This article offers a practical explanation of Direct Marketing. After reading this article, you’ll understand the basics of this powerful marketing tool.
What is Direct Marketing?
Direct marketing is a type of marketing where marketers communicate with their customer via various media such as phone, Whatsapp, brochures, flyers and targeted online advertisements. Often, potential customers are offered something tangible, such as a demo or other valuable content. It’s a fairly aggressive form of marketing because customers are contacted without having requested this beforehand. Direct marketing is usually used by companies that focus on product and service sales, but also by non-profit organisations. While it’s believed that mass marketing is slowly nearing its end, it’s expected that direct marketing activities will increase. The most efficient way of direct marketing takes place when a direct and friction-less effort is made to reach the target group. This means that, in direct marketing, a specific call-to-action is often made, such as: ‘call this number’, or ‘click this button to subscribe’. The advantage of this strategy is that, in such campaigns, efficiency can be measured directly given that the organisation can keep track of how many customers have responded via these calls-to-action.
Montgomery Ward started using direct marketing in the nineteenth century. Ward was a pioneer in the field of mail orders. He managed to remove the intermediary and directly serve his customers to keep prices low. However, the term was later invented by Lester Wunderman in 1967. Wunderman is the man behind the free 1-800 number that’s used in the United States and various customer loyalty programmes.
Customers for whom direct marketing is highly suitable are those who are registered for mailing lists. For example, at the checkout of an online shopping cart, the user is often given the option to subscribe to a service, such as: ‘send me information about promotions and offers in the future’. Such actions already show a customer’s interest in a product or company.
Non-targeted mailing lists are also sent to lots of mail boxes and email accounts. Despite the fact that most people are frustrated by this ‘spam’, a relatively high percentage is converted into sales. These percentages are higher when emails are aimed at a certain group or community.
Due to this frustration, organisations must be creative with their direct marketing strategies. To stand out, they use unusual shapes such as 3D projects, pop-ups or they send large flyers with unusual shapes and colours. The type of direct marketing depends on the industry. A too aggressive or misleading form of marketing often leaves a bad impression of the company. Organisations must also adhere to privacy and contact regulations. Gathering email lists without users having registered beforehand, is punishable by law.
Responses and Profitability
As stated, the costs and responses when using direct marketing can be easily monitored because of the calls-to-action that are used. It’s possible to measure whether the marketing strategy is effective. Successful marketers plan activities, determine objectives and demographics, implement strategies and test elements to make a campaign successful. Evaluating data is the key to success.
To evaluate the success of the direct marketing campaign, information is gathered about the fixed costs and variable costs regarding the number and type of pieces that are sent or the promotions that are offered. Subsequently, the arising generated income is tracked. Following this, a simple costs-benefit analysis can be used to calculate the profitability.
Direct Marketing example
Foto Inc. is an organisation that specialises in developing photo editing software. The marketing team worked on a new direct marketing campaign where temporary free licenses are issued for the newest photo editing software. This demo is sent to 3,000 selected graphic designer agencies. To determine whether the campaign is successful and whether this could be continued in the future, Foto Inc. analyses the results with a simple costs-benefit analysis.
Beforehand, it’s calculated that at least 65 of the total of 3,000 selected companies must purchase the software to make the campaign break even. For this reason, if Foto Inc. doesn’t achieve a response percentage of 2.2% during the campaign period, no profit will be achieved and they will certainly not continue the campaign.
Challenges in Direct Marketing
Many marketers who use a direct marketing campaign acknowledge the financial advantages of increasing their product or service awareness by sending demos or sharing other valuable content with potential customers. Regardless, there are also direct marketing campaigns that use certain kinds of media that create leads of poor quality, with a low response percentage. This is a problem for both the consumer and marketer. Marketers don’t want to waste money on communication and means for consumers who aren’t interested in their products or services.
Undesired emails or postal mail also form a problem in direct marketing. This refers to unsolicited commercial advertisements that are delivered at the postal office or directly to the consumer’s mailbox. Partly because of this, consumers have uttered their concern about the privacy implications of direct marketing.
Developing a Direct Marketing Campaign
A direct marketing campaign starts by gathering data of the demographic and categories of consumers that are thought to be interested in their product or service. For this purpose, lists are developed for making contact. These lists can be manually generated, but also through public or commercial sources. Commercial sources include those that people have actively registered for, such as a weekly newsletter.
Once lists have been created, the medium is selected. Various channels can be used, including email, phone, sending brochures or face-to-face contact. This depends on the type of organisation. A restaurant probably prefers to use flyers that are distributed door-to-door in the vicinity of the restaurant.
Each direct marketing campaign must contain a specific call-to-action. Often, the goal is an immediate purchase. ‘Pick up your phone and order now’, but it can also be something more subtle. In any case, a first step is taken here towards a new lead that could result in a sale.
Furthermore, each direct marketing campaign must implement a method of tracking responses. In the case of the restaurant, a specific phone number may be linked to the campaign, or alternatively, a unique online link or code the consumer can use to benefit from the promotion. Marketers use the response data to measure how effective a campaign was. These data are used to adjust the campaign if necessary, but are also combined with data of other campaigns to give the team a general idea of the demographics and effectiveness of the chosen marketing strategy.
Now It’s Your Turn
What do you think? Are you familiar with the explanation of direct marketing? Do you use direct marketing in your company or have you already been confronted with direct marketing? What are your experiences with marketers who approach you, both online and offline? Do you have any tips or additional comments?
Share your experience and knowledge in the comments box below.
- Chiang, W. Y. K., Chhajed, D., & Hess, J. D. (2003). Direct marketing, indirect profits: A strategic analysis of dual-channel supply-chain design. Management science, 49(1), 1-20.
- Cravens, D. W., & Piercy, N. (2006). Strategic marketing (Vol. 7). New York, NY: McGraw-Hill.
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