Using a Marketing Agency to Create a Direct Marketing Campaign

It is fair to say that direct marketing is still one of the most influential forms of advertising and businesses, both large and small, are utilising the services of a marketing agency to take control of their direct marketing endeavours to ensure that they are on brand and creative. There are various advantages to a direct marketing campaign that aren’t evident with other forms of advertising and discussing your requirements with a marketing agency is invariably the best method of establishing the best method of advertising for your particular requirements.

Using a marketing agency is certainly the most sensible approach to ensure the success of a direct marketing campaign as they will be well versed in the requirements of this type of approach and will boast the sort of skilled and creative professionals who will be capable of producing eye-catching and memorable adverts that engage your customers and prompt them to utilise your services.

How to Ensure a Successful Direct Marketing Campaign

Any business embarking on this type of marketing campaign should ask themselves, and their agency, a number of questions to make sure that they fully capitalise on the potential advantages of this type of campaign. Just some of the elements which are important to bear in mind include:

Sales or Awareness – In the process of developing a marketing campaign of this nature, one of the first things that you will need to think about is whether you are utilising direct marketing as a method to boost sales of a product or to merely raise awareness of it. A marketing agency will be able to work alongside you to help you decide which approach is right for you.

Call to Action – With this type of advertising material, you will need to guarantee that you have a strong and compelling call to action and a marketing agency will be able to assist you in making sure that this is as strong and effective as it can be. All sorts of things can be used to make a piece of direct mail more appealing to the reader – such as introductory offers, free phone numbers and so forth.

Design – It is imperative to get the design of direct marketing spot-on and this is why most savvy businesses will seek out the services of a skilled marketing agency because they will offer a team of designers and creative professionals who will be able to create a design in line with your brand guidelines.

Regardless of what type of advertising campaign you are thinking of running, it is always sensible to seek out professional assistance and a marketing agency should invariably be your first port of call when it comes to direct marketing campaigns and print media.

Direct Marketing Automation – Your Most Reliable Marketing Strategist

Marketing Automation is an evolving concept and that’s why it does not come as a surprise that only a few marketing companies are actually using it. There are, of course, many companies waiting eagerly to climb the bandwagon, so it is a probability that we will see a decent surge in the number of companies and marketers using the direct marketing automation concept in the coming year.

Modern marketers exposed to the evolving technologies and advanced tools in marketing believe that marketing automation would be at the core of marketing activities of businesses of all types and sizes, in the not-too-distant future and they could be spot-on in their assessment. Marketing automation can be used to bring together tactics, technology, strategies and software to automate and streamline tasks that are repetitive, saving marketing professionals time and effort. Direct automation software can also be used for accurately monitoring and measuring the effectiveness of marketing campaigns and initiatives.

Create Winning Strategies and Tactics

It is commonsense that strategy and tactics are key elements of a successful marketing campaign. Strategies help create the main framework and provide marketers the big picture. Tactics involve the implementation part of the marketing plan. These two elements must work together in synchrony for direct automation to produce results.

Automation tools must be customized to make an impact on every business, depending on the size and nature of operations of an enterprise. It must also be suitably tweaked to meet individual marketing strategies. However, some elements of marketing automation are constant to all. These include generation of quality leads, conversion of leads to sales, increasing revenue, nurturing prospects for future use, and personalizing the experience of customers. In many ways, marketing automation focuses beyond direct sales.

Helps Nurture and Develop Long Term Relationships

Marketers believe that by using the right marketing software platform, they can nurture human relationships more effectively. Nurturing long term relationships is central to effective marketing.

Marketing Automation works through the process of automated tracking and monitoring of individual prospects on the company’s website. The marketing team can use the various automation tools to decipher prospect’s interests, needs and goals. It provides marketers the input needed to create personalized campaigns based on user behavior. Direct marketing automation tools can be used to create enticing offers that are sharply relevant to each individual prospect.

With the best automation software, you will be able to collect data about prospects which can help in grouping them based on their common interests, behavior and demographics. The segmentation of customers is a much desired marketing activity because not only does it save marketers time but also helps take the guesswork out of larger marketing campaigns. Management of campaigns can become easier and the campaigns can become more focused and effective.

