Direct Marketing

Direct marketing evolved as a technique to reach pre-qualified customers at a reasonable cost—over against mass marketing in which, for every qualified customer, several hundred totally disinterested people had to be contacted. The Direct Marketing Association (DMA) speaks of an "interactive system of marketing"; direct marketing, however, grew up out of using qualified mailing lists to reach customers. The interactions, therefore, are typically a customer receiving a letter and the sender getting a phone call. Direct marketing, in other words, is as old as the hills. Companies dealing with the same customers on a narrow subject, like bicycles, learned that they could earn extra money by selling their mailing lists to others. The next phases in direct marketing was capturing such lists in computer databases and adding more information about the customer. This was then hyped as "database marketing." Direct marketing has added a proactive function of building mailing lists and databases using federal statistical sources, surveys, and telephone queries.

In a way it is easier to say what direct marketing is not. It is not direct mail, although it uses direct mail. If direct mail is used, it has to be sharply targeted. It isn't advertising, although it uses advertising—including such media as billboards. Again, specificity is important. A billboard may announce a melon sale at the next highway intersection. This is a form of direct marketing. It isn't telephone selling, although it may use telephone banks. Telephone selling is telemarketing; it is part of direct marketing only if a company is calling precious customers.

Most consumers do not understand anything particularly sophisticated by the phrase or even know what it means in detail. They simply think that direct marketing is like mail or people at the door, whereas mass marketing is on TV and in the magazines.

Indeed, in practice, distinctions are very difficult to make, and statistics on the subject are derived from members of the DMA. However, not everyone engaged in direct marketing is a member. And presumably the members also engage in other type of marketing not quite so direct—as becomes clear in the discussion below. The DMA suggests that its activities represented 10 percent of Gross Domestic Product in 2005 or $1.28 trillion. However there is no way to develop this number by an alternative means because federal sources do not report on a "direct marketing" category.

DIRECT MARKETING MEDIA

While many people associate direct marketing with direct mail, direct mail is only one of several advertising media utilized by direct marketers. Other major direct marketing media include the telephone, magazines, newspapers, television, and radio. Alternative media include card decks, package and bill inserts, and matchbooks. Within the major media, new technological developments are giving direct marketers an expanded range of choices from videocassettes (possibly advertised on television, requested by telephone or interactive computer, and delivered via mail or alternate delivery services) to home-shopping networks, interactive television, and the Internet.

Direct Mail

Direct mail is the most heavily used direct marketing medium and the one most direct marketers learn first. Direct mail has been used to sell a wide variety of goods and services to consumers as well as businesses, and it continues to grow despite postage increases. Direct mail offers several advantages over other media, including selectivity, personalization, flexibility, and testability. It allows businesses to target individuals with known purchase histories or particular psychographic or demographic characteristics that match the marketer's customer profile. Direct mail can be targeted to a specific geographic area based on zip codes or other geographic factors. Personalization in direct mail means not only addressing the envelope to a person or family by name, but also perhaps including the recipient's name inside the envelope.

Direct mail packages come in all shapes and sizes, making it one of the most flexible of the direct marketing media. A standard direct mail package includes an envelope, a letter, a brochure, and a response device. The envelope's job is to motivate the recipient to open the package. Regardless of the volume of mail a person receives, the envelope must distinguish itself from other mail by its size, appearance, and any copy that might be written on it. The letter is a sales letter and provides the opportunity to directly address the interests and concerns of the recipient. The letter typically spells out the benefits of the offer in detail. While the letter tells the recipient about the benefits of the offer, the brochure illustrates them. Illustrated brochures are used to sell services as well as products. Finally, the package must include a response device, such as a business reply card, that the recipient can send back. Response rates are generally higher when the response device is separate from, rather than part of, the brochure or letter. Toll-free numbers are often prominently displayed to allow the recipient to respond via telephone.

Direct mail is the most easily tested advertising medium. Every factor in successful direct marketing—the right offer, the right person, the right format, and the right timing—can be tested in direct mail. Computer technologies have made it easier to select a randomized name sample from any list, so that mailers can run a test mailing to determine the response from a list before "rolling out," or mailing, the entire list. Different packages containing different offers can also be tested. Other media allow some degree of testing, but direct mail is the most sophisticated. In relation to the other direct marketing media, direct mail is considered to offer the most cost-effective way of achieving the highest possible response. Telemarketing usually produces a higher response rate, but at a much higher cost per response.

Telephone-Based Direct Marketing (Telemarketing)

The use of the telephone in direct marketing has grown dramatically over the past two decades. Expenditures now may equal, or even surpass, those of direct mail. Telephone-based direct marketing may be outbound and/or inbound. Inbound telemarketing is also known as teleservicing and usually involves taking orders and responding to inquiries. Outbound telemarketing for consumers may be used for one-step selling, lead generation, lead qualification or follow-up, and selling and servicing larger and more active customers. In business, telemarketing can be used to reach smaller accounts that do not warrant a personal sales call as well as to generate, qualify, and follow up leads.

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