Do Small to Mid Size Retailers Need a Web Presence?

Reading between the lines of a New York Times Article entitled, "The Gloves Come Off at Amazon and Wal-Mart" by Brad Stone and Stephanie Rosenbloom clearly answers with a loud YES. It seems that Wal Mart got into a price war with Amazon. Now, why would the largest retailer in the country, with sales of approximately $437.6 billion (according to the article) be worried about a significantly smaller company.

The answer is simple. Wal Mart is worried that Amazon, due to their online presence, is slowly increasing their market penetration. As Fiona Dias, executive Vice President was quoted by the Times, this is "...part of a greater strategic plan. They [Wal Mart] are not going to cede their business to Amazon."

What is especially interesting is that the Amazon's demographics is different than Wal Mart's. The former caters to affluent urbanites while Wal Mart owns Middle America. Again reading the fig leaves, if Wal Mart is so worried that a company less than 1/10th the size with a different demographic illustrates the increasing inroads online sales are making into all facts and all demographics of retail trade. Otherwise, why would Wal Mart be competing so vociferously against Amazon?

The skinny is you better have an online presence with a robust website that does more than have a few static pages. The days of retailers to open up shop and wait for the people passing by their shop is long gone. Due to the Internet, there really is no geography. It is a competitive landscape and the internet has changed the rules of the retail game.

Read a companion piece I wrote Why Small Businesses Need the Internet.

How Do You Define "Success" In Direct Marketing

Success in Direct Marketing is very easy to define and caculate. However, many unsophisticated companies, especially in the small to mid-size business (SMB) community, don't take advantage of the inherent tracking and analytical capabilities direct marketing provides.

Historically, SMBs use local advertising vehicles (that were geographically, but not prospect/customer defined) such as:

• Penny Savers
• Val Paks and other local co-op mailers
• Saturation solo mailings

Failing to test concepts before committing significant advertising dollars ignores direct marketing's major advantage. We can take a small sample and test the concept before committing greater financial resources. Assuming the initial test was successful, we can replicate the same test parameters and have a high confidence of success.

In many cases companies will commit xx Dollars and it is "make or break". If it "does not work" then direct marketing does not work never to be tried again. Companies should test different concepts before making a significant financial investment. There should be a coherent marketing budget with an actual line item for testing. This line item represents marketing dollars devoted to testing, some of which may or may not work.

A response rate is not the single measure of success. Response rate are affected by the cost of the product/service. Generally as your cost of service/product increases, response rates decrease. A "lower" response rate does not automatically translate into an unprofitable campaign. A profitable marketing program is one that has a positive return on investment (ROI). This metric ranks the "success" of any marketing program regardless of media deployed because it calculates the promotional cost and COG to determine profitability. ROI normalizes analysis by providing a metric useful for any marketing campaign.

There are two general types of direct response programs. A "one step" program generates an order from an initial mailing, outbound call etc. A "two step" promotion is used to create a lead generation program. You capture leads and then follow up converting some to sales. In this case you have two costs. They are cost/lead and cost per order. You have to include both to calculate the program's ROI.

The list or media you use is the single most important aspect of any direct marketing (on or off line) program. It accounts for approximately 40% of the program's success. The second most important component is your offer (another 40%).If you target incorrectly, you can have the best offer in the world and it will not make any difference.

Internet and interactive marketing programs have similar financial metrics as off line direct response programs. For example you have click through calculations (CTR) and conversion very similar to off line leads and sales conversion. We still have to calculate the ROI for each search, email marketing or any other media used.

If you are contemplating a direct response campaign or would like additional information, visit www.ebmdirectmarketing.com and complete the registration form selecting the solutions of interest.

EBM Direct Marketing Services LLC © 2009

Using Trigger Marketing to Enhance Customer Relationships

Consider the following scenarios:

1. Any salesperson knows, a lead has to be nurtured. Why? Because most everyone you initially speak to is not ready to buy. There are various steps a prospect must go through before purchasing. Would you throw out the "non-purchasing" leads? This allows the salesperson to "work the lead" gathering information, follow up calls and/or visits culminating in a purchase. Equally important, prospects are handled differently based on their specific requirements and actions. Some will need additional information, others a call back in "x" days.
   
