Looming fear of recession and shrinking budgets make direct marketing popular as its measurability ensures marketers a guaranteed return on Investment, finds Priyanka Mehra
In this pre-recession market, where fears of an impending slowdown are very real, every marketer is trying to get the maximum bang for his buck. Therefore, marketers have found solace in Direct Marketing which has measurable benefits, needs only a low budget and best of all, gives guaranteed return on investments. Direct Marketing (DM) is not an alien concept for Indians, considering that direct transactions between buyers and sellers formed the basis of the barter trade in the days of yore. But much like their global counterparts, Indian consumers today demand more than just the satisfaction provided to them by a product or service. And this is where DM plays an important role.
Marketers find new technology and personalized information about prime prospects and current customers akin to a goldmine in the marketplace. If the Fifties and Sixties were an era of mass marketing, with one kind of cola drink and one kind of shampoo on offer, the current scenario is a far cry from it, with the average Indian consumer spoilt for choice. Consumers are exposed, or rather overexposed to a plethora of goods and services across all industries. An understanding of the consumer, therefore, has become integral to marketers, as consumer satisfaction is not just based on product supremacy, but goes much beyond it today. It is all about how marketers reward the consumer for their loyalty and simplify the transaction between buyer and seller, adding value to the ultimate consumer experience. They not only provide a good price, but make the transaction as personalized for the consumer as possible. “DM has one of the best measurable returns on investment (ROIs) in marketing. Unlike mass media or general marketing, DM has an exact analysis capability on ‘spend’ versus ‘response rate’. It also allows low budget testing, which any marketer knows is the most important factor in brand building or marketing/selling a product or service,” says Dharti Desai, Founder and CEO, Regency Direct Marketing. Her sentiments are echoed by Rajat Sethi, Executive Director of marketing solutions firm Direxions, who says, “DM is effective in generating response or increasing revenues. Our business is totally measurable. The success or failure of a DM or relationship marketing campaign is there for everyone to see as all communication is response-led. So, there can be no better medium than DM to generate a positive response, be it a lead or a conversion or a sale.”
Talking of DM as an industry in India, several approximations make up the general consensus. Veterans and agencies alike think that the usage of this discipline is steadily growing in India; and a lot of marketers and agencies may well be using DM without calling it by that name. One factor giving rise to a bit of ambiguity is that DM is an unaudited sector, making it difficult to arrive at an exact growth rate. “The Direct and Digital industry is growing at around 30%, as compared to Advertising, which is just about reaching the double-digit growth rate,” Sethi estimates.
CONVENTIONAL VS NEW WAYS
The conventional form of DM is being used sparingly now, with the advent of digitization,as DM through social media is gaining ground, along with customer retention and loyalty management. Agencies and marketers alike prefer these methods, as they allow interaction with consumers and contribute to tangible growth.
The social media space is being occupied by all kinds of companies, irrespective of their nature, as ‘catch them young’ through DM seems to be the mantra of marketers. Marketers are ‘talking to the youth’, or rather, ‘having conversations with the youth in their own language, in their own space’ where they retain a sense of belonging. Social media as a tool of DM has given great returns to marketers. Channels such as BIG CBS and Sony PIX have leveraged social media to their advantage. They have even altered the timings of shows based on feedback from viewers, leading to happier and more loyal consumers. Says Vishal Rally, Business Head of BIG CBS, “The connect with your consumer is of utmost importance, and the digital medium greatly helps with this. For example, for ‘Sex and the City’, we would typically run a 30-minute show. But viewers gave us feedback on Facebook to have back to back shows, which we started. We also get feedback from viewers to alter show timings. We do a lot of research, but sometimes that could go wrong. That’s where this kind of feedback really helps.”
According to Himmat Butalia, Marketing Head, Sony PIX, the social medium minimizes turnover time and cost. “The most successful example of directly reaching the consumer through social media is the PIX Movie Club, which heavily depends on pixtelevision.com and Facebook to enrol new members and to communicate with the existing ones. Some of our members suggested that the number of films screened every month should go up, whereas some wanted a mixture of action, comedy, romance and thriller films. We promptly acted upon these points. This helped us keep our members engaged with the channel and also double our member base within a fortnight.”
The social media space is also optimized for DM by the beauty industry. “Oriflame India made its foray into social media in 2011, with campaigns such as ‘Make That Change’ and ‘Dare to Be’. We have been fairly successful in reaching out to desired segments of the market. The ‘Dare to Be’ India Facebook page helped us connect with the youth,” explains Sharmili Rajput, Marketing Director, Oriflame India.
The phenomenal success of ‘Why this Kolaveri Di’, which went viral on YouTube with over 20 million hits and over 8.2 million links shared on Facebook across geographies, is a perfect example of DM. It uses all the key principles of DM, which entails listening to your audience, building a database, engaging the audience in their space and getting measurable results.
While this medium is great to connect with the youth and is possibly a more cost-effective method of reaching out to consumers, traditional methods of DM such as mailers are known to be quite effective as well. In the latter method, effectiveness can be measured through click and response rates, especially in case of FMCG and entertainment brands, and in the recruitment sector.
