducing its impact.
It is possible to make B&W prints from colour by using contrast masks. Otherwise, we can shoot both in black and white and colour.
A catalogue chooses either a down-to-earth approach or an arty approach. It should be an elegant catalogue, rather than something commonplace. Its covers can be exquisitely executed.
One important point is regarding the seasonality. Some products are seasonal, and so they do not appear in the next edition. Some products are, however, constant. The seasonal products are covered either at the beginning or the end, so these pages can be replaced by new pages while keeping the pages of the constant products unchanged. This economises the production.
Best selling products are put on covers. Fast moving items come pretty early in the catalogue. Can we expect our reader to browse through one entire thing till the end? Instead, the reader is most likely to get what interests him in the pages at the beginning.
We can put a cover wrap with a message on the catalogue cover. Such cover wraps are either shorter or narrower than the cover, and hence the rest of the cover underneath can be seen.
A product featured on the cover has to have a cross-reference of the inside pages where its details can be had.
It is possible to have some items from outside sources in our catalogue. These producers can be requested to provide the art work of their products.
Bulky catalogues are mostly compiled. They carry pre-printed pages from the manufacturers. It has some obvious advantages for the manufacturers. It allows them full control over the copy.
These pre-printed pages from different sources are bound by the catalogue sender. Additional copies of the pre-printed pages are always made available by the manufacturers to overcome shortages, pilferages and production problems.
Though matching the paper quality is not necessary while binding these pages, it is necessary to insist on typographical matches. If the catalogue sender desires to have a uniform style of copy, it is better to have pre-printed picture pages without the copy. He has to print them his copy on the blank spaces.
There are two approaches in direct marketing. Individual mailing can be sent followed by a catalogue. Conversely, a catalogue can be sent first, followed by individual mailings. In the first approach, our future mailings would be to those groups who respond to our promotion. In the second approach, we get a chance to select a few of those products that are most demanded for individual direct marketing.
Each family of upper-middle, middle-middle, lower-middle and top class in India is likely to receive a plethora of catalogues in these days of direct marketing. Some duplication is also possible. In this clutter, the catalogue that has creative copy stands out. It gives reasoning behind our buying. Just indication of availability is no valid reason for the patronage of a catalogue.
Re-mailing of the catalogue is necessary periodically. We cannot assume that the catalogue from which an order was placed is still lying on the table of the consumer or is otherwise handy. It is a good practice to send follow-up discount catalogues. We can also ask a nominal price of our catalogue from old list customers, and redeem the same against their first purchase.
There are immense possibilities of exploiting DM further. We can insert direct response advertising in the media or we can do telemarketing. Of course, mailing is the most extensively used method. However, it is not just a hurriedly drafted brochure’s posting with a clumsy covering letter.
We have to be careful about:
1. The target audience to be approached.
2. Identifying the database
3. Planning of the various elements of the direct mail package.
The envelope is only a mailer. But beyond that it brings the target audience in contact with the offer by breaking the natural barrier by rightful design, teasers, challenges, foxing, etc. It allows an entry to the mind of the prospect.
The proposition made in the brochure is made attractive by a personalized letter. It is just a personal talk. It is an attention-getter. It also helps to sustain the attention.
An innovative offer would entice the buyer to the desired action. The offer has many incentives like free-trial period, money back guarantee, early bird discounts, discount coupons, gifts, participation in contests, slogan writing, etc.
Many databases available are not worth. They are not properly compiled. They are not tested. Check the quality of the database before using it.
DM is controlled by the marketer himself. Of course, no one can force a buyer at gun point to sign on the dotted line. But the persuasion is all too insistent. There are well-designed coupons, pre-paid envelopes, timely reminders, innovative offers. There is no excuse for the prospect to put-off the offer.
One letter might not suffice to win a customer. Repeat the process by sending reminders. Sometimes, personal visits may be necessary. This is necessary to save the initial DM investment which otherwise would go waste.
For certain products, DM works out all alone. For many products, DM supports media advertising.
We can deliver our offer on a phone call by an out-bound call. Generally, we give a follow-up on phone after doing the mailing.
Mostly, telephone is used for receiving enquiries, complaints, orders and feedback. Any lethargic approach towards telecom means loss of goodwill and sales. The organisation has to be utmost careful regarding telephone talks.
A call has to be received by a responsible person. If a receptionist receives it, and the concerned official is busy, the person making the call should not be put on endless hold.
