Direct Mail Strategies
I have seen companies try to pitch entrepreneurs everything from direct mail services to design services by phone or the web. Launching a direct mail program or designing a logo are relatively complex tasks involving many variables. Most owners would prefer to deal with someone personally. But marketers realize they cannot afford to offer one-on-one account management to small businesses, so they attempt to sell these complicated products through direct mail or the Internet. Such attempts fail because a more high-touch sales strategy is needed.
Despite a built-in potential audience of 2.8 million Quick-Books users, however, take rates were initially slow. While Kraft feels that the ability to identify and append business addresses to consumer direct mail efforts was a key challenge, leveraging Intuit's relationship with the accounting community would likely also have helped to increase initial sales.
Overestimating the small business market is a classic blunder made by even the biggest of companies. I remember a project in which a Fortune 500 credit card company called us in to analyze how they could attain a better response rate on their direct marketing efforts targeted at small business owners. The card being offered was a premium card with a very high credit limit, targeted at established small businesses with 5 to 50 employees. The only way to qualify for the card was to have a spotless personal credit history and a substantial personal net worth, including a house or some other tangible asset on the line. This credit card company had been attempting to acquire new cardholders but were consistently pulling less than one percent response rates on their direct mail. Of those who did respond, fewer than one-third actually qualified for the card. As a result, the company was getting less than a third of a percent response rate and the cost per active card acquired was...
Accounting software is purchased early in the business life cycle, but the start-up market is difficult to reach because few direct mail lists effectively target this segment. Intuit, an accounting software provider, seeks new ways to reach the start-up market cost-effectively.
Innovations, new products or services created exclusively for the small business market, often necessitate a very customized (high-touch) contact channel (see Figure A.11). The product or service is new and therefore challenging to communicate through mass media or direct mail.
Most Fortune 500 marketers targeting the small business market do not localize their messaging, even though today's direct-marketing technology makes it simple and relatively inexpensive. I can remember consulting with a major United States bank who had requested our help because it had been getting consistently lower and lower response rates on its direct-mail promotions. We examined the bank's product offering, which proved solid, and we established that it was working from a reputable list. Therefore, we focused our attention on how this bank was talking to prospects. The bank's direct-marketing copy was very generic, referring to small business owners and their financial needs.
Direct Mail Secrets Exposed
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