Saturday, January 17, 2009

The Power of Direct Marketing

Markets are a congregation of small businesses and consumers. And, 'marketing' for the non-marketing person is about shopping for groceries for regular household requirements. The essential ingredient of the 'marketing' process is to get the freshest of stocks at the best possible price. Toward this single-minded objective a consumer does a comprehensive price shopping, hopping from one stall to another. When all options are exhausted the final decision to buy is inevitably from the person who is perceived to offer the best overall experience, not the best price (which was the initial goal), perhaps even at a slight or significant premium to the second best choice. This derivation of the best overall experience (an intangible that can only be sensed) is a result of several factors: the stall ambience, the courtesy shown at the very outset, some elements of the subsequent interaction which acknowledged the customer's individuality, prompt recognition and appreciation of the customer's need, a customized range within the category of need to help the customer make the right choice, some freebies thrown in as a compromise to the penny-pinching negotiations. All constructed and executed to perfection to influence the customer's perception that he or she is getting better than the best value for the budget available. In business literature, marketing is defined as the management process related to identifying, anticipating and satisfying customer needs, profitably. This is what the stall keeper has done on a one-on-one basis. The power of direct marketing arises from the ability to mass customize communication by identifying, anticipating and satisfying customer needs, not just once, but economically several times over the lifetime of the consumer. To do so successfully and profitably, an ongoing ability to acquire and deploy customer knowledge becomes critical to the process. The power of direct marketing is directly proportional to the brand's capacity to institute dialogue and design customized (and differentiated) solutions, whether it is a product or service. This must be for a specific segment of its customers. It must arise from intuitive and researched knowledge of the needs and wants of the segment. It needs to be delivered cost effectively through channels that is the preferred mode of interaction and transaction for the customer with the brand. Conversely, direct marketing is absolutely ineffective if the knowledge of the customer is shallow or non-existent. Depth of knowledge helps forge a relationship based on mutual dependence between the brand and the customer. It cannot be one-way street: either the brand is in a monopolistic situation and dictates terms to the customer or the brand is eking a living being a servant to the customer - dropping prices at his or her bidding just to survive. Building relationships is a two-way street. It is about trust. And, trust is all about expectations delivered, consistently at every interaction. Come to think of it, a 'brand' whether Nokia or Hutch - in one sense, is exactly that: a promise, a sum total of experiences delivered at every consumer touch point. Touch points that come under the ambit of direct marketing services to manage and deliver customer delight. Direct Marketing covers a much larger canvas than any other form of customer communication each of which, whether advertising or promotional marketing or public relations, focuses on imparting a message, but do not get down to the brass tacks of developing a relationship to keep the customer and earn a fair share of his purchasing capacity across his or her lifetime. Is there a trick to this whole process? Is relationship marketing all humbug? Daresay no, for it is what keeps the engine of industry running. Let's take the simple example of an individual operating a single line of business to provide an insight on how large organizations must align their numerous functions to leverage the power of direct marketing. To me Narayan Suresh is a brand as is Narayana Murthy of Infosys Technologies fame. The difference, however, is that Narayan Suresh is tangible to me, where as Narayana Murthy, is an intangible, never having met the august gentleman. So, who is Narayan Suresh? All of us on occasion have hired taxis and a stranger has picked us up and either delivered us safely and professionally to our stated destination or drove us tizzy going in circles, but not quite getting there, at least not on time. Imagine the scenario if one is racing to catch a flight. Narayan Suresh was different. He knows the city of Bangalore like the back of his hand (to use a cliché). He zips through town with perfect knowledge of all the short-cuts. Imagine a GIS implant in his spectacles that provides the precise directions to destinations. This leads to a compliment from the writer on how well he knows the town. The compliment led to Narayan Suresh proffering his visiting card. That led to Narayan Suresh being called each time a taxi was needed during the day or night (yes, most times past midnights with the dubious reputation our airlines have for on time arrivals). It did not stop there – he was referred to the neighbors – who cottoned on to him. Wow! Wouldn't every brand want to be a Narayan Suresh? What was special about Narayan Suresh? Not only did he drive you to the destination, but also enquired whether you needed help at the location while he was waiting. On one such instance, he helped with the Kannada language to deal with government officials on some land matter. Narayan Suresh is well-turned out, has a friendly disposition and speaks to the point – not a word more, not a word less. He is effective as a taxi driver on call or liaison person on a mission to get a certification from a sub-registrar. He is what every brand attempts to be: courteous, professional, fulfilling a need without being intrusive. So, why is Narayan Suresh a brand and what has that to do with the power of direct marketing? Brand Engagement: A call to the radio taxi brought Narayan Suresh to my doorstep – a non-entity. Very much like a customer walking into a store, restaurant or buying a service online for the first time. Until the customer walks through the door he is unknown…and may remain so in 99.99999 percent of the cases. Moment of Truth: The foundation of most relationship is established with the first interface or if it is a monopolistic situation (in the broadest sense) over many subsequent interactions. It is either good, bad or indifferent – the last being the worst – suggesting that the brand is not even worth hating. Building / Repairing: The power of direct marketing lies in capturing a positive interaction (a la Narayan Suresh) or repairing a poor one and trying one’s damnest not to repeat the offence. We know that a person who has a fabulous experience may tell three people, but one who has had miserable experience will tell 15 in the next 15 minutes and to a few hundred more through his lifetime. Cannot underscore more dramatically the need for immediate corrective measures. Database Development: Process and software to capture the relevant transaction on a database and building on it. The simplest electronic database today is the phone book on Narayan's mobile phone that alerts him and helps him keep a record of a chain of SMS communication on a customer. Calling Address: Narayan Suresh proffering his card is akin to a business having a web site or a call centre number or a short code for texting for information to facilitate the customer to initiate the relationship or build on a transaction that has been consummated. Thereafter, it is really a matter of good management to keep it going to its logical conclusion. Customer Road Map: Every subsequent engagements (destinations visited in the case of Narayan Suresh) is literally a road map or customized menu card of wants and needs of the customer which operates on short codes: airport, last flight, in-laws, sub-registrar, bill payment. More the short codes, better the relationships, higher the business profitability. Moore's Law: The power of direct marketing grows in proportion with every positive interaction and the ability / capacity to capture, store and retrieve information and put it to relevant use for mutual benefit of the customer and the brand. Brands are built through positive experiences that lead to trust; trust in turn provides the brand the opportunity to expand the relationship with the customer by providing relevant and timely services at a value that is within the customer's capacity to pay, even when at times it is at a premium for customizing the service. Brands fail when they stop improvising on their relationship with customers – when they stop adding value – yet charge premium for non-existent or unperceived value (perhaps Marlboro is a case in point). Direct Marketing through its template of managing an ongoing relationship is completely on top of the 'moving target' called the customer, consistently responding to the customers maturing needs as he or she crosses various milestones – teen to professional, single to married, carefree couple to house-holding, rearing children to seeing them leave the nest, preparing for retirement and sailing into the sunset or a new sunrise. Whatever! Brands that stay still are like the ship happy in the harbor – but that's not what they were built for. Brands are meant to ride the waves the customers are surfing on. Direct Marketing through its intimate knowledge of the customer keeps the brand relevant to its maturing base and the new ones coming in their wake. August 19, 2007 As appeared in Pitch Anniversary Issue 2007