Direct marketing is likely the most misused and misunderstood of all integrated marketing communications tools. When people hear the term "direct marketing", they are certain what's being referred to is either intrusive "cold call" telemarketing, or "junk mail" list brokering. One of the first things this text is designed to do is to dispel the misconceptions surrounding the tool of direct marketing. We'll learn quickly to discern what direct marketing is and what it is not. Most importantly, we'll learn that direct marketing is not a "stand alone" marketing tool, but rather, one of five specific integrated marketing communications tools (advertising, public relations, sales promotion, personal selling, and direct marketing) which when pre-qualified, becomes the most powerful of all relationship marketing tools.
It's amazing how many direct marketing tactics being used today are designed to increase "junk mail" response rates and "sweat shop" telemarketing programs from 1/2 of 1% to something a bit higher, (something that is still a high ninety percentile failure rate). The so called "direct marketer" of today attempts to sell us things on impulse via trickery or manipulation. The "direct marketer" of today will do a back flip if they can get you, (trick you), into opening the mail before it hits the "round file", or get you to stay on the phone for thirty seconds so they can "manage differences" and create a flawed logic trail that leads to an impulse purchase. This text will confound that old view of direct marketing and introduce the reader to a new paradigm, a new view of the great relationship building tool of direct marketing. Direct marketing tactics described in this text will always be timely, relevant, highly personalized, pre-qualified and completely measurable.
After this text gets the reader to surrender their traditional view of direct marketing and embrace it as a powerful relationship building integrated marketing communications tool, we'll look at direct marketing in it's purest form, as a tool which allows you to bypass traditional channels of distribution and build a proprietary database. When you've eliminated any channel intermediary that stands between you and your customer, you will be able to anticipate the needs of your customers, (something your competitors can never do as long as you control the direct relationship). This text will show you how to anticipate customer's time, convenience, fear reduction, or risk reduction needs, so that you'll be able to insulate your customer relationships and gain all of their business. If you do have channel intermediaries, you'd better make sure they are adding significant value to your firm and you'd better only keep them as long as they continue to add value. Can you do both, have channel partners and go direct as well? Yes, this text will explore what it means to create an integrated distribution channel which takes advantage of channel intermediary value and also allows you to go direct to the customer whenever possible.
Much of the direct marketing being written about and taught in universities today has nothing to do with building relationships and everything to do with generating short term revenue. Short term revenue generating tactics may satisfy share holders in the short run, but they will likely lead to the longer term demise of the firm because the central focus of all short term revenue generating tactics is price, and price destroys relationships. If direct marketing is used to create an immediate revenue stream, it's probably not being used correctly. This text exposes the idea that direct marketing be used as a tool that generates an immediate response, a sale. Direct marketing is an investment into building life time value and profitable customer relationships which are less sensitive to price. In fact, it's the direct marketers mission to differentiate their firm away from price sensitivity.
Direct marketing is an integrated marketing communications tool which must always be preceded by other IMC tools designed to create awareness and motivate response. Direct marketing must be pre-qualified, so it's never the first card that a firm plays. Direct marketing is never designed to "churn in" new customers, it's aimed at increasing the share of your best existing customers' business. The new text makes it clear that direct marketing is neither an awareness tool nor a response motivation tool and clearly presents other IMC tools that fulfill those purposes.
HOW THIS TEXT IS DIFFERENTIATED:
Few authors address the new customer driven direct marketing perspective referred to above. Rapp and Collins, in their text, "The Great Marketing Turnaround", and Peppers and Rogers, in their series of 1:1 marketing texts do a formidable job leading us away from mass marketing and toward a more individualized and customized approach to direct marketing. While these texts are powerful and introduce us to what direct marketing truly is, they stop short, they don't integrate direct marketing with the other important marketing communications tools (IMC tools) referred to above. What makes this text so unique is its approach to pre-qualifying direct marketing with other integrated marketing communications tools. There's a tremendous synergy which occurs when direct marketing is pre-qualified by awareness tools such as advertising or public relations and response motivation tools such as sales promotion. Direct marketing becomes powerful when it's primary function is to increase customer share and when it's practiced on our best existing customers instead of being incorrectly used to try to "churn" in new customers.
Mass marketing is dead, manipulative consumer behavior techniques are dead, broad demographic categorizations are useless. It takes commitment from the highest levels of the firm to transform an organizational culture and to cause the leaders of the firm's marketing efforts to question traditional direct marketing approaches. This text is designed to provoke thought, to cause readers to look objectively at their current tactics and to see how they may be flawed. The text is designed to put new tools in the marketer's tool box, tools that will precede and pre-qualify their direct marketing efforts.
This text will expose short term revenue generating tactics that are passed off as direct marketing and are in reality, nothing more than sales promotions. Sales promotions are always an invocation of the "P" of price, a marketing tool that destroys brand loyalty and will throw your firm into a downward spiraling price war that leads to a slow death of declining profit margins. The text will be clear about the fact that direct marketing is not a way to give stock price a quick "shot in the arm" or to create a revenue "spike" for the share holder.
