Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
Selecting and employing the right media in direct marketing channels
Article Type: Industry perspective From: Direct Marketing: An International Journal, Volume 2, Issue 1.
Selecting and employing the right media in direct marketing channels
The entire notion of direct marketing goes well beyond the image of "bothersome" marketing that exists in the minds of both businesses and customers. Just as the traditional approach of communicating to large numbers of potential customers through television or radio ads is no longer universally effective, neither is the characterization of direct marketing being simply junk mail or "spam." Truly, effective marketing must have the targeted, creative, customized qualities that define direct marketing in the twenty-first century. This naturally leads to the problem of employing direct marketing activities to successfully gain access to customers. Direct marketing has significantly changed the concept of marketing "channels," or the means by which the firm gains access to customers.
In the past, any discussion of marketing channels was all about how a firm could construct a distribution network that would bridge the gap between the product's location and the customer. The focus was on physical distribution and logistics which, by there very nature, creates both a tangible and intangible breech between the firm and its customers making relationship management exceedingly difficult. This "old school" focus meant dealing with wholesalers, retailers, physical distribution, inventory control, and all the related logistical challenges that are associated with "moving product." In the world of direct marketing, some of these variables, like wholesalers, can drop out of the process, others (e.g. retailers) take on a new look while still other functions such as inventory control require adaptation. The result is a direct marketing channel structure which not only places control firmly in the hands of the originating firm; but it also is available to firms of all types and sizes.
Consider the retail book industry. The traditional channel model, still used to some extent by major chains such as Barnes and Noble, is incredibly resource-heavy when it comes to physical distribution and inventory control. Potential customers have to take the time to actually go to the store - and the only way to entice them to do this is to provide an inventory containing a wide (and costly) range of books and related products. To offset the high costs of traditional retailing, these companies offer high-margin products such as coffee and pastry. Contrast that with the direct marketing approach used by Amazon.com, where it is possible not only to access and purchase the same types of product but also to have other relevant related products promoted seamlessly as the customer moves through the purchase process. This direct marketing approach applied by Amazon.com alters the business-consumer marketing of books, as well as changing the business-to-business book market to the benefit of small- and medium-sized companies. Where many specialty book shops were geographically bounded and highly dependent on word-of-mouth promotion and repeat customers, sometimes to the point of a monthly, hand-to-mouth existence, working through Amazon exponentially increases their market coverage and dramatically expands Amazon's product line resulting in a "win-win" situation.
Constructing a direct marketing channel: tools of the trade
Clearly, if a channel is to be truly "direct" using the old pieces that formed the basis of a traditional marketing channel is not an option. In a world where wholesaler, distributors, retailers, etc. serve as filters and interact in a way that is dominated by a jockeying for power and controlling dependencies (e.g. Wal-Mart), access to the customer is anything but direct. The fundamental premise behind constructing a direct marketing channel is to remove filters and barriers in order to construct a channel to customers directly controlled by the individual firm. In short, a true direct marketing channel cuts out the "middleman" - to the benefit of the firm and its customers. In direct marketing channel strategy the single, definitive word is relationship.
When it comes to building a direct marketing channel, there are four major tools:
electronic mail; and
internet (web) sites.
If properly used, each has their own unique advantages. Each also has a stereotyped image in the minds of many which would make it unsuitable for any firm which valued its image in the marketplace. When a firm uses these direct marketing tools in a way that plays to each tool's individual strength(s) the firm cannot only construct a highly effective channel to its customers, the old negative stereotypes quickly fall by the wayside.
This discussion in is not necessarily intended to be all-inclusive or exhaustive. For example, as product offerings become more specialized and/or less frequently purchased, other direct channels, such as online auctions, may be a viable approach in some cases. The channel options covered here can be practically and effectively applied by virtually any firm, large and small, where other direct channels, which could be very effective under specific circumstances, may not be generally applicable to all firms at all times.
