Too posh to push direct?

Ray

Luxury brands have traditionally steered clear of direct marketing in a belief that it is for the mainstream only. Butsome are giving it a try – to splendid results.

Premium and luxury brands are often accused of keeping consumers at arm’s length, with marketing focused on glossy print ads in high-end magazines promoting a glamorous lifestyle. But now several upmarket brands are choosing to communicate with people on a more personal level, with impressive results. Last month, car company Land Rover and clothing brand Boden won Marketing Week Engage awards for their direct marketing and customer relationship management campaigns respectively.

Land Rover carefully identified customers whose vehicle was about two years old and who might be tempted to upgrade to a new model. It assigned adventurous and well-known faces to critique the new vehicles, including survival expert Ray Mears, explorer Sir Ranulph Fiennes and Olympic cyclist Victoria Pendleton. The direct mail pieces suggested to customers that the toughest test for the brand’s new model was earning their opinion, prompting them to book a test drive.

Direct Marketing Association executive director Chris Combemale says high-end car marques are one of the sectors to use this type of personalised communication most effectively. “Luxury car manufacturers have always built in very strong engagement with customers after purchase because if you get to know who has bought into your brand, you know that person is likely to buy from you again,” he says.

Certainly this approach has worked for Land Rover: its DM campaign for the launch of last year’s range saw sales rocket – an average 174 vehicles per month, which is an 8.6% response rate.
Agency Wunderman, which designed the mail packs, says the cost of the campaign per car sold was £59, and given that a new Land Rover sells for £40,000-plus, this is some achievement.

The brand’s marketing communications manager Mark Beamont argues that having well-known people endorsing the brand helped it to be so successful, especially during a recession. He explains: “We have had to work hard to get people to draw an association with the product, particularly in a recession. Why would people want to spend a certain amount of money on a car? We wanted to build the credibility of the product and give people a rational reason to buy it, communicating that it is about longevity and practicality.”

Fact focus

How do premium brands use direct marketing?
In a variety of ways. Some see it as beneath them, but others, such as jeweller Tiffany and auction house Sotheby’s, send out catalogues to customers. Sotheby’s also interacts with bidders personally and through an online system, according to Chris Combemale at the DMA. Other brands such as Scott Dunn focus on using catalogues and email marketing.

Why might premium brands avoid it?
They might perceive it as downmarket, or as something that gets too involved with a customer. Brands could associate direct mail and email with mass-market brands, preferring instead to use sponsorship, press advertising or celebrity endorsement to advertise their products.

Marketing Week’s Engage Awards judges were also impressed with Boden’s ’Love Story’ catalogue campaign that ran last winter and achieved a good return on investment. It worked well because each piece of mail sent out with the catalogue was tailored personally to customers and included product recommendations based on what they had bought before, using analytics by supplier Autonomy. Boden CRM manager Neil Warburton says it worked well because it was so targeted and featured founder Johnnie Boden talking ’directly’ to the buyer.

“People had got used to seeing a model on the [catalogue] cover, but when we were talking to them personally, it was much less likely they would assume it was junk mail and not open it,” says Warburton.

But he is candid about how it was received once opened. “People either loved it or hated it. We had much more positive than negative feedback although we definitely got some who said ’never darken my door again’. But we get that with every catalogue.”

Warburton says feedback is very important to Boden and its ABC1 consumers are not scared of coming forward. The Love Story campaign went on to encourage them to contribute to the story by going online and “sharing what they love and loath about Boden”.

For smaller brands, direct marketing can be crucial for building client relationships. Luxury leather goods manufacturer Ettinger started selling via its website in 2008 and also sends out a newsletter six times a year

Warburton is now working on the brand’s 2012 summer catalogues. The first group to be targeted will be its top-spending customers – about 10-20% of its customer base. “No one wants to tell their customers that some are less special than others, but the truth is some of them are much more profitable. If we can spend a bit more to make sure these customers choose Boden over others, then we’ll do it,” he says.

Using direct mail as a starting point has been effective for the brand, he claims. “It worked well because people talked about it on Facebook. The only way to encourage that conversation is to follow up the DM with email and competitions on our community and Facebook sites.”

While Boden might build its business model on direct marketing, it is less relevant for other brands in the premium sector. Victor Lanson, marketing controller, events and communication at First Drinks Brands, which distributes Piper-Heidsieck champagne, Rémy Martin cognac and Hendrick’s gin among others, is sceptical about DM.

“Because we are premium, I don’t really do emails or mail; generally people dislike them. We usually do event sponsorship, asking for exclusivity at events. Consumers won’t see us as people but they will see the brands and associate them with other partners such as Bremont watches, Porsche and Norton motorbikes,” he explains.

However, for some of his brands that have a loyal following, such as Mount Gay rum, direct contact – though not through mail – is appreciated.

The brand is present at the Cowes Week regatta and Lanson claims the rum is “worshipped” by the sailing community. “We do sampling and competitions. People give us their details and we invite them to events the year after,” he says.

