30 Timeless Direct Marketing Principles by Bob Stone
DM Advertising Techniques
Last year more than $17 billion was spent on newspaper advertising . . .more than $10 billion on TV advertising . . . and more than S7 billion in direct marketing. More dollars were spent on direct marketing (DM) advertising than on radio, or magazines, or billboards, or charity booklets, or shirts for the local bowling teams. Why was so much money spent on direct marketing? Because dollar-for-dollar nothing brings in more business than direct marketing used correctly. And yet the average bank spent only two cents of every advertising dollar on this very effective medium. What is direct marketing? Why is it so effective? How does it work? Who's done it in banking and with what kind of results? And. what are the facts and fiction of direct marketing? What Is It? Here's the new definition appearing in Direct Marketing magazine: "Direct marketing is an interactive system of marketing using one or more media to effect a measurable response and/or transaction at any location." The key word: "interactive." This is what separates direct marketing from the rest. Which brings us to the next point: Why Is It So Effective? Because it's one-on-one. Direct mail is an intensely personal medium. Imagine going out on a date with a woman for the first time. You write her a letter the next day. You say. "I really enjoyed myself last evening. You were fun to be with. I hope we will see each other again real soon." The woman receiving the letter would think you were nice to write and would probably receive your next phone call with appreciation. Now, imagine you go on the same date and, instead of writing a letter, you take a full-page ad in the local newspaper with the same message. Or, you contact the local disc jockey and have him read 1t over the radio as a paid commercial. When your date read it in the paper or heard it on the radio, she would run hysterical to her room, lock the door, come down with an imagined case of the flu, not leave the house for a week, and never answer your phone calls or see you again because you embarrassed her. She was embarrassed? But she received the same information in a letter and was complimented! What happened? This: The radio and newspaper were for the world to see and hear. The letter was for her alone. The reaction was different And so it is with the customers of your bank. If you run a special promotion and send literature to your customers on how it works, don't miss anyone. If you do, they will cell and complain and wonder if the bank doesn't want their business any more. If it does, why didn't the bank send the offer to them as well? A bank in Wilmette, Illinois, did a five-part mailing. Every Thursday it sent customers a card stressing a special bank service. One week it was "convenience" and the card noted the number of its drive-in windows. Another week it was "trust." with information on wills and estates. The fifth and final week, the bank mailed calling cards of its call officers so the customer would know who to contact for any advertised services. On the sixth Thursday, a strange thing happened. The phone began ringing early and often. By the end of the day, the operator had logged dozens of calls from customers, who called to say, "Today is Thursday. I didn't receive any mail from you today. How come?" Now when was the last time anyone called to ask why your ad was not in the paper or on the radio? They do not. But, direct marketing is a personal relationship. Once built and tightly constructed, it will be the most effective cross-selling tool you can use. How Does It Work? The theory behind direct marketing for your bank is two-fold: 1. It is far, far easier to receive more dollars from the customer you have than to find new customers. 2. When searching for a new customer. You can be more specific with direct marketing than any other medium. The customer you have. The more services customers have with your bank, the more likely they will stay. If customers have a checking account with you, the odds are 1-to-1 they will leave within a year. If they have a savings account the odds increase to 2-to-1. If they have checking and savings, the odds jump to 10-to-1. If they have checking, savings, and IRA accounts, the odds are 20-to-1. The mathematical progressions add up to a minuscule 100-to-1 chance of their leaving if they have four accounts with you. Direct Mail Fiction And Fact FICTION Nobody reads direct mail. They are opened and throw it away unopened. FACT 8 out of 10 DM pieces are opened and at least looked at. Direct Mail is the best - read advertising medium. FICTION Most direct mail is just thrown in the mailbox, addressed to an anonymous "occupant" FACT 9 out of 10 DM mailers are addressed to a specific household member. FICTION Most people don't want to receive direct mail ads. FACT About 72% like receiving mail. FICTION Most DM is coupons that are just thrown away. FACT Third class mail is the only class of mail that pays for itself. One out of four postal workers depends on direct mail for his livelihood. FICTION Why do we have to subsidise this advertising for the post office? FACT If you add up the coupons and post cards and small packages, the total is about 3%. FICTION Mailboxes are clogged every week with direct mail ads. FACT The national average is 3 pieces per week. FICTION If most people had the chance, they'd take your names off mailing lists. FACT The Direct Marketing Association runs periodic ads in national publications offering to take names off the mailing lists of it's 1700 member companies. Or to put names on lists. So far, those wanting to receive MORE mail out-number those who want to receive less. FICTION It is awfully risky to buy through the mail. FACT Mail-order volume depends on repeat mail Business. They must have satisfied customers to stay alive. (Notice how direct mailers stress their guarantee?) And, the federal government has very strict regulations on offers that use U.S. mails. The object then is to have your present customer have more accounts with you. Not only to bring more dollars but also to make sure they don't wander over to the competitor for this week's free toaster. Pulling a list of customers who have checking accounts but no savings (or vice-versa) is relatively easy to do. Then you have pinpointed a specific market to which you can offer a specific service. With the reasons-why carefully spelled out. And a free gift or incentive to have them take advantage of on or before a certain cut-off date. The 2 key ingredients to a DM program are the mailing list and the offer. What that means: If you have a program for senior citizens. It would not be wise to send out how-it-works details to customers under 60 years of age-too much wasted postage and effort. If you have a second mortgage program, send information to customers who may need dollars for their children's college education or an addition to the home or bills. You would not send it out to senior citizens-too much wasted postage and effort. If you have a new service for your bank, your results will be more effective if the first mailing or telephone marketing call goes to your present customers instead of opening up the phone book and copying addresses or telephone numbers-too much wasted time and effort. Direct marketing is pinpoint marketing. You can zero in on exactly whom you want to reach. One of the most effective and on-going programs in this area was put together by Andrea Strickland, marketing director, First Georgia Bank, Atlanta. Write her at P.O. Box 1700, Atlanta. GA 30370 and see if she has any extra copies of her very effective mailers aimed at specific professions or sections of the population. That's the list. The offer must be something people can understand, relate to, and want. "Money" is a good attraction (it is one of the most powerful pulling words for headlines). Money for loans. Chase Manhattan sends out "approved loans" to customers who have just paid off loans. This encourages them to come in and repeat the cycle. Service is another appeal. First National Bank of Belleville, Illinois, used DM to invite 800 local retailers to a motivation luncheon. And. 600 showed up! Bank openings are another reason. Atlantic National Bank, Atlantic City, New Jersey, mailed out 10 000 certificates in its statements for a free order of French fries in the McDonald's near the new branch location. And 8.300 were redeemed! With the right list and the right offer, you are on your way to DM success.
Creativity in direct marketing starts with analytical thought. I will define the principles as I see them, to take away with you and use as a checklist when you sit down to have your own great ideas.
The days of mass advertising and scattergun TV campaigns are over, according to the worlds leading marketer, Philip Kotler, who says that companies should shift to target and one-to-one marketing in light of increasingly fragmented media channels.
What lies ahead for us in marketing direct? The Americas and other countries are optimistic and from talking to various friends in our industry and although there are a multitude of factors influencing our decisions we are moving forward in Relevant, Responsible and Result-driven direct marketing activities. This is good news.
Pitney Bowes Inc., Stamford, CT, began airing a new flight of DRTV spots this month as part of its ongoing campaign to reach the small office and home office (SOHO) markets that are difficult to reach through direct mail.