Direct marketing automation tools are being effectively used for monitoring social media campaigns. Its growing popularity stems from the fact that automation is easy to use, affordable and has the ability to create strategies that can be long term winners.

Direct Marketing Pros and Cons

The following are forms of direct marketing: Do you remember being given a flyer by someone just outside a train station, advertising a local company recently opened? Do you remember getting some letter from a company listing its line of products that you may be interested in? Do you remember getting a phone call from someone acting as a sales agent, advising you of new offers from a company?

As the name implies, direct marketing is sending information directly to consumers, without the need of so-called middle men, to advertise one’s products or services. In this way a company directly communicates with consumers. It has been around for quite some time, and shows no signs of slowing down. With emails and mobile phones, we have now seen a new form of direct marketing – receiving emails and information texts.

The strategy does have a lot of benefits for the company and consumer alike. The company can target its audience, hence save money on advertising by focusing on its niche. It also allows the company to build and maintain a good business relationship with its customers, as the company can also use the data it gathers from its direct marketing campaign to improve on current services, or perhaps add another one that may have been recommended by a customer. Letters sent to customers usually allow them to write something, either a reaction or a suggestion, sent back to the company. Direct marketing also lets companies get the quickest results for its campaigns as the information are sent directly to customers who reply within a specified time.

Direct marketing does have its share of disadvantages. Many people don’t like the idea of getting ‘junk mail’ or ‘junk texts’ from marketing companies. Instead of winning customers over, some companies risk alienating these same customers. Also, the fact of how they got the customer’s email address or mobile number becomes an issue. Some people see this already as an invasion of privacy. Companies also send out letters and sometimes even product examples to potential customers. With the rise in environmental awareness nowadays, some are saying that this form of marketing takes its toll on nature as it adds to the waste produced annually. There are also some places which ban the distribution of fliers and advertising in the streets. This limits the reach of companies using this strategy.

Direct marketing as a form of delivering information to the market about a company still remains a good way to reach out to potential customers.

Check this out for more information on direct marketing and niche marketing.

Direct Marketing Essentials – Simple Ways to Calculate and Measure Your Marketing

The mathematics of direct marketing primarily rests on three key elements:

  • Sales
  • Marketing Costs
  • Contribution Costs (e.g. Overheads)

Now there is no clear-cut balance for these elements as any direct marketing activity needs to be tailored and fine tuned according to each business. This is why I will never state off-the-cuff a direct marketing response rate for any business or industry type as there are significant variables involved such as the product itself, the demand for it, market preference and the nature of the offer.

Another point to highlight is that the mathematics used is underpinned by the belief that the future will be similar to the past. Hence if any variable within the equation changes significantly (e.g. magazine circulation significantly declines), then you have to expect a different response rate.

So to dive straight into it, I’ve listed below a few essential calculations which every small business should use:

Calculating the Allowable Using Your DM Budget

This equation lets you calculate the amount of money you need in order to make one sale. This is really important to know!

Revenue Selling Price: $1000

Minus Costs Production: $500

Overheads: $150

Postage & Handling: $50

The Breakeven allowance is $300 (the money you are allowed to spend to acquire a customer).

NOTE: If your business requires 10% profit, then your allowable would effectively be reduced to $200.

Using the Allowable to calculate your DM budget

So using our allowable recruitment spend per customer x target No. of Sales = $200 x 100

Marketing Budget = $20,000

What happens if you don’t make the sales required?

It is essential to test the market first using a small quantity before rolling out the entire campaign. Typically your allowable is based on what resources are required to acquire a customer already, plus I would expect some form of marketing research carried out in order to understand the size of your potential market. It is also important to include contingencies within your marketing activities if you don’t make the required sales. I always save 10% of my budget if something goes wrong. Or better still, if a potential list I’m targeting returns a huge ROI, then I have a bit left over to chase the money and market these top prospects again.

