Take Your Direct-to-Consumer Marketing to the Next Level

What is the current state of manufacturer
direct-to-consumer marketing?

One of the most significant consumer marketing trends over the last decade is that the product manufacturers have established direct relationships with their customers. They no longer need to rely solely on retailers to market and sell their merchandise.

Naturally, this is a healthy trend for manufacturers, since they are much better at representing their products than retailers will ever be. But there have been growing pains with the advent of direct-to-consumer (DTC) marketing. Having grown up in a marketing world where it was all about branding via mass media, manufacturers have struggled to develop their direct marketing skills.

Currently, the lack of DTC marketing savvy is causing manufacturers to lag behind their retail partners in online sales. Despite the economic advantage to the manufacturer of selling online vs. through retail, most manufacturers struggle to deliver more than 5% of their sales through e-commerce—while retailers are often above 15%.

“65% of consumers say ‘consumer packaged goods companies should send me (messages) with content based on things they know about me…rather than generic content that everyone gets.’” – EPSILON’S 2008 E-MAIL BRANDING SURVEY

So what can manufacturers do to fill their skill gap?

One effective strategy is really quite simple: steal from retail. That’s right—shoplift strategies and skill sets from retailers, who have been practicing direct marketing for much longer. Better yet, hire their people and their direct marketing service providers. That’s one of the fastest ways to get smarter and better.

Though it may be frustrating to manufacturers to be starting from scratch, this may actually create an advantage. Manufacturers are less encumbered by ineffective traditional practices—“that’s just the way we do it” is not in their vernacular. Instead, they are less resistant to change and have an opportunity to leapfrog retailers in terms of direct marketing best practices.

How can we get even better than retailers at DTC marketing?

The fastest way for manufacturers to leapfrog the retail channel with direct-to-consumer marketing is to avoid the 5 most common pitfalls that retailers have fallen into:

Pitfall #1: Delivering One-Size-Fits-All Messages

Too many direct marketers send undifferentiated messages to their customers and prospects, which depresses both short- and long-term response rates. A bookstore sending me an e-mail about the latest book in Oprah’s Book Club is missing the mark. Not only am I not going to look at that e-mail (nothing personal, Oprah), but it makes me less likely to open the next one. The negative long-term effect of “batch and blast” marketing is usually not well understood and is related to pitfall #2.

Pitfall #2: Measuring Results Only at the Campaign Level

The beauty of direct marketing is that it is highly measurable. But too many DTC marketers limit analysis to the short-term results of their marketing campaigns and programs. Customer-level metrics should be introduced so that important behavioral trends will be revealed and more effective customer-centric marketing strategies can be developed.

Pitfall #3: Managing Your Marketing Programs to Fit Internal Schedules

Managing marketing programs according to corporate schedules (e.g., “Q2 Mailer”) is the opposite of being customer-centric. Most DTC marketers use a blend of corporate-centric and customer-centric strategies, acknowledging heavy customer buying periods for their business and ramping up marketing during these times. The balance of the year is made up of efforts focused on artificially propping up sales during slow periods—usually through steep discounts. By analyzing historical buying behavior at the customer level, you can identify customers who tend to buy during low-revenue periods and focus your efforts on improving response rates and maintaining margin in slow times.

Pitfall #4: Over-Discounting

Related to pitfalls #1 and #3, this pitfall refers to companies offering the same discounts to every customer and not adjusting the amount of the discount offered at the customer level. The fact is, not all customers are equal in terms of their sensitivity to discounts, and your discounting strategy should reflect that reality. Those who buy only at high-discount levels are probably unprofitable for you and should be marketed to sparingly. By customizing your discount offers at the customer level, you will increase profitability.

“Manufacturing (companies) are most challenged by marketing program measurement.” – FORRESTER RESEARCH’S 2009 MARKETING
TECHNOLOGY ADOPTION SURVEY

Pitfall #5: Failure to Integrate Marketing Channels Properly

Many direct marketers look at the comparable cost of e-mail and direct mail and decide to concentrate their marketing investment in e-mail. If you shift money away from direct mail and into e-mail, you run the risk of two possible negative outcomes. First, the volume and frequency of your e-mail to each customer will naturally go up, potentially “burning them out,” which would reduce readership and increase opt-outs. Second, direct mail works much better than e-mail with some customers, and you will be missing out on those purchases if you reduce direct mail too much.

By understanding and avoiding these common pitfalls, DTC marketers can significantly improve results and probably reduce marketing costs as well. However, some investment will likely be required in the areas of data capture, database management, analytics and campaign management technology. The good news is that the technology behind all of these disciplines has become extremely cost-effective over the past several years, so manufacturers can now afford to play on a level playing field with even the largest retailers.