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Fundamentals of Direct Marketing to Consumers


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Fundamentals of Direct Marketing to Consumers

  1. 1. DM DAY 2001 Fundamentals of Direct Marketing to Consumers John M. Coe President Database Marketing Associates Scottsdale, AZ 480-778-9900
  2. 2. My Objectives Today <ul><li>Present to fundamentals of consumer direct marketing to you. </li></ul><ul><li>Give you the opportunity to ask questions on issues or problems that you are facing today. </li></ul>
  3. 3. Agenda <ul><li>Trends and Issues </li></ul><ul><li>Breaking through the clutter </li></ul><ul><li>List, Offer and Creative </li></ul><ul><li>Media </li></ul><ul><li>Testing </li></ul><ul><li>Measurement </li></ul>
  4. 4. Three Key Issues <ul><li>Clutter </li></ul><ul><ul><li>There has been a six fold increase in the last 20 years in messages we see or hear in our daily lives. </li></ul></ul><ul><ul><li>It’s now between 3,000 and 5,000 </li></ul></ul><ul><li>As consumers we are on overload and are increasingly tuning out </li></ul><ul><ul><li>Response rates are declining </li></ul></ul><ul><li>The privacy issue is headed straight at direct marketers </li></ul>
  5. 5. Breaking Through the Clutter <ul><li>Tighter targeting and segmentation leads to increased relevancy of message and offer. </li></ul><ul><li>Personalization that recognizes the relationship you have with the recipient of the communication. </li></ul><ul><li>Media combinations that overlay </li></ul>
  6. 6. Breaking Through the Clutter <ul><li>Permission based programs and relationship marketing </li></ul><ul><ul><li>Not just an web based program </li></ul></ul><ul><li>Great offers or very unique selling propositions </li></ul><ul><ul><li>Consumer think most products and services are commodities </li></ul></ul><ul><li>Straight talk </li></ul>
  7. 7. The Interplay of the Three Direct Marketing Elements <ul><li>Targeting and list 40 – 50% </li></ul><ul><li>Offer 30 – 40% </li></ul><ul><li>Creative & media 30 – 40% </li></ul>
  8. 8. The Wonderful World of Lists <ul><li>There are over 100,000 lists available </li></ul><ul><ul><li>SRDS Mailing List Books </li></ul></ul><ul><li>Three general types of public lists </li></ul><ul><ul><li>Compiled </li></ul></ul><ul><ul><li>Response/purchase </li></ul></ul><ul><ul><li>Co-op databases </li></ul></ul><ul><li>House or customer </li></ul>
  9. 9. The List Business <ul><li>Owners, managers and brokers </li></ul><ul><li>Co-op databases </li></ul><ul><li>Rental vs. purchase </li></ul><ul><li>Seed names </li></ul><ul><li>List accuracy and decay rates </li></ul>
  10. 10. More List Stuff <ul><li>All lists have “selects” and your targeting process should identify the proper “selects” </li></ul><ul><ul><li>Typical selects </li></ul></ul><ul><li>Most DM campaigns use multiple lists and there is normally a merge/purge process. </li></ul><ul><li>Correct postal preparation is important as well. </li></ul>
  11. 11. Targeting for list selection <ul><li>“ Affinity” list selection is a process of deciding how closely the list matches the characteristics of your most likely customer. </li></ul><ul><ul><li>Prior behavior is the strongest predictor of response and campaign success </li></ul></ul><ul><li>Profiling and modeling is a database approach that takes actual customers and enhances and then profiles the file with demographic and lifestyle information. </li></ul>
  12. 12. RFM as a Targeting Model <ul><li>Recency of purchase </li></ul><ul><li>Frequency of purchases </li></ul><ul><li>Monetary value of purchases </li></ul><ul><li>Score the customer file by quintiles and assign a score for all three characteristics – 125 cells. </li></ul><ul><li>Which is the best predictor of future response? </li></ul>
