Vocal and Valuable

Mention direct marketing and with instant, knee-jerk predictability consumers complain. They complain there’s too much of it, it’s too intrusive, it digs too deeply into their private affairs. And these are not just a few stray gripes. Complaining about direct marketing is one of the few universals in the consumer market.

Yet, complaints notwithstanding, direct marketing works. Consumers say they dislike DM but there’s no disputing the fact they respond—indeed, more so than ever. This suggests that maybe the reason consumers complain so vehemently is not because they dislike direct marketing but because they like it so much. To put it another way, consumers are offended not by direct marketing per se, only by its shortcomings. If the bad news is that everybody complains about direct marketing, perhaps the good news is these concerns point the way to an even stronger relationship with consumers. Indeed, good relationships are the linchpin of the DM business. Nothing is more fundamental than understanding what consumers think, complaints and all. To provide a foundation of consumer information and insights for the direct marketing industry, DIRECT and Yankelovich Inc.—a marketing consultancy specializing in lifestyle trends and database targeting solutions—collaborated on a groundbreaking study of consumer attitudes about direct marketing.

Three important findings were uncovered by this research:

o The very consumers who are the most vocal and active in their complaints are also the biggest purchasers of products and services through DM channels.

o Consumers have unambiguous direct marketing channel preferences. Most prefer using just a single channel for completing a DM purchase while others prefer having control over a mix.

o Consumers who go online continue to use all channels and are the most involved with direct marketing, both behaviorally and attitudinally.

With Friends Like These...

Eighty-five percent of consumers say they receive too much unsolicited mail. Eighty-eight percent feel the sale of telemarketing lists without permission is an invasion of their privacy and 87% say the same about e-mail address files. While consumers with more education and income were more likely to express concerns, high levels of dissatisfaction were discovered among every demographic group. (See charts 1, 2, 3)

Notwithstanding the high annoyance factor, the majority of consumers (54%) reported they had responded to at least one DM offer in the past six months, either by seeking additional information, making a purchase, or both. Moreover, three-quarters of those responding to DM—or 40% of all consumers—reported that in the past six months they purchased the product or service being marketed. While the response to any particular direct marketing program may be low, in aggregate, DM motivates a large number to buy. It would seem high displeasure with direct marketing goes hand in hand with high response.

Certain product and service categories have better DM success rates then others. Half of those who acted in response to a direct marketing offer in the past six months answered an offer for books, videos, DVDs or CDs; 45% for clothing; 27%, subscriptions; and 25%, consumer electronics. (See chart 4)

Consumers with more education and income were more likely to report having responded to a DM offer in the past six months; married consumers were also more likely to respond than singles. The same was true for purchasing a product or service. The demographic characteristics of higher education and income that make the average DM purchaser an attractive consumer also make them more demanding consumers.

Direct marketing purchasers are no less likely than non-responders to agree they receive too much unsolicited mail, and that the sale of both telemarketing and e-mail lists without permission is an invasion of their privacy. Direct marketing purchasers are much more likely, though, to either take steps to remove their names from lists or use customer service channels to register a complaint.

Many of the consumers who take their names off lists don’t want to disconnect from direct marketers. Direct marketing purchasers aren’t removing their names for defensive reasons. Rather it’s an offensive lifestyle management tactic aimed at improving—not severing—their connection with marketers. The annoyance felt by DM purchasers is rooted in a failure to connect with them appropriately rather than a desire to avoid using direct marketing.

Compared with direct marketing non-responders, DM purchasers are more comfortable with technology such as the Internet, more involved with shopping, more likely to seek out product information and bargains, and more likely to describe themselves as smart shoppers as well as confident, competent, creative, intelligent, optimistic, talented and well-educated.

The public opinion challenge for direct marketers is only partially one of convincing consumers of the importance and legitimacy of the business. Consumers who complain already believe in DM’s value because they shop direct. Instead, the challenge here is honing the design and execution of marketing programs to better fit consumer needs and preferences. Many complaints tend to arise from an underlying, passionately felt desire for direct marketers to do a better job. And until that happens, consumers will continue to make it harder and harder for DMers to reach them, even as they continue to make direct purchases. Direct marketing will indeed grow, but at an unnecessarily escalating cost.

