Cyber Evolution: The Hi-Tech Path to Integration

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Just two short years ago few direct marketers of consumer goods and services or high technology had staked out a piece of the Internet space. Dominated by content and search engines, the Internet did not look like it was going to contribute to direct marketing sales anytime soon.


Today, those direct marketing companies, who have not found a way to incorporate this interactive medium into their marketing mix, find themselves hopelessly behind. Can two short years really change the way customers view the business and, possibly, threaten the entire business model? The answer is yes. And that's not the worst of it.


In the next two years, the Internet will experience adolescence and will rush headlong into maturity. That's right, in just two years, the dominant marketers on the Internet will hold a significant share of cyber sales and will be almost impossible to dislodge in any market sector.


To avoid missing what promises to be a large and exciting arena for direct marketing, each company must grow as fast or faster than the environment itself. The steps are becoming clear, and climbing each step carefully could ensure a place at the table.


The beginning: brochureware. Most companies have already opened their first Web site. This site, often called brochureware, told the company story and pointed to traditional ways prospective customers could communicate with the company. Perhaps graphically appealing, it soon became clear that the site made no significant contribution to sales.


The next generation of the site may have contained more interactive content, regularly updated information and new ways to communicate with the company (e-mail, bulletin boards, etc.). The company may have even tried to incorporate a few of the hot technologies, including Java apps and memory-intensive graphics. However, it may have found this new site was slower than the first and still hadn't sold a single SKU.


Adolescence: commerce-enabled Web site. Eventually, novelty gave way to reality, and the company incorporated commerce into the plan with the hope of a return on this growing investment. The commerce-enabled site carries hundreds of SKUs and an easy order form for customers to order directly. The stakes are now higher, and while it's selling, the traffic to the site is growing -- slowly. Some direct marketers may have difficulty adapting their business to a Web site since Web sites are essentially a "retail paradigm."


As in retail, a plan to generate traffic is developed. The first step usually involves URL promotion on all of the traditional mailings. Traffic grows, but a majority of the customers are already on the customer file and have elected to use the site as an order channel. There's certainly nothing wrong with this, since the Web will ultimately be a lower-cost way to process orders than traditional telephone or paper orders.


To find new customers, begin to test other media using tried-and-true direct marketing principles. Banner ads, sponsorships and shared links offer some opportunity for generating new traffic to the site. Tracking the back end carefully will show which methods produce the return. Space ads, package inserts, radio, newspaper and public relations offer potential for generating additional traffic.


Young adulthood: e-mail marketing. Somewhere along the way, the company started asking visitors to register at the Web site. Soon it begins to see thousands of e-mail addresses accumulating on the servers. These addresses offer a cost-effective way to communicate with prospective and existing customers. E-mail offers the opportunity to apply the direct marketing skills directly to the Internet.


However, if the company didn't ask for postal address and phone numbers, it will soon realize that it's not sure who it's communicating with, if they're a customer, or if they hold any future potential for sales. With a quick adjustment to the site it adds name, address and/or telephone number to the registration page.


The Web site is growing traffic, and sales are on the rise. The company has collected thousands of e-mail addresses, many of which are enhanced with data.


To be in compliance with existing laws and industry guidelines a company may only e-mail consumers with whom it has some sort of prior relationship. This would include consumers who have given explicit permission to send them e-mail. Or it could include existing customers who have registered at the site. While the e-mail-enhancement services have not yet reached critical mass, once they do they can be matched to the customer file and be included in the e-mail plan.


Consumers who know the company that is sending them e-mail will have a high open rate and a very low opt-out rate (often less than 1 percent). An opt-out (or remove me) option should be included with every mailing. E-mail offers the kind of interactive relationship with customers and prospects that can only be dreamed about in the postal world. If a company is not sure it should be e-mailing customers an offer, just ask! Through simple surveys, it can find out exactly what customers do or don't want to receive. This will improve the relationships and response rates.


Look into endorsed e-mail for new customers and additional revenue. This practice complies with the "prior relationship" rule and allows the offer to reach the customers of complimentary mailers. Companies simply include the offer in their e-mail to generate new customers. Additional revenue is generated by including other mailers' offers in the e-mail. It's simple: Whoever has the relationship sends the message.


Maturity: channel integration. If a firm has reached this stage it is now a multichannel marketer. It has the postal mailings, Web site, and e-mail all working to generate sales. Add retail if it's operating stores. While each of these channels should be very successful independently, there are tremendous gains possible from integration. Books could be (and have been) written on this subject, but here's the "Cliff Notes" version.


Here are a few ideas for achieving channel integration starting with the easiest:


o Despite that slim possibility of diverting a sale, advertising the Web site on the mailings and in the stores is always a good idea.


o Take requests for a print catalog/offer through the Web site, e-mail correspondence and retail locations.


o When sending an e-mail offer for a specific product, make sure the link goes to the page with that product.


o When a purchase is made through any channel, send an e-mail offer with a related product.


o If stores exist, request e-mail address on customer service cards.


o Use e-mail to generate traffic to Web site or store events (i.e. sales, promotions).


o Use e-mail to notify customers of order status, regardless of the channel in which the order was placed.


o Use the Web site to promote retail events with a coupon printed from the Web site and presented at the store.


o Use e-mail surveys of the customers to target mailings of the print offer.


o In the print offer, highlight the opportunity to buy products on the Internet that are not available anywhere else.


o Collect customer e-mail addresses through the telephone customer-service representatives.


Keith Wardell is president/CEO of Shop2U.com, Fairfax, VA. His e-mail address is keith@shop2u.com.
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