Editor's note: This article was excerpted from Successful Sales & Marketing.
Let's say you identify a new market, one that you think is going to be very receptive to your product. The cost of advertising to this market may be prohibitive: The best publications are frightfully expensive, and your ads couldn't appear for six months, anyway.
Direct marketing provides you with a way to conduct a test of this market relatively quickly, at a reasonable cost, and with convincing certitude. You'll know whether this is indeed the gold mine you hope it is.
Perhaps the most common use of a marketing database is to generate a target list for a direct-mail campaign. Of course, direct mail also works with purchased lists. Direct mail provides giant companies with the ability to target defined markets with specialized offers.
For smaller companies, using direct mail has a number of attractive advantages:
- You can target recipients very precisely.
- You can protect against overwhelming response. If you run an advertisement, you can't know whether you're going to get 10 responses or 10,000. For a small company, a powerful response to an ad can be even more disastrous than no response at all, since a poor reaction to a prospect's response will likely damage your relationship even before it's begun. With direct mail, you can start out with a modest-size mailing to study the response and make sure you can handle it expeditiously.
- Costs can be modest. Or, more accurately, you can create a campaign to fit large or small budgets.
- Direct mail can happen fast. With a modest campaign to a known target audience, you can acquire a mailing list, develop mailing materials (including direct-mail letter, flier, reply card), launch a mailing and start to receive results in just a few months. This is faster than the typical advertising campaign--and a lot faster than waiting for the phone to ring.
- You can test different appeals, called "offers" in the trade, to reveal the most potent message. By making a different offer to randomly different portions of your mailing list, you can see which offer pulls best. Go with your best puller until you find a better draw. As you try different offers and different letters, you'll find one does better than another. Use the better one, and then try to beat that in your next mailing. Eventually, you should get better and better response rates.
- You can mail to the same list again with a slightly different mailing and still garner worthwhile results. Most direct-mail experts say that companies don't get enough mileage out of their materials. Use them until they no longer pay their way.
- You can never run out of prospects. Use your imagination to find new niche direct-mail markets for your products, whether retail or business-to-business. Your list broker or mailing consultant can suggest possible target markets worth trying.
With consumer products, you can often sell them right through the mail...or at least get customers to stop in. With business-to-business products, you usually face a two-step process. First, you get a response to your solicitation with an indication of interest (request for catalog, literature, report or sample). This is the lead-generation phase. Once you mail off the requested material, you then follow up with additional material or a phone call/fax/e-mail to use your skills at transforming the lead into a prospect.
Let's put you in charge of another business: a travel agency. It's been in business for nine years and has an established clientele of about 1,400 people. You've taken a close look at who books with you and why, and you've segmented several different submarkets that make up the bulk of your business: the elderly, school groups and vacation and cruise bookings. You don't handle business travelers (they're always wanting you to make last-minute changes and cut back on your discount).
The senior market is the one that interests you. You'll define that as 60 and over. You know the demographics are working in your favor here: More and more people will be entering this age group as the baby boomers get older. Your community has an ample supply of potential clients, and you're not up to your eyeballs in cut-price competitors.
You notice that senior travelers are taking more and more "adventurous" vacations--to China, Australia, the Middle East, India, South Africa--not just to the traditional destinations of 10 years ago. There are lots of eco-tourists, too, in this age group. They have money to spend, they're not overly cheap on accommodations, and they're a trustworthy lot. You want more of them. How do you get them?
You talk to your buddy Glenn, who (after a career in advertising) does some consulting "just to keep his pulse steady." Glenn makes some suggestions on making more of the senior market:
- Create a modest one-page newsletter and mail it out six times a year to your current senior customers. Material should address their travel needs in particular, and it should include lots of "idea starters" to get them thinking about exciting new destinations.
- Send your best senior customers a "Reward Offered" special mailing. If they send you the names of some of their senior friends, you'll contact those friends about becoming their travel agency. If they book a trip with you, you'll reward your original customer with 10 percent off his or her next airline ticket.
- Look to develop new senior customers by some thoughtful mailing-list shopping:
- What magazines do the elderly read and can you get mailing labels for subscribers in your market area? A list broker can help you here, or you can contact the publication directly.
- What local resources are there for mailing lists? Many cities have sophisticated "letter shops" with remarkably adept mailing-list departments.
- Set up focus groups of senior citizens and establish a protocol for finding out how to put together tour packages that will appeal to them. Depending on the importance of this senior citizen demographic, you might want to set up an advisory board of senior citizens to advise you on proposed marketing ventures to the market.