When direct marketing programs are appropriately customized, a substantial number of purchasers are willing to provide personal information, and are more inclined to step forward and put more data into lists. However, direct marketing buyers are disproportionately concerned about the pace of their lives, so a relentless flood of marginally relevant offers will fail to provide the kind of emotional resonance and connection that will soften their resistance. The challenge is one of learning to do more with less.

Different Strokes

Consumers have clear preferences about the ways they want to be contacted. Whether it’s an organization they know or one that’s new to them, consumers overwhelmingly prefer that contact be made through regular mail. Familiarity makes a few consumers more open to phone or e-mail contact, but postal mail is still the preferred method of contact for the vast majority of consumers. (See charts 5, 6)

Younger consumers are more willing to be contacted by e-mail than older consumers, yet they still emphatically prefer regular mail. Higher income, better-educated consumers, despite their generally greater comfort level and sophistication with technology, prefer to be contacted through regular postal mail far more strongly than consumers who earn less income and who are not as well educated.

Different types of DM have different levels of overall response and impact. On an aggregate, cumulative basis, though, catalogs are the type of direct marketing most likely to stimulate a response, particularly a purchase. Direct mail pieces were the second most likely, with e-mail, banner ads, DRTV and telemarketing cited by much smaller percentages of consumers. (See chart 7)

Sixty-one percent of all consumers who bought a product or service through a direct marketing channel in the past six months say they usually use the same DM channel for both researching and making purchases; 23% note they usually use different channels. (See chart 8)

The nuances of executing effective DM are apparent in these results. While most consumers want to use a single channel for a given transaction, for many others there is a three-step process that entails a full yet distinctive use of all direct marketing media. Step one is initial contact and product exposure, and regular mail is the preferred method. Step two is consumer information-gathering and product research, for which Web sites and catalogs are preferred. Step three is purchasing, where several channels are used. Catalogs are the channel medium cited most often, both by consumers who prefer a single channel and those who lean toward multiple media.

Direct marketing customers want offers and channels that match their preferences. Otherwise, DM is felt to be irrelevant and annoying. Different channels serve different purposes, whether consumers prefer single or multiple channels. In particular, most DM purchasers prefer to stick with a single channel per transaction. Even as a general rule, most purchasers have channel preferences; hence, contact directed through other channels is unwanted and actively resisted. Buyers who give multiple channels the edge are deliberately introducing more of their personal preferences into the process, so they find single-channel direct marketing cumbersome and frustrating.

The traditional model in which direct marketers are defined and differentiated by the exclusive use of a single channel—catalogers vs. mailers vs. e-mailers vs. telemarketers vs. infomercial advertisers—still satisfies most consumers. But a model that recognizes the crossover and integrated uses some consumers make of media is of growing importance. Consumers who use the same channel for both researching and purchasing a product or service are slightly older while consumers who use different channels are slightly younger. Thus, the future direction of DM will have to account for an increasing number who prefer a crossover model to a channel-centric one.

Even as traditional direct marketing continues to work successfully, there is an increasing need to give consumers more of what they want and none of what they don’t. This is one of the chief ways in which DMers can do a better job of connecting appropriately with consumers. Delivering direct marketing through the appropriate channels and with the appropriate amount of control can go a long way toward addressing the dissatisfaction and annoyance that causes even the best consumers to actively resist direct marketing. This means good, smart, well-focused design and execution by individual direct marketers.

What the Web Hath Wrought

Direct marketing purchasers are far more likely than non-responders to have access to the Internet. Even among Internet users, DM buyers use the Internet much more than non-responders, shopping included.

