Marketers – and, more specifically, their clients – are always looking for the hottest, freshest marketing ploy. Companies are always on the look-out for the magic bullet marketing campaign or tool that will yield limitless new customers without spending a dime.
Direct marketing, also known as direct response marketing, does not involve advertisements placed on the Internet, on television or over the radio.
Ted Grigg, of the Direct Marketing Consulting Group (dmcg) blends the tools and resources of Internet marketing with an old-school marketing approach based on repeatable, measurable results to bring actual sales.
How did dmcg get started? What did you feel like the other marketing companies were lacking?
I initially started the company in 1987 as an independent direct response consultant to the insurance and managed care industry. In 2001, I changed the direction of our consultancy to include all industries to broaden the company’s scope.
With the advent of the Internet explosion, we began to integrate our direct response strategies to include omnichannel marketing. Our clients still include healthcare and insurance, but we now represent virtually every major industry category.
Clients demonstrate a great need for direct response marketing strategic guidance as opposed to one-off programs that did not include impactful testing. Our clients require financially driven marketing programs. This means marketing results that rely upon the cost per lead, cost per sale, cost per customer and ultimately customer lifetime value.
Everything we do is tracked and evaluated for results. In fact, our short name for the company is “dmcg results.”
Who is dmcg’s main clientele, and how do you meet their particular needs?
Our clients consist of companies of various sizes that already spend money in direct response. They enjoy the same philosophy we do: the purpose of all marketing is to make money for the company. If the marketing dollars spent by the company are not attributable to sales, then we do not work with those clients.
All of our programs start with the financial proforma and end with an analysis that determines if we achieved the clients’ financial objectives. We end up either as heroes or deadbeats depending upon the outcome.
As fate would have it, many of our clients still want direct mail creative development, mailing list support and analytics. Apparently, younger marketers do not receive the intense corporate training in direct response marketing of the earlier generation. There are fewer strong direct response practitioners today than there were the 1980s or 1990s.
This is puzzling, because direct response skills apply more today than ever before in both traditional and digital media. After all, over 90% of the Internet content out there focuses heavily on response and behavioral for success.
This environment has put dmcg in a great place for present and future growth.
How is direct marketing advantageous for a company?
Marketers typically view the world through two lenses. And both are valid even though they do not easily merge for most clients. One is the brander, and the other is the direct marketer.
The best marketers fuse these two strategies to maximize advertising budgets. Nevertheless, direct marketers demand a given return on the overall investment that delivers the client’s financial objectives.
Let’s first address what direct marketing is not. It is not direct mail or any specific channel. Direct marketers (often referred to as direct response marketers) believe that advertising should contain a clear call to action, and that the program lives or dies based on results.
In direct marketing campaigns, all channels in both traditional and digital receive the same treatment and evaluation process.
Direct marketers further believe that the targeting, offers, channels and integration of channels should be tested on a regular basis to deliver the lowest costs per lead or costs per sale.
In direct marketing, one strategy combination might yield 20,000 new customers; whereas the same budget through skillful testing can eventually yield two, three or even four times as many customers.
Getting back to branding, one brand advocate, Walter Lander once said “…a brand is a promise. By identifying and authenticating a product or service, it delivers a pledge of satisfaction and quality.”
Another way to look at it: branding is more about the company, and direct response revolves around the product.
Direct marketers are concerned about the total selling process and not just the communications pieces. For great results, they know that leads that are not followed up immediately decrease sales, and a poorly-written phone script with poorly-trained telesales people cause many great programs to fail.
For direct marketers, success demands that all selling steps are planned and carefully implemented. General advertisers or branders, on the other hand, typically consider these somebody else’s responsibility.
One of the services you offer is direct market planning. Can you give a brief overview of what a direct marketing plan might look like? What are some factors people should keep in mind when putting together a direct marketing strategy?
The content of the direct marketing plan depends upon the objectives of the campaign. It most often involves new customer acquisition direct response strategies to generate leads or “off-the-page” sales.