Instructors using this text must seriously question the validity of traditional direct marketing methodology. They must look objectively at new "customer needs driven" paradigm thinking and be prepared to embrace a completely new view of the tool of direct marketing. The instructors that will find this proposed text appealing are the instructor's that believe that "what worked in the past, will not work in the future", instructors that understand that he/she who knows the customer best will own all of the customer's business, 100% uncompromised loyalty.
This text will show the reader how to differentiate themselves from the competition, to separate themselves from price sensitivity, to create dialogue opportunities, to ascertain customer perceived value and to learn to anticipate the needs of their most valuable customers.
The primary objectives for the proposed text include synthesizing new customer driven relationship marketing techniques with the powerful integrated marketing communications tools of; advertising, public relations, sales promotion, and personal selling.
What is missing from all available direct marketing texts I've reviewed is the relationship marketing theory being used as a foundation for the application of the five IMC (integrated marketing communications) tools and the focus on direct marketing being the most critical of all "relationship" tools, the tool that creates loyalty, creates insulation, and enables you to segregate your database based on customer's current and future values.
Over a six year period, I have consulted, lectured, and taught over 350 courses at seven different universities. During this time, I have refined the methodology described above and have a perspective which is unique and not addressed in any other texts currently available.
There are marked differences between the proposed text and other direct marketing texts I've reviewed. Most direct marketing texts present the tool of direct marketing as a short term revenue generation tool, a tool designed to generate an immediate response, a sale. The proposed new text views direct marketing as a relationship building tool used to increase share of our best customer's business. Direct marketing from this author's perspective is never to be used to churn in new customers but instead, to invest our precious few marketing dollars in building insulated and highly profitable relationships with our best existing customers.
Other direct marketing texts advocate list brokering, mass mailings and telemarketing (provided they meet demographic targeting objectives). The new text advocates direct mail and telemarketing only when the customer or prospect is pre-qualified. In this author's view, broad demographic categorizations are never a deep enough pre-qualification and broad segments of a market are not considered to be targeting deep enough to have value or to differentiate a prospect. In the new text, direct marketing tactics are not to be used unless they are timely, relevant, highly personalized and pre qualified.
The new text is clearly differentiated from current existing texts by presenting advertising as an impersonal mass/broadcast media tool and by presenting direct marketing as a highly personalized and individualized relationship marketing tool.
Most other direct marketing texts advocate that direct marketing be used to generate an immediate response, that response being a sale. The new text presents direct marketing as an investment which creates high profit margins and significant long term value, but doesn't seek immediate return on every dollar invested.
Unlike other texts which were reviewed, the proposed new text advocates that it's no longer acceptable to identify stimuli (sex, fear, death) that invoke a response and use that stimulus to manufacture a need. Direct marketing is all about understanding a pre-existing need and meeting that need better than the competition with our firm specific advantages.
Most direct marketing texts, tell us to track behavior and to store it in a database, but the proposed Sherwin text goes further and teaches readers about differentiating customers based on current and future values.
THE FORMAT:
This text is not conceived to look (or read) like a traditional text book. This text reads much more informally and will be rich with many real life applications, case studies, "food for thought" questions, and references to many well known corporations.
The text is designed to be thought provoking, motivating students and teachers alike to re-consider what they've always held to be true about direct marketing. The text should cause readers to look inward at their own organizations and to realize that there may be serious flaws in their approach toward direct marketing. The text will arm readers with new marketing communications tools and a synergistic methodology which maximizes each precious marketing dollar.
As an Integrated Marketing Communications consultant, I've applied the direct marketing methodologies in this book to many real life organizations, and many of the success stories will be discussed in the text. This is indeed a very practical text and contains many proofs that the material stands up to real world direct marketing challenges.
ANNOTATED TABLE OF CONTENTS:
Chapter 1: Blowing up old paradigm thinking, a new view of direct marketing.
Before we can begin to truly understand what direct marketing is and what it isn't, we'll have to blow up some old paradigm thinking. So, before you read on, please be prepared to challenge everything you thought you knew about direct marketing, be prepared to cancel your contract with your local list broker.
This chapter exposes the myths of direct marketing. Direct marketing isn't being involved in multilevel marketing. Direct marketing isn't running a sweat shop telemarketing outfit. It's not about junk mail, not about list brokering. Direct marketing is dialogue with our customers and prospects, it's database building, it's the tool that will eventually allow us to anticipate needs and meet those needs better than our competition.
If it's not timely, relevant, pre-qualified and highly personalized, it's not direct marketing.
Chapter 2: Let's go DIRECT! (bypassing traditional "place" channels).
We want insulated, loyal customer relationships, relationships which are mutually beneficial. But any entity that stands between us and our ultimate customer prevents us from understanding their unique needs and building loyalty. So, let's go direct, let's eliminate anyone in our distribution channel that isn't adding value.
Chapter 3: Dialogue opportunities.
How do we know what customers really want? How do we know whether or not our customers are "delighted"? How can we possibly anticipate customer needs? We need to encourage dialogue, not deliver monologue.