For smaller brands, direct marketing can be crucial for building client relationships. Luxury leather goods manufacturer Ettinger started selling via its website in 2008 and also sends out a newsletter six times a year. It also makes small, co-branded leather goods for Bentley. Marketing and web manager Jerome Mackay explains that the brand is working on a new database of customers so it can send direct messages to people – but in a refined way.

“We don’t want to hassle our customers. We are not here to get as much out of them as possible. We are there to be friendly and have less of a business relationship and more of a clubby relationship. There are some customers who feel proud to have found us,” he says.

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While Ettinger was founded in the 1930s, Mackay says it has only started seeing itself as a ’brand’ more recently. “Because we are a small company, we have to be very careful with anything we do. We are not a fashion brand, and we are not trying to emulate the marketing strategies that the larger groups can afford. We keep making [the same] goods year after year so it is a very different approach,” he says.

As a result, the brand puts a face and name to every point of contact it has with customers, and has started marketing on a one-to-one basis, sending thank-you emails when someone has bought a product.

For Combemale at the DMA, direct marketing is an activity that is somewhat unfairly maligned by some high-end brands. These brands might not categorise their activities as classical ’DM’ yet consider direct contact vital to their operations.

He warns: “The category has under-used database marketing, usually due to bias at the senior level. But I think that markets have changed. You have to build in activity that is right for the customer, not just bash out a sales message.”

Viewpoint

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Simon Russell, managing director, Scott Dunn

Scott Dunn is a direct-sell-only tour operator – we don’t sell through other means. Therefore, all our communication is direct. One of the big challenges for us being a high-end brand is to convey quality.

Holidays are very emotive. We try to get across what a customer would get for £10,000 and how that makes someone feel. It is a challenge with a traditional paper direct mail.

Acquisition DM is much less targeted, but you still want a quality premium feel. It is difficult to get the numbers to work on that, so conversion is lower. In the past, we have done very little acquisition marketing, it’s mainly been talking to our existing database of customers.

Another challenge is that our high-repeat guests are saying to us that they want to hear from Scott Dunn on a personalised basis. They don’t want to be put on the mailing list with others. They might have spent £100,000 with us in the past three years and expect us to talk to them from a position of knowledge and understanding. We are focusing on that at the moment.

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We want our mailings to feel personal. When I have been sent a DM piece, I can tell if a computer has generated it, inserting three or four facts from a database. Particularly in the luxury sector, the guests are more savvy – you have to work harder to give that real, personalised feel.

A big advantage of being 100% direct rather than through an agent is that we have our customers’ full details. All our outbound marketing is logged against each guest record so we recognise their phone number and can see their enquiry history, quotes, feedback, details of conversations and all the marketing that has been sent.

Typically, travel brands are not as good at personalisation as other sectors. The bar is not set particularly high so it isn’t too difficult to wow people. There is a real opportunity to impress guests with all the information you have about them.

At our end of the sector we send out book-style brochures, which might have coffee-table appeal. Some guests love them, whereas others sometimes send it back saying they object to us spending money on brochures when everything can be done on digitally.

We have got to absolutely know the guests that don’t want the printed material and give them a choice, for example by sending a text beforehand asking them to let us know if they don’t want to receive a brochure.

Top trends: 2011 predictions

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Simon Russell
Managing director
Scott Dunn

With our most loyal guests, we are looking at various options that might take us away completely from any sort of traditional direct marketing, and instead deal with them on a one-to-one basis. So there is almost a one-to-one marketing plan for them. Rather than it being the company knowing them, we want them to feel that there is an individual who understands them well and is marketing to them on that basis.

We are working with agency Fold 7 as part of our strategy to grow quite significantly over the next couple of years. To do that, we’ve not only got to achieve more business and loyalty but get out there and talk to potential new guests. Acquisition is more likely to be digital rather than traditional paper as we can be more targeted.

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Neil Warburton
CRM manager
Boden

Even with digital developments, people will still want our catalogue because it’s portable, more so than an iPad. A quote that sticks in my mind from a focus group is from a lady who said she loves the catalogue because she can read it while waiting to pick up the kids from school. You can’t do that with a phone.

Also, one thing that we learnt with the [personalised] Love Story campaign was that DM can be a bit like Marmite some people hate it, but you can’t not take risks next time because of that. We need to make sure we have the stand-out factor.

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Jerome Mackay
Marketing and web manager
Ettinger

We started selling online a few years ago, but didn’t have a paper brochure. Originally, we thought we could go all-digital; we thought we’d be able to do everything online. But now we are producing a paper format which people can touch and feel. I also see us looking at technology that will allow us to send messages to a smaller section of our database with something that is entirely relevant and geared to them, rather than sending a general message to everyone every time.

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Mark Beamont
Marketing communications manager
Land Rover UK

I think customer relationship management will move to digital but it’s a question of how much it will move there. It’s about how you create the cut-through. Email has even more waste than a hard-copy direct-mail piece, but if there is something of added value in it from a premium brand, it is more likely to be opened.

Tag Heuer, for example, treats direct marketing, through emails, like a club. I only get emails from it when there is something extra, such as an invitation or an offer.

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