Of all the direct marketing tools available to any business, telemarketing may be the most maligned. The stereotype of an unwanted call during dinner time has virtually made "direct" marketing synonymous with "bothersome" marketing and those engaged in telemarketing have often done little to dispel this image. Everyone has been on the receiving end of this type of approach and probably all found it equally annoying. At the same time, it is probably a safe bet to say these same individuals have all responded to a telemarketing contact in a positive way and, perhaps, even found the contact helpful.
In considering a direct marketing strategy and the tactical tools available to any firm, it is important to move beyond simple stereotypes and consider each tool's unique capability. This is especially true with telemarketing. Consider this: if a firm was offered a channel through which you could access customers quickly, cheaply, and in large numbers it would seem to be a pretty good foundation for establishing a very profitable link with the potential customer base. Add to this, the ability to segment and target contacts as well as interact with these contacts in order to clarify offers and answer any questions that might arise. This is precisely what good telemarketing can do. But in order to achieve successful results, it is vital to also understand its limitations.
A good telemarketer knows that success lies, in large part, in the ability to empathize with the contact. Being able to "get inside" their minds is the first big step in effectively employing telemarketing to access customers. Start by considering the timing of the call, or contact. Is it a time the customer would find convenient? Evening mealtime may be a great time-of-day to catch people at home but that does not mean they will be interested in engaging in an unsolicited outside conversation. One of the keys is to know when the contact is most likely to be receptive to the offer.
A good example of this principle in action would be any one of several of the larger US mortgage and finance companies who have discovered the key to successful telemarketing revolves around the simple issues of timing and receptivity. By combining these two concepts financial services firms have discovered an evening call to the customer's home during the first few days of each month produces the best success rate. Superior timing is achieved not only because the customer is more likely to be at home, but also because the first few days of any month is when mortgage payments - generally the single largest monthly expenditure in any household - are most likely to be top-of-mind. The customer's receptivity feeds off of this timing issue and is supported by the fact that they are physically in the home, upon which the offer revolves, at the time of contact. Combine this with the targeting and positioning principles already discussed, and telemarketing can be a formidable weapon.
Like telemarketing, direct mail has a well established stereotype in the marketplace: junk mail. Just as the telemarketing call has historically been approached as quantity-over-quality when it comes to customer contact so has direct mail been characterized as the pile of unsolicited "junk" many potential customers receives everyday. In the USA, depending upon the addressee's demographics, estimates of the number of direct mail pieces a person receives in a single day is as high as ten/day and the number received by postal recipients in Europe and Asia is also rising sharply. Obviously, much of this is wasted on the receiver. Yet, by playing to its unique strengths, direct mail can be an excellent means to establish customer access.
Where telemarketing's success hinges to a large extent, on timing and receptivity, the success of a direct mail campaign is built on recipient targeting and effective information use. Stepping back from the characterization of direct mail as "junk," a closer look reveals its two fundamental strengths:
the ability to target; and
the ability to convey lasting information.
The information needed to initiate a direct mail campaign is readily available and as easy to obtain as the information required in telemarketing. However, with direct mail there is an important quality difference when it comes to contact information. The telephone numbers used as a basis for customer access in a telemarketing campaign do not, in and of themselves, provide much information about the customer which could improve the quality of the contact.
Put another way, in general it is very difficult to effectively segment a market using phone numbers. The address of a customer, however, can provide a wealth of demographic and other information which can be tremendously helpful in effectively segmenting a market and then reaching the selected target, or targets. Addresses provide the ability to identify customers by income (using housing prices, taxes, etc.), specific geographic areas (using zip/postal codes); likely competitors (using basic mapping technology), and a firm's ability to gain access to the customer, or potential customer (using location data). Being able to quickly identify quality contacts cannot be overemphasized when trying to construct a solid, long-term channel for customer access.
