Without These Three Strategies, You're Faking Direct Marketing

Three Critical Elements of Direct Marketing 

Three Critical Elements of Direct Marketing 

It's astounding how many large advertisers generate leads or sales directly from consumers or businesses and think they are using acceptable direct marketing practices.

Some of these clients and prospects spend millions and waste 50% or more of their budgets. In private, direct marketers often say among themselves: "They don't know what they don't know."

That's often true.

But many simply can't practice best of breed direct marketing because of conflicting business goals or preconceived ideas about the effective direct marketing strategy.

Here are the three primary direct marketing strategies regardless of channel. They apply to email, direct response TV, direct mail and e-commerce. If you are not using these, then you may be walking blind or simply wasting your marketing potential.

1. Run your marketing by the numbers.

When evaluating any and all of your marketing budget, look at what your average sale or customer lifetime values. Then run these by finance to come up with an allowable acquisition cost that reveals how much you can spend for a new customer or sale. We call this the Cost Per Sale (CPS) and Cost Per Customer (CPC).

These sacrosanct numbers gives you and the whole management team a clear view of your marketing effectiveness.

Evaluate each channel and omnichannel effort based on these allowables.

If you can spend $100 per sale, then a $1,000,000 budget must yield 10,000 new customers. 

With a cost per customer number, you can now set up your annual marketing budget based on a simple calculation.

Look at your customer attrition rate to come up with the number of customers you need and when you need them to drive the corporate financial objectives.

This budgeting approach puts reason back into the insanity that pervades many budget setting processes in some companies. The financials should grow or decrease based on the final marketing budget. It certainly should not rely on wishful thinking!

2. Track your budget with a customer relationship database.

A relationship database tracks all customer promotions, inquiries and sales by customer. Without it, the marketer cannot track sales by promotion, segment the database for enhanced sales effectiveness or evaluate marketing programs for long term impact.

For example, leads will come in over a given period and sales trickle in over several months or even years. Evaluating sales conversion rates vary significantly from one database segment to another and one offer to the next.

Strong businesses today know the importance of customer data and the future of the company. Yet marketers sometimes do not drive this trend because they do not realize how important it is to their future.

3. Test your offers, creative executions and channels for cost effectiveness

Now that you have your CPS and CPC allowables along with the ability to track customer behavior with your relational database, you've got what you need to implement the underpinning of successful direct marketing.

Test, test and test again. Continually attempt to beat your best creative work and omnichannel approaches. You have the means, you now need belief.

Believe that testing will startle you with it's impact on your sales. One offer sent to the same market on the same day as a test offer on an A/B split basis can vary by 400% to 600%. So don't think you're finished because you achieved your goals this year. Things change.

Without continual improvement, your program has nowhere to go except down.

If you are not tracking sales results for all of your marketing efforts and not testing. Then you are not in direct marketing.

Posted on June 16, 2015 and filed under Planning.