Getting started with direct marketing
Direct marketing has been around for a long time but has evolved as technology develops to include telephone, SMS, Internet and email marketing.
Direct marketing is practiced by businesses of all sizes and budgets and can be a great way to target and grow your market.
On this page:
- What is direct marketing?
- Benefits of direct marketing
- Examples of direct marketing
- Building a customer database
- Evaluating the results of direct marketing
- Tips for improving results
What is direct marketing?
Direct marketing doesn't involve traditional advertising methods such as radio, television, newspapers and magazines. Instead, businesses communicate directly with customers through direct mail, such as fliers, catalogues, letters, coupons, samples, or through emails, e-newsletters, the telephone or SMS messaging.
Benefits of direct marketing
Measurable
The success of direct marketing is easier to measure than conventional forms of advertising. For example, if you send out 1,000 newsletters and you get 300 responses leading to 200 sales, that’s a 30% response rate and a 20% sales rate, and you can compare the cost of advertising with the total sales gained. If your direct marketing included your web address or a link to a specific page on your website, you can track the increase in visitors to your site in the following days and weeks.
Targeted
Direct marketing goes straight to your existing customers, who are interested in your products and services. In addition, if you do the research, you can also target people like your existing customers, who may become customers if they gain a better understanding of your products and services. This means you are not wasting your precious time or advertising budget reaching households of university students when your key customers are working mothers.
Because you are targeting your existing customers and those likely to be interested in what you have to sell, your offers are more likely to be viewed as your business keeping in touch, rather than as unwanted spam. Direct marketing can make your customers feel recognised and privileged. Find out how to target your marketing.
There are laws governing the use of customers' personal information to send them direct mail. Find out more about the Marketing Association of New Zealand’s Code of Practice for Direct Marketing.
Affordable
Direct mail and e-newsletters are some of the most affordable methods of advertising, particularly if you or your staff design the promotional material. An e-newsletter can be created in a few hours or less by your staff or a contracted graphic designer and costs nothing to send.
Make sure you give a detailed brief if you contract a graphic designer to create an e-newsletter or printed material such as fliers or catalogues. If the finished product is not what you had in mind, you will have to pay for the extra time it will take to re-do the job.
When sending direct mail such as fliers and catalogues, calculate the cost of postage in advance. Consider things like envelope size – if you are posting product samples with a letter or flier, postage could cost more. If you are posting bulk letters or parcels, you may be eligible for a discount, or as a business account customer you might not have to pay straight away.
Finally, because direct mail is targeted, you are more likely to get a good return on your investment.
Find out how much you will need to make to cover your costs and make a profit using the free advertising break-even calculator.
Examples of direct marketing
Direct mail
Direct mail can be unaddressed and delivered widely, such as fliers promoting supermarket specials, or addressed and targeted toward a business's customers. Targeted direct mail is likely to get a higher response because it is personalised – your business is sending information on its products, services, specials and deals to those most likely to want them.
For example, a boutique grocery store might post a sample of its new organic coffee beans to their best customers; a beauty therapist might send customers a price list featuring seasonal deals, such as a discounted pedicure if booked in conjunction with a leg wax during spring; and a mechanic might send fliers to remind customers whose WOFs are due soon.
Other forms of direct mail are catalogues, brochures and fliers alerting customers to new stock or services, or to sales and specials, with discounted prices in bold lettering. These are often sent just before a weekend or holiday period, or timed to coincide with seasonal demand.
It is a good idea to include codes or coupons in your direct mail that customers must quote or use when they come into your store or order a product. This way, you can see how many customers are actually responding to your marketing.
Some businesses send promotional letters that greet the customer by name. Bear in mind that writing promotional letters is an art – you have to grab your customer's attention in the first line if you want them to keep reading.
NZ Post offers free direct mail courses and additional resources.
Because customers are spending more time online, e-newsletters are a popular form of direct mail. Just make sure you have your customers' permission to send them email. Otherwise, your efforts will be viewed as spam and possibly cause irritation rather than gain you sales.
