This chapter looks at other fields in which direct marketing skills are important.
PACKAGE GOODS MARKETERS
Even old-line product managers at companies like Procter &Gamble are mastering and deploying direct marketing techniques along with the traditional techniques they use to build consumer awareness and brand usage.
It's largely the database that is responsible for these changes in technique. Its ability to store and use accurate and extensive historical information on customers, coupled with its ability to immediately measure the results of any marketing program, make database marketing an indispensable tool of product and marketing managers in dozens of fields. Databases help these professionals focus on specific consumer market segments, even on specific consumers!
A database developed from coupons redeemed by consumers of a particular breakfast cereal, for example, could be used to
- Mail special promotions to current users of the brand.
- Mail discounts offering more savings to people who eat other similar cereals.
- Offer coupons on other products in the brand "family."
- Mail special merchandise offers to users.
- Send a newsletter to users.
- Test new products related to the "flagship" product.
INSURANCE AND OTHER FINANCIAL SERVICES
Actually, insurance direct marketing hardly qualifies as an 'other" industry. A glance at appendix B shows that, of the top fifty direct marketing companies, eleven sell insurance. In fact, four out of the top ten are either exclusively in the insurance business or have insurance divisions.
That makes it less surprising that, in 1989, $10 billion in premiums were paid for all types of insurance bought through the mail.
During the Depression, companies like Allstate and Equitable Life Assurance began offering life, accident, and auto policies by mail. More and more followed suit, until today almost every major insurance company even those with very large agency forces and sales office networks participate in direct marketing.
Some of them use direct marketing to produce leads that are then distributed or sold to their agents. Others develop insurance policies exclusively for sale by mail, simplifying the qualification process and the application form so that the offer can be made in an appealing and creative way. Still others rent lists of customers and prospects from their agents and use these lists to sell policies that the agents would never bother with because commissions are too low.
Agents and brokers, at first threatened by what they perceived to be competition, have made peace with mail-order insurance and are exploring how they can apply direct marketing to their own books of business. Now, large and small agencies are learning how to generate and convert leads using direct mail and telemarketing, and how to track customers on databases so that they can develop targeted mailings to coincide with birthdays, policy expiration dates, and other events that can bring in new business.
Credit cards, debit cards, consumer loans, mutual fund investments - all are successfully marketed through direct marketing. People who respond to the mailings enjoy the convenience of reviewing the offers in the privacy of their own homes, and are often pleased to be able to purchase them without having to deal with an agent.
FINANCIAL INSTITUTIONS
Banks and savings and loans are finally realizing that the financial records they maintain for their customers can assist their marketing efforts. And so they are asking their marketing staffs to learn how to recruit new accounts, sign up new prospects for loans, even approve small loans by mail or phone.
Upon discovering that a major corporation planned to move to its community, one Alabama bank developed a campaign that blended direct marketing and public relations to recruit the banking business of the relocating employees. It sent new-account applications along with extensive community information and a personalized letter to each of the employees, and successfully recruited 75 percent of the accounts of families relocating to the town.
THE AUTOMOBILE INDUSTRY
Direct marketing is even cropping up in the automobile industry. Porsche has used direct marketing to promote its deluxe cars to individuals with incomes of $100,000. A two-page letter- printed on watermarked stationery for a simple, classic look- urged 300,000 high-income prospects to visit a dealer and take a test drive. In this lead-generation program, the primary emphasis fell on defining and then locating qualified prospects. Porsche didn't want to alienate dealers by sending in people who wanted to test drive but couldn't truly afford the car.
Another car maker tracked purchasers of one of its models and sent "time to buy a new car" reminders to owners five years later. Even car dealers are using databases and direct marketing to promote maintenance and repair services and to put their dealerships first in line when their customers start looking for a new car.
RETAIL
Retail stores, too, are getting into direct marketing. Major chains like Bloomingdale's and Neiman-Marcus offer catalogs of high-priced, specialty goods whose sales equal or surpass those of their best stores. Major catalogers like Eddie Bauer are going the opposite way, setting up retail outlets to complement their catalog sales. In all, it's estimated that about a third of all consumer mail-order sales are generated by retailers with mail-order divisions.
Increasingly, retailers are using direct marketing to build traffic and sales for existing stores. Gordon's Alley, a men's clothing store, established a Gold Card program for its 500 customers who spend more than $1,000 a year. Monthly personalized mailings to this core group cost the store about $500-but bring in $12,000 a month in sales.