Building on this notion of improved quality customer contact is the potential lasting impact of the information communicated, via direct mail. No matter how much interaction a good telemarketing contact is able to establish it is, in the end, a fleeting and intangible experience. Direct mail, on the other hand, not only has the ability to provide a large quantity of tangible, visible information this tangibility but also provides a "shelf-life" for the offer which would otherwise have not existed. Provided a given direct mail piece is able to demonstrate interest, or relevance, to its recipient then there is a high likelihood they will retain the offer, at least for some period of time, for later reference.
The image which electronic mail must overcome is not much different from that of telemarketing: bothersome and annoying. While telemarketing is a proactive contact with a customer, initiated by a firm, electronic mail is more passive in the sense that the recipient has much more control over what, if any, information is received. Regardless of the fact that an individual may have received unsolicited electronic contacts from a firm which were useful, virtually everyone with an active e-mail address has been the target of a regular stream of electronic mail that is indiscriminately sent out to huge number of recipients (i.e. spam).
The lure of such an approach is obvious: it is quick, cheap, and available to just about any size organization. Yet the quality of such a "shotgun" approach in accessing customers is, like the mass TV ad campaigns of years gone by, highly suspect. For example, recently a US state university employed e-mail mailing lists to recruit students to its executive MBA program. Over 50,000 contacts were made world wide yielding exactly one applicant. Not an overwhelming result.
So the question becomes how can the unique advantages (quick, cheap, mass contacts, etc.) be harnessed to achieve quality results. The key lies in applying electronic mail as a channel to customers using common-sense marketing principles; specifically identifying and reaching the right target market with the right offer. The principles underlying these activities need not be revisited. Rather, in the context of establishing effective direct marketing channel(s) the important issue at hand is to create the link between the organization's customer strategy and selling proposition. In the case of electronic mail, the basic foundation of such a link is two-fold - credibility and relevance.
Few things can be more damaging to the credibility of an e-mail contact than to have the recipient's system flag the message as "spam." While it may, or may not, be within the control of an individual organization to get around network spam filters it is possible to address the perceived credibility of the message. To that end, one of the fundamentally most important thing a firm can do in order to achieve the level of credibility necessary for the recipient to read the message is to both identify, not hide, the source as it appears on the sender's address line and utilize the subject line to summarize the content of the message - much like the tag line in an advertisement. Increasingly, security-conscious consumers will not open electronic messages that do not come from a readily identified source and which do not have a specific message.
Coupled with the need for credibility is the need for relevance. Using the subject line on an electronic message provides the link between the two. An effective selling proposition is key if an organization wants to move a potential customer to action. It is the responsibility of the components which comprise the direct marketing channel, in the case of electronic mail in particular, to establish relevance. Using a subject line that "grabs" the recipient's attention, coupled with the application of basic marketing targeting principles establishes the conduit for communicating the offer to the customer - exactly what a marketing channel is supposed to do.
The fourth, and final, generally accepted direct marketing channel is internet, or web, sites. In contrast to the three channels already discussed, the use of web sites would appear on the surface to be a passive, rather than a proactive, channel outlet. However, there is more to the effective use of a web site than simply constructing a home page and listing the site with the usual search engines. Although these activities are clearly a start, a truly successful channel strategy which incorporates web sites utilizes the single characteristic which sets the site apart: the ability to establish and maintain an ongoing, direct relationship with the customer. It goes without saying, tracking of site visits and usage is an accepted activity among all organizations, large and small, which employ web sites. But this alone does not establish any ongoing relationship with its customer base. The site must incorporate the relationship-oriented components of ease-of-use and specialized information or links to other relevant sites to create a value-added experience for the customer/visitor.
Once the customer has located the site, the extent to which it is user-friendly is paramount. Although the term "user-friendly" can encompass a myriad of possibilities, a review of home pages commonly identified as model direct marketing sites reveals some commonalities: ease of navigation, accessible information, and the ability to complete a transaction. Building these into any web site represents the first major step in creating an effective channel to the customer.