Businesses can send e-newsletters monthly, bi-monthly or quarterly, to keep customers up-to-date on new products and services, give after-sales product-care advice, announce news and developments in their industry, and give customers a public forum to send feedback to.
E-newsletters are a low-cost way to keep in touch with customers and keep your business at the front of their minds, and they help position your business as an industry leader by allowing you to showcase your expertise.
Learn more about using email for direct marketing.
Telemarketing
Using the telephone to contact customers enables you to explain complex information more effectively and immediately answer any questions customers might have. However, the disadvantages outweigh the advantages – most people find telemarketing intrusive and resent being bothered in the evening after a long day at work. As a result, telemarketing can see you getting on the wrong side of your customers.
Therefore, it might be wise to use it only in business-to-business (B2B) marketing because people are generally more receptive to such calls when they are at work, rather than when they are relaxing or busy taking care of their family at home.
You can use telemarketing to promote your products and services, ask businesses if they would like to be added to your customer database (after first explaining what you sell and what information and deals you would send them), follow up responses to mail outs, and keep your business front-of-mind with businesses you have existing relationships with.
Bear in mind that you will need to train staff who are assigned the task of telemarketing. Standardized scripts can help achieve a consistent message and tone.
There are legal requirements when selling or marketing by phone. Find out how to comply with the Marketing Association of New Zealand’s Code of Practice for Telemarketing.
Building a customer database
You'll need to know your customers' contact details, and if you want to target people like your existing customers so that they might become customers, you'll need to build a profile of your typical customer.
Gathering the basic info is straightforward – simply ask customers for their name, email and postal addresses, and then record the information. Your database could be a simple spreadsheet or you might choose to use database software.
Building a customer database takes time, but it will eventually become one of your most valuable business assets. Find out more about creating a customer database.
Evaluating the results of direct marketing
Always include your web address on your direct marketing material. Even if customers don't need to access your website to take advantage of your offer, you'll be able to see if your site hits increase after you have contacted customers.
By having customers use the code or coupon system mentioned above, you can compare the number of responses you get with the number of e-newsletters or fliers you sent out to obtain your response rate. You can also divide the cost of your direct marketing by the number of responses to gain your cost-per-response rate. Most importantly, compare the total sales gained with the money spent on your direct marketing campaign. If you haven't covered your costs, you can either try a different approach next time, or look to experts for help.
Tips for improving results
If the results of your direct marketing campaign are less than rosy, don't despair – see it as a learning opportunity.
Targeting
Getting your offer in front of the right customers is key. Usually, the 'right' customers are your best customers, or a niche group within your customers. For example, if you are trying to sell an add-on product such as Mac computer software, there is no point sending the offer to customers who own PCs.
Presentation
Remember, it's not just what you offer but also how you present your offer. You could be offering a steal, but if the information you send customers is confusing, slow to download (in the case of an e-newsletter), or fails to illustrate the key information (i.e., the steal!), you are unlikely to gain sales.
Make things easy for your customers, and ensure your prices, discounts, contact details, web address and opening hours are prominently displayed.
Bear in mind the timing of your direct marketing campaign. Just before Christmas could be great timing if you are a retailer having a sale, but poor timing if you are a restaurant and most people are heading out of town for the next few weeks.
Language is another key factor – you must speak the language of your target market. The way you speak to water sports enthusiasts in the under-30 age bracket will be different to how you address retired golf players.
Creativity and originality
Did the brown envelope containing your mailed flier make it look like a household bill? Did you use an impersonal phrase such as 'Dear Customer' or 'For the manager'? Did the subject line of your e-newsletter use a generic phrase often seen in spam?
These are all pitfalls to avoid. You want your direct marketing to stand out and grab customers' attention. Achieving this can be as simple as addressing your mail outs by hand, using unusually shaped or coloured envelopes, and keeping your e-newsletter punchy, with subheadings, short blocks of text and strong, attractive images.
