Important Trends In Direct Marketing Spending.

Direct marketing may once have been the red-haired stepchild of advertising, but not any longer, according to a recent online survey co-conducted by Tivoli Partners and Interactive Marketing & Research (IMR).

More than 130 advertising and marketing executives from the financial, retail and service industries weighed in with their opinions, and in the process showed that the importance assigned to direct mail has increased dramatically.

“I started my career in the late 1970s, and I once had a production manager say to me, ‘What’s the big deal about direct mail? Just slap a stamp on it and throw it in the mail’,” recounts Lisa Bell, president and chief creative officer of Tivoli Partners, a Charlotte-based agency specializing in direct response marketing.

“Fast-forward to 2005 and it’s clear that the tables have turned,” Bell said. “Clients want more accountable communications. 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. Advanced technology and data mining techniques have brought even more science to the art of direct marketing.”

The national survey of direct marketing professionals reveals 10 key trends in direct marketing:

1. Direct marketing budgets have increased. 69 percent of respondents report an increase in spending over the last two years, with only 16 percent noting that budgets had not changed.

2. Acquisition and retention are equally important. Respondents were pretty evenly split on their reasons for using direct marketing, with 52 percent using it for customer acquisition and 47 percent using it for customer retention.

3. Spending for customer retention lags. More than a third (39 percent) spend 25 percent or less of their marketing budgets on customer retention. The heavy spenders who commit 75 percent or more of their budgets to customer retention efforts comprise just 12 percent of those surveyed.

4. Reminder mailings and newsletters are preferred tactics. When given a laundry list (such as points-based frequent buyer programs and membership clubs) respondents gave high marks to reminder mailings (83 percent used these somewhat/very successfully) and newsletters (65 percent used somewhat/very successfully).

5. There’s no substitute for great customer service. When asked about delivering exemplary customer service, 79 percent feel that their firms are somewhat/very successful. Eight percent indicate that they are not even trying.

6. Marketers are quick to react if something isn’t working. 68 percent agreed with the statement, “We quickly shift dollars during a campaign if we think it’s not working.” The remaining respondents prefer to wait until the end of the campaign to evaluate results.

7. Telemarketing: a bit of good news. 42 percent of respondents are not using telemarketing at all, but of those who are, 43 percent have increased their telemarketing spending in the past two years.

8. Direct mail delivers. Over half (54 percent) have increased their use of direct mail in the past two years. This flies in the face of naysayers who predicted that the Internet would replace print communications.

9. E-mail rules! A whopping 72 percent have increased their use of e-mail marketing. And for those marketers using online banners or sponsorships, 63 percent have increased spending in this area.

10. Cross-selling is king. Respondents were asked to rate certain topics of interest, from customer activation to using innovative tactics. Cross-selling came out on top, with 52 percent of respondents very interested in techniques to deepen the relationship with current customers.

And finally, it’s interesting to take a look at how direct marketers identify their most valuable customers. With Lifetime Value receiving the highest response (38 percent), it stands to reason that customer retention should be receiving a bigger slice of the budget pie.