Direct marketing

Direct marketing allows you to generate a specific response from targeted groups of customers. It's a particularly useful tool for small businesses because it allows you to:

• focus limited resources where they are most likely to produce results
• measure the success of campaigns accurately by analysing responses
• test your marketing - you can target a representative sample of your target audience and see what delivers the best response rates before developing a full campaign

A direct marketing campaign can help you to achieve the following key objectives:

• increasing sales to existing customers
• building customer loyalty
• re-establishing lapsed customer relationships
• generating new business

There are many different approaches to direct marketing. These include mailshots and telemarketing, email marketing, SMS marketing and social media. The method most appropriate for your business will depend on who you are targeting, the message you want get across and response you want to generate.

The results of direct marketing aren't guaranteed. A poorly planned or targeted campaign can be a waste of money. A badly designed mailshot, for example, could simply end up in the bin. And worse still, it may irritate recipients and damage your business' reputation as a result.

Direct marketing can have pros and cons. Consider these carefully before starting a campaign.

Benefits of direct marketing

Some of the strengths of direct marketing include:

• Targeting: You can send specific messages to particular groups of customers and potential customers based on demographics and buying behaviour. The more targeted your campaigns, the more successful they are likely to be.
• Personalisation: Reach your audience with a personal touch. Direct mail or email can be addressed to a specific person, and even include details like past orders. A phone call can engage a customer in conversation to start building a relationship with your business.
• Affordable: Tactics like email marketing or leafleting can be very cost effective. Most direct marketing will be more cost effective for SMEs than mass media advertising campaigns.
• Measurable: If your marketing messages ask the recipient to take a particular action or use a specific voucher code, you can easily track the success of campaigns. This can help you plan future campaigns.
• Informative: You can deliver detailed information on your products, services and prices unlike other forms of advertising.

Challenges of direct marketing

Some of the downsides and hurdles to overcome when using direct marketing include:

• Intrusive: Many people find direct marketing annoying and intrusive. This is especially true of telemarketing and door-to-door sales. Some people dislike marketing mail and consider it to be 'junk mail'.  If consumers find your marketing tactics annoying it can create a negative brand association and make them less likely to buy. This is more likely with less targeted campaigns.
• Environment: Using leafleting or paper-heavy direct mail campaigns can be bad for the environment. To avoid this, and any negative impact on your brand image, use recycled materials or try email campaigns.
• Low response rates: direct marketing response rates tend to be around 1-3%.When you reach a consumer who isn't interested in your products of services, it wastes money and they are likely to find it irritating. Use more targeted lists as opposed to sending out mass messages to minimise this.
• Competition: It can be hard to make your messages stand out when the recipient receives high number of marketing emails or direct mail.
• Cost: Tactics like telemarketing and direct mail may have high financial and resource costs. 
• Legal issues: There are laws relating to privacy and data protection in direct marketing. You must ensure that your mailing list only contains individuals who have consented to receive marketing messages from you. 

There are a range of types of direct marketing tactics that businesses can use to reach their target audience. Each direct marketing tactic requires particular skills - you should consider whether you have these in-house. It might make sense for you to outsource certain activities.

Types of direct marketing include:

• Direct mail - this involves sending information to customers and potential customers by post. This type of direct marketing work best with a high quality, targeted mailing list. Sending mail to a less targeted list means it is more likely to be received by someone who is not interested and considers it to be junk mail. See direct mail.
• Leaflet drops and handouts - these tactics are less targeted than direct mail, but can be cheaper and easier to carry out. Leaflet drops involve posting unaddressed leaflets to all residents in a particular area. A leaflet handout campaign means giving printed information directly to people on the street. Some recipients may consider your leaflets to be junk mail. See leaflet drops and handouts.
• Telemarketing  - this allows you to converse with the consumer by phoning them and speaking to them directly. This lets you gauge their interest and employ direct sales techniques. However, many consumers can find this type of marketing intrusive. See telemarketing.
• Email marketing - this is one of the cheapest and most effective kinds of direct marketing. It's easy to measure the effectiveness of your campaigns and test new ideas to improve. The downside is that consumers often receive high volumes of emails and yours may be ignored. See email marketing.
• SMS/text message marketing is more likely to be read than emails, but consumers may find it more intrusive. This may work best for existing customers as unsolicited messages could be seen as spam. See m-commerce and mobile marketing.   

It's important to evaluate the pros and cons of each direct marketing method and choose what works best for your business.

In-house and outsourced direct marketing

Before starting a direct marketing campaign, consider whether you can do it in-house or whether you need to enlist the help of outside specialists.

If you're preparing basic leaflets for door drops or creating a simple email campaign, you can probably write and lay them out in-house. However, your message must be presented well if your campaign is to be a success. If you're unsure of your in-house copywriting or design skills, saving money on a DIY job is likely to be a false economy.

Outsourcing telemarketing can be useful if you don't have the staffing resources in-house.  The downside is that you will have less control.

For best results you may want to use a marketing or advertising agency or consultant. They offer a range of skills, including:

• planning campaigns
• setting budgets
• finding your target audience
• creating materials
• managing the distribution process

You can search for a direct-marketing specialist with the Direct Marketing Association (DMA).

Read more about how to choose, manage and work with an advertising agency.

A cheaper option may be to outsource elements of your campaign. For example, you could pay a freelance copywriter to prepare the wording of your messages or commission a graphic designer to work on the visual side. 

Direct mail allows you to get information about your products and services directly into the hands of people who may be interested in it. Though it's often dismissed as junk mail, it can be highly effective in both business and consumer markets if it's properly planned and researched.

