Within marketing market communication, direct marketing or direct response marketing is any advertising measure that contains a direct approach to the potential customer with an invitation to respond. The next stage in marketing is direct sales. Direct marketing promotions can take a variety of forms. These are divided into one-step or multi-stage actions. The number of customer contacts made is relevant. It is irrelevant whether these contacts are made in writing, by telephone or in any other way. A mix of these forms of communication is also possible.
The central strength of direct marketing lies in its measurability. Through the use of advertising codes or the direct comparison of the advertised persons with the advertisers, the costs and benefits of direct advertising campaigns can be directly correlated with each other. This direct measurability makes it possible to evaluate direct advertising campaigns on the basis of “hard” key figures. Another direct consequence of this feature is the ability to optimize direct marketing campaigns based on tests.
Depending on the criterion, the individual customers can be distinguished from a “star customer” to a “waiver customer”. Thanks to the possibility of differentiation, it is possible to design an advertising measure individually for each customer. For example, a “star customer” who has a high sales and profit potential as well as the best growth prospects justifies a high marketing effort. This is expressed, for example, in the form of intensive customer support – before, during and after the purchase – priority delivery or consideration of special requests.
A so-called “non-profit customer”, which is characterized by low sales potential and low growth prospects, is better abandoned, as it usually already has a negative contribution margin. This differentiation and selection of customers is one of the success factors of database marketing.
Furthermore, customer relationships are built, which should lead to customer loyalty and ultimately to close customer loyalty. Regular customers continue to generate the most sales. For example, it is up to seven times easier (or cheaper) to persuade a regular customer to buy than to win over a new one. Therefore, direct marketing not only has advantages for the acquisition of new customers, but above all serves the goal of binding regular customers closely to the company.
This customer proximity and customer satisfaction continue to have positive spillover effects on the market. Especially with direct response advertising, it is possible to tap into new target groups, as the recipient of an advertising message expresses his/her interest by responding to the advertising message. The data obtained in this way can in turn be used in further campaigns to make advertising measures more individual.
Due to the oversaturation of the consumer with mass advertising, fewer and fewer promotions lead to the desired success. On the other hand, the individual contact approach reduces the wastage of the advertising materials used in particular and thus leads to an improvement in profits due to the cost reduction potential. Direct marketing therefore allows for an efficient use of financial resources.
However, direct marketing also has its legal and business limits. It has a relatively short duration compared to traditional advertising media.
Care must also be taken to ensure that the dialogue with the customer does not become mechanical, but should be tailored to the specific needs. The more individually tailored this dialogue is to the individual customer, the more cost-intensive it is. In addition, there are costs for data acquisition as well as the construction and maintenance of the corresponding databases. All of this must be justified by the corresponding return that the customer brings.
Furthermore, the essence of direct marketing is always associated with a harassing element. Depending on the intensity of the advertising, this can lead to an unreasonable impairment of the privacy. More and more recipients are defending themselves against this increasing intensity of direct mail by attaching the “No advertising” sticker to their mailbox.
In principle, the law in most of the industrialized countries provide a relatively high level of consumer protection, as it gives priority to privacy over a company’s pursuit of profit. Until now, so-called cold calls were only prohibited by law for private individuals. In principle, however, the prohibition of harassment by telephone advertising also applies to calls between traders.
Exceptions are only permitted if the addressee has asked for the call himself or if there is reasonable reason to believe that the person being called fully agrees with the call. As a rule, this is only assumed in the case of ongoing business relationships.