Either the called party or receptionist must come on the line in a few seconds. In case the called officer is busy, the receptionist promises to return the call. When enquiries are attended to, we must thank the person who was put on hold. If there is no person to attend the call, there should be a voice-mail system.
The answering machine must be installed to give some reasoning for the call not being attended. If a customer does not get through the line in spite of repeated attempts, he may not call up again. We should think of having more telephone lines.
If the organisation makes a call to the customers, the concerned official of the organisation must immediately come on the line as soon as the called party is got through. He cannot be put on hold, as the call has originated from the organisation, and it is bad manners to keep the other party on hold.
The organisation can think of hotline for easy access. They can also install a toll-free line. In Citi Bank, most of the business is conducted on telephone. The phones are manned by banking officers who have the authority to take the decisions on the spot.
This service is available round the clock earning. Citi the sobriquet of ‘the Citi never sleeps’. It is a good investment for the organisation if the staff is trained in telephone answering.
DM got to have a sense of timing. The basic decision is when to do mailing, or run a DM ad, or do the re-mailing. We have to consider how often a catalogue should reach our target audience.
If a marketer knows that the prospect is in the market for a car, or a home-loan or a personal loan, it is far more likely that the marketer will get a response to the direct marketing communication sent to that particular prospect. If people are fasting during Shravan, it makes no sense in inviting them to the opening of a sea-food restaurant.
DM responses take at least a fortnight. Seasonal DM dominates the scene. Garment marketers send their summer collection and winter collection catalogues.
Mailing is related to festival buying, say Deewali or Onam or Baishakhi or Durga Puja or Idd. Post-seasonal mailings take care of those buyers who still have some purchasing power left.
Catalogues are sent to regular buyers who keep on buying several times in a defined timeframe. They get remained catalogues too which they may treat as fresh offers. Catalogues are re-mailed quarterly or half-yearly or yearly or as per seasonal cycle. Occasional buyers are an important group having better status than non-buyers.
It is our sense of timing that may motivate them to patronise us. One time buyers show no purchases for a couple of years after their last purchase and they are to be observed. If necessary, they can be dropped from the mailing list.
Direct marketing ads may be one-step order taking ads or may be two-step enquiry generating ads followed by a sale ad. Enquiry generating ads are not repeated in a short span of one month, because each subsequent insertion pulls lesser response. It is better to change the ad.
In second class mailing, about 50-60% response is generated in about a fortnight after the first order comes in. In first class mailing, the response is generated within a week of our receiving the first order.
If a deadline is given, it is a matter of policy for the organisation to decide how those orders which cross the deadline are to be treated.
An organisation having a large product mix tends to approach the hottest buyers during leaner months.
A customer may like our product. He thinks of possessing it. He puts on an order. He is expecting a good deal. His psychology of happiness prior to the receipt of the product, at the time of receipt and beyond that should continue. This happens if due care is taken to execute the order.
The product is properly packed. There are instructions for the use of a product. These instructions are clear-cut. In case the product needs assembly, there are instructions as to how to assemble it.
The necessary guarantee / warranty certificates are enclosed. There is authenticated product certificate for art products. The delivery time should be adhered to. Generally, it is 3 to 4 weeks or 4 to 6 weeks.
Beyond stipulated time, money should be refunded. The delay can be explained. While doing so, a customer can be requested to avail of a special discount or free gift if he is prepared to wait a little longer.
Perhaps, this may induce him not to cancel the order. Returns are a part of the game. A 5-10% rate of returns is considered normal. As soon as the order is received, a simple thank you letter or a letter of acknowledgement is sent.
At times, the acknowledgement letter repeats the salient points of the sales letter. This reinforces the customer’s belief that he has made a right buy. After receiving the product, the consumer may get post-purchase feeling of dissatisfaction or remorse.
Perhaps, the buyer feels he succumbed to pressure sales tactics. Perhaps, he feels he has made an impulsive purchase. The enclosures with the product should be reassuring enough to him. They should reduce his anxiety level. There should be a where-to-get it repaired list along with the product. The customer should be congratulated for having selected a right product.
This congratulatory letter or a delivery covering letter or welcome letter should be sent separately, thus giving it a personal touch, or can be set along with the product. When sent separately, it may reach prior to the receipt of the product or much after the product has been delivered. Psychology demands that the delivery and the congratulations should coincide.
