The art of direct marketing (2) – What are the strategies and tactics to maximize the financial returns for a SME‘s direct marketing investments?

Startegies and TacticsThis is a must read two (2) parts series on direct marketing strategies and tactics that could be deployed and or implemented by small business owners and or SME marketers.

  1. The art of direct marketing (1) – What should a small business consider before deploying direct marketing strategies and initiatives?
  2. The art of direct marketing (2) – What are the strategies and tactics to maximize the financial returns for a SME‘s direct marketing investments?


Direct marketing is an effective marketing tool that SMEs should deploy as part of their everyday marketing activity. It is one of the most effective ways a small business can acquire new customers, retain existing customers and or increase the revenue potential of an existing base of customers

The tactics of direct marketing

 

Managing the customer lifetime value

Before we get into discussing the tactics of direct marketing, it is important for small business owners and SME marketers to seriously consider how to effectively build a lifetime relationship. Any direct marketing activity without a precise understanding of managing the lifetime of the customer will be futile.

Customer Relationship Management (CRM) has been a buzzword that has been around for a long time. It mostly has been written in the context of systems, processes, opportunity management and so forth. However, small business owners and SME marketers need to understand CRM in the context of direct marketing.  

From a direct marketing perspective, the small business owner or SME marketer should know the 3 phases that must be considered when executing a direct marketing campaign.

  • Are you in the relationship formation stage?

Small business owners and SME marketers should use this phase to reinforce their potential customers’ decision to purchase. The SME marketer should have an offer that has the benefits that interest the customer. A small businesses’ reinforcement of a customers’ decision should include the fulfillment and or delivery aspects of the proposition that your business is trying to sell.

  • Are you in the relationship cultivation stage?

The small business owner should ask if they are able to personalize their relationship to meet the customers’ unique needs. The SME marketer should also consider if they are attempting to build trust and or if they are able to better qualify the customer.

  • Are you in the relationship management stage?

At this stage, the SMB marketer should consider if they are able to fit the value proposition to meet their customers’ unique needs. If they are, it will offer the SME a higher potential to cross sell and up sell their existing propositions.

 

The tactics of direct marketing

Now that we know about the advantages and disadvantages of direct marketing, the key success factors for direct marketing and when to use direct marketing, and all about managing the relationship with the customer, it is time to discuss each of this direct marketing tactics in detail.

  • Direct mail
  • Direct response advertising (including infomercials and teleshopping)
  • Personal selling
  • Telemarketing


Direct mail

A small business owner or a SME marketer should consider the following tactics for direct mail.

  • A SME should make sure that the visual and logical experience is superb, “eye catching” and truly different. Remember that you have only four seconds to involve and rengage the customer!
  • A small business should ensure that the targets are well defined and pre-selected based on the small businesses objectives
  • A SMB must make sure that the value proposition differs significantly from your competition. (Please keep in mind the obvious – do not alert your completion of your direct mail campaign/s J )
  • Other factors that a small business owner or SME marketer should consider includes the size and differentiation of the envelope, the day of the week when the direct mail is mailed out, the reliability of the postal system and the uniqueness of the direct mail design.

In my personal experience, I have engaged in discussions with folks trying to save costs by insisting on low quality post cards or the by minimizing the size of the direct mail. This is absolute nonsense, as you should not even bother with a direct mail campaign, if it does not differentiate from the millions of junk mail delivered each year.

Also keep in mind that the “call to action” should be vivid, direct and conspicuous!.      

 

Direct response advertising

The tactics for direct response advertising should also always include a “call to action” This is an effective tactic for small businesses to promote and sell their propositions.

Small business owners and SME marketers should seriously consider these direct marketing tactics, modes and methods including magazines that include bind-in insert cards, toll free numbers in newspapers and magazine and infomercials and teleshopping channels.

Some key factors that small business owners and SME marketers should consider are that this tactic enables the SME to emphasize the prime benefit and the total proposition wrap.

Keep in mind that tricky, complicated openings rarely work. It would help that if your brand name is well known. If it is, make sure that your feature it conspicuously.

Another tactic that small business owners and SME marketers should consider are to make coupons into mini-ads, complete with  the small businesses brand name, promise, and a miniature image of the proposition itself.

A special note on direct response advertising!

Due to the prevalence of direct response campaigns in developed markets like the U.S.A, Europe and Japan, the attitudes of potential buyers have been ambivalent at best.

However, im emerging and “non-evolved” market such as the Middle East, South Asia and South East Asia and Africa, this direct marketing tactic has a huge potential to drive customers to your small business!.

 

Personal selling or direct sales

Personal selling is the end to end process of face to face communications with existing or potential target customers and the persuasion activities thereof..

For any small business, deploying a direct sales team is most effective when the propositions or services are/have:

  • Relatively have a higher total cost of ownership and or are higher priced.
  • When the propositions are complex or complicated in nature.
  • tailored/customized to users’ needs
  • Offer opportunities to cross sell or up sell or if they are opportunities for the customer to trade in.
  • when the decision process is complex and or when decisions are made at the point of purchase

Is direct selling the best option?

