Or that's what it used to be called.
I am struck by how many of the businesses I see can really use tried and true techniques that were pioneered by the direct marketing industry a hundred years ago.
If your business acquires customers, for instance, whether they are businesses or consumers, and you care about how long it takes and what it costs, then customer acquisition testing is more than important -- it is a business requirement.
If your customers buy more than once, then you care about retention rates and lifetime value.
Now, no amount of good marketing can repeatedly sell vinegar in wine bottles. So this is not a discussion about the quality of the service, etc. But, when all is said and done, there are only two ways for businesses to thrive in a competitive environment. They have to get a higher revenue per unit than their competitors, based on sustainably adding value, or they have to have a lower total cost per unit sold.
I believe that, given an excellent, value added product, direct marketing helps you do both.
Here's a report [Download PostfutureIndexH1-2006.pdf] from Harte-Hanks (they used to be named Harte-Hanks Direct Marketing) about enhanced clickthrough and open rates using personalized at-home printing based on variability. This is just one small example of an old technique - customized variable image printing - being used very effectively today.
I don't think many companies that have needs in customer acquisition or increasing customer transaction size or frequency understand well enough how to effectively use techniques like this.
We built promotions with that technique (this was in the {gasp} 1980s) that sent 1MM customers a postcard announcing an annual retail sales event at a department store. The secret was that the message included a "passing reference" to three items that were on sale among the "hundreds featured" in the annual event. Of course the three items were the output of an algorithm based on each customer's buying history. Customers loved it. It had very high response rates and great customer comments.
We also used this kind of mass individualization for thank you notes, business to business lead generation activities - a whole host of things.
It worked then and it works now.
Another whole example is source code matching, where the marketer traces sales all the way back to the original source to determine ultimate performance as a function of the cost of the original source. It can make the difference between great future results and not so good ones. It helps not only select media but also to tune offers, incentives, and sales activities to the desires of the individual customer, and in an affordable way.
I've gone on too long already. But, the closing thought is that if you or your business have any of these needs, be sure you understand - in detail - how this all works. Get the knowledge inside your company one way or the other. It's critical to success.
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