Catalog retail chains follow the same strategy. Eddie Bauer and other retailers know that a sizable number of their catalogs will not be used for direct mail shopping, but rather for background on purchases that will ultimately be made in their stores. In fact, research by Sears shows that families who receive Sears catalogs are twice as likely to shop in a Sears store than are those who do not see the catalog. Better yet, catalog recipients spend twice as much as others on in-store sales.
MAGAZINE SUBSCRIPTION CIRCULATION
Most magazines subscriptions are sold through the mail and fulfilled by mail. Therefore, magazine subscriptions are a direct mail business, and jobs in circulation are jobs in direct marketing.
When a new magazine concept is tested, its creators first identify its likely audience by studying lists of people with profiles similar to the new magazine's "ideal" subscriber. Next, they test-mail a subscription offer to those lists. Because they must persuade people to become readers of a magazine no one has ever seen, these packages feature long copy and elaborate brochures describing the magazine's content. If response warrants it, the magazine is published and subscription campaigns are conducted in earnest.
Established magazines like Time and Rolling Stone must seek new readers as well as retaining old ones. Renewal letters tend to be shorter but sent more frequently. A publisher may send six or seven renewal reminders before it writes off a subscriber.
The famous sweepstakes contests of Publishers Clearing House and American Family Publishers are used to acquire new subscribers, although they are often not good prospects for renewal.
Magazine publishers are also in the list business, because their subscribers represent substantial rental income. Most publishers employ list managers to promote their lists to appropriate noncompeting marketers.
FUND- RAISING
For decades, nonprofit organizations have turned to the mail for funds. In recent years, the telephone has also become an essential. Most modest contributions are solicited by mail or telephone, although even large donors are often "warmed up" with a personal letter before being contacted in person.
Fund-raising writers need to be able to convey a sense of urgency, as well as a sense of guilt about not responding and a sense of satisfaction for those who do. And fund-raising media specialists need to be quite creative when identifying pools of new donors. Large nonprofit organizations may employ a cadre of fund-raising direct marketing specialists, although most turn to direct marketing agencies (including some that specialize in fund-raising) for assistance.
BROADCAST DIRECT MARKETING
While most prime-time television commercials are image advertisements, many non-prime-time spots are direct marketing ads. These are an outgrowth of the live commercials of the 1950s, when pitchmen who could sell anything to anybody used language, posture, gestures, expressions, and props to sell food slicers, juicers, fishing kits, miracle cleaners, knives, and other products. Back in the 1950s, these commercials were so popular that they were listed in TV schedules, and on at least one occasion a commercial for Salad Maker drew higher ratings than the Lawrence Welk show.
Agencies like A. Eicoff & Company, now a subsidiary of Ogilvy & Mather Direct, specialize in broadcast direct marketing. Its founder, Al Eicoff, notes that the key to making a sale through a broadcast direct response commercial is to make the sale as easy as possible. His motto is "tease 'em, please 'em, seize 'em." "You tease the viewer by raising his expectations. You promise the viewer a product that is better and more useful than anything he has ever seen. You please him with the demonstration of the product, a demonstration that has an almost visceral fascination. And, finally, you seize him with the offer; an offer so attractive that ordering the product seems like a perfectly logical thing to do."
VENDORS TO THE DIRECT MARKETING INDUSTRY
Letter-shops
Letter-shops are the organizations that get mail campaigns into the mail. While many jobs are mechanical or clerical in nature, each one is absolutely essential to "dropping" a campaign, especially one that contains several different components.
Letter-shop sales personnel consult with clients (direct marketing companies or agencies), specifying requirements for insertion and labeling, and confirming the number of mailing pieces that will be needed to complete the mailing. Under their supervision, letter-shop personnel can
- Fold and collate packages.
- Code order forms and labels.
- Prepare the mailing for the post office.
- Follow up with written reports that confirm receipt of materials, mailing costs, and drop dates.
On the client side, large direct marketing companies sometimes have a letter-shop coordinator who manages the multiple mailings going out of multiple letter-shops.
Print Production Suppliers
Behind every great direct marketing package is a talented printer. And working for that printer is a host of sales and customer service professionals who nurse complicated, multi - component mailings from final mechanicals to finished piece. In a very real sense, they are equal partners to the companies and agencies they serve, the vendor counterpart to the production specialists on the client side.
The best graphic arts professionals understand not only the technical aspects of printing a job, but also the dimensions of the direct marketing business. That's why many of them join local direct marketing clubs and work hard to stay abreast of trends in direct marketing. That's also why their work is honored by ECHO and other industry awards, which recognize that a great creative execution needs a flawless printing job to succeed.
Opportunities for aspiring art directors abound at many vendors, who often employ key-liners, desktop publishing specialists, and creative staff.
