In an interesting article written by Alan Mitchell, Iain Henderson and Doc Searls, they argue that direct marketing is facing endemic crisis. I can't agree with them more as there's a tectonic shift in the way customers have to be reached in the future. Direct Marketing needs redefinition. It needs a new approach and a re-jigged business model. It needs to 'co-opt' customers rather than 'target' customers. And the time to do it, is now. If direct marketers don't change, they would become extinct soon. Take a look:
Three core characteristics of direct marketing are responsible for these problems; (1) Data management: all responsibility for data management (collection,storage, analysis, usage, etc) lies with the seller; (2) Information flows are almost wholly ‘ top down ’ from sellers to buyers in the form of selling messages; (3) Metrics: success is defined in seller-centric terms — costs versus benefits to the seller.
Direct marketing’s single most compelling USP is ‘ relevance'. If a buyer and a seller can connect about the right thing at the right time via the right channel, a powerful win-win is unleashed. Both sides can reap significant value by using and exchanging the right information. Unfortunately, these win-wins are massively undermined and sometimes obliterated by the industry’s seller-centric history and operation.
The industry's current modus operandi goes something like this. Organisations harvest as much data as they can about customers — primarily transaction and behavioural data supplemented by data from other sources such as purchased lists, market research and so on. They ‘ mine ’ and analyse these data, looking for trends and patterns. Then they use the insights generated to create profiles of likely customers, distinguish highly profitable customers from less profitable ones, and identify which customers are most likely to be open to up-selling, cross-selling or (perhaps) defection. They then target these customers with appropriate messages, designed to get them to respond in some way, such as take up an offer.
Data-driven marketing is still guesswork
....If they could then eliminate 10, 20 or 30 per cent of non-responders from this mailing, then their costs would go down and their response rate would go up. This is the central agenda of data-driven ‘ insight ’ today: to reduce the wastage generated by guesswork.
Welcome to the world of reverse direct marketing - VRM
By empowering individuals to collect, store and share rich, up-to-date personal data with suppliers, vendor relationship management (VRM) offers a way through direct marketing ’ s current impasse. To realise the new win-wins made possible by VRM, the industry needs to start adjusting now.
...With VRM, the customer becomes the holder of his own master data. VRM tools enable organisations to access these data (on terms agreed on with the customer) to check and update their own files.With VRM, customers not only replicate vendor-side data, but also back it up and improve on it. They also possess means to organise a superset of data that, with the customer’s permission, can be accessed to improve vendors ’ product development and offerings to market.
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My View
Direct Marketing has been broken in its old model and methods. Customers don't want to be disturbed, they care for their privacy more than ever before and new media is a lot more punishing than old media. When was the last time you ticked-off spam emails from brands that you have done business with before and deleted them? There are millions in my email box and I don't care about them. So is the case with SMS( mobile) and other media. If old media created ' clutter', new media 'blinds' your messages very fast as customers shut their in-box or mailers or inserts even before they have seen the message. The new direct marketing mediums might cost brand marketers lesser to reach the customer thro' many of these mediums but they produce diminishing returns too fast. The only way is to co-opt customers, get them to share their interests, information & needs and collaborate with them. Direct marketing needs to become collaborative marketing to survive.
