Direct Marketing Overview

Advertising UniversityApril 6, 2006

Agenda

• Introductions• Definition of direct marketing• Customer lifecycle stages• What makes a successful direct mail effort?

– The mailing list (or database)– The offer– The creative

• How it comes together• When should you use direct?• Review samples brought in by class• The direct marketing mantra: test-measure-refine• Key metrics• How to tell if you will love direct marketing like I do• Suggested reading, etc.

Introductions

• Me:– 15 years in direct marketing

• Specialize in direct marketing strategy• Currently Direct Mail General Manager at Lexicon

Marketing • Former VP/Direct Marketing here at TPG!

• You?– Anyone on a direct marketing driven account?– Do share!

Definition of direct marketing

• Targeted• Response vehicle: BRE, BRC, 800#, fax, web form

Customer lifecycle stages

We market to people differently based on where they are in their lifecycle:

Lifecycle Stage Terminology in “the biz”

Prospect Acquisition

Lead •Conversion•Responder non-converter

Customer Retention

Lapsed •Recapture •WinBack

Q: What makes a successful direct mail effort?

• The mailing list (or database)?• The offer?• The creative?

• Note to self: Stop here so you don’t give away the answer

• A: All three, to various degrees.

– Conventional wisdom says:• The mailing list (or database) – 40%• The offer? – 40%• The creative? – 20%

The List

• Srds.com

The Offer

• An offer is a promotion– It is not the product itself– It is what you do to get the prospect to want to

buy the product• What are some examples from your sample

mailings?• Always use a “Call to Action” (CTA)• Expiration dates work!

The Creative

• Why is the creative a relatively small factor in direct marketing performance? (Discuss)– Opportunity to really tell a story – you have more real estate– Test results have told us this time and time again– The “What’s in it for me?” factor

• Visual look and feel depends on the target– Doesn’t have to be “ugly”– 2 color can be as good as 4 color

• Copy– Don’t spill your guts on the outer envelope– Don’t be afraid to tell the prospect what to do– Be clear about what the prospect gets when they respond

• Mailing Format– Letter/Envelope vs. Self-mailer– Additional components: BRE, buckslip (lift note), brochures– USPS adding a surcharge for certain formats

How it Comes Together Acquisition(Lowest response)

Conversion Retention(Highest response)

List Source

Usually rented(or acquired via space ads, web forms, promotions…)

Database Database

Offer Often gives prospects a better deal than customers. Why?

“Second best” offersSend out as soon as possible

Vary offers to keep customers enticedLoyalty programs

Creative Economical formatLimited personalization opportunitiesException: B2B

Can thank for previous response

Can often spend a bit more on interesting formatsGreatest personalization opportunities

Q: When should you use Direct? A: When the Goal = Increased Sales

• Are there specific sales opportunities in a particular lifecycle stage…

• ACQUISITION?– Generate leads

• CONVERSION?– Convert leads

• RETENTION? – (Key question: How big is your customer database? The

bigger it is the more opportunity)– Increase sales from current customers

• RECAPTURE– Reactivate lapsed customers

Target must be specificBehavior/Trigger Event?

(example: Newborn baby, new mover)Demographic?

(example: Age 65+, in certain zip codes)

Currently use direct successfully?

What are the other delivery systems?

Product needs explanation?

If yes•Other types of direct media may work too, particularly in B2BIf no•Would tweaks make it work?•Look for “nuggets”•Try a whole new approach

Electronic •Internet (Email)•Radio•Phone•DRTVPrint•Magazine•Newspaper

Brochures•Can be detailedDRTV •May be a candidateB2B•Products/services often need explanation.•Multiple direct media often used: phone, email, intrusive direct mail

Mailing Sample Review

The DM MantraTest-Measure-Refine

• Test• Measure• Refine

Key Metrics

• Every company tweaks the definitions, so it is important to ask how a metric is calculated – don’t assume– Response Rate– Conversion Rate– Cost per Acquisition– Lifetime Value (ROI)

How to tell if you will love Direct

• Blend of creative/analytical skills (but more analytical)• No burning desire to raise creative to the “next level” • Don’t mind learning a lot of rules (before breaking them)• Detail oriented• Can communicate with with both nerds & creative types,

bring them into a room, and actually make something productive happen!

• Thick skin (especially if you work at a general agency)• Desire to prove your theories with numbers, yet

understand that not everyone believes statistics (hopefully not your client!)

Suggested Reading, etc.

• “The New Direct Marketing”– by David Shepard Associates

• the-dma.org– The Direct Marketing Association’s website

• Srds.com– Datacards for thousands of lists and databases– List brokers, managers, compiler

• “On the Art of Writing Copy”– by Herschell Gordon Lewis

• Inside Direct Mail– Sometimes they even give results