Direct marketing can be any marketing method that takes the initiative aims to establish or maintain an immediate, one-to-one relationship with customers and prospective customers, rather than waiting for them to discover you in more general, impersonal forms of advertising.

Direct marketing is most powerful when it is used as part of a direct response strategy – that is, asks the recipient to take some immediate action – order a product, get a free gift, enter a contest, give a donation. Perhaps since the advent of the Sears catalog in 1893, the most popular and powerful form of direct response marketing has been via U.S. postal service.

Advent of eMarketing

But times have changed. Digital delivery is rewriting business rules and redefining direct marketing. The advent of electronic forms of communication such as e-mail and the Internet have given marketers new and even more cost effective ways to become more focused and granular in their marketing efforts.

The rise of the Internet produced a gold rush not only in commerce, but in new expectations for online marketing. Many of those expectations were inflated: not all Internet marketing has proven to be created equal. Although successful while still a novelty, Internet advertising response rates are quickly eroding. Users are inundated with banner ads everywhere they go on the Internet.

While it is true that advertising on vertically targeted portals can produce better than average click-through rates, banner ads can be a difficult medium to achieve marketing goals.

Marketers looking for an effective way to reach customers online are turning to e-mail.

E-mail has quickly become a communication standard and the Internet’s most popular application. Both the number of e-mail users and the usage rates are continuing to grow exponentially.

According to eMarketer, by the end of 2000, there were 96.6 million e-mail users in the U.S. representing 43.8% of the total population of adults and teens. In an effort to realize the commercial potential of this powerful communication medium, U.S. companies spent $496 million on e-mail advertising in 2000, a 177% increase from 1999

E-mail is by far the dominant digital delivery application and is already used much more than traditional “snail mail”. Over 395 billion messages were delivered in the U.S. in 1999 as compared to 202 billion pieces of mail delivered by the U.S. Postal Service. Just one year later, in 2001, over 536 billion e-mail messages were delivered – an increase of 35 percent in a single year – versus a growth in postal deliveries of less than 3%. In 2000, some 22 percent of e-mail messages were commercial.

E-mail is proving itself to be one of  more cost-effective marketing tools available – which is why some 68 percent of medium- to large-sized U.S. firms incorporated e-mail into their marketing strategies in 2000.

Several attributes account for the rise of e-mail as a marketing tool:

Faster Prep Time:   Depending on the campaign creation tools that you use, e-mail marketing programs can be quick to create and may arrive in the customer’s inbox immediately.

More Flexibility:  It is much easier and less expensive to create multiple offers and test various creative and copy schemes in e-mail than in traditional “snail mail."

Reduced CPM:  E-mail messages cost only a few cents per recipient compared to traditional direct mail costs because e-mail campaigns don’t incur printing or postage costs.  E-mail costs range from $.01 to $0.25 for per message, compared about $1.70 to $2.00 for each item mailed in traditional direct snail mail.

Greater Acceptance:   Some 73 percent of U.S. consumers say they prefer e-mail as their method of contact with online merchants. (Virtually the same percentage also say they prefer rich-content media e-mail – with graphics and typography – versus plain-text e-mail.

Quick Response:   Responses from recipients usually arrive within 48 hours rather than taking days or weeks via printed and posted mail.

Higher Response Rates:  It is easier and more inviting for someone to respond to an e-mail message than to pick up the phone or mail a response card. And e-mail has a much higher average click-through rates (between 5-15%) than online banner ads.

Accurate Reporting:  Electronic forms of delivery and response make tracking and reporting fast and easy.  It is much easier than waiting weeks for responses and returns.

3. e-Mail Tactics

E-mail marketing can use a variety of tactics – including offers, coupons, contests, newsletters and other value-added links and information.

Those tactics can basically be divided into two types – permission-based marketing and spam.

Forrester Research predicts that the number of solicited e-mails will grow to 250 billion in 2002.  Permission e-mails have higher success rates than spam – both in terms of ROI and in preserving a company’s reputation.

Permission e-mail can take the form of acquisition or retention e-mail – that is, mailings whose primary objective is to prospect for customers or whose objective is to forge a relationship with an existing customer base. In 2000, some 57 percent of permission e-mail dollars were spent on retention and 43 percent on customer acquisition.

4. Success Tips

As with any other marketing campaign, careful planning and proven techniques are the best way to deploy the most effective campaigns and to realize the highest response rates. It’s a matter of putting the right offer in front of the right person at the right time.

Follow these common-sense and time-tested suggestions, and your campaign can produce tremendous results for new customer acquisition, customer loyalty and customer retention.

