The 10 new trends of direct marketing spend

The importance of direct mail, compared to traditional advertising channels, has increased dramatically in recent years, according to a recent online survey co-conducted by Tivoli Partners and Interactive Marketing & Research (IMR), which notes the ten most prominent trends in direct marketing spend.

For the online survey, over 130 advertising and marketing executives from the financial, retail and service industries offered their opinions, at the same time showing that the importance assigned to direct mail is increasing.

"In the late 1970s, a production manager once said 'What's the big deal about direct mail? Just slap a stamp on it and throw it in the post box'," said Lisa Bell, president and chief creative officer for direct response marketing agency Tivoli Partners.

"But fast-forward to 2005 and the tables have turned. Clients want more accountable communications, and they like the fact that you can reach customers and prospects in a more targeted fashion - via direct mail, email, telemarketing and other one-to-one communication methods," continued Bell.

Advanced technology and data mining techniques have truly brought science to the art of direct marketing. When it is done well, direct marketing is no longer about generalised mass communication, instead providing a carefully focussed way of building new and existing customer relationships through relevant messages.

Ten trends of spend
The survey of direct marketing professionals revealed ten key trends in terms of direct marketing spend:

1. Direct marketing budgets have increased.
   Fully 69% of respondents report an increase in spending over the last two years, with only 16% noting that budgets had not changed.
    
2. Acquisition and retention are equally important.
   Respondents were fairly evenly split on their reasons for using direct marketing, with 52% using it for customer acquisition and 47% using it for customer retention.
    
3. Spending for customer retention is lagging behind.
   More than a third (39%) spend 25% or less of their marketing budgets on customer retention. The heavy spenders who commit 75% or more of their budgets to customer retention efforts comprised only 12% of those surveyed.
    
4. Reminder mailings and newsletters are preferred tactics.
   When given a laundry list (such as points-based frequent buyer programmes and membership clubs) respondents gave high marks to reminder mailings (83% used these somewhat/very successfully) and newsletters (65% used somewhat/very successfully).
    
5. There's no substitute for great customer service.
   When asked about delivering exemplary customer service, 79% feel that their firms are somewhat/very successful. However a worrying 8% indicated that they were not even trying.
    
6. Marketers are quick to react if something isn't working.
   68% agreed with the statement: "We quickly shift dollars during a campaign if we think it's not working." The remaining respondents said they prefer to wait until the end of the campaign to evaluate the results.
    
7. Telemarketing: a bit of good news.
   Two in five respondents (42%) are not using telemarketing at all but, of those who are, 43% have increased their telemarketing spending in the past two years.
    
8. Direct mail delivers results.
   More than half (54%) increased their use of direct mail in the past two years. This goes against the opinion of those who originally predicted that the internet would replace print communications.
    
9. E-mail rules the nest.
   A surprising 72% have increased their use of e-mail marketing. And for those marketers using online banners or sponsorships, 63% have increased spending in this area.
    
10. Cross-selling is key.
    Respondents were asked to rate certain topics of interest, from customer activation to using innovative tactics. Cross-selling came out on top, with 52% of respondents being very interested in techniques that deepen the relationship with current customers.

Budget for the future
The direct marketers were also asked how they identify their most valuable customers. With Customer Lifetime Value (CLV) receiving the highest response (38%), it follows that customer retention should soon start receiving a bigger portion of the direct marketing budget.

Companies that responded to the survey employ from 11 to 5,000+ staff, with 55% spending up to US$1 million on direct marketing each year, and 29% spending US$5 million or more.