DM Purchases Different Than Supermarket Buys, Wunderman Says

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GREENWICH, CT -- Lester Wunderman took questions about the economy and privacy yesterday at the Hudson Valley Direct Marketing Association luncheon.


One issue attendees asked about was the recession, as it relates to DM.


"We're at the leading edge of economic cycles," he said. "The nature of the decision that the consumer has to make to buy something direct is different from the nature of the decision they make when they are in the supermarket. We're in a period where people are worried and people are frightened. The economy is down.


"We're in the most optimistic business in the world. When people are feeling good, the direct marketing business is up. If they're feeling bad, we're the leading-edge predictor of trouble. And that's where we are."


He also told the audience that some of the industry's practices, particularly on privacy, are not helping.


"Privacy, which we keep kind of sweeping under the rug, is going to be very serious as it has been in Europe," he said. "The fact that we are getting so much information on consumers is wonderful from a marketing point of view, and dangerous from the point of view of those people who are not disciplined enough to use just what we need for the function of marketing. People are getting weary of seeing their names on letters that don't relate to them. People are worried about ... telemarketing that comes in."


Wunderman also told attendees that the worst argument to get into is whether a piece of copy is good or bad.


"It's really the most fruitless kind of argument that you could ever have because it's so subjective, and we're not, to a large degree, in a subjective business as we can prove and we can test," he said. "One of the benefits of having access to a discipline such as ours is the ability to really test and prove things not through research, but in the marketplace."


Wunderman's 19 things all successful direct marketing companies know was also mentioned. He was asked for his three favorites, which are:


· No. 1: Direct marketing is a strategy, not a tactic. It's not an ad with a coupon; it's not a commercial with a toll-free number; it's not a mailing, a phone call, a promotion, a database or a Web site. It's a commitment to getting and keeping valuable customers.


· No. 10: "Suspects" are not "prospects." "Prospects" are customers who are able, ready and willing to buy; "suspects" are merely eligible to do so. Communication with prospects reduces the cost of sales; communicating with suspects raises the cost of advertising.


· No. 17: Loyalty is a continuity program. "Totally satisfied" customers are least likely to fall away. Those who are merely "satisfied" may fall away without warning. To build ongoing relationships, rewards for good customers should be tenure-based (on previous purchases, usage behavior and length of relationship). Rewarding "tenure" can prevent competitors from "conquesting" your best customers.


Wunderman also touched on the industry's future.


"We are where advertising is going," he said. "I don't think we'll ever lose general advertising. We can't sell an unknown product. We need general advertising to make products known. We need general advertising to create favorable attitudes about products and services.


"Our business will continue to grow. As technology creates these better connections between us and consumers -- and data creates so much more information that we can have the great advantage of knowing who to sell and when to sell them and what to sell them -- I can't believe that we will not end up as the dominant form of marketing."


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