  13. 13. Offer Strategies <ul><li>The offer is the reason to respond or buy now – it’s not the product/service. </li></ul><ul><li>Most common offer types are: </li></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Time </li></ul></ul><ul><ul><li>Availability </li></ul></ul><ul><li>Multiple offers </li></ul><ul><li>Kobs’ 99 Offers </li></ul>
  14. 14. Creative <ul><li>The creative triangle </li></ul><ul><ul><li>Copy </li></ul></ul><ul><ul><li>Graphics </li></ul></ul><ul><ul><li>Production </li></ul></ul><ul><li>Direct marketing creative is different from advertising creative and requires additional skill sets. </li></ul><ul><li>The role of the Creative Brief </li></ul>
  15. 15. Rational/Emotional Grid <ul><li>FCB Grid </li></ul><ul><li>A template to help you think through the creative development of a DM campaign </li></ul><ul><li>Can also be used to graph the competitive messages </li></ul>
  16. 16. The Rational/Emotional Grid Rational (thinking) Emotional (feeling) High Importance Low Importance
  17. 17. The Rational/Emotional Grid Rational (thinking) Emotional (feeling) High Importance Low Importance Examples of Products/Services <ul><li>Computer Systems </li></ul><ul><li>Insurance </li></ul><ul><li>Farm Tractors </li></ul><ul><li>Temporary Services </li></ul><ul><li>Cellular Phones </li></ul><ul><li>Company Cars </li></ul><ul><li>Software </li></ul><ul><li>Mfg Maintenance Supplies </li></ul><ul><li>Employee Uniforms </li></ul><ul><li>Long Distance Service </li></ul><ul><li>Office Supplies </li></ul><ul><li>Office Furniture </li></ul><ul><li>Wall Hangings </li></ul><ul><li>Corporate Gifts </li></ul>
  18. 18. The Rational/Emotional Grid Rational (thinking) Emotional (feeling) High Importance Low Importance Marketing Communication Tactics <ul><li>Long Copy Letter </li></ul><ul><li>Impact Mailing </li></ul><ul><li>Complex Packages </li></ul><ul><li>Telemarketing </li></ul><ul><li>Dialogue eMail </li></ul><ul><li>Video </li></ul><ul><li>Advertising </li></ul><ul><li>Short Copy Letter </li></ul><ul><li>Brochures/Pictures </li></ul><ul><li>Humor </li></ul><ul><li>Permission eMail </li></ul><ul><li>Post Cards </li></ul><ul><li>Self Mailers </li></ul>
  19. 19. Creative Tips <ul><li>Take your personal opinion out of the process to act as your own creative director. Use known and proven principals plus the “eye of the beholder” </li></ul><ul><li>Cost should not be the first consideration . Results, as measured in gross margin or profit terms is the guiding factor. </li></ul>
  20. 20. Creative Tips <ul><li>Relevancy of message and offer fights through the clutter. </li></ul><ul><li>Remember that a “flat” piece of mail is handled differently than a 3-D or something that goes “bump in the mail”. </li></ul><ul><li>Don’t try to trick the audience. </li></ul>
  21. 21. Direct Mail Creative Guidelines <ul><li>Direct mail is a conversation with one person. </li></ul><ul><li>Design the envelop to get it opened ! </li></ul><ul><li>Letter is the heart of your communication and does the hard work. </li></ul><ul><li>Design the response vehicle first and then write the letter. </li></ul><ul><li>Who’s the “hero”? Offer, reader or you? </li></ul>
  22. 22. Bob Stones’ Seven Copy Guidelines <ul><li>Feature the most important benefit no later than in the headline, first sentence or first paragraph. </li></ul><ul><li>Immediately enlarge on your most important benefit. </li></ul><ul><li>Identify specifically what they will get if they act now. </li></ul>