   
2. Now think about the traditional marketing process. A direct marketing program is executed generating sales from responders. Often the marketing department plans the next marketing campaign for another target audience. Or, in some cases, non responders from the past program are re-solicited with another campaign.
   

The two scenarios are diametrically opposed. The second scenario represents "lost opportunity" in sales dollars by not nurturing the "non-purchasers".

Historically, it would be a manual process of developing various queries through the IT department identifying each "group" based on their pre-determined marketing "actions". The marketing department would take the data and coordinate with external printers or email providers to launch the targeted message to those groups. Secondly, you would incur minimum production costs. It would be financially prohibitive to launch one piece of communication. Finally, the logistics of tracking and analyzing responses would be a manual process requiring another request into the IT department. All but the largest companies, having ample financial resources and time, could develop this type of sophisticated marketing program.

Now, you can. Recently, I came across a software offered by my company I call DMTraffic. This cloud software specializes in, what I call trigger marketing. What is a "trigger"? It is a responder's action (or lack of action) such as:

• A request for information by telephone
• Filling out a web form and requesting specific information
• Responding to an email via a web form requesting follow up in a specific time period
• Making a purchase
• Filling out their birthday for special announcements
• Not making a purchase in a specified time period
• Making a particular type of purchase indicating a particular preference encouraging cross and upselling opportunity
• Requesting a follow up phone call

DMTraffic, automates the sales and marketing process through the development of specific "touches". What is a "touch"? Simply, it is a series of emails, phone calls or direct mail pieces sent to an individual contact at a predetermined time. It is an outbound communication compared to an inbound inquiry. You create a series of Touches in DMTraffic using personalized post cards, emails and business letters. You assemble the series of Touches in a Track and the Track is assigned to a Campaign.

Campaigns are set up with all pre-defined collateral (i.e. emails, direct mail, web form(s)) along with rules determining which prospects receive which series of "touche(s)" based on their "triggers". Once the rules and budgets are established, the marketing campaign is on auto pilot. It starts and stops based on the your predetermined instructions and budget. Responses are collected within the same platform facilitating response analysis and ROI.

DMTraffic integrates with your website. Specialized web forms can be created to collect specific information from a campaign's visitors. Based on the selection(s) through the web form, (they will be stored in the internal database), the prospect will be funneled into a particular track based on pre-defined rules.

Another technical feature is something called Variable Data Printing (VDP). This is a high tech printing, (email or print), feature allowing any collected data element change the message for each recipient. Why is this valuable? Because response rate increase when communication is personalized to the individual receiving it. Examples include:

• Changing the name and address
• Changing images
• Changing promotional offers

What is especially cost effective is that the software will execute (on demand) one response or 1000's of responses. DMTraffic is customer relationship marketing at its best.

In an earlier post, "A Marketing Database-Your Business' Central Nervous System", I discussed the importance of a database in collecting and storing information about your company's prospects and customers. Your database along with DMTraffic goes to the heart of customer relationship marketing. Customers will generate the greatest return on investment (ROI). Therefore, focus your marketing dollars on your customers and highly qualified prospect leads that require nurturing.

Think of DMTraffic's possibilities:

• Develop a campaign to cross sell customers after they make purchases. Specific products are tailored to customers based on their specific purchase. Based on specific customer triggers, automated communication is emailed or mailed.
• Sales executives can automate their follow up communication with a series of touches to each qualified lead to increase their closing ratio.
• Birthday announcements can be tailored to each specific announcement. For example, a picture of women's clothing can be included in one announcement, and men's clothing in another based on gender (The gender would have to be a data element stored in the database).
  
• Special loyalty promotions with different promotional offers can be sent based on the customer's historical purchasing behavior.

In the May 4, 2009 issue of DM News an article entitled "Mining for (data) gold" dicussed the increasing importance of well maintained in-house customer and prospect databases. Mr. Jonathan Marguilies, of the Winterberry Research Group stated that non-targeted, saturation and "spray and pray" type mailings were declining. He went on to state:

"Where we're not seeing declines is in data-driven, impactful, relevant communication. The channel that continues to drive and be positioned for growth is personal, digitally produced, variable content around creative offers - the true one-to-one communications."