ROADBLOCKS GALORE
For all its effectiveness, the DM industry faces multiple challenges too. The main obstacles before it are:
Unorganized industry: DM as an industry has been growing by leaps and bounds, and is an acknowledged or unacknowledged part of a brand’s marketing mix. However, it is yet to attain the status of an organized industry. Till today, there is no way of checking the quality of players entering this sector.
Violation of consumer’s privacy:In many ways, DM has become very intrusive and aggressive; principally to blame are telemarketing campaigns. This has not just given DM a bad name, but also made marketers wary of positioning their brands through this domain. A lot of brands have resorted to direct selling or oneoff deal campaigns. “Paradoxically, the very core of this discipline is based on the principle of respecting the privacy of consumers. However, we find this being violated increasingly in the form of spam mail and unsolicited marketing calls even after introduction of the DND (Do not Disturb) registry,” adds Sethi.
Lack of a robust and reliable database:The lack of an updated database leads to bulk and spam mail, which in turn puts consumers off, becoming a deterrent as opposed to an aid in DM. “The key to a successful DM campaign is scientific database management and a proper follow-through programme, or else benefits can quickly turn to nothing,” cautions Dharini Mishra, Global Head of Brand, Suzlon.
Lack of integrated approach:As multiple agencies now handle different aspects of a business, in all likelihood, a 360-degree campaign may not have an integrated and focused approach, targeting the consumer effectively. “How can we expect the agency people, long fed on the mass media dream, to adopt a new way of thinking if they don’t know what benefit they can get from other disciplines such as Direct Marketing? Often, the many handlers of a campaign meet for the first time in the client’s office, just before the presentation starts, and the body language (or the lack of it) is evident to clients. DM is often presented in a tactical, opportunistic way, and that too is evident to the client. When this happens, clients perceive them as a sort of collateral competency of an advertising agency and as such, find it easy not to take them seriously,” observes Sethi.
Lack of knowledge base:Lack of a talent base and no formal education in this discipline add to the woes of the DM industry. “Knowledge of DM as a discipline is poor till today as it is perceived to be only mailers or material by post,” says Vatsal Asher, CEO, Direct Marketing Association of India (DMAI).
INDUSTRIES USING DM
The main industries using DM for growth and retention of clients are insurance, banking and the luxury segment. The banking sector has seen huge growth in DM due to increase in customer loyalty which propels subsequent card activity. “It is a win-win situation for advertisers, who get access to credit-worthy consumers, and endorsement from the bank increasing credibility in the eyes of the consumer,” says Desai.
DM is the key to survival in the insurance sector, where the core of the business is customer retention. Private players entered the Indian insurance market in 2000. According to Swiss Re, a global reinsurance company, the insurance penetration then was at 1.7%. By 2011, penetration had increased to 4.5%. The insurance sector has evolved from nationalized to a liberalized market and an increase in awareness provides a huge potential for DM in this segment. According to a recent report, nearly 80% of the Indian population is uninsured and continues to be underinsured by international standards, leaving a window of mega opportunity open to direct marketers.
In the luxury sector too, DM plays an important role. In October 2011, Capgemini released a report that stated Asia- Pacific’s High Networth Individuals (HNIs) outnumbered Europe’s for the first time. This growth was dominated by China, Japan and Australia with India in the ninth place. India has thus entered the elite group of 12 countries with concentrations of the wealthiest citizens in the world, who can be tapped by marketers. This growth has been well recognized by luxury brands such as BMW, Volkswagen, Ferragamo and many others who effectively use DM to personalize communication and reach out to their niche target group.
THE PROMISE OF GROWTH
Perceived dissatisfaction with the results of mass advertising and spamming are an indication that result-oriented targeted marketing will continue to gain impetus and control a bigger share of the marketing budgets of companies. The Indian market with its set of unique peculiarities, diversities and intriguing complexities related to population and size, offers a world of opportunities for DM. Moreover, a marked increase of players in the luxury, banking and insurance segments as well as shrinking budgets indicate that DM is the medium of the present and will evolve into a discipline of the future in a much bigger way.
CASE STUDY
Product category and behaviour-based targeting for Indiaplaza.com by Kensico Digital Marketing Pvt Ltd
The focus: The focus was to go beyond plain vanilla email communication and help develop the most customer focused e-mail marketing system. The strategies, powered by complex marketing automation have helped Indiaplaza achieve higher conversions rates and growing rate of customer loyalty.
The challenge: To automatically track customer preferences for various product categories. To send better targeted product offers based on tracked behaviour. Encourage retention through customerfocus and improve the ROI of e-mail campaigns.
The Solution: Segmentation of consumer data based on past behaviour and preferences. Creation of product categories and association of all future e-mail campaigns with these categories. Automatic updating of customer profile based on responses and activity. Sending extremely targeted and relevant mailers based on behaviour tracked.
Result: A three-fold increase in response rates as a result of better targeting. A significant improvement in customer engagement and decrease in un-subscription.
Feedback: priyanka@exchange4media.com
