Fundamentals of Direct Marketing to Consumers

DM DAY 2001DM DAY 2001Fundamentals of Fundamentals of

Direct Marketing to ConsumersDirect Marketing to Consumers

John M. Coe

President

Database Marketing Associates

Scottsdale, AZ

480-778-9900

My Objectives TodayMy Objectives Today

• Present to fundamentals of consumer direct marketing to you.

• Give you the opportunity to ask questions on issues or problems that you are facing today.

AgendaAgenda

• Trends and Issues

• Breaking through the clutter

• List, Offer and Creative

• Media

• Testing

• Measurement

Three Key Issues Three Key Issues • Clutter

– There has been a six fold increase in the last 20 years in messages we see or hear in our daily lives.

– It’s now between 3,000 and 5,000

• As consumers we are on overload and are increasingly tuning out – Response rates are declining

• The privacy issue is headed straight at direct marketers

Breaking Through the ClutterBreaking Through the Clutter

• Tighter targeting and segmentation leads to increased relevancy of message and offer.

• Personalization that recognizes the relationship you have with the recipient of the communication.

• Media combinations that overlay

Breaking Through the ClutterBreaking Through the Clutter

• Permission based programs and relationship marketing– Not just an web based program

• Great offers or very unique selling propositions – Consumer think most products and

services are commodities

• Straight talk

The Interplay of the Three The Interplay of the Three Direct Marketing Elements Direct Marketing Elements

• Targeting and list 40 – 50%

• Offer 30 – 40%

• Creative & media 30 – 40%

The Wonderful World of ListsThe Wonderful World of Lists

• There are over 100,000 lists available– SRDS Mailing List Books

• Three general types of public lists– Compiled– Response/purchase– Co-op databases

• House or customer

The List BusinessThe List Business

• Owners, managers and brokers

• Co-op databases

• Rental vs. purchase

• Seed names

• List accuracy and decay rates

More List StuffMore List Stuff

• All lists have “selects” and your targeting process should identify the proper “selects”– Typical selects

• Most DM campaigns use multiple lists and there is normally a merge/purge process.

• Correct postal preparation is important as well.

Targeting for list selectionTargeting for list selection

• “Affinity” list selection is a process of deciding how closely the list matches the characteristics of your most likely customer.– Prior behavior is the strongest predictor of

response and campaign success

• Profiling and modeling is a database approach that takes actual customers and enhances and then profiles the file with demographic and lifestyle information.

RFM as a Targeting ModelRFM as a Targeting Model

• Recency of purchase

• Frequency of purchases

• Monetary value of purchases

• Score the customer file by quintiles and assign a score for all three characteristics – 125 cells.

• Which is the best predictor of future response?

Offer StrategiesOffer Strategies• The offer is the reason to respond or

buy now – it’s not the product/service.

• Most common offer types are:– Price – Time – Availability

• Multiple offers

• Kobs’ 99 Offers

Creative Creative

• The creative triangle– Copy– Graphics– Production

• Direct marketing creative is different from advertising creative and requires additional skill sets.

• The role of the Creative Brief

Rational/Emotional GridRational/Emotional Grid

• FCB Grid

• A template to help you think through the creative development of a DM campaign

• Can also be used to graph the competitive messages

The Rational/Emotional Grid

Rational(thinking)

Emotional(feeling)

HighImportance

LowImportance

The Rational/Emotional Grid

Rational(thinking)

Emotional(feeling)

HighImportance

LowImportance

Examples of Products/Services

•Computer Systems

•Insurance•Farm Tractors

•Temporary Services

•Cellular Phones

•Company Cars•Software

•Mfg Maintenance Supplies

•Employee Uniforms

•Long Distance Service

•Office Supplies

•Office Furniture

•Wall Hangings

•Corporate Gifts

The Rational/Emotional Grid

Rational(thinking)

Emotional(feeling)

HighImportance

LowImportance

Marketing Communication Tactics

•Long Copy Letter•Impact Mailing

•Complex Packages

•Telemarketing

•Dialogue eMail

•Video

•Advertising•Short Copy Letter

•Brochures/Pictures

•Humor

•Permission eMail

•Post Cards•Self Mailers

Creative TipsCreative Tips

• 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”

• Cost should not be the first consideration. Results, as measured in gross margin or profit terms is the guiding factor.

Creative TipsCreative Tips

• Relevancy of message and offer fights through the clutter.

• Remember that a “flat” piece of mail is handled differently than a 3-D or something that goes “bump in the mail”.

• Don’t try to trick the audience.

Direct Mail Creative Direct Mail Creative GuidelinesGuidelines

• Direct mail is a conversation with one person.

• Design the envelop to get it opened!

• Letter is the heart of your communication and does the hard work.

• Design the response vehicle first and then write the letter.

• Who’s the “hero”? Offer, reader or you?

Bob Stones’ Seven Copy Bob Stones’ Seven Copy GuidelinesGuidelines

• Feature the most important benefit no later than in the headline, first sentence or first paragraph.

• Immediately enlarge on your most important benefit.

• Identify specifically what they will get if they act now.

Seven Copy GuidelinesSeven Copy Guidelines

• Back up your statements with proof, endorsements or testimonials.

• Call to action -- tell them what to do, when and even how .

• Highlight what they might lose.

• Rephrase the prominent benefits in the closing offer.

Creative TipsCreative Tips

• Design the letter– 1st, 2nd and 3rd order scanable

• Z path – start upper left; exit lower right

• Folds – reader will open to widest point

• Color out pulls b/w – 2 to 1

• Cartoons vs. picture – a tough choice

• No more than 7 lines per paragraph

• Type size should be no less than 10 point

Creative TipsCreative Tips

• Opening paragraph should have no more that 11 –17 words.

• All sentences should average no more than 14 words.

• In a 2-page letter, break the last sentence into the next page.

• Quotes increase readership and interest – unless they are by you.

• Odd numbers are more believable than even

• Be as specific as possible

Creative TipsCreative Tips

• Don’t ever use an *

• Serif type is best for letter readability

• The eye goes to anything out of order

• Use screen tints – red and yellow are best

• After their name people read either the– P.S. or response card

• Avoid reverse-out type – decrease readership by 33%

Media – a Brief OverviewMedia – a Brief Overview

• Mail– Post card– Inserts– Self-mailer– Letter package– Impact mailing

• Telephone– In and out-bound

• E-mail and Internet

MediaMedia• TV

– Short form– Long form

• Print

• Radio

• Outdoor and others

• Combinations– TV and mail– Mail and phone– E-mail and phone

Brand ResponseBrand Response

• The advertising quandary:– “we advertise for brand awareness but

measure by number of leads or sales we make”

• Combine brand advertising with direct response.– The key is the offer that is related to

the USP– The design of the ad changes as well

TestingTesting

• You are not a direct marketer unless you test. Why test?

• What to test is the issue– List – Offer– Creative

• How to test is the second issue– A/B split – Multiple cell– Statistical projections

MeasurementMeasurement

• Response rates

• Cost per lead

• Cost per sale

• Breakeven

• Lifetime value

To Sum UpTo Sum Up

• Consumer DM is BIG – in 2000 sales were $937.7 billion

• We have barely touched the surface in this large, growing and sophisticated world.

• Suggest you learn more by joining the DMA, attending conventions, reading trade journals and stealing from people like me.

Thanks for AttendingThanks for Attending

• Questions – call us at 480-778-9900

• Come to a completely different session on B2B this afternoon

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