Midterm Report

Direct marketers are not acting they way they're supposed to.

Normally they work their house lists during tough economic times, but that's not the case this year, according to a survey from The Kern Organization.

Of the marketers polled, 44% are devoting over half of their DM budgets to customer acquisition, and 25% are pouring over three-quarters into it. In contrast, less than 20% are allocating more than half of their spending to retention or cross selling.

“Unlike in prior recessions, customer acquisition is still extremely important,” says Russell Kern, the DM agency's president. “Companies are not turning within to focus on their current customers.”

That doesn't mean they're doing it only through direct mail. On the contrary, 31.5% are cutting postal budgets, compared with 29% that plan to spend more. Yet almost 80% expect to boost e-mail spending.

But it does indicate that they want to attract new customers. And Russell has some ideas on how to do that in this climate. His creative tips for surviving the downturn can be found on page 22.

Let's look at a couple of findings that were not so gratifying to Kern. One is that better than 60% set aside less than 5% of their budgets for testing.

“That shocked me,” he says. “People don't feel they have the time, and they don't feel they know the disciplines of testing. They don't want to take a risk on a test that might fail.”

Then there's DMers' seemingly low esteem for lifetime value. Only 22.5% listed LTV as a metric they're held accountable for delivering (vs. 61% for ROI and 57% for response rates, 47% for sales dollars generated, 38% for cost per lead and 31% for cost of new customers).

You can read the full results of the survey at http://directmag.com/news/dmers_spending_0713/.