Are you really doing direct marketing?

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John Miglautsch, Miglautsch Marketing
John Miglautsch, Miglautsch Marketing

Since 1968 the definition of direct marketing has been examined and refined over and over. Here is a composite definition from 28 text books: “Direct marketing is a database-driven, interactive process of directly communicating with targeted customers or prospects using any medium to obtain a measurable response or transaction via one or multiple channels.”

Based on that definition, are the following three scenarios examples of direct marketing?

Acme MegaCorp decides to improve its sales. It matches present customers' addresses to a large database to add demographic variables and build a customer profile. This is sent to its ad agency to shape the design, offer, and media positioning. A grand ad campaign drives traffic to its website and Facebook page. Sales double within two months.

Costo Club Retail takes customer card information to identify trading areas and penetration. It highlights characteristics of neighborhoods with high market share versus low market share. From those factors, it produces newspaper fliers. Its sales associates are trained on customer interaction. Sales increase 30 percent for three weeks following the fliers.

Sally Vendar plans a garage sale. She calls a selection of people from her church directory to pick the best day. On the basis of that feedback, she puts an ad in the bulletin and posts the event on Facebook. She greets every person who visits, and she keeps careful track of her $250 in sales.

Each example uses a database, systematically communicates with customers, and interacts directly with them at some point. In fact, in each example not only are there “measurable” outcomes, but there actually is measurement (which often is not the case, especially where there are multiple overlapping media).  From an inclusive view, our three sellers are all direct marketers. But are they really?

The key element of direct marketing

Testing, testing, testing. The pioneers of this industry assumed everyone doing direct marketing would know and practice this.

Obviously it's possible to mail offers without tracking or even selling anything. It's also possible to measure results without any comparison. General advertising is always trying to measure, but the ubiquitous nature of mass media tilts its measurement toward focus groups, attitudinal surveys, and test markets—none of which precisely isolate causal variables.

In an example of the most basic A/B test, we send half our list (offer A) “50% off” and the other half (offer B) “Save $9.95” and see which one not only gets more orders, but after we've paid the cost of goods, mailing, and order processing, which one makes more money. If the total price is the same, I'd bet on the second offer every time (people don't like figuring out what 50 percent comes to).

Field valid scientific experimentation through isolation of causal variables allows you to actually test and prove the impact of changes in your copy, creative, offer, list, timing, etc. It's possible to accomplish this through most media. And though it's helpful to have a database you measure, most important is to correctly design the experiment before you launch it. This and this alone is what sets apart the practice of direct marketing. You can see whether it's better to charge $10 or $9.95, allow three easy payments, market to high income or low, and even see if it's worth the trouble to put a thank-you note in the box. Yet with every year that goes by, I see fewer and fewer practitioners standing firm on the principle of testing.

Why aren't you testing?

It's always more expensive to create a campaign with a test than to just create the campaign alone. Even the simplest test requires modification of something, and modification takes thought and planning. Constant vigilance is necessary to ensure that you're conducting valid experiments.

There's a price to all our segmentation and variation. Marketers often struggle to meet all the deadlines for each email blast, monthly newsletter, and Web update, not to mention deal with the training issues that keep everyone aligned for each customer inquiry. In this frantic marketing mix, few have the stomach to ask, “Did we remember to test what we're doing?”

“Try” is so much easier than “test.”

“We do lots of different things and compare the results.”

How can you define direct marketing success without testing?  I helped launch an imprinted merchandise catalog. We put our customers like 3M, Caterpillar, and Miller Brewing Co. on the cover. After a dozen executives asked me—“Why would I want to buy Miller hats?”—we decided to do a cover test: corporate logos versus “your imprint here” with no other change in the catalog. We mailed 600,000, split in half. The “your imprint here” version did more than 40 percent better. Same audience, same time, same look, same pricing; it could only be the little messages on the cover items.

The big point

Great companies always test. Legendary retailer John Wanamaker once said, “Half of my advertising is wasted, I just wish I knew which half.” You can know. Find an old-time direct mail marketer and perhaps he'll show you how.

John Miglautsch is founder of Miglautsch Marketing. Find him on Twitter: @JRMigs.

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