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Use direct marketing to turn your company into a learning organisation

Direct Marketing

The demands of markets, channels and customers, as driven by internal business intelligence forces in organisations, continually place pressure on direct marketers to meet two key objectives: drive sales and generate brand awareness. However, says ROYDEN VOLANS, strategy and business consultant at Knowledge Factory, it's time for direct marketers to extend their sphere of influence and look at how they can use their skills to solve problems in other areas of the business.

Direct marketing uses a range of advertising media to effect measurable responses such as direct orders, lead generation, traffic generation, and the creation of a database of respondents. Aside from being a vehicle for generating enquiries and selling products and services, direct marketing plays a fundamental role in promoting customer loyalty and retaining customers, creating awareness of an organisation, generating store traffic, and generating leads for salespeople.

But direct marketers have the opportunity to accomplish so much more for their organisations. While many companies are making substantial investments in business intelligence solutions, the truth is they often have very little significant information about their clients. The direct marketer, however, can boost return on intelligence by making learning about the customer a primary objective of each customer interaction, thus maximising the value of these interactions.

Let's place this argument in context:

  • Customers want, need and demand the right attention, but they do not want to be spammed;
  • An organisation's historical data typically furnishes only half the full customer picture;
  • Cost cutting in a highly competitive environment is simply not sufficient to ensure customer loyalty; and
  • There continues to be great uncertainty around the value of marketing to the organisation.

Against this backdrop disciplined innovation is key.
While organisations focus on brand awareness and selling products and services, there is increasing pressure on them to differentiate between their customers and to put in place customer management programmes that will retain their client base in the face of relentless competition. And this is where the value of direct marketing can be tapped.

Let's look at the following example: A retail company that had made substantial investments in business intelligence, a core component of which was vested in channel performance, found it was not retaining client information and was thus unable to determine channel trade areas. The company put together a promotional kit containing a special offer accompanied by a redemption voucher. This was mailed to hypothesised surrounding areas of the company's target market, defined in terms of spend patterns, demographics, residential preferences and other criteria. The uptake on the offer was so successful that customer satisfaction was increased by around 30%, while the average basket size per customer also increased by 5%. At the same time, the company achieved its business intelligence objectives in terms of its channel.

This rather simple but highly effective exercise contributed to the development of the company as a learning organisation, where intelligence enhancement is set to become its greatest competitive differentiator. This is part of a process that can be defined as the direct marketing cycle of learning which begins with defining your target market, hypothesising its response, planning your campaign or promotion, acting on it, analysing the results, refining the campaign, and starting the cycle all over again.

Direct marketing can also be an invaluable tool for companies that have no research budget but need to know more about their customers than ever before. In another example, a company derived the ability to differentiate its customers by understanding customer value, and developing the ability to build a predictive churn model that demonstrated why its higher value customers were defecting. The direct marketing team asked customers appropriate questions, a representative sample was extracted and a special offer communicated to the respondents through a variety of channels. The results were extrapolated and for a limited additional cost - incurred through data capturing - the direct marketing team could provide the company's analytic team with the insight required to build a churn model. Along the way, the average customer lifecycle was extended by 22% as a result of enhanced interaction.

What these examples demonstrate is that the value of each customer interaction is significantly enhanced when learning becomes a primary objective. In a learning organisation, cross-selling is improved through alignment with customer needs; strategy can be more effectively formulated; valuable relationships preserved; service redefined; and profitability increased, giving you the ability to define exactly what effective marketing can contribute to an organisation. By adopting a learning approach you can find out more about the intelligence challenges your business is facing and ultimately take control of the future you wish to create for it.

* Knowledge Factory is the customer insight services company in the JSE Securities Exchange-listed Primedia group,

Contacts:
Royden Volans
Knowledge Factory
011 445 8110
roydenv@knowledgefactory.co.za

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