Direct marketing is a business tool that’s been around in one form or another since the days of Benjamin Franklin. It turns out that Ben used a direct-mail campaign to market his publication "Poor Richard’s Almanack" to people living in the American colonies back in 1732.
Today’s direct mail techniques offer companies a way to conveniently get information on their products and services out to targeted prospects and existing customers. They also make it easy for customers to order products without having to leave their office or the comfort of their cozy couch.
Direct marketing companies include any business that targets customers without using a middleman for advertising. These companies send information directly to their customers and prospects about the firm’s products and services.
A Company vs. a Process
The direct marketing firm terminology is also used to encompass a group of companies, such as advertising firms, public relations firms or marketing consultants, that provide the means for product and service providers to market directly to their customers. This differs from direct marketing as a process that any business can use to make product offers directly to its customers through various channels.
For example, say a company wants to distribute by email an electronic version of its catalog along with a coupon. It would hire a direct marketing firm to provide an expert staff of experienced personnel, including copywriters, advertisers and graphic artists, to formulate an email with effective content and an effective appearance. The firm would also likely offer services such as tracking the response and reflecting any useful information in future campaigns.
In contrast, an example of marketing to customers indirectly would involve corporate sponsorship banners at a ball game, useful blog posts that don’t sell anything, online reviews and product placements. No marketing is taking place directly between the manufacturers and customers, but the product or brand exposure strives to build a friends-first awareness of the company and its products.
Direct Marketing Definition
Direct marketing is a method of selling products and services directly to public consumers by means of telephone, mail order or the internet, for example, rather than through traditional retailers. Direct marketing is very commonly used and takes many forms, including catalogs and brochures, newsletters and flyers, coupons and postcards. That's just the physical format. Telemarketing is another frequently used form of direct marketing, and since so much of the population now spends time online, companies have started sending direct marketing materials through emails and text messages. Additionally, targeted online display ads also continue to become more popular forms of direct marketing.
Who Uses Direct Marketing?
In the early days of direct marketing, a few department stores started using it with their sales catalogs. Montgomery Ward started by publishing its catalog in 1872, and Sears published its catalog in 1888. These are some of the first examples of direct marketing. These catalogs were a response to the fact that many Americans at the time lived in rural areas, far removed from cities that had large stores with a variety of product choices. Today, with the availability, ease and low cost of online technologies, just about anyone can use some form of direct marketing to approach potential customers.
Why Not Use Mass Marketing?
The usual goal of mass marketing campaigns is to increase consumer awareness about a product or service, but this type of marketing usually costs a good amount of money because it takes place via expensive channels, such as radio and television ads. Direct marketing, on the other hand, has a different goal. Companies engaging in direct marketing have one simple mission, which is to persuade someone to take some form of action. Making a sale is the ultimate goal, but direct marketers know that people are not always ready to buy on the spot. Direct marketing ads focus on getting a targeted prospect to visit a website, call the company to find out more information, mail back a postcard to request a quote or at the very least, enter their name and email into an online form for more information.
Direct marketing has some distinct advantages that make it successful. For example, many types of advertising are presented to the masses, such as billboards, while direct marketing is targeted only to people with a high degree of probability of being interested in or needing the company’s product or service. Marketers gain insight about their target audience based on information that the company has gathered about them or by third-party companies that collect consumer data.
Direct marketing examples abound on both a large and small scale. For example, graduates of Harvard University might receive an email letting them know that a new cashmere sweater carrying the school’s logo is now available for purchase. The only people likely to want this piece of clothing are current students, their parents and graduates.
Because of this targeted audience, the manufacturer saves money and effort by advertising only to people with a high chance of buying the sweater, so the company saves money on advertising while also increasing the likelihood of selling to each of the people contacted.
Many companies find that direct marketing also offers other benefits, such as the ability to make marketing messages personalized to each recipient, thus making customers feel that the messages are meant strictly for them. Direct marketing can be much more cost-effective than mass marketing, which means it also gives a higher return on the advertising dollars invested. Additionally, direct marketing typically uses a variety of ways to track the success of each campaign, helping to calculate profitability and to make improvements with each new marketing cycle.
