The standfirst of David Benady’s article on whether direct marketing was becoming too complex for its own good (MW December 15), suggests the industry could learn from retailers. What a sensible idea.
Because NCH is both a database company and the handling house for 85 per cent of the UK’s coupons, it works at the sharp edge of the interface between the economies of scale and elegance of tighter targeting and the promotions industry’s primary functions – to tempt people to sample different brands, to revisit products they no longer use and to encourage regular purchasing of brands.
By continuously refining data selections, you may maximise response rates as a percentage of mailings, but you risk excluding potential customers who do not fit neatly into your identified profiles.
Often, sales promotion techniques can excite the interest of people outside of the usual customer profile and turn them into trialists and, potentially, committed customers.
While this may be more expensive per acquisition, in time, the customers it generates may drive a further profile which DM techniques can identify. Thus sales promotion techniques and DM analysis can work closely together.
Data analysis should improve targeting, reduce wastage and enable replication of the tried and tested sales practices, such as “know your customer” and “right message to the right person”. But there is no reason why sales promotion techniques such as “money-off discounts on multi-purchase” and “free gifts on purchase” should not be used alongside it to incentivise purchase. They would generate even more data.
For example, Tesco is envied because of the data benefits achieved by its Clubcard. It has used sophisticated data analysis to maximise these benefits and improve the performance of its direct marketing, its store development and its marketing.
Tried and tested sales promotion techniques, such as coupons, working in combination with DM, can significantly improve response rates and demonstrate a return on investment DM alone would struggle to replicate.
NCH Marketing Services