Taking relationship-building within the direct marketing context one step further, including information or active links to related sites provides a value-added component which can move the customer from simply satisfied to "delighted." Research shows that the firm which can go the extra mile and delight the customer has established a relationship where the customer is more likely to return on an increasing basis, purchase more per visit, and create significant levels of positive word-of-mouth promotion. Such a site can vault what might have been a small, local specialty firm onto the national, or even international, stage.
Multi-channel marketing strategy: putting the pieces together
Having covered the basic cornerstones of direct marketing channels, it is important to step back and consider a key point: it is not necessary (or even advisable) to build any channel using just one form of the four basic options. The firms, both large and small, which tend to be most frequently identified as successful direct marketers tend to use a "multi-channel" approach. As the term "multi-channel" implies, it is quite realistic to combine the different channel options. Alternatively, multiple applications of the same channel may be the answer. The trick is to identify the right combination.
For example, one British university finds that, in marketing management training programs to local governments, the right combination of direct mail and telemarketing seems to produce the best results. After trying several campaigns using an e-mail/web site combination the institution realized that, although on the surface the electronic approach looked relatively cheap and had a wide potential reach, the old adage "you get what you pay for" rang true for their particular set of circumstances. The intention was to lead with an e-mail which would form the basis of the offer and then use a link in the message to re-direct the targeted recipient to the university's management training homepage.
The problem encountered was two-fold. First, in the finest tradition of governments at all levels the world over, the local councils (courtesy of her majesty's government) had all invested in a large amount of technology and software. Good news for an electronically-based direct marketing campaign. However, having the technology did not necessarily mean the individuals in the local government offices knew how to use it. In implementing the software applications, many of the local officials adopted the "more-is-better" approach, in particular with the e-mail filters. This resulted in many e-mails outside the network not reaching the intended recipient and, in at least one case, no outside e-mails at all made it through the filters ... including those from other local councils and government agencies. Others had the opposite problem: no filtering at all resulting in overloaded mailboxes and crashed systems.
The second problem was that those messages which did get through did not hit the intended target market. While it is true the recipients would be potential participants in a management training course, they did not make the decision whether or not they actually participated. That decision was left to their superiors. In short, the message was being received (when it was received) by the potential consumer but not the actual buyer - an important distinction to make and a crucial connection to establish. In many ways the problem is the same as that faced by breakfast cereals - convincing a child to eat sugar-coated cereal for breakfast is usually not difficult, getting the parents to buy the cereal is another matter.
In the case of the university in question, the trick to success lay in using a multi-channel approach to link the buyers and consumers through a combination of direct mail and telemarketing. First, local council supervisors were identified and mailed a letter, using university envelopes and letterhead, describing the program and directing them to the university's management training program web link. A few days later calls were made with the simple objective of identifying "hot," "warm," and "cold" leads. Those in the "hot" and "warm" categories were then mailed simple bi-fold brochure to be distributed within the office. Follow-up calls were made first as a courtesy to determine if the brochures had been received (and if they had been distributed along with the level of interest). A final call was made to "close" the deal which may have involved sending application materials, online registration, or in some cases an on-site office visit. While not as inexpensive as the electronic approach, the more personal and directed use of direct mail and telemarketing proved to be the multi-channel answer in this particular situation.
The use of multiple channels is an example of expanding the width of the channel strategy. Another option is expanding the depth of the channel strategy. One common and effective approach is to use multiple forms of e-mail such as an initial "mass" mailing to reach a large number of potential buyers/consumers with an offer and then, based on their responses, establish an ongoing and focused, yet arms-length, relationship. This is especially effective for impulse-type purchases such as books, DVDs, CDs, etc. personal or sensitive products such as pharmaceuticals, as well as cyclical/seasonal products such as flowers, candy, greeting cards, and gift baskets. Although this example is just directed at e-mail, the principle could also be applied within any of the other channel options.