As well as a mailing letter, you typically include a range of enclosures such as a product brochure, order-form and pre-paid reply envelope. Don't cut corners in preparing your materials - the success of your mailshot depends on it.

The other key ingredient for a successful direct-mail campaign is a high-quality mailing list. The most effective lists are those sourced in-house from a well-managed database - you already know the preferences of the recipients of your mailshot and can tailor your offer accordingly.

There's also a range of commercial list providers you can use to generate lists of both businesses and consumers. Find details of list providers from the Direct Marketing Association (DMA).

Tips for a successful direct-mail campaign

The following tips will help you make the most of direct mail:

• Draw up a budget which sees your business profiting at a realistic level of response.
• Consider incentives such as prizes or discounts to maximise response - and make sure you have included these in your budget.
• Source a mailing list that's appropriate to your objectives.
• Make sure you have the resources to run the campaign, follow it up and cope with the response.
• When your campaign is over, quantify the costs, returns and rates of response. If you started with clear objectives, you should be able to learn a lot about what you achieved and how.

Selling to existing customers is far easier and cheaper than finding new ones. That's why your customer database is one of your most valuable assets.

What information does your database currently hold? A list of customer contacts is a start - but more specific information about their needs and interests makes your marketing more effective. This data might include:

• ordering behaviour - dates, frequency and timing of orders
• order types - type and quantity of goods or services ordered and their value
• your total annual sales - the margin on these sales and their payment history
• distribution details - postcode, type of area (eg urban or rural)
• personal profile of individual consumers - age, gender and details of their lifestyle or socio-economic status

With the right software you can use your data to send mailings to groups with specific characteristics. For example you could target women aged between 18 and 25 who live within a five-mile radius of your shop.

But remember that data-protection and electronic communication laws cover how you hold, use and otherwise process information about customers and potential customers and how you contact them.  You normally need consent before you can send an individual marketing messages. Read more about the direct marketing legal issues and best practice.

Your database must be kept up to date if it's to be a valuable business tool. You need to clean your list regularly by removing or amending incorrect data. Failing to do so wastes your money through misdirected marketing - and your data could become unusable within three years.

Read more about how to manage your customer database.

Leafleting is probably the simplest and cheapest form of direct marketing. It may be worth considering unaddressed leaflet drops and street handouts if you want to promote your business in your local area, particularly to consumers. For example, if you:

• offer services locally - such as food delivery, taxi services, gardening or double-glazing installation
• want to attract people to your shop's sale or the opening of your new restaurant

However, leafleting brings significantly lower response rates than direct mail. It's less targeted - you don't know the characteristics of the recipients and you can't personalise your message. As a result it's often best to use leaflets for products or services of universal appeal, or when you need a large number of leads.

Decide whether you need to get your leaflet into every building in the area - called blanketing - or if it's more appropriate to hand information to people in the street near your business.

If you're blanketing, using a postal service is a possible alternative to organising your own door-to-door distribution and may make it more likely that recipients will read your leaflet. 

If you want a return on your investment, you need to prepare your materials carefully. Ensure materials look professional and contain clear, useful information.

To find out how effective your campaign has been, it's a good idea to include some kind of incentive for feedback. For instance, you could provide a small discount or special offer for the first 100 customers who bring in your leaflet. As with any such offers, make sure they're priced into your overall budget for the campaign.

If you are gathering, storing, using or otherwise processing information about customers, potential customers or suppliers, you must comply with the Data Protection Act 2018 and in particular, with the six data protection principles. These require that:

• the processing of personal data must be lawful and fair
• the purpose for which personal data is collected must be specified, explicit and legitimate, and not be processed in a manner that is incompatible with the purpose for which it was collected
• personal data processed must be adequate, relevant and not excessive
• personal data processed must be accurate and, where necessary, kept up to date
• personal data processed must be kept for no longer than is necessary for the purpose for which it is being processed
• personal data must be processed in a manner that ensures appropriate security of the personal data, using appropriate technical or organisational measures 

You must also:

• have permission to hold third-party information; and
• check whether you need to register with the Information Commissioner's Office. 

Read more about privacy and data protection in marketing.

Privacy and electronic communications

The Privacy and Electronic Communications Regulations require you to get individuals to opt in consent before sending them marketing emails, unless they've already shown interest in similar products or services and have met the requirements of the 'soft opt-in' rule. Namely, that the individuals are customers of your business, were given the opportunity to opt-out of marketing emails when you first gathered their data and are given the opportunity to do so at each subsequent commination and any marketing emails solely relate to similar products or services for which they are interested.

The law also covers contacting sole traders and unincorporated partnerships. You can send unsolicited marketing emails to companies or individuals within companies - though doing so may not be good for your reputation and you will need to ensure that this is in compliance with GDPR.

Preference services

Individuals and businesses may prefer not to be contacted by your business unless they have given their consent for you to do so. If you are selling or marketing using post, phone, fax or email, you should check to see if anyone you intend to contact does not want to be approached in this way and keep a record of this. You can do this by

• getting your call list cleaned by a list cleaning company
• checking numbers online on the Telephone Preference Service (TPS) website
• buying a licence for the area or time period you require

Anyone opting out of receiving direct mail may have registered through the TPS, the Mailing Preference Service (MPS), the Fax Preference Service (FPS) or the Corporate Telephone Preference Service (CTPS). The CTPS represents corporate bodies, schools, government departments and agencies and hospitals and other public bodies. 

It is illegal to communicate by telephone or fax with anyone registered with the TPS or FPS if you do not have their consent first. It is also illegal to send unsolicited email messages to individuals unless they have consented to receiving information from you. There are some exemptions to this. Read more about email marketing.

As with all marketing, you must be honest and accurate about the goods and services you offer.