A small business owner or a SME marketer should seriously consider the following factors before deciding if a direct sales team is the best option for a direct marketing campaign.

Order taking – Is the direct sales effort just an order taking tactic?

Technology consulting – Is the small business dependent on the direct sales force to enable and empower the customer to have more technical information, advice, and service?

Complex propositions – Are your propositions sophisticated and complex?

System selling – Is your proposition an end to end system of propositions, products or services?

Continuous improvement mission – Is your sales team on a mission of purpose? Are your direct sales teams calling on accounts for purposes of monitoring the satisfaction of buyers and updating the buyers’ needs?

I personally believe that In emerging and developing markets, the channel and marketing economics make it ideal for direct sales as an effective direct marketing tool for small businesses.

Direct sales marketing campaigns are one of the most effective ways in which an SME or small business can promote their propositions.

  • It gives their customers the totality of experience that that no other marketing tool can provide. They include the visual, sound, logical, and touch experience. (Sometimes they do enable taste as well, but I will not dwell on that here).
  • The direct sales approach enables pre-selection and an ability to demonstrate the benefits of a small business proposition much better that any other means.
  • Additionally, SMEs should know that when you have the attention of a customer or a potential target, there is no other competition to enable the cognitive dissonance of your potential customer!

However, any small business owner or SME marketer should be aware of the potential pitfalls of direct marketing through direct a direct sales team:

They are expensive as they demand the time of your customer and you are putting your small businesses’ image and likeability based on that one contact!

Telemarketing

Telemarketing is a very potent direct marketing tool for any small business owner or SME marketer to consider for the following reasons:

  • A SME’s potential and existing customers can be selectively targeted.
  • The success and impact of the telemarketing campaign can be monitored and tracked.
  • This direct marketing tactic offers the small business owner or SME marketer the ability to experiment with different scripts and delivery formats that are simple and practical.
  • Telemarketing offers the SMB owner to have a live constructive dialogue with their customer.
  • In other words, just like as it is in direct mail, telemarketing offers the small business owner to offer a customer almost a totality of experiences including sound, logic and a chemistry.

However there are potential pitfalls that a small business owner or SME marketer should consider. They include the fact that

  • Telemarketing is very expensive on a cost-per-contact basis.
  • A major portion of the prospects are not reachable.
  • Telemarketing can be annoying to your customers. They do not have the flexibility like direct mail. You cannot choose your delivery options.
  • Time is money for most customers – when you reach people in their space, you have a limited attention span to communicate your intention and elicit the responses that you intended.
  • The practice of telemarketing is highly maligned due to its annoyance factor.

 

How do you target and measure the effectiveness of direct marketing?

Small business owners and SME marketers should have a clear understanding of how they target their customers and how they measure the effectiveness of a direct marketing campaign. Direct marketing is an expensive strategy and tactic to implement. Therefore selecting the target is important. Some key considerations for selecting a target include the following:

B2C direct marketing demographics that should be considered!

  • Age
  • Income
  • Gender
  • Marital Status
  • Homeowner
  • Dwelling Type (home or apartment)
  • Mail order buying (by product type)
  • Interests
  • Married or divorced or single?
  • Presence and number of children
  • Geography

B2B direct marketing demographics that should be considered!

  • Vertical or industry market
  • Number of employees
  • Revenue
  • The title and responsibility of the person to whom the dorect marketing campaign is addressed to.
  • Information on all influencers and decision makers
  • The credit worthiness
  • Geographical
  • Number of branches, sites and or offices
  • Number of lap tops
  • Fixed assets versus employee size

 

The RFM model

Experienced direct marketers often use a simple model that is based on the premise that there is a higher propensity for a customer to respond and buy from or through a direct marketing campaign> The model works on the premise that if the customer had purchased Recently,  Frequently and if the size of the Monetary value of the purchase is relatively high, then there is a higher preponderance for the existing customers to buy again. (Hence the RFM model).

Small business owners and marketers should apply this model, if they have a database of customers with previous buying experience derived from direct marketing activities.

At the end of the day, no matter what your small businesses direct marketing strategy or the resultant tactic is, what are important is the sum total of your Cost per inquiry (CPI) and the cost per order (CPO) advantages of direct marketing.

 

In summary, SMEs should keep the following in mind before deploying direct marketing initiative.

  • The sales process and sequence is the set of customer or potential customer decision steps necessary to close a deal that should be matched with a set of direct marketing communications designed to provoke each step.
  • SMEs should use direct marketing strategies, tactics and tools to narrow the universe to “qualified prospects”.
  • Small business owners should remember always that direct marketing sells the next step in the sequence of the relationship cycle.
  • SMBs should always keep in mind the totality of the cost of the customer relationship – from the relationship formation, cultivation and the management stage!

Happy direct marketing!

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