Direct marketing channels: strengths and weaknesses
Telemarketing has always been recognized as an inexpensive means of establishing direct contact with a potential customer. What is often overlooked is that telemarketing, when done properly, can be personal, interactive, and coordinated so that the timing of the contact matches the receiver's receptivity and, perhaps most importantly, has the ability to produce directly measurable results. Direct mail, on the other hand, while not allowing for personal interaction, has a distinctly different set of unique strengths. Typically more expensive than telemarketing, direct mail can be very effectively targeted, is generally viewed as non-intrusive, and can provide a lasting impact due to its tangibility and visual, information-rich nature.
At the same time, technology-based channels each combine some of the strengths of the more traditional telemarketing and direct mail channels with advantages only available through technology. Like direct mail, electronic mail allows for mass contact. It is also relatively inexpensive, impersonal (i.e. senders and recipients can maintain a comfortable distance), discrete, confidential, and controlled by the recipient (they can read it, save it, delete it, etc.). Similar to telemarketing, the results of an e-mail campaign can also be measured for success fairly accurately. The use of the internet and web sites has, like direct mail, the potential for conveying information over a long period of time. However, unlike direct mail, this information can be regularly updated which, combined with the fact it is user initiated, means this channel can quickly become a value-added product feature. Added to this is the bonus of the data and customer feedback which internet sites can quickly and easily provide.
As one might expect, especially given the stereotypes associated with direct marketing, we need to recognize the weaknesses or limitations of each channel option as well. It is no secret that telemarketing can be intrusive and has been over-used making it difficult to engage contacts. The advent of caller id and the national "no-call" list further exacerbates these problems. Direct mail has also been over-used. Chances are most, if not all, of these relatively expensive (production, postage, etc.) pieces go straight into the garbage. If they does not, the offer can easily become dated which leads to customer confusion and dissatisfaction.
The more recent technology-based channels are also not without problems. E-mails can be filtered (and are rapidly being used almost to the point of saturation), it can be difficult to obtain a quality contact list, and gaining quality attention can be problematic. Finally, many times internet web sites require the intended target to initiate contact and, to be effective, these sites require ongoing commitment related to site maintenance and content monitoring. Taking into account both the positive and negative aspects of direct marketing channels, it becomes vitally important to focus on the keys to building an effective and efficient channel.
Points to ponder
A review of this discussion reveals that, in the case of each of the four direct marketing channel options presented, building particular characteristics into the direct marketing channel strategy will put any firm, large or small, business-to-consumer of business-to-business oriented, on the right road to success.
Success in telemarketing is neither advanced rocket science nor is it adopting an approach akin to a walking artillery barrage. Using the former perspective often means a telemarketing strategy so data-heavy and complicated that to achieve anything reasonably close to success it would require an almost 100 percent "hit" rate. On the other hand, the later is built around a massive shotgun approach - the very quantity-over-quality paradigm which produces the poor quality results and negative stereotypes of telemarketing which are to be avoided.
Successful telemarketing is founded on two simple principles: timing and receptivity. The importance of understanding your consumer's, current and potential, behavior in the context of your firm and its offering cannot be over-emphasized. Few places are this knowledge more practically valuable than in determining the best time to make a telemarketing contact. By understanding the time(s) when your customers will have your offering top-of-mind you are far more likely to be successful contacting customers, which based on consumer behavior knowledge, the firm knows are more likely to be "hungry" for the product on offer.
At the same time, receptivity (an emphasis on quality over quantity in the actual message) is also necessary. Good telemarketers know exactly what they are going to say, how they are going to say it, and why. The proposed script, complete with various contingencies depending upon the response given, is both the most vital and frequently overlooked key to successful telemarketing. InfoCision Management Group, a firm which started as a one-person company based in the owner's garage gas grown to be one of the country's leading telemarketing fundraising firms with a specialty in non-profit and political organizations. The challenge of convincing a customer to be confident in establishing a value-for-value relationship is a daunting enough; getting these same individuals to make a financial commitment for little of no personal gain, via the telephone, is in many ways unimaginable. Gary Taylor, the Founder of InfoCision, credits his success to quality scripts which are extensively tested and practiced before they are actually used. Mr Taylor's commitment to the importance of "scripting" is so deep that, to this day, he is still personally involved in script development and application.