In short, just the type of marketing communications DMTraffic produces. If you would like additional information about DMTraffic and how it can help increase your customer revenue please visit my website. Please complete the information page, selecting "DMTraffic" under Media Interests. Additional information can be found on my web page, customer relationship marketing (CRM).

Copyright 2009 EBM Direct Marketing Services LLC-Eric B. Mohr

Is Direct Marketing Still Relevant?

Recently, the following question was posted on LinkedIn's "Questions and Answers", "Is direct marketing still relevant?"

On January 5th, Marketing Executives Networking Group, MENG, released their second annual marketing trends study providing some relevant information answering this question. Advertising Age wrote an article about the study's findings.

MENG consists of senior level marketing executives who at one time in their career were at the Vice President Level (or higher). Consequently, these executives, due to their career level, are in charge of and handling the strategic direction of their organization. Therefore, their collective marketing insight is relevant. The study was sent to over 1800 members resulting in approximately 600 responses collected.

Let's keep in mind my definition of direct marketing. In an earlier post entitled, "A Marketing Database Your Central Nervous System" I defined direct marketing from the late Bob Stone's and Ron Jacobs' book "Successful Direct Marketing Methods" (7th Ed). If we accept their definition of direct marketing, we see several direct marketing capabilities within the study's findings. The survey's findings, in part, were revealing.

1. Customer Satisfaction and Customer Retention are the two most important and relevant to marketing executives.
   
2. Other important marketing concepts include, Marketing ROI, Brand Loyalty, Segmentation, Quality, SEO, Competitive Intelligence and Data Mining.
   

• Customer Retention: this plays to the strength of database and relationship marketing. Capturing customer information on past purchasing aids database marketers make more intelligent decisions in the areas of merchandising marketing. It also improves future marketing programs by identifying the customers' LTV and value to the organization thereby directing financial resources for the highest ROI.
• Marketing ROI: direct marketing is a 100% quantifiable advertising channel. By replicating your roll out with the exact same components of your test, marketers can predict with a high degree of certainty the response and ROI. This is the heart of direct marketing.
• Segmentation: Direct Marketing emphasizes quality over quantity. The key objective is to achieve the highest top line sales at the highest ROI. Segmenting your database enables direct marketers to carefully select those customers/prospects most likely to respond to any given promotion.
• Data Mining: As any database marketing professional knows, the customer database is the heart of the any company. I discussed this at length in an earlier post called, "A Marketing Database Your Central Nervous System". "Data Mining" is the art of identifying underlying trends and patterns within a customer database. This can take the form of predictive models, customer profiling to name two examples. The database marketer's objectives are multi-faceted:

1. Identify customers with similar purchasing patterns. This enables marketers to tailor specific campaigns, message, or merchandise based on the information gleaned from the data.
2. Identify new marketing opportunities. Mining a customer database can reveal new markets to penetrate. For example, as Director of Database Marketing, data mining I performed on a B-T-B customer database revealed additional SIC's the company could target in general advertising and mailing lists.
3. Customer profiling improves on and offline advertising channels. Increased customer knowledge can reveal where to direct advertising placement or conversely where existing advertising should be pruned or eliminated. Based on simple frequency counts, marketers can identify geographic areas where more merchandise should be allocated or increasing advertising expenditures.

In this Internet age, traditional direct marketing (i.e. off line channels) are now (or should be) intertwined with online marketing. SEM, SEO, Email Marketing, Social Media are new communication channels. However, at their root, each of them, like traditional off line direct mail, TV Direct Response, Infomercials, Package Inserts, CO-OP fall under the definition of direct response marketing. We are still offering direct response marketing services so the same financial metrics are still required. We still must test, calculate ROI, profitability and determine response rates (i.e. click through, conversion rate) to determine success.

In these difficult economic conditions we are facing, direct marketing is more relevant today than ever before. Only direct marketing provides marketers the ability to analyze with small carefully selected test panels before committing significant financial resources. And only direct response marketing provides the analytical ability to predict with a high degree of certainty future response rates and ROI.