  23. 23. Seven Copy Guidelines <ul><li>Back up your statements with proof , endorsements or testimonials. </li></ul><ul><li>Call to action -- tell them what to do, when and even how . </li></ul><ul><li>Highlight what they might lose. </li></ul><ul><li>Rephrase the prominent benefits in the closing offer. </li></ul>
  24. 24. Creative Tips <ul><li>Design the letter </li></ul><ul><ul><li>1st, 2nd and 3rd order scanable </li></ul></ul><ul><li>Z path – start upper left; exit lower right </li></ul><ul><li>Folds – reader will open to widest point </li></ul><ul><li>Color out pulls b/w – 2 to 1 </li></ul><ul><li>Cartoons vs. picture – a tough choice </li></ul><ul><li>No more than 7 lines per paragraph </li></ul><ul><li>Type size should be no less than 10 point </li></ul>
  25. 25. Creative Tips <ul><li>Opening paragraph should have no more that 11 –17 words. </li></ul><ul><li>All sentences should average no more than 14 words. </li></ul><ul><li>In a 2-page letter , break the last sentence into the next page. </li></ul><ul><li>Quotes increase readership and interest – unless they are by you. </li></ul><ul><li>Odd numbers are more believable than even </li></ul><ul><li>Be as specific as possible </li></ul>
  26. 26. Creative Tips <ul><li>Don’t ever use an * </li></ul><ul><li>Serif type is best for letter readability </li></ul><ul><li>The eye goes to anything out of order </li></ul><ul><li>Use screen tints – red and yellow are best </li></ul><ul><li>After their name people read either the </li></ul><ul><ul><li>P.S. or response card </li></ul></ul><ul><li>Avoid reverse-out type – decrease readership by 33% </li></ul>
  27. 27. Media – a Brief Overview <ul><li>Mail </li></ul><ul><ul><li>Post card </li></ul></ul><ul><ul><li>Inserts </li></ul></ul><ul><ul><li>Self-mailer </li></ul></ul><ul><ul><li>Letter package </li></ul></ul><ul><ul><li>Impact mailing </li></ul></ul><ul><li>Telephone </li></ul><ul><ul><li>In and out-bound </li></ul></ul><ul><li>E-mail and Internet </li></ul>
  28. 28. Media <ul><li>TV </li></ul><ul><ul><li>Short form </li></ul></ul><ul><ul><li>Long form </li></ul></ul><ul><li>Print </li></ul><ul><li>Radio </li></ul><ul><li>Outdoor and others </li></ul><ul><li>Combinations </li></ul><ul><ul><li>TV and mail </li></ul></ul><ul><ul><li>Mail and phone </li></ul></ul><ul><ul><li>E-mail and phone </li></ul></ul>
  29. 29. Brand Response <ul><li>The advertising quandary: </li></ul><ul><ul><li>“we advertise for brand awareness but measure by number of leads or sales we make” </li></ul></ul><ul><li>Combine brand advertising with direct response. </li></ul><ul><ul><li>The key is the offer that is related to the USP </li></ul></ul><ul><ul><li>The design of the ad changes as well </li></ul></ul>
  30. 30. Testing <ul><li>You are not a direct marketer unless you test. Why test? </li></ul><ul><li>What to test is the issue </li></ul><ul><ul><li>List </li></ul></ul><ul><ul><li>Offer </li></ul></ul><ul><ul><li>Creative </li></ul></ul><ul><li>How to test is the second issue </li></ul><ul><ul><li>A/B split </li></ul></ul><ul><ul><li>Multiple cell </li></ul></ul><ul><ul><li>Statistical projections </li></ul></ul>
  31. 31. Measurement <ul><li>Response rates </li></ul><ul><li>Cost per lead </li></ul><ul><li>Cost per sale </li></ul><ul><li>Breakeven </li></ul><ul><li>Lifetime value </li></ul>
  32. 32. To Sum Up <ul><li>Consumer DM is BIG – in 2000 sales were $937.7 billion </li></ul><ul><li>We have barely touched the surface in this large, growing and sophisticated world. </li></ul><ul><li>Suggest you learn more by joining the DMA, attending conventions, reading trade journals and stealing from people like me. </li></ul>
  33. 33. Thanks for Attending <ul><li>Questions – call us at 480-778-9900 </li></ul><ul><li>Come to a completely different session on B2B this afternoon </li></ul><ul><li>By By </li></ul>