Over the past decade, manufacturers have significantly increased their own direct-to-consumer (DTC) marketing. As they ramp up their efforts, manufacturers can do themselves a favor by examining the experience of retailers and by learning from their successes and failures.
Retailers have developed sophisticated on- and off-line direct marketing operations. Amazon and Best Buy are good examples. But many others have failed to optimize their 1-to-1 communications as they succumbed to some of the most common pitfalls in direct marketing.
If manufacturers can familiarize themselves with these mistakes, they have a chance to surpass their retail partners in terms of DTC marketing effectiveness and efficiency.
Here are the top five pitfalls for manufacturers to avoid:
1. Delivering one-size-fits-all messages.
Too many DTC marketers send undifferentiated messages to their customers and prospects, depressing both short- and long-term response rates. A book store sending me an email about the latest entry in Oprah’s Book Club is missing the mark. Not only am I not going to look at that email, I’m less likely to open the next one. The negative long-term effect of “batch and blast” marketing is underestimated and is related to pitfall #2.
2. Measuring results only at the campaign level.
Direct marketing’s beauty is that it is highly measurable. Too many DTC marketers limit analysis to the short-term results of their marketing campaigns and programs. Customer-level metrics should be introduced to reveal important behavioral trends and allow more effective customer-centric marketing strategies.
For example, calculating customer profitability and tracking it over time will help you make your marketing investments more wisely -- especially avoiding those customers who have a track record of unprofitable behavior.
3. Managing your marketing programs to fit internal schedules.
Managing marketing programs according to corporate schedules (e.g., “Q2 Mailer”) is the opposite of being customer-centric. Most DTC marketers use a blend of corporate-centric and customer-centric strategies, acknowledging heavy customer buying periods for their business and ramping up marketing during these times. The balance of the year is made up of efforts focused on artificially propping up sales during slow periods (usually through steep discounts).
By analyzing historical buying behavior at the customer level, you can identify customers who tend to buy during low revenue periods and focus your efforts on them to improve response rates and maintain margin in slow times.
4. Over-discounting.
Companies too often make the mistake offering the same discounts to everyone and not adjusting the amount of the discount offered at the customer level. The fact is, not all customers are equal in terms of their sensitivity to discounts and your discounting strategy should reflect that reality.
Those who buy only at high discount levels are likely unprofitable and should probably be marketed to sparingly. Conversely, those customers who almost never use a discount should probably receive a different type of message. By customizing your discount offers at the customer level, you will increase profitability.
5. Failure to integrate marketing channels properly.
Many direct marketers look at the comparable cost of email and direct mail and decide to concentrate their marketing investment in email. If you shift money away from direct mail and into email you run the risk of two possible negative outcomes. First, the volume and frequency of your email to each customer will naturally go up, potentially “burning them out” -- reducing readership and increasing opt-outs. Second, direct mail works much better than email with some customers and you will be missing out on those purchases if you reduce direct mail too much.
In reality, the best strategy is an integrated one -- where email and direct mail (and SMS) are used together in multi-channel, multi-wave campaigns designed to optimize customer engagement.
By understanding and avoiding these common pitfalls, DTC marketers can improve results significantly and possibly reduce marketing costs. Some investment will likely be required in the areas of data capture, database management, analytics and campaign management technology. The good news is that the technology behind all these disciplines has become extremely cost effective over the past several years, so manufacturers can now afford to play on a level playing field -- unencumbered by bad habits and outdated technology investments -- with even the largest retailers.
Mercury is a Boston-based marketing agency that focuses on driving growth and profitability for clients through enhanced customer experiences. For more information, visit http://www.mercury-agency.com/
