Direct to the customer

By Ollie Walsh MBS Managing Director www.micromarketing.ie

‘Direct marketing’ or direct mail as it’s also known, is simply targeting people by post or email ‘directly’ at their home or business. I believe direct marketing is one of the most cost effective methods of promoting your business, which is always valuable, but especially so in times of recession.

There are factors involved which contribute to the effectiveness of a direct marketing campaign.

Permission Based

The first factor is if the direct marketing campaign is permission based, that is do you have permission from people to contact them. If you do, the effectiveness of the campaign, and therefore your return on marketing investment is high. Generally, you will get permission to contact existing customers simply by asking them. If you have a business which services the general public, hospitality or retail for example, use customer comment cards to get email, text numbers, or postal address to contact them. (It’s a legal requirement under data protection that you ask permission to contact them by email. ) By utilising comment cards to collect contact details, you can quickly build up a database of customers to target. If possible, get their email addresses as it’s significantly cheaper and less time consuming to target customers by email as opposed to post. It’s also more environmentally sound. If you’re in a business to business market you will already have ongoing communication with customers (as opposed to B2C where you’re dealing with people you have no contact details for ) so you can contact them to ask permission to send them promotional information.

For companies operating in any sector, you can collect email addresses through your website to use for direct marketing.

The reason that permission based direct marketing can be so successful is you are predominantly targeting people who have already experienced your product and/or service, so they will already have confidence in your company. To illustrate what is meant by this, consider the example of a new restaurant opening in Galway. Before you decide to try it out, you will probably ask your friends if they have tried it, maybe read a review, and so on. This is to reduce the fear you have of wasting money or having a bad evening in the restaurant.

Having tried it you will naturally rate it in terms of quality of food, service, atmosphere, value for money, and any other criteria that are important to you. Assuming you like it, the ‘fear’ you originally had is now gone and a decision you make to go again is much simpler. When you receive a direct marketing message from the restaurant, you are much more likely to act on it, as opposed to acting on information from a restaurant you had never tried. This is also the reason that it is significantly cheaper to retain existing customers than capture a new one, as they have confidence in your company. If you’re the restaurant owner, it’s pretty safe to assume that if someone gives you permission to contact them, they enjoyed themselves and are interested in coming again. The same principle applies to B2B companies; you can use direct marketing to get your customers to ‘trade up’ by buying more from you.

‘Cold’ Targeting

If you don’t have permission from customers to target them, it’s known as ‘cold’ targeting. The success rate of cold direct marketing is very low, as little as three – five per cent, but the cost of the campaign can be so small, that even response rates that low are worthwhile.

There are a number of options for cold targeting. The first and cheapest are unaddressed flyers targeting a geographic area with door-to-door delivery. You can get 5000 DL flyers (the size of an envelope ) designed, printed and distributed for about €1000. If our new restaurant from the example above did this and got five per cent response, that would be 250 bookings. There would be a variety of size bookings, but even if we assume its all bookings for two people, with an average spend on €70, that’s €17,500! Even if they got a one per cent response rate of couples with that spend, its €3,500 which is a 350 per cent return on marketing investment.

A more expensive option is to purchase a database of names and addresses which you can do for domestic or business targets. On top of the price for the database, you will also have printing, postage, envelopes and administration. Purchasing a database has a greater response as you can specify the type of customer you are targeting based on location, age, marital status etc. For example, just this morning I received a 2009 calendar and discount voucher from Guinness. I never gave my address, so they must have purchased it from a database, based on my demographics – where I live and my age, as I’m likely to be a potential customer.

In a B2B situation, it’s always better to have addressed targeting, as this enables you to follow up on the information you send by calling the person it was addressed to. By following up the call and discussing your offering, you significantly increase the effectiveness of the campaign.

Regardless of what type of direct marketing you use, you should include a ‘call to action’ which is a limited time offer that encourages the recipient to respond to the communication. For our restaurant it can be a percentage discount or a free glass of wine but limited to a date to encourage them to respond soon.

Cold targeting should only be done by post, never by email (this is spam ) or SMS as it’s extremely unpopular with people and can have an adverse effect on your sales by alienating people. In general terms, this doesn’t happen with post.

Next week I’ll discuss websites.

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