Five DM specialists discuss developments in the sector that are leading to digital and traditional campaigns delivering ever-higher response rates.
Peter Wilton (PW)
Head of brand and marketing communications, Lloydspharmacy
Philip Price (PP)
Head of brand marketing, P&O Cruises
Marc Michaels (MM)
Director of direct and evaluation, COI
Chris Combemalem (CC)
Executive director at DMA UK
Adam Henderson (AH)
National dealer marketing manager, Jaguar UK
Marketing Week (MW): How have you used direct marketing over the past year?
Peter Wilton (PW): At Lloydspharmacy, we are using DM to help change the perception that only older people use pharmacies. We are the second largest pharmacy chain but have not used DM in the past. However, we have run three multimedia campaigns with agency TDA around smoking cessation, weight loss and type 2 diabetes using direct response TV, the press and a smartphone app. Our direct response strategy has raised interest in our ’online doctor’ service, which allows people to talk about conditions they may be embarrassed about.
Philip Price (PP): DM brings both our loyal customers and a large bank of enquirers closer to the brand. The last part of the conversion programme for P&O Cruises of any mailing enquiry is a ship visit and we run 84 every year in Southampton. People pay for lunch and a tour but the cost is reimbursed if they book a cruise.
Chris Combemale (CC): We promote the DM industry and our own membership products and events, with email marketing and direct mail used to promote the industry awards. We have also tried to improve the tone of our communication. After rewriting our legal newsletter for members, the open rate jumped by 40%.
Adam Henderson (AH): DM is the foundation of our marketing, accounting for about 25% of the communications budget. One of our most successful campaigns, created with local marketing agency EMO, involved Jaguar dealer inserts in Dennis Publishing magazines including The Week and Auto Express. Using segmentation profiling, 24,000 targeted subscribers received a personalised pack from their nearest Jaguar dealership and an invitation to enter a draw to win a Bowers & Wilkins iPod speaker system. The response rate of 2.5% was higher than the average inserts response rate for this sector of between 0.5% and 1%.
Marc Michaels (MM): Currently, COI continues to use direct mail, door drops, face to face, inserts and email to good effect. Door drops have performed well in the pilots for the new NHS 111 telephone number. We still use contact centres to handle responses and promote conversion.
MW: How do you measure return on investment?
MM: COI’s evaluation team has made strides in this area, building on the Artemis response and conversion system to create a more holistic approach to evaluating what people know, think, talk about and do as a result of communication.
CC: More of our budget is migrating to direct digital channels that are more measurable. We measure click-through rates and engagement levels when we tell members what the DMA is doing. It is crucial we measure campaigns around paid events like our summer lunch. Every brand must assess the lifetime value of customer segments and not just one campaign.
AH: Each month, we run a sales match programme where we look at sales data and overlay the customer’s details with the mailing file for a particular DM campaign. Each campaign has a nine-month life so we know the cost of doing each piece of activity and the follow-up costs. This technique has convinced us to repeat the insert activity with Dennis Publishing.
PW: Direct response means we can see actual figures and we scan promotional barcodes when people come into the pharmacy. We’ve introduced direct response questionnaires for doctors on what role a pharmacy should play in the NHS reforms and the response rate has been between 8% and 12%. We also have a brand tracker panel of 600 people who are tested for spontaneous and prompted awareness of Lloyds Pharmacy.
PP: We have standardised reporting across the marketing department so we can see more closely how DM performs in terms of cost per acquisition. We are more analytical and no longer have an offline and an online marketing team because we aim to get a single view of every customer. This will make our regional and world cruise mailings more efficient with more targeted and relevant messaging.
MW: Is there any type of direct communication you find particularly effective?
AH: No channel works independently. We follow up with phone calls from the dealer or from our customer relationship team to get people to visit our website.
PP: Our average audience is over 55 so, for the moment, nothing has the marketing power of a brochure or our customer magazine. These are available online but still work better when they arrive in people’s hands. Marketing technology is moving faster than people can react to it and we have to go at our customers’ pace. Having said that, our website forum is busy.
PW: We have ongoing email conversations with customers to bring them into the pharmacy. Yet door drops at a local level remain vital to explain our price proposition and to tell people that a Lloydspharmacy has moved.
MM: All of the direct media channels we use are successful at lead generation. Some may convert better than others but this will vary. Face to face was very effective on a recent cancer campaign. However, we found that inserts were more effective for the launch phase of the How Are The Kids? survey for the Change4Life initiative. The key is to test the direct channels you feel will work and then roll out the ones that deliver conversion, not just response.
It is critical that people are happy to share information with a brand if lifetime value is to be achieved
MW: How do you make sure that DM is integrated into a whole marketing campaign?
PP: We have five specialist teams in the marketing department but everything is integrated and collective decisions are made on all campaigns. To help structure this we have appointed Arnold KLP to handle our integrated advertising. This relationship is only a few months old and we are asking the agency to do things it is not used to, such as looking at our customer letters, because we want them at the heart of everything we do.
CC: It comes back to building trust because it is critical that people are happy to share information with a brand if lifetime value is to be achieved. If DM is not integrated, a brand can miss opportunities. It may see response to an email newsletter double, but was this because of the content or subject line or simply because a TV campaign broke at the same time, which raised awareness?
