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The CEO has just told you that you have to cut 20% off the marketing budget. Your team is in shock, they thought that they were doing well. Everyone is downcast, except the Direct Marketing person. They are rubbing their hands in glee! Why?
Accountability, ROI, response driven campaigning are the tools of trade for e direct marketer and any downward shift in economic conditions, means more resources are turned to things that are producing results, measurable results, not “awareness” or “brand recognition” metrics. Direct marketers talk the language of prospect generation, sales leads, enquiries and sales, this is the language that the CEO wants to hear. They fast become the corporate heroes when the going gets tough.
Here are five ways you can look like a hero.
1. Increase DM Expenditure.
It may come as a surprise to some, but some smart companies actually increase their marketing expenditures during slow economic times. They see it as a way to gain market share at the expense of competitors who are cutting back, or to enter markets where there is more opportunity for growth or to ensure they have momentum when the recovery begins.
While such a strategy will be made at the highest management levels, direct marketers are in a unique position to recommend where the best new opportunities among customers and prospects lie. They have tried and tested a number of access points for prospects and know how to best maximise response rates as well as being able to identify market needs.
So, drop a few “brand” orientated campaigns and replace them with some hard nosed response driven communications.
2. Dissect, Analyse and Remove.
Good times are forgiving of waste. Unfortunately, companies often respond by arbitrarily cutting back marketing by a fixed percentage across the board, when the business climate worsens. A better strategy is to cut activities that make marginal contributions to profitability. Here, direct marketers should be able to evaluate profit against historical marketing spending across several products and services and then provide empirical data for the best campaigning to achieve profit targets.
For instance, are customers acquired through a particular channel both lower in initial and long-term value? RFM modelling, lifetime value, average order size, expenditure per customer cluster analysis becomes your best friend. These are the metrics that allow best ROI on direct marketing campaigns. If you are not doing this type of analysis, then you have a wonderful opportunity to get something started that will rifle point your campaigns and generate measurable and positive customer reaction..
3. Get detailed, get some answers. Now is a good time to make sure your analytical assets and capabilities are as honed as they can be. If some of your statistical models no longer seem to be performing as well, or you believe that a different approach could improve the performance of marketing programs, such an investment may be warranted. Test some new data cells, test some new offers to existing data cells. Get some fresh data into the mix, use some of the proprietary analytical tools to segment your current customer data to find niche groups within your customer base. A direct marketer has the answers, they know that this is boring, detailed and intensive work, but they are up for the task, because they know that their future campaigns will be better and more responsive as a result.
If you are not renting commercial lists, now is the time to start (shameless plug for the suite of lists that AML offers). Your current customers are the best pointer to the sought of lists that you need to rent. Look to the groups that are performing the best within your own customer database and then ask for lists that match them. Whether you are a B2B or B2C marketer, lists of fresh names can be added to your next customer communication campaign and can add prospects for your sales teams to explore.
4. Can you make your marketing simpler. One area of hidden waste is unnecessary complexity in marketing processes. For example, a dozen or more product-specific statistical models support many cross-selling programs. This means that each model needs to be maintained and refreshed, that scoring the customer database may take longer, and that campaign logic may be very complex. Have you looked at the models and determined if they are doing the same thing for the different customer groups, can this process be simplified across the segments. Do you have multiple databases that have to be maintained using different applications or platforms, can these be housed together and then the relevant data fields populated for you to identify clusters?
For example, newer methods permit a single model to be built and implemented. If the new model can help improve marketing results and reduce the level of effort for the program, then it will be a smart investment even in lean times. This is just one example of how marketing can be simplified and become more efficient in the process. Other examples include the housing of data in one database, the use of external analytics and suppliers of these services so that you can have all the information and expertise without the head count.
5. Treat your suppliers like partners. Your suppliers will work with you to reduce costs, if you treat them like partners. Sometimes simple changes to your mailing pack, email template, data buying, data analytics can achieve cost savings. Consider all the elements that are necessary for success and then look to ways to minimise the changes while saving cost. Some examples include: moving to an A4 letter with an inserted generic response coupon rather than a perforated dl fold up to a letter, this will save some lasering and printing costs.
Perhaps this is not ideal, but if you have to make savings, test this change of format to see if there are any impacts on response. Many fundraisers use the perforated fold up or across in their mail packs, I wonder of there could be some savings if they considered a different approach. But make sure you test, we don’t want to be sacrificing response rates just to save a few cents. The saved cents mean nothing if we lose thousands of dollars in sales at the other end.
If a supplier seems unwilling or unable to help, or if you already have been dissatisfied, now is the time to look at alternate suppliers. The aim is not to get the cheapest supplier, but rather one that can work within your tighter budget, while meeting your quality expectations.
No matter what the economic conditions, t is the best of times to be direct marketer because, our RESULTS will always speak louder than anything else.
Posted on 29th May 2008