Lead generation requires several steps to close the sale, such as incorporating a sales team and a telesales support group. A direct sale “off-the-page,” on the other hand, depends solely on a single or repeated message that sells the product without external sales support.
Whether this is a new and untested campaign designed to help the client enter the direct response world or an experienced direct marketing company, the plan always presents the campaign in test mode. This limits the exposure to failure and attempts to find a winning campaign quickly by testing several things simultaneously.
There is no such thing as a one-off campaign in our plans.
Winning in direct marketing programs requires accumulating learning through ongoing testing, and always attempting to beat the control (that is, the winning direct mail package or an entire omnichannel campaign).
Testing never ends. Without it, direct programs either never roll out or lose their effectiveness by wearing out the target audiences with too much of the same thing.
What wins today may not win tomorrow.
Our plans lead all clients in defining the financial success of their campaign by developing a financial proforma. This proforma works back from the acceptable cost per sale for the client to determine whether the response rates needed for a win are reasonable.
Our budgets never look at a percentage of sales, a media plan or some other incomplete approach. Our recommended budgets revolve completely around the cost per sale allowable to develop profitable campaigns.
Success equals our ability to acquire the desired volume at the allowable cost per sale.
The client must share their allowable cost per sale (or allowable cost per customer) with us before we begin writing the plan.
The plan includes the product description, the target audiences, the competitive environment, the creative strategy, the channel selections, tracking, digital support, telesales/sales support, audience target list counts and so on; focusing on the budget for the test implementation.
If agreed to, dmcg can implement all phases of the plan, which assures the best possible environment for success both on our side and the client’s.
Another of your services is tactical implementation. Could you also give us a brief overview of what that means, and what it might look like in the real world?
Once approved by the client, dmcg offers turnkey support as needed to implement the plan.
This includes copy development for all channels, list hygiene, list rentals, media buys, production management, coding responses for multichannel tracking and so on to deliver the plan to market.
As a virtual direct response agency, dmcg maintains a large portfolio of specialists for client work. The people we use are highly experienced in their direct response fields. Our copywriters, art directors, analysts, list brokers, digital marketers and direct mail production houses are located throughout the US and Canada. So we handle both small and large assignments once the plan is approved.
dmcg uses a variety of traditional marketing strategies such as direct mail and outbound telemarketing along with online promotions. How effective are the old-fashioned methods of doing things? What are some reasons people should consider strategies outside of the Internet?
A number of our clients have asked us to add traditional media to their digital mix to increase market penetration.
Digital campaigns are very cost effective. But with thousands of new web sites coming on board every week, it is difficult to get attention. And companies need every tool at their disposal to succeed.
Successful, traditional direct response campaigns cannot succeed without digital integration.
Whether promoting a company’s website in traditional media or not, well over half of the respondents to DRTV, direct mail, radio or other channel will check out the company’s web site and social media for the advertiser’s reputation and customer satisfaction.
Almost all of our direct mail efforts overlay email for a synergistic effect that increases response well beyond the added cost.
Though digital is essential to success and highly efficient, it often does not produce the required attention-getting power or response penetration of experienced traditional media advertisers.
All of our plans include digital marketing as part of the mix to one degree or another.
Another of your services is lead generation. What advice do you have for people for generating new customers? What about converting leads into sales?
As with any new customer acquisition, the client needs to agree on the evaluation process and the desired result for a lead generation campaign.
For example, if the allowable cost per sale is $1,000 for marketing (not including the sales commission), then the cost per lead relies on the conversion rate.
Assuming that on average the sales force converts 20% of all leads to a sale, then the allowable cost per lead is ($1000X.20) $200.
Of course, not all leads are equal. There are loose or tight leads and everything in between. The loose leads are less qualified, but over time will buy. Tighter leads are better quality and convert at a higher rate. But tight leads increase the cost per lead, which puts pressure on the conversion rates.
