Let's take a look at the traditional definitions of direct marketing and the latest incarnation, relationship marketing. The Internet provides exciting marketing communication opportunities using these methods to customize presentations and exchange information with end users. Looking at our favorite Web sites also demonstrates the direct communication methods that the Internet supplies.
We usually think of direct marketing as junk mail and dinner-time telemarketing efforts, but the methods are much more in depth than we may realize. Simply put, direct marketing involves direct sales to a buyer by a seller. More important, direct marketing generally involves at least five distinct elements in any program or effort:
Promotional materials carry the marketing message to the end user. They may be mail packages, catalogs, phone scripts, fax letters, postcards, or e-mail messages. Any material, from four-color glossy to spoken words and even television infomercials, can be considered the promotional materials of a direct marketing effort. These materials are then delivered to the prospect or customer using some method. The script being read by the telemarketer at the other end of the phone during dinner is an example of direct marketing promotional material. The method of delivery in this case is outbound telemarketing.
Databases are electronic information storage and manipulation files. They are used at a basic level to provide contact information for the promotional materials to be forwarded. A simple list of addresses for a mailing or names and phone numbers for a telemarketing effort can be considered a direct marketing database. Real direct marketers, however, use databases over time to create contact, prospect, and customer files for ongoing business development and customer service efforts. Every communication to and from a prospective or current customer is recorded. This is why modern direct marketing is sometimes called database marketing. The telemarketer called you during dinner because you are included in a database of information. Your contact information was probably purchased from a database company that specializes in consumer home contact information.
Direct marketers analyze database information before, during, and after each program they run to better use resources and further target offerings to prospects and customers. This is how direct marketing is developed and how it is measured. Using the telemarketing example, you are being called because you have demonstrated your willingness to do whatever the telemarketer is asking you to do. You may be a well-qualified prospect. Being a responsible credit card customer is one reason you get called during dinner with offers for more credit cards.
Whatever the reason you are contacted, that reason was determined by a direct marketer. And you were chosen to receive that call through analysis of a database. If you do speak with the telemarketer and sign up for the credit card, then you have advanced from qualified prospect to customer. Later, when the program is analyzed for success, the costs to run the program and the number of new customers can be compared and evaluated. Though those telemarketing calls may seem random, and sometimes they are, a company is paying for the call and the caller. A company can't afford to call every person who has a phone. You are being called because a database was analyzed at some level and your name and contact was provided as a prospective customer.
That call almost always involves an offer. And an offer is included in direct marketing communication to solicit and motivate response. Response is a communication action taken by the recipient of the offer. Offers work on the age-old psychological principle of "What's in it for me?" Offers can be anything included in a marketing message that sweetens the deal enough to solicit response. They might be free gifts, special pricing, time-sensitive discounts, and standing offers like money-back guarantees and risk-free trials. Direct marketing always contains some form of call-to-action that can be responded to. In the telemarketing call, the offer is usually a discounted finance charge and an introductory interest rate. You may have been offered a special credit card carrying a particular set of benefits important to you based on some type of affinity, like an alumni association or frequent flyer program. This offer was developed based on deeper analysis of your contact or customer database file. The response is verbal during the call.
Once a response is captured by a direct marketer, some type of fulfillment is executed. If a product is purchased directly from a catalog, then fulfillment involves charging the customer's credit card account and shipping the appropriate product to the correct address. A request for information is fulfilled in the appropriate manner. A credit card account is created and opened and the cards are shipped to the new customer. A record of this transaction is recorded in the direct marketing database for analysis and later use.
Use of these methods over time is now defined as relationship marketing. In a relationship marketing model, every communication between the customer and marketer is recorded in the database. And every department in a company has access to that same information, from sales to customer service to shipping and accounts receivable. In this type of marketing every person or department that has contact with the customer shares the same information. This creates a higher level of customer service, satisfaction, and efficiency in every interaction with the customer.
Greater use and sharing of information helps companies build and keep relationships with their individual customers.
As this information is captured and analyzed, special offers are being developed that are specifically targeted to the individual based on his or her demonstrated needs and buying history. This process builds a relationship between buyer and seller. Buyers get what they want, when they want it. Sellers deliver what is wanted at the right time. Both participants are engaged in a positive commercial relationship.
This customization is very successful in the marketplace, and it has been said that all marketing will eventually become direct relationship marketing between individuals and companies. Customization of marketing messages involves traditional elements, like personalization of promotional materials. But more important, it includes offers of products and services specifically designed to meet the wants, needs, and desires of the customer involved. These offers can be delivered in a customized presentation using personalization and targeted solicitation.
The Internet and Web are excellent communications methods for all of these aspects of direct and relationship marketing. The dynamic aspect of this media also makes individual customization of presentations available and powerful. Using the Internet as a relationship marketing tool incorporates the five elements of direct marketing to build relationships over time and deliver customized presentations and marketing messages to individual users.
Promotional materials. The Web can be used as an interactive promotional medium displaying text, graphics, and any other media available that is practical for communicating to prospects and customers. E-mail can serve the same role as traditional mail and phone communication. It could be said that every Web site is promoting something to some audience.
Databases. The nature of this medium, based on computer technology, provides the marketer with immediate interactions between users and databases of information. Information can be captured and manipulated instantaneously and utilized to provide solutions to wants, needs, and desires. A perfect example is the availability of Federal Express package tracking on the Web.
Analysis. Again this can be done immediately to provide value for the end user. Information can also be captured for later review, reporting, and improved targeting of information. This process is done automatically and behind the scenes of a Web site.
Marketing with offers (response driven). Successful Internet marketing involves the use of targeted offers. In any situation on the Web special offers can be made to solicit immediate response. And the Web provides an immediate, interactive response device that can capture and exchange information instantly. Offers can be individual for particular customers or specific products or services, such as special discounts for certain airline tickets purchased on-line. They can be available only on the Web or otherwise. Many heavily discounted airline offers can't be purchased any other way. Some offers in traditional media can be further strengthened by adding a Web response option. A recent mailing offered frequent flyer miles for completing an airline survey. The number of miles awarded was increased if the survey was completed on the Web. Fulfillment. In some situations, including software, information products, and services like on-line trading transactions, fulfillment can be completed immediately over the Internet. Many research reports and software tools can be downloaded immediately after purchase. Internet stock trading is another example. Other products and services require fulfillment through traditional channels, including shipping of Web-based catalog purchases. But parts of the process can be automated using the Web. Credit card processing can be facilitated and fulfillment information can supplied to the customer. Order status (i.e., processing or back order) can be displayed on demand and an e-mail message can be sent when a package has been shipped.
As all of these processes are completed over time, an individual profile of each customer and his or her interactions over the Internet can be compiled. This information can be made available internally, inside the company, using a Web interface for facilitation of customer interactions. It can be added to existing customer databases and used in other media as well.
Most important, these compiled information profiles can be used to create customized presentations for each customer, further enhancing the customer/marketer relationship. As the profile grows, with more information added during each interaction, the marketer can build customized interfaces and offers that are specifically targeted to the customer. We'll look at examples of this activity in the following exercises.
We'll also start looking at the simple mechanics of the information exchanges that can take place over the Web. Information is solicited by marketers and supplied by the end user. Information captured by the marketer can then be used to build marketing relationships and fulfill wants, needs, and desires.
Some of these concepts also become apparent when we look at our personal favorites on the World Wide Web. Our favorite Web sites usually supply something we want-either information, products, or services. Looking at these sites helps us to start thinking about targeting Web presentations to audiences. And that is the subject of the next chapter.