4 Ways Database Marketing Rescues Direct Mail
October 7, 2009 By Ethan Boldt, Editor-in-chief, Inside Direct Mail
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For those reasons, database marketing is becoming increasingly popular among any company that uses direct mail. "The return on investment can be very easily realized and demonstrated when direct mail is conducted leveraging the key components of database marketing (strategy, strong marketing database, reporting, advanced analytics and campaign management)," explains Devyani Sadh, Ph.D., CEO, founder and head of client relations of Data Square.
Database marketing can solve the direct marketer's costs-rising nightmare, says Pegg Nadler, vice president of database marketing at Hachette Filipacchi Media U.S. "The latest postal hike only reinforces the need to utilize database marketing effectively to reduce mail quantities while increasing response rates," she says.
Here are four specific points to know about database marketing—including why (and how) it can help change the fate of direct mail, immediately.
1. Why Database Marketing Works for Direct Mail—Now
"Database marketing has become critical to successful direct marketing," states Eric Schmitt, executive vice president at the Allant Group. "Using a database to drive mail improves both efficiency and performance."
Efficiency gains are realized by centralizing data hygiene and processing, and automating list selection and mail execution processes. Performance is improved by optimizing contact frequency and utilizing analytical models to improve response and order rates. "Meanwhile, a database gives the marketer an institutional memory of contact history, and a vehicle for integrating with other outbound and response channels, like e-mail and the Web," illustrates Schmitt.
If that's not enough, the customer-specific information from the database also can be used to tailor the creative, offer and message on the piece itself.
Lisa Freeman, senior vice president of client strategy at Merkle, agrees. "Across many verticals, we are seeing a steady shift toward leveraging data and insights to make smarter, more informed decisions not only about who to mail, but also what offer and message to send, when to mail (timing and frequency), and even how to determine when mail is the most effective media to reach a given group of customers," she describes.
2. Why Database Marketing Becomes Vital in a Squeezed Economic Climate
"The difficult economy means that direct mailers must be even smarter about who, when and how often they mail, and what offer they make," asserts Schmitt. "Investments in database marketing should do exactly that and deliver measurable, ROI-based results that will satisfy even the most skeptical chief finance officer."
Freeman also explains that better data can reduce production and postage costs by eliminating names that are not likely to be responsive based on factors such as incorrect addresses.
"Even in tough economies, people continue to purchase items they need and want, but they will now be choosier about where to spend their dollars," says Nadler. Database marketing will allow you to identify those customers and prospects most likely to respond to your offer.
3. Best Ways to Leverage Data on the Creative Mail Piece—Today
A personalized call to action often is superior to generic messages, points out Schmitt. "This can include a simple mail-merge name or be as sophisticated as a unique Web URL. Understanding what a customer has purchased in the past can drive the choice of offer, creative and message," he says.
"Integrating demographics with RFM [recency/frequency/monetary value] will definitely help lift response in your programs," concurs Nadler, who gives the example of recognizing a former subscriber to a magazine in a renewal effort.
Predictive modeling, according to Sadh, can leverage data effectively in:
• Audience selection—to find the best prospects or customers for specific mail pieces and programs
• Message selection—to identify the appropriate message and creative via profiling or segmentation techniques
• Offer—to determine the appropriate offer for various segments (she says while some customers would only buy with a $5 discount, others may need a $20 discount)
• Channel—to identify the appropriate channel or mix of channels to communicate with customers
• Timing—seasonal or trigger-based
• Contact strategy—to analytically optimize frequency, timing, channel mix/sequence and messaging for different customers
4. Where to Put Variable Data—That Goes Beyond the Name
"Consumers are naturally curious about content that calls out things that are specific to them," says Freeman. For example, there are a variety of ways to leverage the name of the city or state in which a consumer lives in the context of a direct mail piece—references to local areas of interest within copy, incorporating comparison charts that include the hometown as the starting or ending point, or providing offers for retailers that are local.
Nadler mentions the use of personalized coupons or offers, price points based on previous purchases, and brief surveys that reinforce specific interests or buying habits of these customers and prospects.
And don't forget that variable imagery can add valuable communication to certain segments. "Creative teams can incorporate photos that depict a unique geographic area or season (such as the northeast during the fall), or photos that vary based on demographic attributes (such as targeting the student or young adult segments) to make the customer feel that the communication is 'for them,'" describes Freeman, who says that variable imagery also is impactful in product-based/retail verticals, giving marketers an opportunity to vary the showcased product imagery based on data points such as previous purchasing patterns and "next best product" strategies.
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The Business of Database Marketing