How Companies Use Direct Marketing
Companies use a variety of different direct marketing solutions to achieve their sales goals. Direct mail, the original method, is still in use today via catalogs, coupon mailers, door hangers, postcards and even those business cards you find stuck under your car’s wiper blade. Other direct marketing channels include telemarketing, which involves contacting customers by telephone to sell products and services. Telemarketing is often used to find potential customers and follow up after some other type of direct marketing campaign. With all of the spam calls people receive, effective telemarketing requires good planning and well-researched, accurate customer data to make sure you’re contacting the right customers and matching them with a very relevant product offering.
Email marketing is another type of direct marketing, and companies can deploy it at minimal cost. Various tools exist to help you measure results, such as how many recipients open your emails or how many viewers click through to your website. Emailed materials include newsletters, discount offers for existing customers and enticing offers to generate new customers. Emailed direct marketing can even include your ads delivered in another company’s emails.
Text or SMS (short message service) marketing is another low-cost way that companies are using to reach a large base of their customers. They use texts as an effective way to give timely, brief alerts for store sales, reminders for appointments or deliveries and links to updates on their website.
One of the most popular direct marketing methods, social media marketing, makes it easy for a business to have direct interactions with its customers and to share company and product-related news on a regular basis. An important feature of social media marketing is the ability for customers to easily share a company’s posted content to their own social networks, which can exponentially increase the reach of an advertising campaign. Social media sites also provide the capability for customers to write comments and give detailed feedback at no cost to the business.
A Company Example
Say, for example, you mail out a catalog to 100 customers, and it contains a discount coupon on the last page. Then, you get 20 customers who bring the coupon into your business to use, which tells you that your campaign garnered a customer response rate of 20 percent. By factoring in the costs to create and mail your catalog and subtracting them from the profits you made from your customers who used the coupon offer, you can get a very precise assessment of the customer conversion and monetary success rate of your direct marketing catalog campaign.
Making the Most of Direct Marketing
Planning out your direct marketing campaign and executing it well can pay huge dividends. Staying focused on the core goals of your campaign can help you get the most out of your targeted efforts.
It may seem redundant, but the first priority of your direct marketing campaign is to target your most ideal customers. It's important to tailor your messages to these specific buyers and prospects, and the time you invest in researching and identifying these people can pay huge dividends. Once you have truly targeted your customers and have sent out several campaigns, you'll be able to gain very accurate insights about how this group responds to various product and service offerings.
Maximizing your direct marketing options should be a no-brainer because you can execute in several ways for little to no cost. You can broadcast your information through several social media channels, such as putting up a company page on Facebook, sending out tweets to customers and followers on the social media platforms Twitter and Instagram and using email marketing or sending texts to your targeted customer base. You can really get a lot of bang for your buck by using all of these direct marketing channels.
It typically takes money and effort to acquire new customers, but you can use direct marketing methods to welcome back existing customers who have not made a purchase in some time. Many people are open to receiving communications from a business with which they've already become familiar. Drive increased sales to your existing customer base by keeping reliable records of their previous purchases and using this data to form simple, well-executed promotions. You can also approach lapsed customers to update their information, rekindle their interest and find out information about why they might have moved on.
Another way to maximize your direct marketing is by improving your customer loyalty. The ease of use and availability of social media makes it easier to build and keep direct relationships with your customer base. You can formulate personalized promotions, offers and email notes, for example, to make a direct link with your customers and build a personal connection with your business. Many companies use direct marketing channels like email to implement their customer loyalty strategies, such as emailing them birthday cards, inviting them to upcoming sales and sending out special discount offers.
You can also maximize direct marketing campaigns when you’re creating a new business. Many people in marketing talk about finding your customer niche because it's much easier to market to a group of like-minded, prequalified prospects than to the general public. This one part of your strategy can dramatically increase your prospects’ response rate. For example, you could do a direct email campaign to jump start the sales of a new product and reward customers for referring new customers to you by offering future product discounts. You can also post useful content on your social media accounts that existing followers and customers can forward to their friends, family and circle of influence, potentially rewarding you with new customers.
Cynthia Gaffney has spent over 20 years in finance with experience in valuation, corporate financial planning, mergers & acquisitions consulting and small business ownership. She has worked as a financial writer and editor for several online finance and small business publications since 2011, including AZCentral.com's Small Business section, The Balance.com, Chron.com's Small Business section, and LegalBeagle.com. A Southern California native, Cynthia received her Bachelor of Science degree in finance and business economics from USC.