Time cold direct mail was finally junked?

With response rates as low as 0.5 per cent, and a high annoyance factor, no wonder Toyota has rethought its mailing strategy, says Gemma Charles

The phrase “junk mail” sets direct marketers’ blood boiling. However, a sizeable proportion of the UK’s direct mail consists of communication never actively sought by the receiver. And it’s a sizeable proportion of a large number – according to the Direct Mail Information Service (DMIS), nearly 5 billion pieces of direct mail dropped through the letter boxes of UK households and businesses in 2001.

This multi-million pound industry will now have to do without cold mailings from car manufacturer Toyota, however. Last week, the company announced plans to drop its cold direct marketing programme along with the agency responsible, WWAV Rapp Collins. It has consolidated its entire below-the-line business into roster agency Miller Bainbridge (MW last week). As Toyota tries to become more “relationship-driven”, the bulk of its &£6m direct marketing business will be spent on managing prospective customers who have already shown an interest in the company, rather than on cold mailings to people who have never made contact with the company.

The opportunity to make an impact on the intentions of new car buyers is notoriously slim. Miller Bainbridge managing partner David Miller says that new car buyers change their car on average every three years, and that only ten per cent of new car buyers are actively looking for a car at any one time. He adds that research shows that even Volkswagen, one of the most popular car brands in the UK, will only be considered by 20 per cent of car buyers. On that basis, Miller argues that cold direct mail in the automotive sector is likely to catch the wrong people at the wrong time.

Brand advertising plays a major part in selling cars, and Toyota’s overall marketing budget has been skewed towards above-the-line advertising to build brand awareness of models such as the RAV4 and Yaris. Despite accounting for only about four per cent of the UK car market, Toyota spent &£19.3m in the first quarter of this year, just less than Ford, which spent &£20.4m in the same period.

Toyota’s customer-acquisition programme will now centre on “brand considerers”: people who have contacted Toyota in the past through media such as its website, showrooms or by telephone.

Miller says: “Our role will be to maximise conversion. What we are not trying to do is send out cold direct mail to people who may not be in the market or be interested in the Toyota brand. It’s just a waste of money.”

The charity sector is also doing some soul-searching about its use of cold mailing. NSPCC head of direct donor marketing Nick Hunter comments: “It’s an incredibly competitive sector and trying to achieve any kind of cut-through from a creative point of view is very difficult.”

Charities including the NSPCC have been increasingly testing direct response TV, as rates have remained reasonable and the paperless direct debit – which cuts out the need to fill in a form to donate – has made donating easier. The charity sector’s marketing mix is being further fragmented with the growth of face-to-face marketing, adds Hunter.

Marketers in one area – financial services – seem content to continue cold mailing, in particular with regard to personal loans and credit cards. The latest DMIS figures show that the financial services sector is the country’s largest mailer, sending 235 million items in the three months to June 2002, a year-on-year increase of 3.4 per cent. In this sector, a response rate of between 0.5 per cent and two per cent is considered respectable.

At least one financial services company is reassessing its approach to cold direct mail, however. Sean Ingram, managing partner of Ping Communications, which specialises in financial services direct mail, says his (unnamed) client is “using cold lists to build the prospects”, but is then tagging the data and sending no more acquisition mail to those recipients until further information is received on them.

Steve Gapper, an independent consultant who is also a member of the Direct Marketing Association’s financial services council, thinks a more considered approach should be taken by certain parts of the financial services sector when it comes to direct mail. He says: “Everyone I talk to is fed up with getting credit card offers. The numbers must stack up, but companies are not thinking about the long-term effect on their brands. Why spend millions on a brand TV campaign only to bombard people with stuff they don’t want?”

But he expresses surprise at the radical route taken by Toyota and suggests that it may have to generate more leads by bolstering the direct response element of its advertising.

Former Air Miles director Judith Mann argues that marketers should focus on customer retention rather than acquisition, and that the way to do that is to ensure the brand experience lives up to the initial promise made to customers through direct mail or advertising.

Mann says: “If you do this, you will lose fewer customers and will not constantly have to be trying to make up for lost ones.”

As businesses become more focused on financial accountability, direct marketers are forced to reassess where their efforts are best directed. The move away from cold mail, and towards a focus on those potential and existing customers who have already registered an interest in the brand, shows no sign of abating.

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