Measuring Costs, Responses and Sales

Here are a few very simple, yet essential equations to help measure costs, response and sales:

Cost per Unit:

Total cost / Total Quantity = Unit Cost

e.g. $20,000 / 4,000 = $5

Response Rate:

(Total Responses / Total Mailed) x 100% = % Response

e.g. (200 / 1,000) x 100% = 20%

This equation is exactly the same as measuring the Conversion Rate which would be Converted Leads / Total Leads Contacted

Cost per Sale:

Total Cost / Total Sales = Cost per Sale

e.g. 20,000 / 500 = $40

Example: Let’s say you were a travel insurance broker wanting to advertise in the local newspaper to sell premium travel insurance for $500 per person. I’ve listed some assumed sales and marketing costs to acquire a customer:

Advertising Cost: $7,800

Newspaper Circulation: 150,000

Promotional Cost: $5 per lead (e.g. Call centre costs)

Revenue per sale: $500

Total Marketing Cost for 100 leads is therefore: $8,300

The Cost per Inquiry or Sale will vary depending on the response rate, which you won’t know until you advertise. But the main focus on advertising is to achieve a required level of profitability in order to justify the expense. I like to refer to it as measuring the Profit Index. (This is exactly the same as using your allowable to calculate the number of sales you require in order to justify any marketing spend).

Profit Index (%) = Total Marketing Cost / Total Revenue

Profit Index (%) = 8,300 / 10,500

In this instance the Travel Insurance company requires 20% profit from print advertising. If my profit Index falls below 20%, then the advertising is deemed unprofitable. I’m so harsh!

Hence, 21 travel insurance premiums need to be sold to meet a profit index of 21%.

In other words, the allowable DM Budget would be set at $8,300 for advertising in the Local Newspaper.

Using Spreadsheets to Negotiate Spend

If you’ve seen the spreadsheet then you’ll wonder why I’ve highlighted the following cost fields – Ad Cost and Promotional Costs. Promotional Costs are harder to change in the short term, but negotiating advertising costs can be extremely effective. You’d be amazed to discover that by saving 10% of advertising you drive down your Profit Index, which means your advertising dollar doesn’t have to work as hard to acquire customers or sales. In the example used, you would only have to sell 19 Travel Premiums in order to meet the minimum profitability requirements. It also does hurt asking for a trial advertising rate to test the viability of a product in a publication. Some account managers will assist if it means you become a regular advertiser.

There are a couple of examples which the above calculations can be applied to in order to gain some further perspective for your next lead generation campaign.

Lead Generation Conversion Programs

1. Generally the more time you have to qualify an enquiry, the more it costs to generate. For example, if your telesales representative took 15 minutes to convert a prospect, while others may take only 5 minutes, then this will drive your overall costs to acquire a customer, and must be factored into your overheads or marketing costs.

2. Lead generation lists (Prospect Lists) can also support repeat conversion contacts, but you’ll always get a reduced response rate with each effort. For example, if you mailed 1,000 prospects, it may generate 250 leads. The second time you mail the list (minus the 250 leads you generated the first time round), you might get another 100 leads. This means you have generated a total of 350 leads from the prospect list. But we wary that if you use the list too many times then it will get to the point of being unprofitable.

As a general rule of thumb, you should change a portion of the DM piece the next time you mail (e.g. The offer, or a larger discount), as customers may respond to varying aspects of your direct marketing campaign, which is why it is always important to test.

You may hear direct marketing consultants talking about list building, and how much of their time is dedicated to developing a database of qualified prospects and customers. These lists are in fact a key ingredient which differentiate direct marketing from traditional marketing.

But I will say that typically, a list of present customers will respond much better or at a higher rate to a new product compared to non-qualified, or “cold” prospects.

It is also important to point out that while companies always depreciate their expenses over time such as equipment, machinery and inventory, they almost never capitalise what could be their most important asset, their customer. Therefore, small business owners should view their customers as investments and be able to measure and monitor customer data, and capitalise on it for the future.

Just remember that the maths of direct marketing sets it apart from all other marketing disciplines!