Transcript The Business of Direct Marketing – Some Guiding Principals

Using Direct Marketing to Boost
Revenue
What is Direct Marketing?
 Direct Marketing is both marketing and sales.
Direct Marketing is the translation of one-onone, face-to-face selling into broad reach media.
Always be Selling
 Product / Service / Next Step
 Response
 Continued Engagement
General Advertising and Direct Mail –
A Simple Comparison
Advertising
Direct Marketing
Mass
Targeted
Competitive Attention
Selective Attention
Breadth
Depth
Remember
Respond
Impression
Decision
Pay for Everyone
Pay for Targets
The Two Most Important Factors in DM
 Pre-selection
 Refining the target based on pre-existing level
of interest
 The Offer
 What does it take to provoke response?
The Relative Power of Media
Face-to-Face
Strengths
Weaknesses
 Sight
 Likeability
 Sound
 Demands Time
 Eye Contact
 Expensive
 Body Language
 Interaction
 Demo Ability
 One-to-One
 Provides Time
 Pre-selection
 No Attention Competition
 Chemistry
The Relative Power of Media
Direct Mail
Strengths
Weaknesses
 Sight
 Easy not to engage
 Pre-selection
 4 seconds to involve
 Low attention competition
 Postal system dependent
 List dependent
The Relative Power of Media
Telephone (Outbound)
Strengths
Weaknesses
 Sound
 Interruptive
 Some Chemistry
 Requires Time
 Interaction
 Annoying
 One-to-One
 Pre-selection
 Low Attention Competition
Some Unfortunate Truths About Direct
Marketing
 The more we need people to read (listen, watch), the less
willing they are to do so.
 The more resistant the universe, the more expensive the
cost of buying sales time (choice of medium, and devices
within each medium; offer)
Cost of persuasion power is inversely proportional to the
level of pre-existing interest within a prospect universe
 The more it costs to acquire a customer, the less valuable
the customer.
Sales Support – The Sales Sequence
 The sales sequence is the set of decision steps
necessary to close a sale matched with a set of
communications designed to provoke each step.
 Direct Marketing tools are typically used to narrow
the universe to “qualified prospects” .
 DM sells the next step in the sequence.
 The cost of acquisition is the total cost of all the
contacts at each step necessary to provoke a
single decision to the next step.
The Cost of Acquisition in a
Sales Sequence
Step1:
Lead Generation
Step 2:
Qualification
Step 3:
Sales Call
Vehicle: Direct Mail
Vehicle: Telephone
Vehicle: LPS
Universe: 10,000
Universe: 500
Universe: 50
Cost/Contact: $1.00
Cost/Contact: $10.00
Cost/Contact: $200.00
Response Rate:
5%
Conversion to Appt. :
10%
Conversion to Sale:
25%
Cost/Conversion:
$10,000/500 =
$20
Cost/Appointment:
500 x 10 = 5,000/50 =
$100
Cost/Sale:
50 x $200 = $10,000/13
= $770
Total Cost of Acquisition = $20 + $100 + 770 = $890
Common Sales Sequences
Mail/Ad

Generate
Interest
Phone
Mail/Email
Qualify
 Decision
 Authority
 Determine
who is involved


Provide
information
or quote
Phone LPS

Set
appt.
Phone
Mail/Email
Phone
LPS
Generate
and Qualify
 Id decision
process

Provide Info
 Confirm Call
Back
Answer


Questions
Set appt.
Sell the next step.

Demo
 Close
See
rep
Qualified leads are based on need –
not interest
Ad Generated Interest
Ad
Need Generated Interest
Ad
Selection Factors
 Consumer Lists
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Age
Income
Gender
Marital Status
Homeowner
Dwelling Type (home or
apartment)
Mail order buying (by
product type)
Interests
Presence of children
Geographical (zip, SCF,
county, state, carrier
route)
 Business Lists
 SIC (Standard Industrial
Classification)
 Employee Size
 Annual Sales/Revenue
 Title
 Any other information
captured on
subscription form
(publications)
 Corporate linkage
information
 # of years in business
 Geographical (zip, SCF,
county, state)
 Credit information
Outer Envelope Formats

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Window Envelopes
Plastic Card
Invoice
Personal
Odd Size (9x12; 6x9)
Offer Disclosing
Lumpy
Certified
Outer Envelope Formats

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See Through
Dimensional
Tactile Devices
Teasers
1st Class vs. Third
Stamp vs. Meter
Handwritten
Invitation
Letter Planning and Structure
The Opening
The Body
The Close
The Signature
The P.S.
Writing Leads for Letters – How to Start
 A strong, startling fact, research result, something
true of their industry
 Establish a connection




referral
similar occupation
status as a customer, etc.
recognition of status as a donor/contributor
 Tell a story
 A quote
 Reference a competitor
Drop Paragraph One
Post-Call Follow-Up
 Letters/email from the rep
 New information (pricing, research, etc.)
 Discount
 Appeal rotation
 Decision cycles
The Three Phases in the Lifetime
of a Customer
Phase
Phase
Phase
1
2
3
Relationship
Formation
Relationship
Cultivation
Relationship
Management
Reinforce Decision
Key to Source
and Channel
Personalize
Build Trust
Quantify Potential
Cross-Sell
Fit Value Proposition
to Customer Needs
The Second Transaction is Critical
 Customers are converted or lost in the first 30 – 120
days
 Create positive early experiences that cement the
relationship
 Fast shipping, delivery
 Project LTV from early behavior
 Provide opportunities for additional transactions while
interest is high
 Use communication to drive behavior and the relationship
FAS Management – Retaining/Growing the
Relationship at the Lowest Cost
Customers
Mailings
A
12x
B
8x
C
7x
D
6x
The Issues in the Management of FAS
 Relationship retention
 Relationship growth
 Matching cost of retention and growth stimulation
to LTV
 Retention and growth are accomplished by
frequency of contact and power of contact
 It is easier to convert ‘B’ customers to ‘A’s’ than D’s
to C’s
FAS in a Sales Support Situation
Customers
Face-toFace
Phone
Mail/
E-Mail
Annual
Cost $
A ($1MM+/yr.)
12
($3,600)
12
($120)
12
($24)
$3,744
B ($500 - 1MM/yr.)
6
($1,800)
18
($180)
14
($28)
$2,008
C ($250 - $500/yr.)
4
($1,200)
12
($120)
16
($32)
$1,352
D ($250/yr.)
2
($,1,600)
8
($80)
16
($32)
$712
The Last Premise
Focus on Them
“You can make more friends in 2
months by becoming interested in
other people than you can in 2
years by trying to get people
interested in you.”
Dale Carnegie
Thank You
Recipients of Direct Mail
 Customers
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Have pre-existing interest
Will read more copy
Require less costly mail
Mailing to customers generates $ and improves retention
 Frequency tolerance
 Prospects
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

Pre-existing interest is “likely”
Requires more expensive mail to buy readership
Resistant to reading (looking for a reason to stop)
Relevance is key
 Influencers
 Gatekeepers/Saboteurs
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Mail Room
Administrative Assistant
Spouse
Post Office
More Unfortunate Truths - Direct Mail
 People read direct mail, looking for a reason to stop
 The margin of error on direct mail is greater than in any other
medium.
 Special interest offerings tend to do best in direct mail, but the
more specialized the interest, the more limited the growth
potential (requires product proliferation – old/new/same).
 There is an inverse relationship between degree of pre-existing
interest and cost per response.
 There is a direct relationship between readership and response.
 People are not dying to hear from you.
 Very little body copy is ever actually re-read.