The fact is that direct marketing can and does work in a number of industries, for companies of all sizes. For example, consider the pharmaceutical industry. Up until a few years ago, pharmaceutical companies weren't permitted to advertise directly to consumers. They had to focus all their marketing on physicians. However, now that the laws have changed and pharmaceutical companies can market directly to consumers, they're seeing greater brand recognition and increased profits. Recent surveys have found that 77% of Americans have seen a pharmaceutical ad on television, and 52% of those people said that the advertising made them want to try the medication. In addition, most drug manufacturers have systems in place to entice potential users of their products to sign up for email newsletters, and direct mailings. So if direct marketing works in an industry where the end user isn't the final decision maker (the physician is), then it can work in your industry, too.
While you likely don't have the multi-billion advertising budget that pharmaceutical companies do, you can employ the following suggestions to create a successful direct marketing campaign.
1. Develop a Fan Base
Your fans are your best customers. Not only do they buy from you often, but they also recommend your company to others. Look through your customer data and pinpoint who your fans are. Where do they live? What product or service do they purchase most often? What problems do they have that your company can solve? By knowing the type of customer who buys from you the most, you can target other people in that same demographic. Remember that the objective of any direct marketing effort is not just to get a response or make a sale; it's to build customers. When you market directly to your fan base, you leverage the 80-20 rule, which states that 80% of your business will come from 20% of your customers. Therefore, identify your 20%, and market to them and others like them.
2. Select the Right Media
No one specific advertising medium is the right choice for every company. Depending on your customers, you may need to use direct mail pieces, Internet marketing, radio ads, newspaper coupons, or some combination thereof. Knowing your customers makes the decision easier.
For example, if you're marketing a truly broad-based product, then direct mail will probably not be the way to go. It is too expensive on a per-thousand basis and takes too long to execute. Television will probably be a better route. Once you produce a "spot," the cost of buying television is less per thousand than direct mail. On the other hand, if you have a niche or micro-market, television normally isn't the best route. For targeting, direct mail and print advertising work best. The key is to pick the medium that makes the most sense for your customers and your budget.
3. Make the Right Offer
An offer is what you are willing to give and what you want in exchange for a particular response from prospects. Included in the offer are price, terms, guarantees, and extras. The right offer doesn't necessarily mean the one that generates the most responses or the one that generates the highest profitability from the individual effort. The right offer is the one that ultimately contributes the most profit to your business.
Offers are normally categorized by the objective of the direct marketing effort:
- Lead Generation (for field sales or telephone follow-up). In lead generation, you have both hard and soft offers. The harder the offer, the fewer but more qualified the responses. Hard offers generally will ask prospects for considerably more information about themselves and their buying intentions, ask for an appointment or demonstration, mention the cost of the product or service, and refrain from offering any type of gift or premium.
- Traffic-Building (to a retail location, trade show booth, or website). Traffic-building offers normally involve premiums, special discounts, or exclusives.
- Direct Sell to business or consumer markets. In direct-sell situations, free trials, samples, premiums, and discounts can all work to draw attention to your promotion and to boost response. Whenever possible, offer a guarantee.
4. Get a Response and Build a Relationship
You need to break through all the communications clutter in the marketplace in a way that's credible. For example, a drugstore owner can put a photo of a cute baby on the envelope of a direct mail package to get it opened. But they have to tie the product to the baby (such as flavoring for children's medicine) or it will have attracted attention but not delivered in terms of marketing.
Good direct response advertising involves the recipient. In direct mail, personalization, tokens and rub-offs, stamps, and quizzes all aid involvement. Good direct response advertising also makes it as convenient as possible for a prospect or customer to respond. Use as many vehicles as possible, including toll-free phone numbers, pre-paid reply envelopes, fax numbers, and e-mail.
5. Find a Niche or Unique Selling Proposition
Small business owners must find their unique selling proposition in order to compete against "The Big Boys." This could mean free home delivery or phone call reminders when it's time to purchase or use a service again. Another way small businesses can compete with the national chains is to develop a niche in a target market. For example, with the aging of the "Baby Boomers," there are many unmet needs, ranging from health care to travel and from investing to real estate needs. Pinpoint what's unique about your company or what niche you fall into, and target that market directly.
6. Analyze Response to Improve Profitability
One of direct marketing's great assets is that you can easily measure its effectiveness. Using key codes and coupons are great ways to determine if a particular campaign is working, as is simply asking people, "How did you hear about us?" The more you can measure your campaign's effectiveness, the more you can improve. But the only way to improve is to test on a continuous basis. Critical factors to test include:
- The media used. Which brings in new customers most inexpensively? Are they "better" customers?
- The effectiveness of the offers. Which offers pull the best response and produce the most fans repeatedly time after time?
- The creative approaches. What strategy best separates your company from your competitors?
- The timing. What months are best for the specific product or service? What's the ideal time between efforts for particular prospect and customer groups?
If lagging sales are putting the squeeze on your business, or if you simply want to expand your company's market reach, then direct marketing may be for you. And regardless of your personal opinion about pharmaceutical companies, advertising directly to consumers, the bottom line is that it works. In fact, most consumers report that they appreciate pharmaceutical ads, as it alerts them to treatment options and makes starting a discussion with their physician easier. When you start doing some direct marketing for your company (and measure the response), you'll be able to target your message appropriately and reap the most rewards.
About the Author
Alan Bayham is a sought-after business coach and consultant with a master's degree in organizational management, combined with more than 30 years of experience in leadership, management and marketing training. As the president of Bayham Consulting LLC, he has worked with companies ranging from small- to medium-sized businesses, as well as Fortune 500 companies. For more information, contact Alan at 504-259-8682, or visit www.bayhamconsulting.com.