Several bounce-back offers can be expected, e.g., a TV set can generate a bounce-back offer of a video game. In the same mailing, when we receive a demand for something other than the first ordered product, that something else is suitable to become a bounce-back candidate.
Cosmetic treatment of an order reduces chances of refusal. These should be ‘handle with care’ label, a mailing address which is neatly typed, guarantee forms, etc. Costly products are put in a box.
Direct Marketing – Direct Marketing Costs (With Formula)
Any business operation has to break-even before it starts making the profits. A break-even quantity is that quantity where there is no profit and no loss. Break-even can be calculated in terms of sales also.
The formula for break-even point in units is:
In the above formulae, we come across the term contribution margin. It is the difference between the sales per unit and the variable costs per unit.
Contribution Margin (unit) = Sales Price (unit) – Variable Costs (unit).
The gross contribution margin is –
Gross Contribution Margin = Total Revenue – Total Variable Costs
Contribution here is the contribution towards fixed costs or overheads. If the cost of all overheads like rent, electricity, phone, depreciation, travel, secretarial help, etc., is met and still there is any sum left over, it represents profits. In direct marketing business, the overall fixed overheads are at 10 to 15 per cent.
The more the mailings, the lesser will be the overhead burden on a particular mailing. The break-even point is thus lowered, if there are more mailings. Overheads exceeding 15 per cent need an examination. Perhaps the organisational structure is not lean. Overheads are taken against sales and not costs.
Our product cost has several cost components:
(i) Bare product cost ex-factory.
(ii) Inward transport cost when the product is transported from the factory.
(iii) Storage and warehousing cost.
(iv) Outward transport cost.
(v) Order processing cost.
(vi) Development cost percentage for an innovation developed by the organisation.
(vii) DM itself. Production of all mailings, insertions of these, mailing and postage charges, business response envelope costs.
(viii) Pilferage, spoilage, losses.
(ix) Sales returns.
(x) Insurance premium.
(xi) Fixed overheads as percentage of sales.
It is better to replace low cost items outright rather than incur the cost of correspondence which is very high.
Post-sales correspondence reduces the sales returns. Promotional gifts also reduce heavy sales returns. There are refusals without inspection. Such refusals are common with telephone orders. It is better to seek confirmation.
It is a good policy not to take refusals as a ground for quarrel with the customer. A letter of regret expressing that you could not be pleased may win the customer in future.
Postage costs are a major item of expenditure. For an order costing a particular sum, you can recover postage and packing charges from customer.
Restricted availability offer is a good attraction. Here, a ceiling is put on purchases; say only 2 items per order. We can economise on paper by adjusting its weight, on envelopes by avoiding die-cuts, odd sizes and folds. We can economise on printing. We can save costs by reducing the size of an ad. Instead of buying lists, we can swap lists to save costs.
Most direct marketers adopt MGM approach (member-get-member approach) to add new names to their list. Suggesting a name may earn him an incentive. Conversion of a suggested name into a customer earns additional rewards for him. Even the suggested name is given certain incentives if he decides to buy.
In net-centric relationships, the transaction costs are falling. In bank marketing, the transaction cost with a teller is $ 1.07, mail-order transaction cost is 73 cents, a telephone transaction costs 54 cents, using an ATM costs 27 cents and logging on to internet account to perform all these functions costs just one cent.
Direct Marketing – Consumer Guided Marketing (CGM)
Mostly, database marketing leads to problems of intrusion on privacy. To overcome this, Dick Shaver Advocates Consumer Guided Marketing. Here, personal information is not obtained from the third party databases. Information is sought directly from the consumers about their likes, dislikes, what they do and don’t do.
It is database loading research (DLR). Targeting becomes precise once such data is available. Copywriting also becomes consumer-specific. Because of right targeting, mailing costs get reduced. The response rate goes up. Processing consumer information is though quite an intricate task, especially when there are several hundred items for several million people.
It is necessary to learn how to frame the questionnaire and how to analyse the data. All this calls for training. India is still had driven and DM accounts for just two p.c. of ad expenditure. In some countries, DM accounts for 40 p.c. expenditure. India still lacks the tools to measure the effectiveness of DM.
Mass advertising has a high wastage factor because of wrong targeting. The distribution channel accounts for a large percentage of expenditure. As against this, DM can be quite cost- effective. Consumer guided marketing is a new approach to Direct Marketing. It is far more personal and powerful.