Segment Lists, Targeted Messages:  Chop your database into smaller, segmented slices based on preferences and past behaviors, in order to make your messages as relevant as possible to each group.  Prospects and customers will be more likely to respond to messages that match their interest sets. Use historical data to apply what you know about the likes and dislikes of your target market segments, and develop your messages and offers to fit.

Personalize to the Max:  Don’t just segment when you can use the full power of the database to personalize e-mail content to individual name, history, likes and dislikes. In the world of direct emarketing everyone is unique and one size does not fit all, so use the tools available to be as personal and as relevant as possible.

Quality Over Quantity:  Boost response rates by creating offers for unique products, useful information, compelling content, special pricing or gifts.  Again, match the offer to the segment. Every message in a customer’s inbox requires time and attention. Your objective is to offer each customer something of value – be it information, entertainment, or monetary value. If you don’t deliver, your customers will opt out of your mailing list.

Call-To-Action:  Your campaign’s primary objective should be to have prospects take action.  Examples include: Click to….. link to more information, buy, join, communicate with a sales representative, participate in a survey, play in a contest or refer a friend.

Sales vs. Marketing:  Many marketers think the Web is primarily a direct sales medium, rather than a multifaceted communications tool that can used to create sales activities in other channels. But many sales are not done on impulse or from afar  Decide which sales channel your campaign is going to support.

Text vs. HTML:  Give your customers the option of receiving messages in text or HTML format.  Some people will always prefer text to graphics, and some e-mail readers only support basic text. Give your customers what they want, and be sure your e-mail has been tested for readability by all major e-mail readers.

Micro-Sites:  Giving respondents a micro Web site to respond to rather than just an e-mail address creates more interaction and measurement opportunities. Plus, a picture paints a thousand words.

Online Off-line Integration: Use a micro Web site, too, as a response option for your off-line (direct mail, display ads) promotions.  Again, you’ll not only create more opportunities to interact with your customers, you can keep ads and mailers less cluttered and entice readers online for the full story.

No Spam Ma’am:  Don’t send unsolicited e-mails.  As mentioned earlier, spam messages are unwelcome and counterproductive. You’ll only damage your company’s reputation by sending unwanted e-mails.

Respect The Customer:  Messages and offers that go to unresponsive consumers week after week are no better than spam.  Also make it easy for them to unsubscribe, access and change data.

Measure & Report:   Tracking the actions of your customers and prospects is critical to your success.  After deploying several campaigns you will have generated a mountain of response information.  Analyze it and use it when creating new offers and new approaches.

Click Through Analytics:  Analyze campaign response data in conjunction with Web site visitor behavior data to get a single, unified view of your customers and prospects behavior.  Track what pages prospects visited; what information they viewed, and what products they bought.  Again, use the data to customize your offers and Web site content.  And remember that technology is a magical tool for marketing wizards to use—but it does not replace the wizard.

5. Choosing a Vendor

Deciding to include an e-mail marketing strategy is really only the first step. The next step is putting that strategy into practice. Running a successful e-mail marketing campaign actually requires a sophisticated combination of technology, strategy and marketing expertise.

The availability of content management, data analysis and business rules applications makes it hard for an ambitious IT department to resist the urge to create an in-house campaign management tool. 

But creating, personalizing, delivering, and evaluating campaigns can be more complex and more costly than it first appears.  For this reason, many companies choose to work with an outside vendor rather than try to develop the system in house. There are several advantages to working with an outside partner.

Minimize Complexity:  Integrating multiple, complex content management, electronic marketing and database applications from multiple providers can be a frustrating and costly undertaking.  Find a solution provider who has already made the development investment.

Exert Marketing Control:  In many companies, the IT department still controls the Web site, reporting, etc.  If your IT department already has a huge backlog, look for solution providers that offer tools that allow you to work independently from your IT department.

Maintain Scalability:  A great deal of bandwidth is required to manage large quantities of outgoing messages, incoming responses and undeliverable bounce-backs.  Additional database power is required to manage and analyze personalization information, response knowledge and unique campaign data. Seek out providers who will bear the burden of this responsibility on your behalf.

Data Analysis:  Response data is just meaningless information unless it can be analyzed and turned into valuable customer knowledge.  Database driven marketing requires sophisticated analysis tools that help to predict future actions based on past behavior.  Search for a provider who has mature data analysis and reporting capabilities.

Leverage Marketing Expertise:  Solutions that have been developed by software engineers without the aid of experienced, professional marketers will lack the critical understanding of the marketing objectives, principals and methods.  Look for firms whose leaders are business and marketing professionals, not developers.