If a salesman converts the 1 out of 5 leads for a 20% conversion rate, he would rather convert 1 out of every 2 leads or 50% conversion. He works less when he gets the tightest leads possible.
Unfortunately, most marketing programs will never achieve these results at high enough volumes on a consistent basis.
If the 50% conversion rate becomes a requirement, then perhaps the company should think about selling the product without a sales force. They should try to sell the product “off-the-page” on the Internet and through traditional media with the support of a strong telesales group.
There are books written on this single subject.
When you start working with a client, the first step you take is determining the scope of a project. How do you determine what kind of resources a project will require? What are the dangers of not giving enough resources for a new project?
At dmcg, we quickly qualify all company prospects by asking them what they want to achieve and what each new customer or sale is worth to them.
We help them to come up with the number. But frankly, any company pretty well knows what they can spend on a new sale.
If they say “the least amount possible,” then we do not accept this because we could probably find 100 new customers for very little money. But finding 10,000 within a 6-month period is another matter. The deeper the penetration in their target market, the higher the cost per sale.
The client knows they cannot make their goals on 100 sales. So they need to get real about what they will need to spend to attract new customers.
If they say they can spend $250 per sale and they need 10,000 sales to make the year, then we know the annual budget is $2,250,000.
Once we have this, then we determine what depth of research and customer response propensity modeling is required to target their future customers.
If the market can be clearly identified and found on available lists, then we proceed to see what offers we could test to get these prospects to respond to our offers.
After a series of tests and analyzing the results, we are able to then project the proper channel mix to further improve response rates.
For direct marketers, determining the target audience and generating target universe counts is everything.
Direct marketers cannot maximize their skills until they have identified exactly who is and who is not a good prospect.
Sometimes, identifying the target market begins with the web site and gathering responses to identify the target audiences more accurately. We might even overlay DRTV testing to see who responds.
Eventually, direct marketers are looking to refine the target over time and then to penetrate that market with strong offers and excellent creative executions.
As a reminder, those executions may take the form of email, outbound telesales, e-commerce, direct mail, broadcast, and direct mail – either alone or as an omnichannel campaign.
With the market being what it is, why do businesses need to consider every strategy that is at their disposal?
I think that most marketers tend to recommend or do what they are comfortable with. The same holds true for clients.
The danger is determining a course of action without looking at all of the options in an objective manner. We all realize, however, that it is impossible for human beings to make decisions or reason without some degree of bias.
I will admit to my bias that marketing has only one role. That role is to make money for the company. Furthermore, I think it is the marketer’s responsibility to determine the sales results for his campaigns.
This means that I insist on working with data-driven campaigns that track responses and transaction history for every single customer and lead. This data and understanding it is the first step in understanding the customers and how they behave when encountering the company’s promotions.
When taking this philosophy to the CEO or owner, I am on his team as a partner to achieve the sales results and profits he must achieve.
As a partner is the company’s success, I am looking at every sales and customer contact in the company that drives or kills sales.
Are we handling sales promptly to each customer’s satisfaction? Are orders going out on time and correctly? What complaints are we getting? What questions or objections are we getting in the telesales area? I want to listen to customer and prospect conversations in real time. Are the communications we are creating addressing the concerns I hear from my customers? And the probing continues from there.
With an open mind, I then look at how to increase my sales. But I do that by looking at the results data first. Without the data, I cannot help the company.
I insist on making the proper attribution for sales by channel. I at least make attribution to the channel mix for any given campaign. I never give up in this effort. I can assure you, the CEO and CFO will hound me until I do. Or the CEO might simply let me go.
So do not be guilty of gross generalizations such as: “We can outperform any channel with email. We can outperform traditional media with digital media alone. Direct mail does not work. Television is not affordable for us. Radio has no future in our marketing efforts. All we need is social media. The world has changed overnight and intrusive advertising does not work anymore.” And on and on…
Test everything and retest until you get it right. And then test again to keep improving what you’ve done before.
For more updates from Ted Grigg and dmcg Results, follow him on Twitter and connect with him on LinkedIn.