Direct Marketing – Direct Marketing Guild of India
Recently, this association is formed to secure recognition for DM in India and to provide this profession a direction. It shall ensure sharing of knowledge, and will provide training. It also becomes a lobbying agency for this industry.
It can help remove malpractices in this profession by accrediting ethical suppliers. Currently, there is a lot of brokering around by list vendors and data entry operators who are building the list illegally.
In the US, legislation is being enacted to stop direct marketing companies from being intrusive and transferring information about a consumer to other companies interested in going the direct marketing way. However, one has to be tactful in handling such delicate issues.
MCI came up with a ‘friends and family plan’ which asked customers whom they called most frequently and offered a discount on those phone calls. MCI was flooded with responses. If the company would have just tried to track frequently called numbers by other means, it would have amounted to intrusion.
It is not the only solution to a company’s marketing problems. It is useful while communicating with small select audiences and when premium products are being sold. But while launching a product, it is necessary to advertise to generate awareness.
After establishing reputation as a mass marketer, it makes easier for one-on-one communication to work successfully. Many companies try the DM route without brand building, but it takes far more time to build a degree of comfort.
Telemarketing is an excellent tool of direct marketing; but has to be used sensitively and with caution. Telemarketing used insensitively becomes intolerable. It is necessary to make a national register of ‘Do not call’ (DNC) numbers. There should be compensation from the insensitive company that still calls any DNC. Telemarketing can sully the brand equity if it continues to irritate.
The Association has 15-member companies in 2010. There are four other companies which have applied for registration. In other countries, most of the direct selling is about cosmetics. However, Indian market has a mix of the products including cosmetics, wellness products, etc. For instance, there are companies like Tupperware selling kitchenware.
Amway is a major player in wellness products and even fertilisers. Oriflamme is a major player in cosmetics. The IDSA has set guidelines for member companies. Top priority is given to ethics, repurchase of products and product chain. It is a self- regulatory body.
Direct Marketing – Advantages of Direct Marketing
The advantages of direct marketing are:
i. Focused approach – Marketers can identify specific segments by looking at demographic data like age, sex and education. Then design the appropriate message and channel and suit the segment.
ii. Reduce wastage – Through selecting the right target group the message is directed to the hot prospects and prevent wastage of efforts. For example, a hoarding attracts many viewers of whom several may have no interest in buying the product.
iii. Frequency – Because of its low cost as compared to other promotional tools frequency can be increased to gain impact and increase effectiveness.
iv. Immediate and flexible – The response from direct marketing is immediate. It also provides flexibility in creativity. Direct marketing are used to send CDs on products to be marketed.
v. Lead time – Relatively a direct marketing campaign can be put together in a short time. Buying space/time in media on a casual basis can bring economy in spending.
vi. Personalisation – Insurance buyers are congratulated on their decision to buy insurance through personalised mail.
vii. Measuring effectiveness – Effectiveness of promotion can be easily measured in direct marketing. Feedback is immediate and likely to be accurate.
Direct Marketing – Disadvantages of Direct Marketing
The disadvantage of direct marketing is:
i. Direct marketing is seen as nuisance by many customers. Junk mail and spam are ignored. Telemarketing by firms is seen as invasion of privacy. These factors may negatively impact the brand image.
ii. Direct marketing is widely used by companies in India.
Some of the applications are-
(a) Marketing of credit cards by HSBC, Citibank etc.
(b) Marketing of restaurant services – Oberoi, Grand Ashok.
(c) Marketing of resorts – Sterling, RCI.
(d) Marketing of durables – Eureka Forbes.
(e) Marketing of magazines – Readers Digest.
(f) Marketing of consumer products through catalogue -Burlington.
(g) Marketing of mobile services – Spice.
(h) Promotion of conferences and workshops
iii. Direct marketing is based on one to one marketing strategy. Its effectiveness largely depends on the database.
Some of the important sources of databases are following-
(a) Census report.
(b) Telephone directory.
(c) Postal pin codes.
(d) Credit card holders’ name list.
(e) Members of a club.
(f) Research Agencies.
However, access to databases is now being legally restricted to provide privacy to individuals.
iv. Direct Marketing can be done through-
(a) Advertising in print or broadcasting media.
(b) Personal selling.
(c) Marketing on Internet.
(d) Telephone marketing.