Manipulation and marketing are polar opposites. It's no longer, identify stimuli (sex, fear, death) that invoke a response and use that stimulus to manufacture a need. Direct marketing is all about understanding a pre-existing need and meeting that need better than the competition with our firm specific advantages. None of this can be accomplished without the creation of dialogue opportunities.
Chapter 4: Firm Specific Advantages and "augmented" products and services
What is our "firm specific" advantage? It's not about having a better mousetrap. It's not about having superior technology. It's not about having cost or manufacturing advantages. Augmented product is the bundling of value added services that meet customer's time, convenience, fear reduction, and risk reduction needs. We must never attempt to create a product or service without first understanding our customer's pre-existing need for it.
Chapter 5: Ascertaining customer's perceived value.
How can I price my products or services without first understanding the customer's perceived value? The customer places great value on having their individualized needs met in a customized fashion. The best customers and prospects are the ones that value having these needs met more than they value their money. This chapter refutes all the "cost plus" pricing methodologies which dominate the business landscape and introduce us to "value based" pricing.
Chapter 6: Differentiation away from price sensitivity.
It is the direct marketer's number one responsibility to create firm specific advantages which meet the customer's specific needs better than the competition in such a way that it creates differentiation. Why is this so important? Because it takes the hot spot light away from price and it is the only thing that can ensure that your profit margins will be high enough to sustain the firm.
Chapter 7: A database all dressed up but with nowhere to go.
Our database is living, breathing, and constantly changing. We don't want every customer out there, only those which will be willing to pay a premium to have their needs met. We certainly don't want to treat every customer we have equally.
Some customers (some prospects for that matter) are more valuable than others. Customer's value is constantly changing. We need to be moving customers from categorization to categorization (bucket to bucket) in our database based on their current and projected future value. Some of our biggest customers (from a gross revenue standpoint) are also our worst customers, our most demanding customers, our least profitable customers.
Chapter 8: Integrated Marketing Communications (IMC).
Open up your tool box. What's on top? The hammer of course. Why? Because it's the last tool you used, it's the tool you always use. O.K., close the tool box, now pretend it's a marketing tool box and open it up. What's on top? Advertising. Why? Because it's the last tool you used, it's the tool you always use. Take that tool out of the box. Look at all those other marketing communications tools! There's public relations, sales promotion, personal selling and direct marketing. Turn the box over, dump out all the tools, turn the empty box upright, put advertising at the bottom, put all the other tools on top. Don't go for that advertising tool ever again, don't use any tool as a stand alone tool.
Chapter 9: Synergy, linkage, measurability, the building blocks of IMC.
There's a stereotypical conflict which has always existed between finance and accounting and marketing. Marketers haven't learned to speak the language of the finance officer. When the marketing manager says "trust me baby, I have a great idea", that won't cut it. Marketing is strategic, pro-active and highly measurable (if done correctly). But remember, we're not measuring immediate sales, we're measuring lifetime value.
Chapter 10: Better than fishin'
Create awareness, motivate response and allow prospects to identify themselves. Create active participants. Don't spend a dollar on a prospect unless they raise their hand and acknowledge that they want to play.
Chapter 11: The internet is not the "boob tube".
The Internet is not the "boob tube", it's the greatest direct marketing tool ever made available to us. People don't ever stumble upon your web site, they are driven to your web site. Your web site is not a mass media tool. Don't buy banner ads, don't fall for reach and frequency lies. The internet is not an awareness tool, hits mean nothing.
Chapter 12: The great linkage tool of sales promotion
Direct Marketing is not sales promotion. Direct marketing is pre-qualified by sales promotion. Linkage of response motivation tools to relationship building tools is discussed in this chapter. We'll see how sales promotion tactics can serve as response motivators that create active participation and pre-qualify direct marketing tools.
Chapter 13: Personal selling, like direct marketing is a pre-qualified relationship tool.
Sure, we can sell somebody something on impulse using dramatic sales promotion techniques, but profit margins will be small and loyalty will be not be created. Leave your bag of samples at home and go on a mission designed to learn about your customer's constantly changing needs.
Down with intrusive, confrontational, cold calling. You can't sell something and then assume the relationship has begun. Today, we must first build the relationship and then we may be able to sell products and services that meet customer's pre-existing needs.
This chapter is all about the use of personal selling as a pre-qualified secondary marketing communications tool. Why spend all your time trying to "churn" in new customers when you could be building insulated relationships with your best existing customers?
Chapter 14: The positive multiplier effect.
Why do firms put a bounty on new customers? Why do firms pay their best customers for referrals? Shouldn't our best customers be happy to tell others about us? Why try to churn in new customers with mass media when we can maximize the positive multiplier effect?
Chapter 15: What's your passion?
This chapter will bring together all the concepts discussed throughout the book with several practical examples and is designed to motivate people to pursue their marketing ideas. Students will now realize that they can launch their own businesses without huge advertising budgets.
There's a blessing and a curse that comes with reading this last chapter. Readers will realize that most "so called" marketers practice flawed methodology and that they (the reader) now know more than the so called "professionals" (that's the blessing). The curse is that after reading this book, every day of their lives they will be exposed to senseless, flawed, unmeasurable marketing tactics and will not be able to understand why so many large companies just don't get it.