Like telemarketing, the effectiveness of direct mail is also based on the proper use of consumer behavior knowledge. However, in the case of direct mail this has less to do with the timing of the contact than it does the targetability of the contact. To put it simply: put your direct mail materials into the hands of quality potential customers, not just anyone. This means searching your existing customer data for potential patterns as well as possibly moving outside and conducting primary market research. The other characteristic of effective direct mail is a long-recognized, yet often overlooked, characteristic: lasting impact. Well targeted direct mail, containing a significant amount of product and firm information, will be kept as a resource by the customer for the future. Over a century ago, Sears and Roebuck understood this when they introduced the concept of the "mail order" catalog. Some how that lesson has been lost over time by many firms and organizations.
In electronic mail, one needs to take a "sniper" not a "shotgun" approach. Using electronic mail well means creating credibility and relevance. Credibility can be derived simply by:
clearly identifying your organization; and
sending the "mailing" out, no matter how large the targeted segment(s), in such a way to avoid the "spam" label.
Our objective is steak not "spam" - don't make the recipient have to guess the source or try to cleverly hide the source of the contact. If you have applied your basic marketing principles, there should be at least a reasonable chance they want information about your organization and its offerings. Secondly, it is imperative that your offer is clear, obvious, and explicit. Every e-mail has a subject line. Use it just like a traditional advertisement would use a "tag" line - directly communicate your core message at the outset.
This brings us to internet/web sites as a direct marketing channel. In effect, a good web site incorporates some of the same characteristics of a good brick-and-mortar retail store. Specifically, a good web site is user-friendly. That is, customers can easily access the information they are seeking. To that end, it is vital that any firm or organization using web sites as part of this direct marketing channel should avoid the "tech-trap." It is undeniably true that the average web site user is incredibly more sophisticated, technology-wise, than just a few years ago. At the same time, it is important to recognize that, no matter how enamored your IT people are with the latest bells and whistles, your site should be an electronic map to your firm and it offerings - not a maze that requires time and effort to negotiate. Finally, recognize that by building such a site your organization becomes a resource that customers, and potential customers, will seek out again and again.
A summary of the key lessons for constructing an effective direct marketing channel would be as follows:
direct marketing channels are a means of accessing customers which are available to all sizes of firms and organizations;
using direct marketing enables firms to side-step the issue of power/dependency in their channel strategy;
a direct marketing channel affords the firm more direct control;
increased channel control leads to increased quality in customer relations and increased margins (i.e. revenue); and
direct marketing channels provide a quick and efficient means to substantially expand a firm's markets.
Never forget that direct marketing channels are generally cost-effective options for firms and organizations of all types and sizes. Does that mean each is equally valuable or all should be considered? No, the answer as to which is appropriate for a given operation is predicated on a clear understanding of the organization's product offering, a solid knowledge of current and potential customer's consumer behavior, and an awareness of the firm's strengths and weaknesses in terms of direct marketing expertise.
It is also important to remember that direct marketing channels enable small-to-medium sized firms to not only side-step the problems of power and dependency associated with traditional marketing channels but also it actually empowers these firms with much higher levels of control over their channel to the customer. This direct conduit to customers naturally leads to an increase in the quality of customer relations which has a direct link to increased revenue. Finally, direct marketing channels enable even the smallest of firms to expand their market not only domestically, but also internationally. Electronic mail and web sites, in particular, are by-and-large unencumbered by geographic boundaries.
Bruce KeillorTechnology Concepts, Inc., Ravenna, Ohio, USA