PW: Until this year we did not have a strategy to integrate all our marketing. But now people can collect prescriptions from a pharmacy the same day they use our online advice service [which includes private doctors who can consult and prescribe some medicines]. We are driving offline consumers online. For instance, we have been using in-store advertising to promote our Cheeky Hats online campaign for erectile dysfunction, created by TDA. We have also been running more online-only offers on weight-loss products. We know that by building our online database we can develop our CRM programme.
MM: One of the direct team sits with the communications planners and I am in close contact with the evaluation team and other parts of COI, such as research and interactive services and agencies. This ensures we have a clear understanding of the whole campaign using owned, earned and bought media. We also ensure our contact centres are plugged into this and can handle the responses that an integrated campaign generates.
AH: Our marketing department and agency colleagues worked together on a recent campaign for our XJ saloon. We ran a premium direct mail campaign that built on Jaguar’s association with the Savoy Hotel and saw selected potential buyers enjoy a luxury weekend in London. They were chauffeur-driven from and to their homes in the new model. Other prospects were invited to track experience days and we created a special landing page on the website. Some 450 people went to the landing page and more than 100 applied for a test drive big numbers when you consider the price of an XJ starts at £56,000.
MW: Direct mail has recently been criticised by TV show Panorama as being ’scam mail’ or ’junk mail’. How do you defend it?
CC: It was not clear to viewers the difference between legitimate advertising mail and scam mail linked to criminal activity. The legitimate industry generates £16bn in sales for the UK economy and supports 280,000 jobs. Companies must be able to market their products for the economy to function. Consumers benefit from convenience, price and value and it allows people who are not that mobile or who are living in a remote area to have anything sold in the world delivered to their door.
MM: The industry is a key employer and a crucial source of revenue for Royal Mail. The vast majority of direct mail is already being recycled. It is a channel people actually quite like when it is targeted, timely, relevant and motivating. The programme confused scam mail with junk mail but these do not come from responsible direct marketers, who would not carry out direct mail campaigns unless they knew it was working and the public responded.
PW: The programme did not understand the mechanics behind the industry or appreciate how mail order is fundamental to people who do not have access to the high street.
Some brands get it wrong but why would you do that deliberately? It is a waste of money if you do not deliver the right product at the right time. In the pharmacy sector, we like to write to people who have expressed an interest in a particular product or service. This is important for prospect engagement.
AH: There is a problem with scam mail so better data profiling is the key to raising the reputation of direct mail. This will ensure mailings are going to relevant audiences rather than large audiences. Reaching the right people means we are not wasting our money and recipients are not annoyed.
PP: Direct mail can be expensive when you consider operations, paper and print costs so as a brand we have to make it work. We know there is a saturation point for our customers so you have to set a frequency limit to protect any relationship. The growth in personalisation is the way to counter the Panorama arguments.
I want to make more use of personal URLs to create sites that match an individual’s needs
MW: What innovations have impressed you recently?
MM: At the Marketing Week Live! Data Marketing Show there were some interesting developments. In particular, something that could match a customer’s tracked online search through to them phoning a call centre in response to that online search caught my eye. I have also had quite a few mailings recently looking at new formats such as pop ups and textured ink. Even in this digital age, there is something about the physical or sensory nature of print and the immediacy of a phone call or face-to-face meeting that still brings a greater impact and likelihood of conversion.
AH: True personalisation has impressed me and agency EMO has been good at personalising content with a local call to action. We are only scratching the surface because we want to take all the personal information we have, such as household income, likes and dislikes and link it to the partnerships we have with other premium brands such as Wimbledon and The Savoy to give people information about our brand in a very bespoke way.
CC: New channels are being adopted by consumers and behavioural tools developed at a speed I have never witnessed in my DM career. The opportunity to market products and services via social media sites is very exciting.
PW: The integration of offline and online is impressive. For example, the National Trust’s 45-year-old Neptune Coastline Campaign, where direct mail is now being used to encourage people to donate online where there is rich content.
PP: I am impressed by the potential offered by more personalisation. We would love to send our customers a brochure with relevant content and pricing information based on their previous behaviour. We are probably a couple of years off this because of the costs involved.
MW: What future trends do you see and how will you integrate them into your activity?
PW: We have millions of customers using our pharmacies but many are not online. We need to encourage them so we can follow the trend of communicating more and more with our customers digitally. The pharmacy is usually the first line of support for health issues and we can provide a lot of advice through our online doctor service and video content.
PP: The trend towards a single-customer view is something we want to embrace. Our business is based on five databases that do not communicate with each another. That is something we must address. We want that single view on how people purchase cruises and how they behave on board our ships, right down to what they drink.
CC: In future, all communication will become direct communication. Even TV is becoming more direct response-orientated and we have seen ITV’s acting group marketing and research director Julia Porter join the DMA board.
AH: Integration is everything and I want us to make more use of trends such as personal URLs on websites so we can create sites that match an individual’s needs. Digital is not effective on its own for a premium brand like Jaguar. People still like our magazines and brochures which are the starting point in the relationship even if they then do their research and register interest online.
MM: We have to build behavioural economics practically into DM communications and think more about the context and space in which marketing messages are being received. There is a growing trend to use DM to reduce any barriers in the customer journey.