Consumers who currently use the Internet are a bit more likely to express DM dissatisfaction than consumers who do not go online. Nevertheless, Web-savvy consumers are much more likely to have responded to a DM offer either by seeking additional information, making a purchase, or both. While online consumers have added the Internet as a channel they have not narrowed their use of direct marketing channels to just the Web. Instead, they have maintained roughly the same level of usage of other channels as consumers who do not use the Internet. The increased likelihood to respond and the broad use of different media are paralleled by a much greater likelihood to actually make a purchase.

Internet consumers are also somewhat more likely to use different DM channels for research and purchases. Among these multichannel consumers, there are important distinctions between consumers who do and don’t use the Internet. Multichannel buyers who use the Internet overwhelmingly prefer to use Web sites for research about products and services. Non-online multichannel consumers overwhelmingly prefer to use catalogs. Multichannel online consumers are more likely to choose to make purchases via 800 numbers or catalogs while multichannel consumers who do not use the Internet disproportionately prefer direct mail. There are only small differences in the types of products and services purchased by multichannel consumers who do or don’t use the Internet. (See charts 9, 10, 11, 12)

It’s worth highlighting the impact of the Internet on catalogs among consumers who like to use different channels for research and purchases. For research, multichannel online consumers replace their use of catalogs with the Internet. However, for making a purchase, these consumers are more than twice as likely to use catalogs as Web sites. Even though the Internet has narrowed the role of catalogs for multichannel consumers who use the Internet, catalogs remain important to them. The Internet has changed the face of direct marketing, but not by displacing traditional channels or making them obsolete. Consumers who use the Internet are no less likely to use the full variety of traditional DM channels. Instead, the Internet has established a point around which high value consumers cluster. Online consumers are more likely to make DM purchases. Internet use is the common characteristic of the most active direct marketing customers. (See chart 13)

There is a noticeable qualitative difference in the demands and requirements of consumers who use the Internet. These consumers make more use of direct marketing so the pitch of their dissatisfaction is an octave higher, and they make use of DM channels in some unique ways. Whether behaviorally or attitudinally, consumers who use the Internet are more involved in direct marketing. Winning more support from those online would be a big step forward in addressing the dissatisfaction among consumers in general, and the highest-value direct marketing consumers in particular. (See chart 14)

Call to Action

The DIRECT-Yankelovich research sets three clear priorities for direct marketers.

First, dissatisfaction with direct marketing can and should be addressed as a marketing issue. The threat of restrictive regulation and legislation is fueled by consumer ire. Certainly, outright abuses must be policed. But DMers must recognize that no amount of PR will reverse the unhappiness consumers feel because of bad marketing. The biggest complainers are the highest-value consumers, who aren’t looking for limits on direct marketing so much as they are looking for better DM. Regulations, legislation, lobbying and public relations won’t solve the problems at the root of these dissatisfactions.

Second, all DM channels should be strengthened and improved. No one channel like the Internet is going to obviate the need for all others. The most important DM channel continues to be regular mail, and the mail system needs a lot of immediate support and improvement. The direct marketing channel preferences of consumers are strong, either for specific channels or for the flexibility of using a mix. Each channel needs all the others to maintain the value and relevance consumers find in direct marketing as a whole. The viability of direct marketing as an industry depends on the ability of consumers to find the channel or channels that are just right for them.

Finally, direct marketers need to emotionally—as well as executionally—engage consumers. The systems and technologies of direct marketing have their own momentum, often encouraging DMers to ignore consumer complaints in pursuit of the next small increment of lift and response. This is not a long-term survival strategy because it inherently and deliberately sacrifices consumer goodwill in pursuit of short-term gains. Soon enough, as consumers become more active and more powerful, it will be impossible for direct marketers to connect with them executionally. Consumers will have the means to resist any and all direct marketing that doesn’t connect with them emotionally. This is the DM industry’s next frontier: developing the tools to put attitudes and emotions into the databases that drive the business so every executional connection will resonate with a powerful emotional one as well.

– J. Walker Smith and Craig Wood

J. Walker Smith is president of Yankelovich Inc. and Craig Wood is president of Yankelovich’s Monitor MindBase division.